Professional Documents
Culture Documents
PROMOTIONS - 2013
CLERICAL TO
OFFICER
Date: 25.03.2013
Dear Comrades,
We are happy that for the year 2013-2014, Union made the Management to notify 500
JMGS-I Officer vacancies to be filled on promotion from Clerical Cadre. The Online Written Test is
scheduled on 5th May 2013 (Sunday) for the applicants under Merit Quota.
From the year April 2014 onwards, the vacancies in JMGS-I Officer cadre shall be filled 50%
from within i.e. by way of promotions from clerical cadre and 50% by Direct Recruitment
(Probationary Officers)
You are aware that the Union has signed a Settlement on 13-12-2010 and modified the
minimum service stipulation from five years to two years for the benefit of newly joined clerks.
We hope that the material will not only useful for promotion aspirants but also for all staff in
general.
Yours Comradely,
(T. Ravindranath)
General Secretary
BANKER`S
DIGEST
1
Joseph Badaracco
For the benefit of the readers, the present edition is divided into
two parts viz., Banking & Current Trends and Andhra Bank -
Products & Services. The first part is designed exclusively to
suit the requirements of the staff aspiring for promotions. The
second part covers various products and services that are being
offered by Andhra Bank. Brief details of staff welfare schemes
are also incorporated for the benefit of serving as well as retired
staff.
One of the important functions of the Banks is to accept deposits from the public for
the purpose of lending. In fact, depositors are the major stakeholders of the Banking
System. The depositors and their interests form the key area of the regulatory
framework for banking in India and Reserve Bank of India has been issuing broad
guidelines to the banks from time to time. Various deposit products offered by the
Bank are assigned different names. The deposit products are categorized broadly
into the following types.
d) Term Deposit means a deposit received by the Bank for a fixed period
withdrawable only after expiry of the fixed period and includes deposits such as
Recurring / Cumulative / Annuity / Reinvestment deposits / Cash Certificates, etc.
The minimum period of Term Deposit is 15 days. However, branches can accept term
deposit for 7 days also provided the amount of deposit should be `1 lakh & above.
The maximum period should not exceed 10 years except in case court/minor
deposits as special case.
e) Notice Deposit means term deposit for specific period but withdrawable on
giving at least one complete banking days notice;
Bank may, from time to time design/come out with new deposit products, with
certain additional benefits with or without payment of certain charges to cater to
needs of specified categories of depositors and the same may not be made available
to other customers.
Joint Accounts - Deposit accounts can be opened by an individual in his own name
or by more than one individual known as Joint Account. These accounts can be
operated by single individual or by more than one individual jointly as per the
mandate. The mandate for operations can be viz., Individual; or Jointly; or Either or
Survivor; or Former or Survivor; or Any one or Survivor. If the account is held by
two individuals - Either or Survivor, the final balance with interest, if applicable, will
be paid to survivor on death of anyone of the account holders. If the account is held
on former or survivor basis, the final balance along with interest, if applicable, will be
paid to survivor on the death of Former. The bank may at the request of all the joint
account holders allow addition or deletion of name/s of joint account holder/s if the
circumstances so warrant or allow an individual depositor to add the name of another
person as a joint account holder. However the name of the first joint account holder
cannot be replaced.
Illiterate Accounts - The Bank may at its discretion open deposit accounts in the
name of illiterate individuals. However, opening of Current Deposit Account requires
prior permission from higher authorities. While opening of the account, the depositor
needs to call on the Bank personally along with a witness who is known to both the
depositor and the Bank. The Bank official shall explain the terms and conditions
governing the account including safe keeping of Passbook, Cheque Book, Debit Card
etc., to the illiterate person. At the time of withdrawal/repayment of deposit amount
and/or interest, the account holder should affix thumb impression in the presence of
the authorized officer who should verify the identity of the person.
Visually Impaired Persons - Visually Impaired Persons may be allowed to open all
types of deposit accounts, except current accounts, either singly or jointly with other
persons. Opening of Current Accounts for visually impaired persons at the branch
level requires prior permission from higher authorities. The terms and conditions
governing the accounts including special conditions, if any, should be read and
explained to the visually impaired person by the bank official in the presence of a
witness in view of his physical infirmity. Branch should obtain witness signature
(known to the bank) on Personal Data Form and the Account Opening Form along
with specimen signature of the depositor at the time of opening of the account.
No Frills Accounts - Bank offers basic banking facility - 'No-frills' account for low-
income individuals, with either zero or low minimum balances and charges. The
nature and number of transactions in such accounts would be limited, the details of
which would be made known to customers from time to time. These accounts also
will be subjected to compliance with limited KYC norms.
Staff Accounts Banks can offer additional interest of 1% on the deposits placed
by the staff members either working or retired subject to conditions laid down by the
respective banks. The spouse of the deceased also can also avail this facility. In case
of Joint accounts, the first name in the deposit should be the staff or ex-staff or
spouse of the staff. However, staff rate of interest is not applicable for
NRE/NRO/FCNR deposits.
Premature Renewal of Term Deposit - In case the depositor desires to renew the
deposit by seeking premature closure of an existing term deposit account, the bank
will permit the renewal at the applicable rate on the date of renewal, provided the
deposit is renewed for a period longer than the balance period of the original deposit.
While prematurely closing a deposit for the purpose of renewal, interest on the
deposit for the period it has remained with the bank will be paid at the rate
applicable to the period for which the deposit remained with the bank reckoning from
the date of deposit and not at the contracted rate.
Tax Deduction at Source (TDS) - The Bank has statutory obligation to deduct tax
at source (at present 10%) if the total interest paid/payable on all term deposits
held by Resident person exceeds the amount specified, presently `10000 in a
financial year under the Income Tax Act. However, TDS is exempted to the individual
depositors who submits 15G (whose age is below 65 years) and 15H (whose age is
above 65 years) stating that their total income from all sources including the interest
on bank deposits is well within the taxable income limit. Branch should obtain
15G/15H in triplicate and return one copy to the customer as acknowledgement and
it should bear round seal of the branch. As per extant Income Tax guidelines, all
depositors invariably submit PAN failing which the interest income on such term
deposits attracts TDS @20% with effective from 01.04.2010. It is the responsibility
of the branches to download Form 16A from TIN website and also generate single
interest certificate for a customer. Branches should ensure that TDS certificate
(Form 16A) as well as Interest certificate should be sent to the depositor without
waiting for or seeking any written request from the depositor. The Bank will issue a
tax deduction certificate for the amount of tax deducted. Further, if any depositor
requests for TDS certificate, the same should be issued again even though the TDS
certificate was already issued. Interest received on NRE/FCNR/Recurring deposits,
irrespective of amount is exempted from TDS.
Frozen Accounts With regard to the savings bank accounts frozen by the
enforcement authorities, Bank will continue to credit the interest to the account on a
regular basis. However, withdrawal/debits can be allowed only when the accounts
are released by the Enforcement Authorities. In the case of Term Deposit Accounts of
Customers frozen by the orders of the enforcement authorities, Banks are required
to obtain a request letter from the customer for renewal for a term equal to the
original term, on maturity. No new receipt will be issued. However, suitable note will
be made regarding renewal in the deposit ledger. Renewal of deposit shall be advised
by registered letter / speed post / courier service to the concerned Govt. department
under advice to the depositor. In the advice to the depositor, the rate of interest at
which the deposit is renewed will also be mentioned. If overdue period does not
exceed 14 days on the date of receipt of the request letter, renewal shall be done
from the date of maturity. If it exceeds 14 days, interest for the overdue period shall
be paid as per Banks extant guidelines that are referred in this policy.
Payment of Term deposits by cash - Section 269 of Income Tax Act, 1961
prohibits payment of term deposits or notice deposits in cash if the amount involved,
principal plus interest is `20,000/- or more. Hence, the payment of such deposits is
to be made by way of credit to the account of the party (or) by way of A/c Payee
crossed demand draft or pay order only.
Advances against Deposits - The Bank may consider request of the depositor/s for
loan / overdraft facility against term deposits duly discharged by the depositor/s on
execution of necessary security documents. Whenever loan is granted, a lien on the
deposit is marked and bank shall have the right to appropriate the deposit proceeds
to the loan account on the date of maturity, in case the loan remains unpaid. The
interest rates applicable, margins to be maintained etc. will be made known to the
customers at the time of availing the Deposit Loan and also will be placed in Bank's
website from time to time.
Insurance Cover for Deposits - All bank deposits are covered under the insurance
scheme offered by Deposit Insurance and Credit Guarantee Corporation of India
(DICGC) subject to certain limits and conditions. The insurance premium is being
paid by the Bank at present. The details of the insurance cover in force will be made
available to the depositor.
Service Charges - The terms and conditions for opening a deposit account and the
charges that will be levied on the account will be provided to the customer at the
time of opening of the account. The revised charges, if any, are to be informed to the
customers well in advance either through press releases or advertisement in print
media and or by displaying in Bank's web site.
Customer information & Secrecy - The information collected from the customers
shall not be used for cross selling of services or products by the Bank, their
subsidiaries and affiliates. If the Bank proposes to use such information, it will be
strictly with the consent of the account holder. Bank should prepare a profile for each
customer based on risk categorization. This profile contains the information relating
to customers identity, social/financial status, nature of business activity etc. The
customer profile is a confidential document and details contained therein will not be
divulged for cross selling or for any other purposes. The Bank shall not disclose
details / particulars of the customers account to a third person or party without the
express or implied consent from the customer. However, there are some exceptions,
viz. disclosure of information when the interest of our Nation is at stake and
compulsion of law, where there is a duty to public to disclose and where interest of
the Bank requires disclosure.
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10
As per RBI guidelines, it is mandatory for the banks to ensure KYC norms for all the
customers duly collecting full information of the account holder, type of transactions
to be conducted, sources of funds and other relevant matters at the entry level itself.
The policy guidelines are to be adhered not only to new accounts but also to the
existing accounts. The guidelines are applicable to all types of deposit and advance
accounts as well as new technology products such as Credit, Debit, Smart, Add-on
cards. The objective of KYC is to insulate banking from unscrupulous participants and
to avert misuse/undue advantage of system. The key elements of the policy are
Address proof: Banks are advised to obtain any one of the documents mentioned in
the list can be accepted as valid address proof.
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Foreign Students: Banks are permitted to open resident accounts in the name
foreign students studying in India with ATM card facility by obtaining documents viz.,
Pass Port, Valid Visa with photograph, Proof of Admission Letter from
University/College, Address Proof A letter from College/Hostel or certificate from
embassy or any certification of registration issued by Foreigner Registration Regional
Office (FRRO).
Banks are advised to accept Aadhaar number issued by the Unique Identification
authority of India (UIDAI) as a proof of identity but not of address for opening of
accounts. According to the new guidelines, if the address on the document submitted
for identity proof by the prospective customer is the same as that declared in the
account opening form, the document may be accepted as a valid proof for identity
and address.
KYC once done by one branch of the bank should be valid for transfer of the account
within the bank provided the customer submits his address proof at new place. This
is causing inconvenience to many customers. To address the issue, RBI permitted
the banks to obtain self declaration from the account holder about his/her current
address, however, the address proof is to be submitted within 6 months.
iii) Due Diligence: All the forms and documents submitted by the applicant while
opening of the account are to be verified by the officer with the originals to ensure
that the identification and address of the applicant is correct. Further, the officer
should satisfy with the identity and legal existence of the applicant and note the
same in the interview cum due diligence form. Further, the guidelines also stipulate
sending a letter to the customer in the prescribed format on the same day of opening
of the account.
iv) Risk Categorization: RBI advised the banks to classify the accounts into Low,
Medium and High Risk categories based on the risk perception while opening of
accounts and further reviewed once in 6 months. As per the existing guidelines,
customer identification data (including photos) is to be updated once in 5 years in
case of Low Risk Category Customers and once in 2 years in case of Medium and
High Risk category customers. RBI directed the banks to complete the process of risk
categorization and compiling/updating profiles of all existing customers on or before
31st March 2013.
Monitoring of transactions: Banks are expected to fix threshold limit and monitor
the transactions closely and ongoing basis. It covers monitoring of high risk
accounts, NRE accounts, accounts with high turnover, large amount of cash
transactions and Periodical review and reporting of the transactions to appropriate
law enforcing authority.
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Reserve Bank of India directed all banks to implement KYC guidelines for new
accounts in 2002 and subsequently made it mandatory for all accounts including
retail investors with effective from 1st January 2011. It is used by financial
institutions and other regulated companies to identify clients and acquire relevant
information in order to prevent identity theft, identity fraud, money laundering,
terrorist financing, etc. Thus KYC has quickly become an important global due
diligence list.
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Hitherto, Branches were only the strategic outfits (Delivery Channels) and invariably
the customers are required to visit the branches at the specified timings to complete
their transactions. Extending service to the customers round the clock without
presence of physical branch is called as Alternate Delivery Channels. Adoption of
new delivery channels (ATM, Mobile and Internet Banking) has become order of the
day for banks to survive in the competitive environment to meet the emergent
expectations of the customers besides achieving the optimum utilization of scarce
resources. At present, banks are issuing ATM/Debit cards to the customers on
opening of the account itself. The convenience coupled with cost effectiveness has
enabled the cardholders to use the card extensively for all their retail payments.
ATM/Debit Card will be issued to Account holder based on his request. ATM Card is
used for withdrawal of cash from Automated Teller Machines. Debit Card is a
payment card used to with draw cash from ATM, purchase of goods and payment for
services automatically debiting to the card holder's bank account instantly, to the
extent the credit balance exists. In ATM / Debit card the customer can draw cash
from ATM up to the balance available in his account subject to daily caps prescribed
by Bank from time to time. While providing ATM / Debit card, a customer is provided
a PIN number to facilitate withdrawal of amount. Debits to the account using ATM /
Debit Card through PIN Number are treated as mandate for withdrawal of the cash
by the customer from the account.
In order to facilitate the cardholders RBI has issued guidelines to all banks not to
levy service charges on ATM transactions of Savings Bank Cardholders. However,
Other Bank Cardholders are allowed to withdraw cash on our ATMs up to `10000/-
per transaction and the maximum number of transactions allowed are 5 per month
at free of charge. The number of free transactions shall be inclusive of all types of
transactions, financial or non-financial. With this, the customer of a Bank has
become customer of all Banks, which has paved the way for Any Bank Banking.
White Label ATMs: The RBI has decided to allow white-label ATMs, permitting
third-party service providers to set up more ATMs in off-premises areas, which
include residential complexes, hospitals, tourist destinations, bus stops and railway
stations. These ATMs would not belong to any bank in particular but will be owned as
well as maintained by independent service providers. This initiative will enable the
excluded segments to avail ATM services as at present majority ATMs are confined to
Urban/Metro areas only. However, service provider levy charges which are to be
either bear by the Bank or the customer.
Complaint Resolution: The revised guidelines has led to increased volume on ATM
Network leading to deficiency in service on account of technology issues and the
resolution is taking undue long time, which is causing concern to the customers and
regulators. In the above backdrop, RBI issued the following directives to all banks:
As per recent guidelines, Banks are advised to issue debit cards with photographs
with a view to reducing the instances of misuse of lost / stolen cards. Further, banks
are asked to ensure full security of the cards and any loss incurred by the cardholder
on account of breach of security or the failure of the security mechanism would be
borne by the banks.
Through ATMs, Bank can penetrate into new areas without opening physical bank
branches and provide value added service to its customers. It is most cost effective
since the investment and operational cost are low when compared to traditional
Branch Banking.
Internet Banking system interfaces between the customer computer and the Banks
Core Banking system (CBS). Customer access is controlled through Customer ID
and Password. However, the customer is not allowed to access the CBS directly to
ensure safety. It is protected with firewalls to prevent unauthorized access,
hacking and virus infection. Advanced encryption technology is used to ensure that
messages from/to the customers are not intercepted and misused by others. With
regard to financial transactions, banks are providing another layer of security i.e.
Online Transaction Password (OTP) to the customers on their mobile or through e-
mail. Though it is convenient and cost effective delivery channel for customers and
banks, there is an imperative need on the part of the banks to educate the
customers with the importance of Password to protect them from hacking/fishing.
Mobile Banking: The mobile-phone revolution that is transforming the world could
also turn into a banking revolution. Banks have been exploring the feasibility of using
mobile phones as an alternative channel of delivery of banking services. The swift
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Transfer of Funds - E-Products: RBI has been playing an important role in the
area of national payment system, which is the backbone of economic activity and has
taken several initiatives for a safe, secure, sound and efficient payment system in
India. Last one decade witnessed spurt in electronic payments due to increased
adoption of technology and regulatory guidelines. The evolution of e-payment
systems in India are:
ii) Electronic Clearing System (ECS): The introduction of ECS - Credit i.e. Single
Debit - Multiple credits, helped large corporate bodies to pay their dividend, interest
and refunds electronically on the due date, which is very cost effective to corporates
and its customers. Similarly, the utility bodies are now in a position to collect their
bills through ECS Debit (Multiple Debits Single Credit) right on the due date. The
entire process including passing the credits to the beneficiaries accounts take only
one day, which is convenient and cost effective to both banks and customers.
iii) Any Branch Banking (ABB): Under CBS, Branch customer has become Bank
customer and they are allowed to approach any branch across the country for
deposit of cheque or cash and withdrawal of cash or transfer of money. No cash
payment will be made to third party (bearer). However, payment to third party up to
`20000/- is allowed to NRE / NRO accounts and branch should ensure identity of the
bearer while making payments. With regard to deposit of cash / transfer of funds
among the bank branches is allowed at par for any amount.
iv) Real Time Gross settlement (RTGS): RBI launched RTGS for instant transfer
of funds across the banks (`200000/- & above) across the banks within India. It
offers a powerful mechanism for limiting settlement and systemic risks in the inter-
bank settlement process. It enables in expediting the settlement, control and
governance mechanism in the banking system. Funds will be transferred
electronically and credited to the beneficiary accounts instantaneously. It saves lot
of time and paper work and cost effective (Not exceeding `55/-). The timings for
customer payments are 9 AM to 4.30 PM on Monday to Friday; and 9 AM to 1.30 PM
on Saturday. Similarly, for interbank payments; the timings are 9 AM to 6 PM on
Monday to Friday and 9 AM to 3 PM on Saturday. Transfer of funds below
`200000/- are not allowed under RTGS.
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viii) Debit cards known as check cards. It operates like cash or a personal check.
Debit cards are different from credit cards. Credit card is a way to "Pay Later"
whereas debit card is a way to "Pay Now." In case of debit card, bank account of
the customer will be debited immediately on completion of transaction. Debit cards
are accepted at many locations, including retail stores, petrol pumps, and
restaurants. The liberalized norms coupled with ease of usage have led to increase
debit card base over the years. Of late, banks are consciously driving the customers
to alternate delivery channels by issuing debit cards on the day of opening of the
account itself to reduce the work load and to enable them to pay focused attention
on core banking activities.
ix) Charge Card: Charge card is like any Credit or Debit Card. These cards neither
offer revolving credit like the Credit Card nor debit the account instantaneously like
Debit Card. However, the cardholder is required to settle the bill in full by the due
date each month. Charge cards make a good option to develop financial discipline
which likely to enable the cardholders to improve their credit history. Further, charge
card offers a dynamic limit, while rewarding good payment behaviour.
x) Prepaid Card: A prepaid card looks like a credit card and works like a debit card.
These cards resemble credit and debit cards in appearance and allow users to load
any amount up to `50000/- and can be used at any ATM/Point of Sale Terminal. On
use of card, funds are directly debited from the card. Cardholders preload the cards
with funds via a cash deposit or wire transfer. There are no finance fees or interest
payments as charges are deducted from the prepaid balance. It is an opportunity for
people who have had little or no access to the mainstream financial system by
loading funds onto a prepaid card. It is a secure and convenient alternative to cash.
Various types of Prepaid Cards are - Re-loadable Cards (value is replenished once
it is used), Disposable Cards (discarded once the value is used), Closed Cards can
be used for a specific purpose (Phone Cards) and Open Cards (multi-purpose). Re-
loadable cards are most popular among under-banked individuals, or those who
tend not to possess conventional bank accounts.
The existing identification modes used in new delivery channels has a major
drawback as it recognize the PIN but not the person. Sometimes, it leads to
impersonation and may cause financial loss. To overcome the problem, biometric
technologies such as Fingerprint Recognition, Face Recognition, Voice Authentication,
Hand Geometry, Retinal Scanning, Iris Scanning and Signature Verification have
come in to force. Whenever the user access to delivery channel, it verifies with the
server and deliver the service if found correct.
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Merchant Discount Rate (MDR) is the fee that merchant establishment pays to
the terminal deploying bank (Acquiring Bank), which play vital role in Point of
Sale (POS) transactions. Recently, RBI advised banks to cap MDR at 0.75
percent for transactions up to `2000/- and 1 percent for transactions above
`2000/- to popularize POS transactions using Debit Cards.
Banks are advised to promote Credit/Debit cards to pave the way for cashless
economy. Further, card based transactions leave adequate audit trails and
hence disincentives black money generation.
It is proposed to stop the practice of taking Post-dated Cheques (PDCs) from the
borrowers and ensure that repayments should be only through electronic payments.
Existing PDCs should be converted to electronic payment mandates within a
prescribed timeline. With electronic transfer facilities being available to trade, one
can foresee this as one of the major thrusts towards strengthening accountability
and discouraging unaccounted activities.
***
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Retail Banking is basically a mass banking with focus on Individual customer rather
than on large Corporate Houses/Groups, both on liabilities and assets side of the
balance sheet. While Savings, Current and Fixed deposits, with certain flavors,
remain the prominent products on the liability side; the assets side includes products
like Housing, Education, Vehicle, Clean and Personal loans. Besides the above, banks
are also extending ancillary services such as Credit/Debit cards, Depository services,
Bank assurance products, Mutual funds etc. It is appropriate to call Retail Banking as
a Life Cycle Product package for individuals to meet all their banking needs right
from childhood to silver-line age.
While considerable growth rate is seen under PSBs deposits, the share of low cost
deposits has come down from 39.95% to 33.45% during the last five years i.e. 2006
to 2012. Similarly, Yield on advances is under strain on account of offering
competitive interest rates to corporate clientele besides rise of Non Performing
Assets over the years. Today, the survival and the success of the banks crucially
depend on sustainability of Net Interest Margin (NIM), which is possible only through
judicious deposit mix (CASA) besides augmenting Interest Income through
expansion of credit portfolio with quality. In the above backdrop, banks have been
focusing attention on Retail banking.
The sustained GDP growth has given a fillip to a consumer boom. The rise of the
Indian middle class coupled with more liberal attitude towards spending and personal
debt is one of the major reasons for increased retail lending in India. Further, the
increased proportion of young population (70%) provides greater demand for retail
banking services. Retail lending enables the banks to improve interest spread as the
lending rates are normally higher than other segments and the credit risk tends to be
well diversified. This segment generally loyal and tend not to shift accounts very
often and facilitates cross selling.
There are seven Ps viz., Product, Price, Promotion, Place, People, Process and
Physical evidence, play a vital role for the banks in developing and designing of retail
bank products. The appropriate mix will deliver the desired results. However,
Product and People are to be very much cared in marketing strategies of retail
products by the frontline staff. Today there are many players in the market to extend
retail banking services on one hand and increased discerning demands of the
customers on the other hand, which is making the banks to walk on the tight rope
with utmost care and caution. Providing uninterrupted cost effective value added
services to the customers is another major challenge for the banks.
India is experiencing a surge in retail banking and the market has decisively got
transformed from a Sellers market to a Buyers market in the light of evolving
macro-economic environment, increased profile of Gen-Y and rapid advancement in
information technology. Retail Banking is going to play significant role in Indian
Banking landscape and banks now need to use retail banking as a growth trigger.
21
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NRI can open NRE account Singly or Jointly with their resident
Who Can Open close relatives. However, individuals / entities of Bangladesh
and Pakistan nationals require prior approval of RBI.
Nominee can be a resident or a Non Resident.
Nomination Claim Settlement Resident Nominees In Indian Rupee
Non Resident Nominee Repatriable as per RBI Norms.
Repatriation Balances in the account are Fully Repatriable.
Type of account Current, Savings, Recurring, Term Deposits.
Period of Deposits Term Deposits Minimum one year and Maximum 10 years.
Saving Deposits Deregulated At present 4.0 %
Rate of Interest Term Deposit Deregulated - One Year 9.40%, > 1 Year and
up to 2 Years & above 2 years is 9.25% and 9% respectively.
Rupee loans to be allowed to depositor / third party without
Deposit Loans
any ceiling.
Margin 15%
Interest on Loans Dep. Rate + 2 %.
Applicability of Local No TDS on Int. earned.
Taxes No Wealth Tax. Free from all Taxes
Transfer of amount To NRO permitted
to other types To FCNR permitted
Penalty 1% on premature cancellation is applicable. No Interest
Premature is payable, in case of cancellation before 1 year. Conversion
Cancellation from NRE to FCNR or vice versa, before maturity is subject to
Penalty. No penalty in case the amount is placed in RFC.
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In case the rate of interest payable on NRE/FCNR deposit held as security is Nil due
to premature closure before the expiry of minimum period i.e. one year, the rate of
interest on the loans against such deposit is Base Rate + 7%.
Diamond Dollar Account Scheme in terms of which firms and companies dealing
in purchase/sale of rough or cut and polished diamonds/precious metal jewellery
plain, minakari and/or studded with/without diamond and/or other stones, with a
track record of at least 2 years in import/export of diamonds/coloured gemstones/
diamond and coloured gemstones studded jewellery/plain gold jewellery, and having
an average annual turnover of `3 crore & above during preceding three licensing
years, are allowed to open Diamond Dollar Accounts (DDA). RBI issue DDA on a
case-to-case basis, subject to the following terms and conditions:
The permissible credits in the accounts are amount of pre-shipment and post-
shipment finance availed in US Dollars; Realisation of export proceeds from
shipments of rough, cut, polished diamonds and diamond studded jewellery; and
Realisation in US Dollars from local sale of rough, cut and polished diamonds. The
permissible debits in the accounts are Payment for import/purchase of rough
diamonds from overseas/local sources; Payment for purchase of cut and polished
diamonds, coloured gemstones and plain gold jewellery from local sources; Payment
for import/purchase of gold from overseas / nominated agencies and repayment of
USD loans availed from the bank. Transfer to rupee account of the exporter.
Introduction of Basic Saving Bank Deposit account for all individuals with
simplified KYC norms.
Information and Communication Technology (ICT) based Business
Correspondent model for delivery of low cost door step banking services in
remote villages is being implemented.
Roadmap to cover villages with population above 2000 by March 2012 was
prepared and implemented successfully. Process of covering the remaining
villages with population below 2000 is underway.
Opening of 25% of new branches by banks in unbanked rural centers is made
as on obligation.
Other players such as mobile and network companies have been allowed to
partner with banks in offering services collaboratively.
Government has encouraged a multi-channel approach including mobiles,
handheld devices, smart cards, micro ATMs, kiosks etc., for providing financial
services to the target group.
A village is considered to be covered by banking service if either a Brick &
Mortar Branch or Ultra Small Branch or Business Correspondent.
Basic Savings Bank Deposit Account: With a view to achieving greater financial
inclusion, RBI directed the banks to make available basic banking services to the
needy people with Nil balance account without any service charges. However, the
restrictions on transactions and amount are to be made known to the depositors
transparently. In order to ensure that persons belonging to low income group both in
urban and rural areas do not face difficulty in opening the bank accounts due to the
procedural hassles, the 'KYC' procedure for opening accounts for those persons who
intend to keep balances not exceeding `50000/- in all their accounts taken together
and the total credit in all the accounts taken together is not expected to exceed
`100000/- in a year has been simplified to enable those belonging to low income
groups without documents of identity and proof of residence to open banks accounts.
However, these accounts need to be introduced by the existing KYC compliant
customer who had satisfactory dealings with the bank for at least six months.
Photograph of the customer who proposes to open the account and his address need
to be certified by the introducer.
28
i) Low Cost ATMs: The presence of ATMs mostly found in Metro/Urban centers and
banks are not keen to install at Rural/Semi Urban centers in view of high investment
and low transaction volume. Deployment of low cost ATMs at Rural/SU centers with
basic features (cash withdrawal, balance enquiry etc.,) enables the customers to
have access to cost effective convenient banking.
ii) Biometric ATMs: The penetration of ATMs into Rural / Semi-urban areas may
not serve the purpose unless it is put to use by both Literate and Illiterates. The
existing ATMs are not being used optimally by rural folk on account of PIN and
Password related issues. Introduction of Biometric ATMs enables the illiterate and
semi-literate customers to avail ATM facilities on par with literate customers. Under
this, Thumb impression of the cardholder will be scanned and transfer the same to
central server as one time measure. While swapping the card customer is required to
keep thumb on the slot, system verifies the finger print and allows access to his
account/s.
iii) Mobile ATMs are designed for providing ATM facility to the rural folk as well as
other customers. The Van would move at the pre-determined places and also
accessible to Biometric card holders. It can also be used for opening of accounts
during the visits to the rural areas.
All the above initiatives warrant the banks to invest substantial amount on
infrastructure besides recurring expenditure. There is an urgent need to bank on
alternatives to overcome the said constraints and to extend branch less banking to
achieve desired goal.
Business Correspondent (BC): The BC model allows the bank to use third parties
(Individuals/associations/institutions/corporates) to extend the basic banking
services. Normally the operations of BC should be within 30 KMs of base branch
located in Rural/Semi-Urban/Urban areas and it is 5 KMs in case of Metro areas.
However, the distance criteria may be relaxed with prior approval from DCC/SLBC.
BCs are provided with laptop with connectivity to have seamless operations with the
respective banks central server. BCs use biometric smart cards, in which customer
data including finger prints are stored and works on PoS machines with key
management.
Ultra Small Branches: Recently, the Government has directed banks to set up
Ultra Small branches in all villages under financial inclusion scheme by March 2012,
typically in a premises spread 100 to 200 sft. It aims to provide a wide range of
banking services, including credit transactions, in villages where only cash
transactions are being provided by BCs. A designated officer will visit the village on a
prefixed date and time every week with laptop and will be connected to Banks
central server (CBS).
29
However, the Identified Business Correspondents and BCAs should not have been
defaulters to any financial institution and should not have been blacklisted by any
bank in the last two years for deficiency of service. While appointing Business
Correspondent Agents (BCAs), following general guidelines should be followed by BC:
30
Activity Remuneration
In addition to these charges, the Service Provider will be paid fixed charges @ 2,500
per month for each outlet for a period of six months from the date of activation of
each outlet, at least 80% or more of which must be passed on by the BC to BCA. The
date of activation would be the date of first transaction. The fixed charges will be
paid subject to the condition that the BCA records at least 25 transactions
(enrolment of new accounts or transactions in existing accounts) during each month.
31
In order to ensure electronic transfer of subsidies directly into the accounts of the
beneficiaries under the various schemes of the Central/State Governments, it is
important that the beneficiaries have an account in the service area bank.
Accordingly, banks have been advised that the service area bank in rural areas and
banks assigned the responsibility in specific wards in urban area ensure that every
household has at least one bank account.
All Banks are advised to provide basic banking services at all villages having
population of above 2000 either opening a bank branch or appointing a
Business Correspondent Agent. A BCA must be operational in each of the FI
village.
All banks must complete the mapping of their respective service area to
ensure that one BCA is available in each Gram Panchayat. The collection of
account opening data including Aadhar number is to be done by BCA on
priority.
Banks are advised to establish a regular Brick and Mortar or Ultra Small
Branch in all habitations with population of 5000 and above in under-banked
districts and 10000 and above in other districts.
Banks are advised to provide Branch, ATM and BCA access points to all the
beneficiaries across the country. Further, it is stipulated that a BCA has to be
made available within a radial distance of 2 KM and a branch within a radial
distance of 5 KM. Banks should issue Debit Cards to all eligible account
holders.
32
33
The need for commercial banks to improve Priority Sector advances was emphasized
since 1968 with special focus on Agriculture and Small Scale industries. The
description of the priority sectors was later formalized in 1972 by RBI. Initially there
was no specific target fixed in respect of priority sector lending but in the year 1974
banks were advised to raise the share of these sectors in their aggregate advances
to the level of 33 1/3 percent by March 1979. Subsequently, on the basis of the
recommendations of the Working Group on the Modalities of Implementation of
Priority Sector Lending and the Twenty Point Economic Programme by Banks under
the chairmanship of Dr. K. S. Krishnaswamy, all commercial banks were advised to
achieve the target of priority sector lending at 40 percent of aggregate bank
advances by 1985. Sub-targets were also specified for lending to agriculture and the
weaker sections within the priority sector. Since then, there have been several
changes in the scope of priority sector lending and the targets and sub-targets
applicable to various bank groups.
The Internal Working Group of the RBI headed by Shri C. S. Murthy and the Shri
Y.H.Malegam committee constituted to study issues and concerns in the Micro
Finance institutions (MFI) sector, inter alia, had recommended review of the
guidelines on priority sector lending. Subsequently, RBI has setup a Committee
headed by Shri M V Nair to re-examine the existing classification and suggest
revised guidelines with regard to Priority Sector lending classification and related
issues. Accordingly, revised guidelines on Priority Sector are issued in July 2012.
1. Agriculture
Short-term loans for raising crops, i.e. for crop loans, which include
traditional/non-traditional plantations, horticulture and allied activities.
Medium & long term loans for agriculture and allied activities (purchase of
agricultural implements and machinery, loans for irrigation and other
developmental activities undertaken in the farm, and development loans for
allied activities).
Loans granted for pre-harvest and post-harvest activities such as spraying,
weeding, harvesting, grading, sorting, processing and transporting
undertaken by individuals, SHGs and cooperatives in rural areas.
Loans to farmers up to `25 lakh against pledge/hypothecation of agriculture
produce for a period not exceeding 12 months.
Export credit to farmers for exporting their own farm produce.
If the aggregate loan limit per borrower is more than `2 crore for the above said
purposes, the entire loan should be treated as indirect finance to agriculture.
34
2. Micro and Small Enterprises: Bank loans to Micro and Small Enterprises (MSE)
engaged in providing or rendering of services will be eligible for classification to MSE
sector under priority sector up to an aggregate limit of `2 crore per borrower/unit,
provided they satisfy the investment criteria for equipment as defined under MSMED
Act, 2006.
All advances granted to units in the Khadi and Village Industries Sector, irrespective
of their size of operations, location and amount of original investment in plant and
machinery. Such advances will be eligible for consideration under the sub-target (60
per cent) of the small enterprises segment within the priority sector.
35
5. Education Loans: Education loans include loans and advances granted to only
individuals for educational purposes up to `10 lakh for studies in India and `20 lakh
for studies abroad, and do not include those granted to institutions.
Retail Trade shall include retail traders/private retail traders dealing in essential
commodities (fair price shops), and consumer co-operative stores etc with credit
limits not exceeding `20 lakhs.
Micro Credit: Provision of credit and other financial services and products of very
small amounts not exceeding `50000 per borrower, either directly or indirectly
through a SHG/JLG mechanism or to NBFC/MFI for on-lending up to `50000 per
borrower, will constitute micro credit.
Weaker Sections: Loans to the following categories are treated as weaker sections:
Small and marginal farmers with land holding of 5 acres and less, and
landless labourers, tenant farmers and share croppers.
Artisans, village and cottage industries where individual credit limits do not
exceed `50000/-.
Beneficiaries under SGSY/ SC&ST/ DRI / SJSRY / Liberation and Rehabilitation
of Scavengers (SLRS) / SHG schemes.
Loans granted to persons from minority communities for the said purposes.
Differential Rate of Interest Scheme (DRI): The target stipulated for lending
under DRI scheme is 1% of previous year total advances of the Bank. The existing
loan limit is increased from `6500/- to `15000/- and the housing loan limit is also
increased from `5000/- to `20000/-. The borrowers family income eligibility criteria
is revised to `18000/- & `24000/- p.a. for Rural & Semi-Urban/Urban areas
respectively. At least two third of DRI advances should be granted through
rural/semi-urban branches. 40% of DRI advances should go to SC/ST. 2/3rd of total
DRI lending is to be routed through Rural and Semi Urban branches. Branches can
assist the handicapped/disabled persons for acquiring aids, appliances and
equipment needed especially by students for pursuing studies and vocational training
example Braille Typewriters for blind etc.
37
Project Cost
Category Borrower Subsidy
contribution Urban Rural
General 10% 15% 25%
Special (SC/ ST/OBC/Minorities/Women/ Ex-
servicemen / Physically handicapped/ NER / 05% 25% 35%
Hill and Border areas etc.)
Project cost will include Capital Expenditure and one cycle of Working Capital. Cost of
the land should not be included in the Project cost. Projects costing more than `5
lakh, which do not require working capital, need clearance from controlling office.
PMEGP is applicable to all new viable micro enterprises, including Village Industries
projects except activities indicated in the negative list of Village Industries.
Existing/old units are not eligible. Only one person from one family is eligible for
obtaining financial assistance for setting up of projects under PMEGP. The family
includes self and spouse.
38
For all individual loans exceeding one lakh and group loans exceeding `10 lakh, in
addition to primary security such as hypothecation/mortgage of land or third party
Guarantee as the case may be, suitable margin money/other collateral security in
the form of insurance policy; marketable security/deeds of other property etc. may
be obtained .The upper ceiling of ` 10 lakh is irrespective of the size of the group or
prorate per capita loan to the group while deciding the limit for collateral security,
the total project cost. The repayment period - minimum of 5 years and branches
should ensure that repayment not to exceed 50% of incremental income. In the
event of unfortunate/untimely death of the borrower, LIC make payment of `6000/-
for natural death and `12000/- for accidental death to the legal heirs of the
borrower. (Cir no. 189 Ref 28/3 dated 2.8.2012)
Swarna Jayanti Shahari Rojgar Yojana (SJSRY): The objective of the scheme is
to address Urban poverty alleviation, the scheme seeks to provide gainful self-
employment to the urban poor (living below the urban poverty line) either
unemployed or under employed, through setting up of self-employment ventures or
provision of wage employment. The scheme has components such as Urban self
Employment Programme (USEP), Urban Women Self-help Programme (UWSP), Skill
Training for Employment promotion amongst Urban Poor (STEP-UP), Urban Wage
39
40
Differential Rate of Interest (DRI): The income criteria to eligible for DRI loan is
`18,000/- pa in Rural areas and `24000/- in Urban areas. With regard to farmers,
the land holding should not exceed one acre wet land or 2.5 acres dry land.
However, it is not applicable to SC/ST borrowers. The unit cost is `15000/- for
general purposes but it is `20000/- for Housing Loans to SC/ST borrowers. The
repayment of the loan ranges from 3 to 5 years. These loans attract interest @ 4%
p.a. The target for the banks is 1% of previous year advances, of which 40% should
go to SC/STs & 2/3rd through Rural/Semi-urban branches.
***
41
Micro Credit is defined as provision of thrift, credit and other financial services and
products of very small amount to the poor in rural, semi-urban and urban areas for
enabling them to raise their income levels and improve living standards. Banks have
discretion to devise appropriate loan and savings products and the related terms and
conditions including size of the loan, unit cost, unit size, maturity period, grace
period, margins, etc. Such credit covers not only consumption and production loans
for various farm and non-farm activities of the poor but also include their other credit
needs such as housing and shelter improvements. Banks, NBFCs, NGOs and other
institutions/organizations are allowed to undertake activities relating to Micro Credit
in India. The introduction of the Self Help Groups (SHG) format and the nationalized
banks lending system helped accentuate the importance of the same.
However, for Rural SHGs - the maximum amount allowed to each SHG Group is
`1.75 lakhs, `2.50 lakhs and `5 lakhs under First, Second and third dose
respectively; and for Urban SHGs, the maximum amount allowed to each SHG Group
is `1.75 lakhs, `3.25 lakhs and `5 lakhs under First, Second and third dose
respectively.
42
Debt Swapping: Financing to the group members for repayment of loans availed by
them from non-institutional lenders i.e. Private Money lenders. It is only one time
measure.
Interest Rate: The applicable interest rate for SHGs is Base Rate + 4% irrespective
of the amount of finance. State government is providing interest subsidy to SHGs
which are prompt in repayment of loan installments to Banks. It is called Paavala
Vaddi scheme which means 25 paise interest, which amounts to 3% p.a. Amount of
interest charged over and above 3% p.a. will be reimbursed to the group at half
yearly intervals. The reimbursement is to be credited to groups savings bank
account, but not to the SHG loan account. With effect from 01.01.2012, AP State
Govt. reimbursing the full interest for the SHG loans who repay the loans promptly.
***
43
The Small enterprises contribute nearly 40% of the countrys industrial output and
offer the largest employment after agriculture. Therefore, this sector presents an
opportunity to the country to harness its local competitive advantages for achieving
global dominance. In recognition of these aspects, Government of India enacted the
MSMED Act in the year 2006. In accordance with the provisions of the act, the
activities of MSME are broadly classified into Manufacturing Enterprises and Service
Enterprises.
Small Enterprises: It includes all loans given to micro and small (manufacturing)
enterprises engaged in manufacture / production / processing / preservation of
goods, and micro and small (service) enterprises engaged in providing or rendering
of services which include small road & water transport operators, small business,
Professional & Self-employed persons and other service enterprises. Indirect finance
to small enterprises shall include finance to any person providing inputs to or
marketing the output of artisans, village and cottage industries, handlooms and co-
operatives of producers in this sector.
As per recent RBI guidelines - Loans granted to private retail traders with credit
limits not exceeding `20 lakh and loans to retail traders dealing in essential
commodities (fair price shops) and consumer co-operative stores without any ceiling
in credit limit are eligible for classification under Micro (service) or small (service)
depending on investment in equipment criteria as mentioned above.
44
40% of the total advances to micro and small enterprises sector should go to
micro (manufacturing) enterprises having investment in plant and machinery
up to `10 Lakh and micro (service) enterprises having investment in
equipment up to `4 Lakh.
20% of the total advances to micro and small enterprises sector should go to
micro (manufacturing) enterprises with investment in plant and machinery
above `10 Lakh & up to `25 lakh, and micro (service) enterprises with
investment in equipment above `4 Lakh & up to `10 Lakh. Thus 60% of MSE
advances should go to the Micro Enterprises.
Banks are mandated not to accept collateral security in case of loans up to `10 lakhs
extended to units in the Micro and Small Enterprises sector and all such loans are to
be covered under Credit Guarantee Scheme. Banks may, on the basis of good track
record and the financial position of the MSE units, increase the limit of dispensation
of collateral requirement for loans up to 25 lakh (with the approval of the appropriate
authority). Women entrepreneurs will be given further interest rebate of 0.50%
irrespective of credit rating and size of the unit. Composite loan (Term Loan and
Working Capital) up to `100 lakhs should be processed under single window concept.
Units undergoing technology up-gradation are eligible for 15% Credit Linked
Capital Subsidy Scheme (CLCSS). Units engaged in food processing are eligible for
subsidy 25% of unit cost with maximum of `50 lakhs and units are located at difficult
areas (J&K, HP, Sikkim, Andaman, NE States and tribal development project areas)
are eligible for 33.33% with maximum of `75 lakhs.
45
Eligible Accounts: All MSE units classified under Manufacturing, RTO, Business
Enterprises, and Professional & Self Employed are eligible for coverage.
ii) Small Enterprises: Manufacturing units with investment in Plant & machinery
above `25 lakhs and up to `5 crore and servicing units with investment in equipment
above `10 lakhs and up to `2 crore are covered under this scheme.
The lending institution may invoke the guarantee in respect of credit facility within a
maximum period of two years from the date of NPA. The initiation of legal
proceedings as a pre-condition for invoking of guarantees shall be waived for credit
facilities upto `50000/-. The trust shall pay 75% of the guaranteed amount on
preferring of eligible claim within 30 days. The trust shall pay interest at prevailing
Bank Rate to lending institute for the period of delay beyond 30 days.
46
Eligibility Criteria: The student should be an Indian National and should have
secured admission to a higher education course in recognized institutions in India or
Abroad through Entrance Test/Merit Based Selection process. However, entrance test
or selection purely based on marks obtained in qualifying examination may not be
the criterion for admission to some of the post graduate courses or research
programs. In such cases, banks will have to adopt appropriate criteria based on
employability and reputation of the institution concerned.
Minimum Age: There is no specific restriction with regard to the age of the student
to be eligible for education loan. However, if the student was a minor while the
parent executed documents for the loan, the bank will obtain a letter of ratification
from him/her upon attaining majority.
Quantum of finance: Banks may consider sanction of maximum up to `10 lakh for
studies in India and `20 lakh for studies abroad. It may also be noted that even
loans in excess of `10 lakhs qualify for interest subsidy under Central Sector Interest
Subsidy Scheme for loans up to `10 lakhs.
47
Margin: No margin is required to bring in by the borrower for the loans up to 4 lakh
and for loans above 4 lakh, 5% margin is stipulated. In case of studies abroad the
margin stipulated is 15%. Margin may be brought-in on year-to-year basis as and
when disbursements are made on a pro-rata basis.
Security: The loan documents should be executed by the student and the parent /
guardian as joint-borrower.
Rate of Interest: Interest to be charged at rates linked to the Base rate as decided
by individual banks. The loan attracts simple interest during the study period.
Servicing of interest during study period and the moratorium period till
commencement of repayment is optional for students. Accrued interest will be added
to the principal amount borrowed while fixing EMI for repayment. 1% interest
concession may be provided by the bank, if interest is serviced during the study
period and subsequent moratorium period prior to commencement of
repayment. No processing / upfront charges may be levied on loans sanctioned
under the scheme.
Repayment: Repayment of the loan starts after one year from the date of
completion of course or 6 months after getting the job whichever is earlier. The
repayment should be in Equated Monthly Installments (EMI) and maximum
repayment period allowed for loans up to `7.5 lakhs & above `7.5 lakhs 10 & 15
years respectively. If the student is not able to complete the course within the
scheduled time, extension of time for completion of course may be permitted for a
maximum period of 2 years.
Educational loans can be sanctioned either at the Bank branch near to the residents
of the parents or to the educational institution. Existence of an earlier education loan
to the brother(s) and/or sister(s) will not affect the eligibility of another meritorious
student from the same family obtaining education loan as per this scheme from the
bank. Loan applications have to be disposed of in the normal course within a period
of 15 days to one month, but not exceeding the time norms stipulated for disposing
of loan applications under priority sector lending. Branches should not reject any
eligible loan proposal for the reason that the applicants residence does not fall under
service area of the Bank/Branch.
48
Eligibility Criteria: The following are the eligible categories to avail housing loans
under Direct Housing Finance:
Age Criteria The age of the borrower should be between 21 to 65 years at the
time sanction of the loan.
Assessment of Loan The quantum of loan will be arrived based on the gross &
net income of the borrower and other factors like spouse income, assets, liabilities,
stability of income etc. Further, the loan amount also depends on the tenure of the
loan and interest rate of the loan as these variables determine outflow which in turn
depends on disposal income of the borrower/spouse.
Loan To Value (LTV) Ratio - In order to prevent excessive leveraging, the LTV
ratio in respect of housing loans should not exceed 80 per cent. However, for small
value housing loans i.e. housing loans up to Rs.25 lakh (which get categorized as
priority sector advances), the LTV ratio should not exceed 90 per cent. In order to
ensure proper LTV, banks should not include charges such as stamp duty,
registration/document charges in the cost of the asset.
Interest Rate It is the discretion of the banks to levy their own interest rates.
49
Equated Monthly Installment - Normally, banks fix EMI which covers Principal as
well as Interest. Some banks offer Floating and Fixed Interest Rates and it is up to
the borrower to choose. Under Floating Interest, the interest rate is subject to
changes from time to time by the Bank with reference to Bench Mark rate (Base
Rate) where as Fixed Interest Rate is a rate which continues to be the same
during the entire tenor of the loan. Banks are also offering flexible repayment
options viz., Step-up and Step-down, depending on the future cash flows of the
borrower. Under Step-up option, the lower EMI in the initial years and EMI increases
as years roll by. It is convenient for borrowers who are in the beginning of their
careers. In case of Step-down option, EMI is high initially and decreases in the
subsequent years, which is useful who are close to their retirement.
Other conditions:
i) In cases where the applicant owns a plot/land and approaches the banks/FIs for a
credit facility to construct a house, a copy of the sanctioned plan by competent
authority in the name of a person applying for such credit facility must be obtained
by the Banks/FIs before sanctioning the home loan.
ii) An affidavit-cum-undertaking must be obtained from the person applying for such
credit facility that he shall not violate the sanctioned plan, construction shall be
strictly as per the sanctioned plan and it shall be the sole responsibility of the
executants to obtain completion certificate within 3 months of completion of
construction, failing which the bank shall have the power and the authority to recall
the entire loan with interest, costs and other usual bank charges.
iii) An Architect appointed by the bank must also certify at various stages of
construction of building that the construction of the building is strictly as per
sanctioned plan and shall also certify at a particular point of time that the completion
certificate of the building issued by the competent authority has been obtained.
iv) In cases where the applicant approaches the bank/FIs for a credit facility to
purchase the built up house/flat, it should be mandatory for him to declare by way of
an affidavit-cum-undertaking that the built up property has been constructed as per
the sanctioned plan and/or building bye-laws and as far as possible has a completion
certificate also.
v) An Architect appointed by the bank must also certify before disbursement of the
loan that the built up property is strictly as per sanctioned plan and/or building bye-
laws.
vi) No loan should be given in respect of those properties which fall in the category
of unauthorized colonies unless and until they have been regularized and
development and other charges paid.
vii) No loan should also be given in respect of properties meant for residential use
but which the applicant intends to use for commercial purposes and declares so while
applying for loan.
***
50
1. Short Term Agricultural Credit: In order to provide short term credit (Crop
Loans, PAGCC, Kisan Vikas Cards, Rythu Mitra Groups, Joint Liability Groups,
Agricultural Gold Loans and Working Capital Loans financed to Fisheries) to the
farmers at reasonable interest rate, Government of India announced a scheme of
Interest Subvention in the year 2006. Under this, farmer receives short term credit
at 7% p.a. from the date of disbursement to the end of the respective season with
an upper limit of `3 lakh on the amount. However, Agricultural Medium Term Loans
are not covered under this scheme. Government will provide Interest Subvention to
the banks viz., PSBs, RRBs, and Farmers Service Co-operative Societies, on the
amounts financed to farmers (short term) at the following rates:
Banks lending to short term agricultural credit are eligible to claim 2% Interest
Subvention from Government of India for loans disbursed in year 2011-12. Further,
farmers are eligible for another 3% interest subvention who repays the loan
promptly. This additional subvention is available to Public Sector Banks on the
condition that the effective rate of interest on short term production credit up to `3
lakh for such farmers will be 4% p.a. Branches are required to submit claim half-
yearly (September & March) for reimbursement of interest subvention amount from
RBI. For crop loans up to one lakh disbursed during Rabi 2011-12 in AP State
attracts zero interest rate as state government is reimbursing the entire interest to
the banks for prompt payment.
3. Micro & Small Enterprises: Paavala Vaddi Scheme was introduced for the
benefit of Micro & Small Enterprises set up in AP State except in the Muncipal
Corporation limits of Hyderabad, Vijayawada and Visakhapatnam. The scheme is
applicable to the term loans availed on fixed capital investment by the eligible new
Micro and Small Enterprises on or after 01.04.2008. More than 75% of the plant and
machinery should be new and not second hand. Under the scheme, interest charged
over and above 3% p.a. (i.e. 10% - 3% = 7%) will be reimbursed to the group at
half yearly intervals. However, the maximum reimbursement is restricted to 9% p.a.
The benefit is available for a period of 5 years i.e. up to the first half of 6th year or till
the closure of term loan, whichever is earlier. However, this benefit is available to
only those accounts, which in regular in payment of principal and interest. It is
applicable to one-time payment accounts also.
51
5. Educational Loans Interest Subsidy: India is one of the few countries having
large pool of young people, which is an opportunity to the country provided these
Human Assets are converted into Knowledge Assets. Providing proper education to
the students is a prerequisite to achieve the desired goal. The poor financial
background of the students is one of the major constraints for the students aspiring
for higher studies. In the recent budget, it is envisaged to ensure
technical/professional education to all the deserving students by providing required
financial support by way of Interest subsidy.
The benefits of the scheme would be applicable to those students belonging to EWS
with annual gross parental/family income upper limit of `4.5 lakhs per year from all
sources. The interest subsidy shall be available to the eligible students only once,
either for the first graduate degree course or post graduate degree/diplomas in
India. Interest subsidy shall however be admissible for integrated courses
(graduation plus post graduate). The scheme shall be applicable from the academic
year 2009-10 starting 01.04.2009. Any amount disbursed before the academic year
2009-10 would not be considered for Interest Subsidy under the said scheme.
Canara Bank is the Nodal Bank for the scheme for release of interest subsidy to the
banks on yearly/half-yearly basis as decided by the Government of India. In order to
claim the interest subsidy from Nodal agency, bank branches are required to obtain
income proof certificate from appropriate authority as decided by state government
and agreement with borrower/parents.
6. SHG Loans: AP State Government introduced Vaddi Leni Runalu scheme with
effective from 01.01.2012 for all repayments made after that date for the
outstanding SHG Bank loans, including any fresh loans given thereafter. The interest
incentive will be available only to those accounts who repay the loans regularly. The
incentive will be released directly to the credit of SHG account once in Half-year.
***
52
Financial statements and their analysis: The statement which provides us the
financial position of a Balance Sheet are called Finance Statements, which includes
- Trading Account (in case of Manufacturing concerns), Profit & Loss Account,
Balance Sheet, Cash Flow Statement and Funds Flow Statement. The analysis of
Balance Sheet is a process of bringing down the difficult matter into a simple and
easily understandable one. To have a clear understanding of the financial position of
the Business concern, at least three years financial statements are to be ascertained.
They provide us treasure of information. Balance Sheet of a business concern shows
the strength of the concern on a given date but not reveal the current state of affairs
of the concerns. Balance Sheet is having certain limitations, because it does not
disclose the critical factors, such as Managerial Efficiency, Technical competence,
Marketing capabilities and Competition in the market.
Ratio means a comparison of two items which are having cause and relationship.
Ratios can be expressed in percentage or in number of times. Depending upon the
nature, the ratios are broadly classified in to four categories viz., Liquidity Ratios,
Leverage Or Solvency Ratios, Activity Ratios and Profitability Ratios.
I. LIQUIDITY RATIOS: These Ratios helps to find out the ability of the business
concern to pay the short term liability of its liquidity. Any adverse position in liquidity
leads to sudden fall of the unit.
i) Current Ratio: Current Ratio denotes the capacity of the business concern to
meet its current obligation out of the realisable value of the Current Assets. Current
Ratio = Current Assets / Current Liabilities. Term Loan installments falling due for
payment in next 12 months are to be taken as Term Liability for the purpose of
calculation of Current Ratio /MPBF. Inter-corporate deposits are to be treated as
Non-Current Assets. Ideal Current Ratio is 2:1. Acceptable Ratio as per our Loan
Policy guidelines is 1.33:1 for the limits enjoying above `6.00 crores and 1.15:1 for
the business concerns availing limits of below `6.00 crores. Any deviation below the
required ratio requires ratification of Higher Authority.
ii) Quick Ratio Or Acid Test Ratio: This ratio is a comparision of Quick Assets to
Current Liabilities. Quick Assets mean the assets which have instant liquidity of the
business concern. Though the Inventory and Prepaid expenses are part of Current
Assets, it may be difficult to sell and realize the inventory. Hence, Inventory and
Prepaid expenses are to be excluded for arriving the Quick Asset Ratio.
Ideal Quick Ratio is 1:1. Current Ratio is always to be read along with Quick Ratio. A
fall in the Quick Ratio in comparison to the Current Ratio indicates high inventory
holdings.
II. LEVERAGE AND SOLVENCY RATIOS: These Ratios helps to find out the Long
Term Financial stability of the business concern
i) Debt Equity Ratio: Long Term Debt / Equity - Here, Equity refers Tangible Net
worth. The Ideal ratio is 2:1 and the higher may also be considered as safe.
ii) Debt Service Coverage Ratio: It helps to know the capacity of the firm to
repay the Long Term Loan Instalment and Interest. Ideal DSCR is 2:1. The higher
the DSCR, we may fix the lower repayment period. However, banks may also
53
iii) Fixed Assets Coverage Ratio (FACR): This ratio indicates the extent of Fixed
assets met out of long term borrowed funds. Ideal Ratio is 2:1
Net Block
FACR = --------------------------- (Net Block means Total Assets Depreciation)
Long Term Debt
Where EBIDT is Earning Before Interest, Depreciation and Tax. This ratio indicates
the interest servicing capacity of the unit. Higher the ratio has probability of non-
servicing of interest and hence avoidance of slippage of asset.
Lower the collection period indicates efficiency in realization of receivables and vice-
versa.
Higher velocity denotes that the company is enjoying credit from its suppliers and it
has bearing on Maximum Permissible Bank Finance (MPBF)
Total Operating Assets= Total Assets Intangible Assets. Higher the ratio indicates
favorable situation of optimum utilization of all the fixed assets.
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i) Gross Profit Ratio -> Gross Profit/Net Sales*100 - Gross Profit Ratio
indicates the manufacturing efficiency and Pricing policy of the concern. Higher
percentage indicates higher sales volume, better pricing of the product or lesser cost
of production.
A decline trend is a pointer to some unhealthy development unless the company had
made usurious profits in the past and has consciously decided to reduce its profits by
lowering the prices of its product.
Maximum Working Capital credit limit up to which Turn Over method can be
extended is `6 Crores. Where the limits of above `6.00 Crore, the margin is to be
taken as 25% projected current assets. If actual NWC is less than required
margin, the borrower has to bring in the short fall.
The minimum acceptable Current Ratio for working capital credit facility up to `6
crore & above `6 crore is 1.15 & 1.33 respectively.
Maximum acceptable level of Total Debt- Equity Ratio is 6.
Maximum permissible Gearing Ratio while assessing the eligibility for non-
funded limits is 10.
Standard average DSCR specified for all Term Loans is 1.50 to 2.00. However,
in case of assured source of income, it can be taken as 1.20. Lower DSCR can be
accepted for Rural Godowns.
***
55
Bank Guarantee: As a part of Banking Business, Bank Guarantee (BG) Limits are
sanctioned and guarantees are issued on behalf of our customers for various
purposes. The guarantees comprise both performance guarantees and Financial
Guarantees depending on the purpose i.e. for EMD, Mobilization advance,
Procurement of Material etc. Though, BG facility is a Non-fund Facility, it is a firm
commitment on the part of the Bank to meet the obligation in case of invocation of
BG. Hence, monitoring of Bank Guarantee portfolio has attained utmost importance.
The purpose of the guarantee is to be examined and it is to be spelt out clearly if it is
Performance Guarantee or Financial Guarantee. Due diligence of client shall be done,
regarding their experience in that line of activity, their rating/grading by the
departments, where they are registered. In case of Performance Guarantees, banks
shall exercise due caution to satisfy that the customer has the necessary experience,
capacity and means to perform the obligations under the contract and is not likely to
commit default. The Financial Indicators / Ratios as per Banks Loan Policy guidelines
are to be satisfactory. The position of receivables and delays if any, are to be
examined critically, to understand the payments position of that particular activity.
The financial position of counter party, type of Project, value of Project, likely date of
completion of Project as per agreement are also to be examined. The Maturity
period, Security Position, Margin etc. are also to be as per Policy prescriptions and
are important to take a view on charging BG Commissions.
Branches shall use Model Form of Bank Guarantee Bond, while issuing Bank
Guarantees in favour of Central Govt. Departments/Public Sector Undertakings. Any
deviation is to be approved by Zonal Office. It is essential to have the information
relating to each contract/project, for which BG has been issued, to know the present
stage of work/project and to assess the risk of invocation and to exercise proper
control on the performance of the Borrower. It is to be ensured that the operating
accounts of borrowers enjoying BG facilities route all operations through our Bank
accounts. To safeguard the interest of the bank, Branches need to follow up with the
Borrowers and obtain information and analyse the same to notice the present stage
of work/project, position of Receivables, Litigations/Problems if any leading to
temporary cessation of work etc.
56
ii) Irrevocable Letter of credit is a firm undertaking on the part of the Issuing
Bank and cannot be cancelled or amended without the consent of the parties to letter
of credit, particularly the beneficiary.
iii) Payment Credit is a sight credit which will be paid at sight basis against
presentation of requisite documents as per LC terms to the designated paying Bank.
iv) Deferred Payment Credit is a usance credit where payment will be made by
designated Bank on respective due dates determined in accordance with stipulations
of the credit without the drawing of drafts.
v) Acceptance Credit is similar to deferred credit except for the fact that in this
credit drawing of a usance draft is a must.
vi) Negotiation Credit can be a sight or a usance credit. A draft is usually drawn in
negotiation credit. Under this, the negotiation can be restricted to a specific Bank or
it may allow free negotiation whereby any Bank who is willing to negotiate can do so.
However, the responsibility of the issuing Bank is to pay and it cannot say that it is
of the negotiating Bank.
vii) Confirmed Letter of Credit is a letter of credit to which another Bank (Bank
other than Issuing Bank) has added its confirmation or guarantee. Under this, the
beneficiary will have the firm undertaking of not only the Bank issuing the LC, but
also of another Bank. Confirmation can be added only to irrevocable and not
revocable Credits.
viii) Revolving Credit is one where, under the terms and conditions of the credit,
the amount is revived or reinstated without requiring specific amendment to the
credit. The basic principle of a revolving credit is that after a drawing is made, the
credit reverts to its original amount for re-use by beneficiary. There are two types of
revolving credit viz., credit gets reinstated immediately after a drawing is made and
credit reverts to original amount only after it is confirmed by the Issuing Bank.
ix) Installment Credit calls for full value of goods to be shipped but stipulates that
the shipment be made in specific quantities at stated periods or intervals.
xiii) Back to Back Credit / Countervailing credit - Under this the credit is
opened with security of another credit. Thus, it is basically a credit opened by
middlemen in favour of the actual manufacturer/supplier.
xiv) Red Clause Credit - it contains a clause providing for payment in advance for
purchasing raw materials, etc.
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xvi) Green Clause Credit is an extended version of Red Clause Credit in the sense
that it not only provides for advance towards purchase, processing and packaging
but also for warehousing & insurance charges. Generally money under this credit is
advanced after the goods are put in bonded warehouses etc., up to the period of
shipment.
Other concepts
i) Bill of Lading: It should be in complete set and be clean and should generally be
to order and blank endorsed. It must also specify that the goods have been shipped
on board and whether the freight is prepaid or is payable at destination. The name of
the opening bank and applicant should be indicated in the B/L.
ii) Airway Bill: Airway bills/Air Consignment notes should always be made out to
the order of Issuing Bank duly mentioning the name of the applicant.
iii) Insurance Policy or Certificate: Where the terms of sale are CIF the insurance
is to be arranged by the supplier and they are required to submit insurance policy
along with the documents.
iv) Invoice: Detailed invoices duly signed by the supplier made out in the name of
the applicant should be called for and the invoice should contain full description of
goods, quantity, price, terms of shipment, licence number and LC number and date.
Goods are to be consigned only in the name of LC opening bank and never directly to
the buyer. Similarly Documents of title to goods should be required to be sent only
to the LC opening Bank but not to the importer directly. The origin of the goods is to
be specifically mentioned in the application. No onerous clause is incorporated in the
LC, which is detrimental to the interest of the Bank. Payment to be claimed only
against presentation of full set of documents. Currency in which payment for import
is to be made is in accordance with the permitted methods of payment.
59
***
60
Banks do business with depositors funds. The Banks have to honor their
commitment to return the deposits whenever demanded by the depositors. The
primary source of funds for repayment is the business itself; hence banks take
considerable care to evaluate the profitability and sustainability of the business
financed by them. Despite all care and due diligence some of the businesses could
fail. The cause of failure may be changes in the external environment or
mismanagement. Banks have to ensure that even if the business fails, their funds
are recoverable by invoking the Security offered by the borrowers. Security is an
asset like land, building and machinery, stocks (raw materials / finished goods),
receivables and other securities which are charged to the bank. Charge is the legal
right given by the borrower to the bank to take possession of dispose of the security
in the event of default. The types of charges are:
i) Pledge is a charge where the borrower hands over possession of asset to the
bank. For example loans against gold jewellery, warehouse receipts, key loan etc.
The relationship between borrower and the bank is Pledgor and Pledgee. Under
this, the ownership of the goods remains with the borrower but the possession of the
goods is in the hands of the bank. The bank enjoys Right of Sale in case the loan is
not repaid and the bank can sell the pledged goods after giving adequate notice of
sale to the borrower. It is the responsibility of the bank to take as much care of the
goods pledged as a man of ordinary prudence would under similar circumstances.
When the loan is fully paid, it is the responsibility of the bank to handover the
possession of the goods back to the borrower.
ii) Hypothecation Normally banks lend funds to the borrowers to acquire raw
material / assets to undertake their business activities and these assets continues to
be in the possession of the borrower. It is as if the borrower holds the asset on
behalf of the Bank. Hypothecation gives the Bank right to take possession and sell
the asset, in case of default. However, bank need to initiate action either under
SARFEASI or Court/DRT to take possession of the asset.
Pledge Vs Hypothecation - Thus, while under pledge the ownership remains with
the borrower but the possession passes on to the bank, under hypothecation, both
ownership and possession remains with the borrower. While under pledge the bank
can sell the asset without going to court, under hypothecation it can be done only
through the legal process. Hypothecation creates floating charge on assets created
out of bank funds. Though hypothecation is the most prevalent form of charge for
bank finance, it is inferior to pledge. To protect their assets, banks need to inspect
the hypothecated assets periodically.
i) Simple Mortgage: A simple mortgage does not involve giving the possession of
the mortgagor's property to the mortgagee. It is under mutual agreement that in
case of non-payment by the mortgagee to the mortgagor within the specified time,
the mortgagee can cause the mortgaged property to be sold in accordance with law
and have the sale proceeds adjusted towards the payment of the mortgage money.
ii) Mortgage by Conditional Sale: This type of mortgage entails the apparent sale
of property by the mortgagor to the mortgagee on a conditional basis, that on
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iv) English Mortgage: The mortgagor transfers the mortgaged property to the
mortgagee in entirety. However there is a condition that on complete repayment of
the repayment money, he will re-transfer the property back to himself.
v) Anomalous Mortgage: A mortgage that does not fall under the purview of any
of the mortgage types is called an anomalous mortgage.
vi) Conditions attached with mortgage: While mortgaging property, only legal
rights are transferred to the mortgagee but not the possession. An instrument of
mortgage deed is mandatory. On sale of a mortgaged property, the mortgage flows
along with the property.
Lien It means the right to hold anothers property till his debt is repaid. Section
171 of the Indian Contract Act 1872 confers the right of general lien on bankers. In
the absence of any specific document or charge, Banks can exercise the right of lien
on any asset of the borrower which has come into their possession. Thus, bankers
line is considered as an implied pledge. Bank can recover the dues by selling the
asset only after giving the notice to the owner.
62
Large banks do have the capability to meet the credit needs of most of their business
clients. However, when the amount involved is huge, the bank may ask the borrower
to approach other banks for the part of the credit requirements as they may not wish
to take up the risk of lending the entire amount. Multiple banks may finance the
borrower under two arrangements viz., Consortium arrangement and multiple
banking arrangements.
Consortium of Banks Under this the banks come together and collaborate with
each other in assessing the credit requirements of the borrower duly sharing the
credit facilities as well as sharing securities with Pari Pasu charge. Normally, the
bank which has larger exposure act as leader who conduct meetings, assess the
credit requirements of the borrower and share all the information with member
banks from time to time. However, the decisions taken at the consortium meetings
are not binding on the individual banks and the management of each bank has to
approve in its respective boards.
Multiple Banking Under this, the borrower approaches various banks and avails
credit facilities across banks. Each bank undertakes their own assessment of risk,
decide the mix of credit facilities and stipulate their own terms and conditions. Each
of the banks takes the security and gets the charges registered with the ROC in their
favour. Practically there is no co-ordination between the banks and they compete
with each other to protect their business and interests. This is giving scope to the
borrowers to take undue advantage from the banking system i.e. excess borrowings
and interest concessions. In order to ensure financial discipline RBI issued guidelines
on sharing of information between banks and making the lead bank responsible for
ensuring proper assessment of credit requirements of the borrower so that over
financing can be averted.
Joint Lending Arrangement (JLA) - Under the existing system of Credit Delivery,
credit requirements of large borrowers are being met under Consortium or Multiple
Banking arrangement systems. It is observed that high value borrowers have been
availing credit limits through Multiple Banking over the years which has led to
dilution of asset quality as well as control on the borrowers. In order to address the
challenges associated with Multiple Lending, Govt. of India has introduced ground
rules governing Joint Lending Arrangements. The scheme shall be applicable to all
lending arrangements, with a single borrower with aggregate credit limits (both fund
and non-fund based) of `150 crore and above involving more than one Public Sector
Bank. Borrowers having multiple banking arrangements below `150 crore may also
be encouraged to come under joint lending arrangement, so that the wholesome
view of the assessment of credit requirement as well as the entire operations of the
customers can be taken by banks.
New Borrowers - Lending under joint arrangement shall be mandatory for Public
Sector Banks for borrowers seeking credit limits of `150 crore and above by way of
term loan, working capital and non-fund based facilities, from multiple banks. The
Bank from which the borrower has sought the maximum credit will be the designated
Lead Bank for the JLA.
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An existing member-bank may be permitted to withdraw from the JLA after two
years provided other existing member-banks and/or a new bank is willing to take its
share by joining the JLA. In case, where the other existing member-banks or a new
bank are unwilling to take over the entire outstanding of an existing member
desirous of moving out of the JLA after the expiry of above-mentioned period of two
years, such bank may be permitted to leave the JLA by selling its debt.
It is necessary that lead bank and member bank(s)/institution(s) ensure that formal
joint lending arrangement does not result in delay in credit delivery. The Lead Lender
will make all efforts to tie up the Joint Lending Arrangement within 90 days of taking
a credit decision regarding the proposal. Lead bank will be responsible for
preparation of appraisal note, its circulation, and arrangements for convening
meetings, documentation, etc.
For taking over of any accounts, Banks must put in place, a Board approved
Policy with regard to take over of accounts from another Bank and the same
should be incorporated in the credit policy of the Bank.
Normally, the accounts having ratings above the level approved by the Board
should only be taken over and the concessionary facilities should be extended
only in extremely deserving cases with specific reasons recorded in writing.
The guidelines of joint lending should be strictly applied in all cases where the
borrower seeks to have additional exposure from the bank after taking over
the account.
No cases should be taken over by a Bank from any Bank where any of its ED
or CMD had worked earlier. In case, any such cases need to be taken over,
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The operational guidelines with regard to Take over of accounts from other Banks are
as under:
The account should be a Standard Asset with Positive Net Worth & profit
record.
Account Statement - The account copies of all the borrowal accounts with
the present bankers/financial institution shall be obtained at least for the last
12 months (revised from the earlier guideline of 6 months) and ensure that
the conduct of the a/c is satisfactory and no adverse features are noticed. In
case of standalone term loans, the copies of the A/c statement of Current
Account or any other operative a/c maintained by the borrower with the
present bankers shall be obtained and studied for the last 12 months and
ensure that the conduct of the account is satisfactory and no adverse features
are noticed.
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The success of a bank crucially depends how it manages its Asset Portfolio as it is the
major source of income to the Bank. Managing credit risk plays an important role
and its effectiveness lies in an efficient recovery and exit strategy. Timely follow up is
the key to keep the quality of assets intact and enables the banks to recover the
interest/installments in time. To have better control on the assets created out of
borrowings, banks need to watch the functioning of the units by paying frequent
visits and this is to be done to all the units irrespective whether the account is
performing or non-performing one. Thus, Banks should focus attention on:
i) Awareness Calling When the first payment is due, a call is initiated to make
him aware of the date of payment of installments/dues. This can be done either by
the branch or by call centre.
ii) Reminder Call When the demand is not paid, a reminder call may be made
with a request to make payment of the dues and note the response or commitment.
Repeat calls are made if the borrower fails to honor his promises.
iii) Demand Notice In case where there is n response to the calls, a written
communication is issued to the borrower informing him the status of the account and
advising him to pay the dues. Banks can also make use of technology and notice
may be sent through SMS or E-mail.
iv) Field Visits It involves paying visits to borrowers office or residence either by
bank staff or its agents to appraise the position of the dues and need for repayment.
Continuous persuasion definitely yields positive results. These visits also enable the
banks to assess the functioning of the activity and quality of the assets. If they found
that the financial position of the borrower is deteriorated, bank may strike a
compromise deal to recover the dues.
v) Disposal of Assets In the event of failure of the borrower to repay the dues
despite the said initiatives, the bank need to proceed to take possession of the
assets including collateral duly invoking SARFEASI or through approaching Court /
DRT. Repossession and sale of assets can be done by issuing Recall Notice, Pre-
possession intimation, Letter of peaceful surrender of the asset, Record of inventory
and notarization, Pre-sale notice to borrower and Auction of the asset.
Outsourcing of Banking Services - Of late, banks have been availing the third
party services for recovery of dues. RBI has issued code of conduct to ensure that
the customers are not harassed, their privacy is protected and the banks code of
commitment to customers is not violated. Outsourcing agencies should be appointed
only after proper due diligence with approved Board policy. Banks should publish the
names of outsourcing agencies and the details are to be kept on Banks website for
the benefit of the customers and general public. The agents appointed by the
outsourcing agency are to be provided with authorization letters / identify cards. All
agents should undergo a mandatory 100 hours training conducted by the Indian
Institute of Banking and Finance (IIBF) and get themselves certified before sending
them into field. Customers are to be contacted ordinarily at the place of his choice,
whether office or residence at appropriate time. In appropriate occasions such as
bereavement in the family or such other calamitous occasions are to be avoided for
making calls or visits. Professional and formal language is to be used in all
interactions with customers. Each bank should have a mechanism whereby the
borrowers grievances with regard to the recovery process can be addressed. The
details of the mechanism should also be furnished to the borrower while advising the
details of the recovery agency. The Fair Practices Code for Lenders and the Code of
Commitment to Customers must be adhered to strictly.
66
A strong banking sector is important for flourishing economy. The failure of the
banking sector may have an adverse impact on other sectors. High level of Non
Performing Assets (NPA) suggests low credit quality and warrants high provisioning,
which has direct bearing on profitability and net-worth of banks and value of
shareholders. The increased incidence of NPA is one of the major concerns of Indian
Banks in the recent years. An asset is classified as NPA, if due in the form of
principal and interest are not paid by the borrower for a period of 90 days. If any
advance or credit facility granted by banks to a borrower becomes non-performing,
then the bank will have to treat all the advances/credit facilities granted to that
borrower as non-performing without having any regard to the fact that there may
still exists certain advances / credit facilities having performing status.
Potential NPA (PNPA): are those accounts showing overdues and irregularities
persist beyond 30 days. These are also known as Border line Performing Assets.
Date of NPA: It is the date on which the overdues or the irregularities cross 90
days or the date on which the account comes under Income Recognition norms.
Overdue: Any amount due to the bank under any credit facility is overdue if it not
paid on the due date fixed by the bank.
Net NPA=Gross NPA (provisions held towards NPAs + Balances in Interest Sundry
Suspense A/c + part payments received in suit filed accounts and kept in Sundry
Suspense.+ claims received from ECGC/CGC and kept in Sundry Suspense a/c).
Reversal of Income: If an account becomes NPA for first time during the year the
unrealized interest that was taken to P&L account on accrual basis pertaining to the
current year as well as pertaining to the preceding year, if any, shall also be
reversed. This will apply to Government guaranteed accounts also.
iii) Loss Assets: A loss asset is one where loss has been identified by the bank or
internal or external auditors or the RBI inspection but the amount has not been
written off wholly. It is considered as uncollectible and it is not warranted to continue
as bankable asset since there is little scope for salvage or recovery value.
Accounts where there is erosion in the value of security: Where there are
potential threats for recovery on account of erosion in the value of security or non-
availability of security, asset should be straightaway classified as doubtful or loss
asset as appropriate.
Advances against Term Deposits, NSCs, KVPs, IVPs and LIC policies need not
be treated as NPAs. Advances against gold ornaments, government securities and all
other securities are not covered by this exemption.
Loans with moratorium for payment of interest: In the case of bank finance
given for industrial projects or for agricultural plantations etc. where moratorium is
available for payment of interest, payment of interest becomes 'due' only after the
moratorium or gestation period is over.
Ever greening: Rescheduling of a loan without assessing the viability of the activity
for the purpose of avoiding an account becoming NPA.
Provisioning Norms
Status Provision to be made
0.25% on Direct advances to agriculture and SME sectors.
1.00% on Commercial Real Estate
Standard
0.40% on all advances other than stated above
2.75% on recast loans in standard assets for first 2 years.
25% on unsecured exposures (20% in case of infra loans)
Sub-Standard
15% on other loans
Unsecured portion: 100%
Secured portion: if asset remained in doubtful <= 1 year 25%
Doubtful
If asset remained in doubtful - 1 to 3 years 40%
If asset remained in doubtful > 3 year 100%
Loss At 100% on the outstanding
RBI Panel suggests 5% provision on new restructured accounts starting 1st April
2013 instead of existing 2.75%.
Advances against term deposits, NSCs eligible for surrender, IVPs, KVPs and
life policies.
Advances granted under rehabilitation packages approved by BIFR / Term
lending institutions.
Advances covered by CGTSI guarantee - No provision need be made towards
the guaranteed portion. The outstanding in excess of the guaranteed portion
should be provided.
Advances covered by ECGC /DICGC guarantee - provision should be made
only for the balance in excess of the amount guaranteed by the Corporation.
***
69
i) CDR Standing Forum provide an official platform for both the creditors and
borrowers (by consultation) to amicably and collectively evolve policies and
guidelines for working out debt restructuring plans in the interests of all concerned.
70
iii) CDR Cell undertakes the initial scrutiny of the proposals received from borrowers
/ creditors to decide whether rehabilitation is prima facie feasible. If found feasible,
proceed to prepare detailed Rehabilitation Plan with the help of creditors and, if
necessary, experts to be engaged from outside. If not found prima facie feasible, the
creditors may start action for recovery of their dues.
Take-out Finance - The scheme has been designed to enable lenders to address
the concern of the hitting the sectoral limit, asset-liability mismatch and liquidity
issues that may arise by the long-term debt financing to core projects. Under the
scheme, banks and lenders can enter in an arrangement with financial institutions for
transferring the loan outstanding in their books to those of the financial institution
which is taking out long-term debt. The tenor of the take-out finance is up to 15
years. The sectors eligible for Take-out finance are Road and bridges, Railways,
Seaports, Airports, Inland waterways and other transportation projects; Power,
Urban transport, water supply, sewage, solid waste management and other physical
infrastructure in urban areas; Gas pipelines Infrastructure projects in SEZs,
International convention centers and other tourism infrastructure projects. It is one
of the emerging products in the context of funding of long-term infrastructure
projects. Under this arrangement, the Banks financing infrastructure projects will
have an arrangement with other financial institutions for transferring to the latter the
outstanding in respect of such financing in their books on a pre-determined basis.
The norms of asset will have to be followed by the concerned banks in whose books
the account stands as balance sheet item as on the relevant date. The lending
institution should also make provisions against any asset turning into NPA pending
its takeover by the taking over institution. As and when the asset is taken over by
the taking over institution, the corresponding provision could be reversed. At present
IIFCL is providing a Take-out finance window to the banks in India.
***
71
Basel-I Accord: It was introduced in the year 2002-03, which covered capital
requirements for Credit Risk. The Accord prescribed CRAR of 8%, however, RBI
stipulated 9% CRAR. Subsequently, Banks were advised to maintain capital charge
for Market Risk also.
Basel-II New Capital Accord: Under this, banks have to maintain capital for Credit
Risk, Market Risk and Operational Risk w.e.f 31.03.2007. The New Capital Accord
rests on three pillars viz., Minimum Capital Requirements, Supervisory Review
Process & Market Discipline. The implementation of the capital charge for various risk
categories are Credit Risk, Market Risk and Operational Risk. Analysis of the bank's
CRAR under both Basel-I & Basel-II guidelines should be reported to the Board at
quarterly intervals.
Internal Ratings Based (IRB) Approach: Under this approach, banks must
categorise the exposures into broad classes of assets as Corporate, Sovereign, Bank,
Retail and Equity. The risk components include the measures of the Probability of
Default (PD), Loss Given Default (LGD), Exposure at Default (EAD) and Effective
Maturity (M). There are two variants i.e Foundation IRB (FIRB) and Advanced IRB.
Under FIRB, banks have to provide their own estimates of PD and to rely on
supervisory estimates for other risk components (like LGD, EAD) while under
Advanced IRB; banks have to provide their own estimates of all the risk components.
It is based on the measures of Expected Losses (EL) and Unexpected Losses (UL).
Expected Losses are to be taken care of by way of pricing and provisioning while the
risk weight function produces the capital requirements for Unexpected Losses.
Market Risk: It is a risk pertaining to the interest rate related instruments and
equities in the Trading Book i.e AFS (Available For Sale) and HFT (Held for Trading)
positions and Foreign Exchange Risk throughout the bank (both banking & trading
books). There are two approaches for measuring market risk viz., Standardized
Duration Approach & Internal Models Approach.
Operational Risk: Banks have to maintain capital charge for operational risk under
the new framework and the approaches suggested for calculation of the same are
Basic Indicator Approach and The Standardized Approach. Under the first approach,
banks must hold capital equal to 15% of the previous three years average positive
gross annual income as a point of entry for capital calculation. The second approach
suggests dividing the banks business into eight lines and separate weights are
assigned to each segment. The total capital charge is calculated as the three year
average of the simple summation of the regulatory capital charges across each of the
business lines in each year.
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Area Coverage
Capital Capital structure & Capital adequacy
Risk Exposures & Qualitative disclosures for Credit, Market, Operational,
Assessments Banking Book interest rate risk, equity risk etc.
General disclosures for all banks.
Credit Risk
Disclosures for Standardised & IRB approaches.
Credit Risk Mitigation Disclosures for Standardised and IRB approaches.
Securitisation Disclosures for Standardised and IRB approaches.
Disclosures for the Standardised & Internal Models
Market Risk
Approaches.
Operational Risk The approach followed for capital assessment.
Equities Disclosures for banking book positions
Interest Rate Risk in Nature of IRRBB with key assumptions. The increase /
the Banking Book decrease in earnings / economic value for upward /
(IRRBB) downward rate shocks.
Time lines for implementation of Advanced Approaches are set as 31st March 2014.
The Basel-II norms are much better than Basel-I since it coveres operational risk.
However, risks such as Reputation Risk, Systemic Risk and Strategic Risk (the risk of
losses or reduced earnings due to failures in implementing strategy) are not covered
and exposing the banks to financial shocks.
As per Basel all corporate loans attracts 8 percent capital allocation where as it is in
the range of 1 to 30 percent in case of individuals depending on the estimated risk.
Further, group loans attract very low internal capital charge and the bank has a
strong incentive to undertake regulatory capital arbitrage to structure the risk
position to lower regulatory risk category. Regulatory capital arbitrage acts as a
safety valve for attenuating the adverse effects of those regulatory capital
requirements that activitys underlying economic risk. Absence of such arbitrage, a
regulatory capital requirement that is inappropriately high for the economic risk of a
particular activity could cause a bank to exit that relatively low-risk business by
preventing the bank from earning an acceptable rate of return on its capital.
73
***
74
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SARFAESI enables the banks to seize and sell the properties secured to the bank
without the intervention of courts resulting in realization of the amount due in NPA
accounts and reduction of NPAs. As per the act, officers with a rank of Chief Manager
and above are empowered to act as Authorized Officer to initiate proceedings which
includes issue of notices, taking possession of the property and sale of property.
Branches have to identify the NPA account borrowers to whom the notices are to be
issued under Sec.13(2) of the Act. However, the following are the exceptions
provided under Sec.31 of the SARFAESI Act:
Where the outstanding liability in the account does not exceed Rs 1.00 lakhs
Any security interest created in agriculture land
Pledge of movables / Lien on any goods
Amount due is less than 20% of the principal amount and interest
Creation of Security Interest in any Air Craft / Vessel
Any conditional sale, hire purchase or lease or any other contract in which no
security interest is created
Any right of unpaid seller / Any properties not liable for attachment /sale
under section 60 Civil Procedure Code.
The prerequisite should be that notice should be issued one month after identification
of NPA advising the borrower/mortgagor to pay the entire amount due with in 60
days from the date of receipt of the notice. In case, more than one borrower, notice
shall be sent to each one of them. If the borrower avoids notice, the same may be
served by publishing in two leading Newspapers (English and Vernacular language).
On expiry of 60 days notice period and on default of the payment, possession shall
be taken of the property mentioned in Sec.13 (2) notice and the notice of the same
shall be give to the borrower and general public in two newspapers English and
vernacular Language. The Possession of moveable property may be taken by taking
inventory in the presence of two witnesses.
Authorized Officer shall keep the property either in his own custody or in the custody
of any person authorized or appointed by him who shall take as much care of the
property in his custody as an owner of the property. Insurance of secured assets and
their valuations are to be done before sale of seizure of secured assets. Security
agents can be engaged while seizing the secured assets. Authorized Officer may sell
the secured assets of which the possession is taken by obtaining quotations from the
parties; by inviting tenders from the public; by holding public auction; by private
sale. Auction notice is to be kept on the banks website.
If sale is by inviting tenders from the public or public auction the same has to be
published in two news papers viz., English and another in Vernacular language. Sale
can be affected only after issuing 30 days notice to the borrower / mortgagor. If the
property is subject to speedy decay the Authorized Officer may sell it immediately.
The authorized Officer cannot sell the property less than the reserve price. If the
entire liability of the bank is not cleared after affecting the measures under the Act,
the bank is to file a suit or application before the court or DRT for recovery of the
balance amount of loan. In the accounts where the borrower failed to honour his
commitment under the compromise/OTS, then compromise/OTS permitted should be
withdrawn before initiating action under the Ordinance.
In case of resistance from the borrower to hand over the possession of assets, such
resistance should be recorded in the presence of two witnesses and application
should be made under Sec.14 of the act to Chief Metropolitan Magistrate/Dist.
Magistrate seeking their assistance for taking possession of secured assets.
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Clean Note Policy: The usage of stapling is causing mutilation of notes and
shortening the life of the currency. RBI prohibited the banks from stapling currency
notes under section 35A BR Act with an objective to provide clean notes to public. As
per policy, Banks should
Issue clean notes to the public and accept small denominations such as `1/,
`2/- & `5/-.
Not issue number cut notes to public. Any deviation in this regard attracts
penalty.
Ensure sorting all notes by branches and only Clean Notes/issuable notes are
put into circulation amongst general public.
Ensure that branches are not hoarding any Fresh Notes and coins and to be
distributed to the customers.
Counterfeit Notes: In order to combat the menace, RBI has issued guidelines to all
Banks/Financial Institutions on detection and impounding of counterfeit notes. It is
necessary that
FIR is required to be filed in case where the counterfeit notes found are five
pieces and above in a single transaction and acknowledgement is to be
obtained from the concerned police authorities. However, in other cases, a
consolidated report is to be sent to Police once in a month.
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Cash Remittances: Cash movement takes place from one branch to another branch
and branch to currency chest and vice versa on a regular basis. Branches / Offices
are required to be adhered the following guidelines since it is an important and
sensitive one. The guidelines are as under:
Surprise Verification of Cash at Branches: All Branch Heads should carry out
verification of cash of their respective branches every month, at different dates of
the month with total confidentiality. The verification should also be rotated every
month i.e. once before commencement of office hours, another time at the middle of
the day and sometimes at the close of the office hours. Besides the above, branches
are subject to surprise verification of cash by controlling offices once in a quarter.
Surprise verification report shall cover the aspects such as maintenance of Cash
Movement / Key Movement / Cash Discrepancy Registers, maintenance of cash
beyond retention limit, maintenance of Bait Money and shortage/excess of cash, if
any. Wherever cash position is in excess of Cash Retention Limit, the entire cash on
hand should invariably be verified by the Branch Manager and necessary
endorsement should be recorded thereof.
Incentives & Penalties: RBI introduced scheme in the month of September 2008
for providing incentives to banks for extending enhanced services in the area of
mutilated/soiled notes & coin distribution and levying penalties for deficiency in
providing services to members of the public. (Cir no. 158 Ref 55/13 dt.19.07.12)
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Scheme on Penalties
Activity Penalties
`50/- per piece in addition to the
loss (shortage) in case of notes
in denomination up to `50/-.
Shortage in soiled note remittances and However, for notes in
currency chest balances denomination of `100/- and
above, the penalty is equal to
the value of the denomination
per piece in addition to the loss.
Equal to the value of the
Counterfeit notes detected in soiled note
counterfeit note in addition to
remittances and currency chest balances
the loss.
Mutilated notes detected in soiled note `50/- per piece irrespective of
remittances and currency chest balances the denomination.
Non compliance of operational guidelines such
`5000/- for each irregularity.
as non-functioning of CCTV, non utilization of
Penalty will be enhanced to
NSMs and keeping branch cash / documents in
`10000/- in case of repetition.
strong room.
Violation of any term of agreement with RBI or
deficiency in service in currency area as
detected by RBI officials viz.,
i) Non issue of coins over the counter to any
member of public, despite having stock.
ii) Refusal to exchange soiled notes all bank
`10,000/- for any violation of
branches / adjudicate mutilated notes (Currency
agreement in this
Chest branches) tendered by any member of
regard/deficiency of service
public.
iii) Not conducting surprise verification of chest
`5.00 lakhs in case there are
balances, at least at bimonthly intervals by
more than 5 instances of
officials unconnected with the custody thereof.
violation by the branch. The
iv) Denial of facilities/services to linked
same will be placed in public
branches of other banks.
domain.
v) Non acceptance of lower denomination notes
(`10/- `20/- and `50/-) tendered by members of
public and linked bank branches.
vi) Detection of mutilated / counterfeit notes in
reissuable packers prepared by the chest.
RBI during their Incognito visits to Branches may levy penalty with regard to non
adherence of above guidelines and the same will be recovered from the officials
responsible for such lapses. Hence all branches have to follow the laid down norms
scrupulously without any deviation.
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The Government and the regulator (RBI) have been emphasizing the importance and
the need to extend speedy, efficient, fair and courteous customer service in banking
industry. In this direction, the following committees were set up:
Bank should offer a basic bank account with privileges such as certain number
of transactions, cheque facility, ATM/Debit Card etc., without any prescription
of minimum balance.
Before marking the account as inoperative, the banks must intimate the
account holder by SMS. Banks should introduce Uniform Account Opening
forms and Account Number Portability across the banks.
The users of electronic bank platforms for making collections may offer small
discounts to their customers to favour electronic payments.
Reason for penal interest on loan accounts, rate of interest charged should be
mentioned in Passbook/Statement of Account.
Banks must ensure that loan statements are issued to the borrowers
periodically giving full details including demand, repayments, interest
component and charges.
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Bank should provide Most Important Terms and Conditions (MITC) of the
product explicitly in Arial font and size 12 for better readability.
All home loans should permit a switchover between fixed to floating or vice-
versa at least once during the loan tenure at an appropriate and reasonable
fee. Home loans backed by insurance products, the procedure should be
explained upfront to the customers.
Banks should put a system in a place for Automatic updation of the customers
to the senior citizen category based on the date of birth.
Pensioner may be allowed to submit the annual life certificate at any of the
branches of the bank. Bank should make arrangements to disburse pension to
sick and disabled pensioners at their door steps.
Banks should ensure that at least one of the staff members in Tribal / North-
East areas is conversant with local language.
With regard to one-man branches Banks should place Proper systems for
safety of cash and also continuity of services in case of leave etc.
Banks to install CCTV at all ATMs. For Debit/Credit cards at POS, PIN based
authorization should be made mandatory.
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RBI has set up BCSBI with an objective of evolving standards for bank services to
depositors, borrowers and common persons at affordable and reasonable price and
monitoring the same in effective manner. It covers -
Fair Practices code for Lenders liability: Loan application forms should be
comprehensive to include information about rate of interest, interest application
intervals, penal interest, processing charges, up-front fee, prepayment charges etc.
Loan applications are to be processed within reasonable time and communicate the
terms and conditions in writing to the borrowers. Banks should give notice to the
borrower about the subsequent changes in interest rate / charges, if any.
Credit Card - Fair practices: All credit card issuers should provide Most Important
Terms and Conditions (MITC) to customers and prospective customers. MITC should
include information such as admission fee; cash advance charges, default charges,
annualized percentage rate and grace period. Further, card issuers should maintain
Do Not Call Registries and should not provide unsolicited calls/SMS/Cards/Credit
facilities unilaterally. Card issuing banks are responsible for any omission or
commissions of their agents (Sales/Marketing/Recovery agents).
Providing better and timely service to the customers is a prerequisite for banks to
remain stay in the market. Despite best efforts, sometimes, omissions and
commissions may creep in which may lead to inconvenience to the customers. In
order to protect the interest of the customers, banks formulated compensation policy
based on the principles of transparency and fairness in the treatment of customers.
The expected action and compensation payable to the customers in the event of
deficiency of service are as under:
The above initiatives will definitely paves the way for better service and the instances
of referring the customer grievances to Ombudsman or any other forum will come
down to a greater extent.
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GDP growth rate has been 5% in 2012-13 as against the target of 7.6%.
The estimated GDP for the year 2013-14 is likely to be in the range of 6.1%
to 6.7%.
Fiscal deficit recorded at 5.3% for 2012-13 and the target set for 2013-14 at
4.8%.
Current Account Deficit (CAD) continues to be high touching USD 75 billion.
Thrust on Foreign Direct Investment, Foreign Institutional Investors and
External Commercial Borrowings to reduce CAD
The budget focused on Agriculture credit and Financial Inclusion with
significant allocations to Rural Development programs (`80194 crore) and
other welfare schemes.
Womens Bank is to be set up under Public Sector with initial capital outlay of
`1000 crore
Government has assured capital support for the state run banks and a
provision of `14000 is made for the year 2013-14.
All Public Sector Bank branches to have an ATM by 31st March 2014.
Interest subvention scheme for short term crop loans continued (4% per
annum) for farmers making repayments on time.
Current personal income tax rates remain same. Tax credit of upto `2000 is
extended to every person who has a total income upto `5 lakhs. Introduced
surcharge of 10% on individuals whose taxable income exceeds `1 crore.
Allowed additional deduction of interest of `1 lakh to first time home buyers
for loan amount upto `25 lakhs.
TDS @ 1% has been introduced on value of transfer of immovable property
exceeding sales consideration of `50 lakh.
It is proposed to introduce inflation-indexed bonds/national certificates to
encourage and protect savings of the poor and middle class.
Controlling subsidy as well as curbing gold and oil imports will be necessary to keep
Current Account Deficit (CAD) and Fiscal deficit in check. However, there are
concerns that food security bill may push up subsidy bill. Moderation of inflation is
the need of the hour to drive the investments and to take the economy on the
growth path.
New Private Sector Banks - The guidelines for Licensing of New Banks in the
Private Sector have now been released by RBI and the salient features are:
ii) Fit and Proper criteria: Entities/groups should have a past record of sound
credentials and integrity, be financially sound with a successful track record of 10
years. For this purpose, RBI may seek feedback from other regulators and
enforcement and investigative agencies.
iii) Corporate structure of the NOFHC: The NOFHC shall be wholly owned by the
Promoter/Promoter Group. The NOFHC shall hold the bank as well as all the other
financial services entities of the group.
iv) Minimum Voting Equity capital requirements for banks and shareholding
by NOFHC: The initial minimum paid-up voting equity capital for a bank shall be `5
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vii) Corporate governance of NOFHC: At least 50% of the Directors of the NOFHC
should be independent directors. The corporate structure should not impede effective
supervision of the bank and the NOFHC on a consolidated basis by RBI.
viii) Prudential norms for the NOFHC: The prudential norms will be applied to
NOFHC both on stand-alone as well as on a consolidated basis and the norms would
be on similar lines as that of the bank.
ix) Exposure norms: The NOFHC and the bank shall not have any exposure to the
Promoter Group. The bank shall not invest in the equity/ debt capital instruments of
any financial entities held by the NOFHC.
x) Business Plan for the bank: The business plan should be realistic and viable
and should address how the bank proposes to achieve financial inclusion.
Procedure for RBI decisions: At the first stage, the applications will be screened
by the Reserve Bank. Thereafter, the applications will be referred to a High Level
Advisory Committee, the constitution of which will be announced shortly. The
Committee will submit its recommendations to the Reserve Bank. The decision to
issue an in-principle approval for setting up of a bank will be taken by the Reserve
Bank. The validity of the in-principle approval issued by the Reserve Bank will be one
year. In order to ensure transparency, the names of the applicants will be placed on
the Reserve Bank website after the last date of receipt of applications.
85
i) Forward Markets Contract: The passage of the bill was facilitated by the
removal of a controversial Forward Market's Contract clause that would have allowed
banks to enter into future trading of commodities. Very few banks were keen on
trading in commodities and some felt that the clause had been incorporated to
provide banks a level playing field with corporate giants.
iii) Voting Rights: The bill also allows investors to have voting rights with a higher
cap of to 26% from the existing 10% in case of private sector banks and 10% from
1% at present in case of public sector banks. Existing banks will gain as their
strategic shareholders will be encouraged by the move to increase voting rights.
86
The payment history has a significant impact on the score. Hence, if one has
missed the payments on any of his existing loans, over the last couple of
years, the score is likely to be negatively affected indicating that the serving
of existing obligations may be difficult.
High utilization of credit limits also play a vital role in arriving credit score of
an individual.
A higher concentration of home loans or secured loans is likely to be more
favourable for the score than a large number of unsecured loans. More the
number of unsecured loans with high utilization, larger are the payments
resulting from its high rate of interest and consequently lower would be the
score despite satisfactory payment track.
Credit Hungry behavior - many applications for loans, indicates that the
debt burden is likely to, or has increased and one is less capable of honoring
any additional debt and is likely to negatively impact the score.
It enables the lending institutions to take informed decisions while according credit
sanctions. In the post implementation of CIBIL, it is observed that the default rate in
credit card receivables have gone down due to issuers exercising stricter due
diligence while sanctioning credit cards. With CIBILs help, banks have caught many
frauds like individuals trying to avail multiple loans on the same house, vehicle etc.
Sharing of information through CIBIL is more or less stabilized and it is the
responsibility of all of us to take it forward by creating awareness among the
individuals across the country.
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Base Rate: Banks are not allowed to lend below Base Rate w.e.f. 01.07.2010 except
certain categories such as Differential Rate of Interest (DRI) advances, Loans to
banks own employees, Loans to banks depositors against their own deposits, loans
to tribals/physically challenged persons, Interest Subvention Schemes viz., Crop
loans, Export credit and Restructured loans. The final lending rates include the Base
Rate plus variable or product specific operating expenses, credit risk premium and
tenor premium. However, Banks may charge interest at the rates prescribed under
SHG schemes, National Schedule Tribes Finance and Development Corporation
(NSTFDC) and National Handicapped Finance and Development Corporation (NHFDC)
to the extent refinance is available. Banks are required to fix Base Rate duly taking
Cost of Deposits / Funds, Negative carry in respect of CRR and SLR, Unallocated
Overhead Costs and Average Return on Net Worth in to consideration.
Floating Rate Deposits - Bank Term deposits are the most preferred among the
variety of investment options. However, of late the Bank depositors found
unattractive as the real rate of return is low and sometimes negative since they get
interest at contracted rate only while the interest rates are on the rise. Asset Liability
management is the greatest challenge for the Banks as majority of the banks
liabilities are of short term while the repayments of assets spread over relatively
longer tenure i.e. beyond 36 months. Further, the present term deposit interest rate
scenario is acting as disincentive for long term investors since the interest rate on
deposits of beyond 2/3 years is low compared to short term deposits. Normally, the
retail borrowing happens at floating interest rates whereas their deposits with banks
attract fixed rate exposing them to interest rate risk. In the above backdrop, Banks
have been examining the feasibility of introduction of floating rate term deposits,
wherein the rate of interest keeps changing depending on the market rates. The
interest rate is reset with reference to a benchmark/anchor rates which are directly
observable and transparent to the customer. Floating rate term deposit looks ideally
attractive for the retail investors. On the flip side, since the interest rate is floating,
the income from term deposits may be adversely impacted when the rates fall. The
floating deposit rate concept helps banks to manage their assets and liabilities
better. At present, the Floating Interest Rate Deposits are being offered select banks
only and the concept is yet to take momentum in India.
88
Swavalamban Scheme: The New Pension System (NPS) is aimed to inculcate the
saving habit and to provide pension benefit to the citizens through systematic
savings plan. Under this, the government has made a provision to pay an incentive
of `1000 per year (up to 2014) to every NPS account opened subject to the
minimum contribution of `1000 and maximum `12000 per annum. The age of the
subscriber should be between 18 to 60 years. The subscriber is required to invest
minimum 40% accumulated savings to purchase a life annuity from any IRDA
regulated insurance company, in case where he opts for exit at the age of 60. If the
subscriber prefers to exit before 60 years, he is required to invest minimum 80% of
accumulated savings in annuity policy. In an unfortunate event, the nominee
receives 100% of the NPS pension wealth in lump sum. However, the exit would be
subject to the overriding condition that the amount of pension wealth to be
annuitized should be sufficient to yield a minimum amount of `1000 per month. If
not, the percentage of pension wealth to be annuitized would be increased so that
the pension amount becomes `1000 per month, failing which the entire pension
wealth would be subject to annuitisation.
New Pension Scheme is introduced for Bank Employees in the year 2010 under
which Bank employees are eligible for Defined Contributory Pension Scheme (DCPS).
It is mandatory that all employees who have joined the service of the Bank or after
1st April 2010 enroll themselves as members of this scheme which entails obtaining
of Permanent Retirement Account Number (PRAN) from NSDL who are the Central
Record Keeping Agency. Under this scheme, the members shall contribute 10% of
the Basic pay and Dearness Allowance towards the DCPS and the bank shall make a
matching contribution in respect of these employees. The scheme is governed by
Pension Fund Regulatory and Development Authority (PFDRA) and the funds are
managed by approved fund managers from public and private sector with proven
track record. Employees would be free to carry their PRANS to new employments or
continue as individuals after change of employment status.
Rajiv Gandhi Equity Savings Scheme (RGESS) is a tax saving scheme announced
in the Union Budget 2012-13 and the scheme is designed exclusively for the first
time retail individual investors in securities market, whose gross total income for the
year is less than or equal to `10 lakh. The investor would get under Section 80CCG
of the Income Tax Act, a 50% deduction of the amount so invested, up to a
maximum investment of `50000, from his/her taxable income for that year. The
objective of the Scheme is to encourage the flow of savings and to improve the
depth of domestic capital markets. This would help in promoting an equity culture in
India. The Scheme aims at widening the retail investor base in the Indian securities
markets and also furthers the goal of financial stability and financial inclusion.
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Treasury Management - Banks not only lend money to customers but also invest
in securities such as Bonds and Debentures of Government as well as Corporates.
These instruments are easily tradable in the capital and money market. The
tradability of securities makes investments an attractive option for banks for
deployment of their funds. Further, banks buy securities not only to trade but also to
hold them till maturity to take advantage of the attractive returns with relatively
lower risk. Banks are allowed to invest in shares of companies. However, the
volumes are low due to associated high risk besides regulatory restrictions. The
investment portfolio of the banks broadly divided into three groups viz.,
i) Trading Book Securities purchased with the intention of selling them within 90
days are held in the trading book. Trading opportunities arise in the market on
account of fluctuation in interest rates and arbitrage opportunities.
ii) Available for Sale (AFS) Securities which are bought with the intention of
selling them but not necessarily within 90 days is considered to be AFS securities.
They are also part of the trading portfolio of the bank but only the time frame is
different. Both the trading and AFS securities have to be Marked to Market every
quarter while finalization of quarterly results.
iii) Held to Maturity (HTM) These securities are meant to be held till their date
of maturity and the purpose investing in them is to earn reasonable steady income.
These securities are carried in the books at cost or purchase price till maturity.
Hence, HTM securities need not be Marked to Market as the bank is certain of
receiving the maturity value on the specified date. Banks are not allowed to shift
securities freely from trading and AFS to the HTM book as this may lead to
overstating of profit figures. However, banks can opt for shifting only once in a year
to adjust their overall portfolio.
Reverse Repo is the mirror image of a repo. Under reverse repo, securities are
acquired with a simultaneous commitment to resell. Hence whether a transaction is a
repo or a reverse repo is determined only in terms of who initiated the first leg of the
91
Call Money Markets: Call and notice money market refers to the market for short
term funds ranging from overnight funds to funds for a maximum tenor of 14 days.
Under Call money market, funds are transacted on overnight basis where as in case
of notice money market; funds are transacted for the period of 2 days to 14 days.
Zero Coupon Bond / Deep Discount Bond: The bond is issued at a discount to its
face value, at which it will be redeemed. When such a bond is issued for a very long
tenor, the issue price is at a steep discount to the redemption value. The effective
interest earned by the buyer is the difference between the face value and the
discounted price at which the bond is bought. The essential feature of this type of
bonds is the absence of intermittent cash flows.
Adjusted Net Bank Credit (ANBC) denotes Net Bank Credit plus investments
made by banks in non-SLR bonds held in HTM category. However, investments made
by banks in the Recapitalization Bonds and Inter-bank exposures will not be taken
into account for the purpose of priority sector lending targets/sub-targets.
92
Monetary Policy: Refers to the use of official policy instruments, under the control
of the Central Bank to regulate the availability, cost and use of money and credit
with the aim of attaining optimum level of output and employment, price stability,
healthy balance of payment position and any other goals set by the government. In
an expansionary monetary policy, money supply increases causing an expansion in
aggregate demand through lower interest rates. This stimulates interest sensitive
spending on investment for manufacture of goods, housing, export, business etc.
and in turn, acting through multiplier leads to a rise in gross domestic product. The
reverse process takes place when monetary policy is tightened. However, in a fully
employed economy monetary expansion would primarily raise prices and nominal
gross domestic product with little effect on real GDP as the higher stock of money
would be chasing the same amount of output.
Indian Rupee Symbol: After years of missing unique identity, India got a
distinct symbol to distinguish from Pakistan, Nepal, Srilanka and Indonesia countries
whose currencies are designated as Rupee or Rupiah which is similar to our currency
i.e. Rupee. Now Indian rupee joined the select club of currencies such as the US
Dollar, Euro, British Pound and Japanese Yen that have a clear distinguishing identity
and it is considered as a step towards internationalization of Indian Rupee. Though
the symbol is not be printed or embossed on currency notes or coins, it would be
included in the Unicode Standard and major scripts of the world to ensure that it is
easily displayed and printed in the electronic and print media. After incorporation in
the global and Indian codes, the symbol would be used by all individuals and entities
within and outside the country. The new symbol portrays the nation's strength &
stability, both politically and economically and acts as Brand Ambassador.
93
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Right to Information Act 2005 - The act has come into effect from October 12,
2005. This Act is meant to give to the citizens of India access to information under
control of public authorities to promote transparency and accountability in these
organizations. However, this mechanism is meant for seeking information only and
not for making complaints. Under this Act, Citizens of India will have the right to
make the request for information in writing, clearly specifying the information
sought. The application should accompany a fee of `10/- either in cash or DD/PO.
The application for request should give the contact details (postal address, telephone
number, fax number, email address) so that the applicants can be contacted for
clarifications or the information. All Public Sector Banks are covered under this act
and they are required to furnish the information sought by the citizens of India.
Branch Managers are designated as Central Assistant Public Information Officers
(CAIPO) and they have to forward the requests received to the Zonal Managers
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The India Inclusive Innovation Fund (IIIF): Traditional innovative models have
often focused more on addressing the wants of the affluent, rather than the needs of
the deprived, a tendency that directs the best human and financial resources away
from solving more basic developmental needs. In the above backdrop, National
Innovation Council has initiated steps to set up Inclusive Innovation Fund, which
provides risk capital funding to enterprises that create and deliver technologies and
solutions aimed at enhancing the quality of life at the Bottom of the Pyramid
without compromising on economic success. It creates a new Indian model of
innovation - one that bridges Growth and Equitability. The fund size is targeted
around `500 to `5000 crore with contributions from Government, Banks, Insurance
companies, Financial institutions, Public/Private sector companies, and High
Networth Individuals.
Permanent Account Number (PAN): As per section 139 (4A) of Income Tax Act
1961, all individuals whose income exceeds the tax free limit and in case where the
person carrying a business, the sales turnover or gross receipts exceeds 5 lakh in a
year are required to have PAN and the same is to be quoted in all returns and
correspondence with IT authorities. As per the extant guidelines, it is mandatory to
furnish PAN number for all transactions viz., purchase/sale of immovable property of
`5 lakh and above, purchase/sale of motor vehicles (other than 2 wheeler), security
transactions of above `1 lakh, purchase/sale of shares/debentures/bonds of
`50000/- & more and bank transactions (cash) of `50000/- & above and payment to
hotels exceeding `25000/- at any one time.
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Global Depository Receipt (GDR): These are the instruments through, which the
Indian companies raise their resources from international markets. It is a negotiable
certificate issued by a depositary company (normally an investment bank)
representing the beneficial interest in shares of another company whose shares are
deposited with the depository. It is a Dollar denominated instrument, traded on
Stock Exchange in Europe or USA or both and represents publicly traded specified
number of local currency equity shares of the issuing Company.
Derivatives: A credit derivative derives its value from the credit quality of the
underlying loan or bond or any other financial obligation of an underlying company.
The underlying asset can be equity, index, foreign exchange (forex), commodity or
any other asset. Derivative products initially emerged as hedging devices against
fluctuations in commodity prices and commodity-linked derivatives remained the sole
form of such products for almost three hundred years. The financial derivatives have
become very popular in the recent years. Credit Derivatives are financial
instruments designed to transfer credit risk from the person / entity exposed to that
risk to a person / entity who is willing to take on that risk.
SWAP refers to exchange of one asset or liability for a comparable asset or liability
for the purpose of lengthening or shortening maturities or raising or lowering coupon
rates to maximize revenue or minimize financing costs. This may entail selling one
securities issue and buying another in foreign currency; it may entail buying a
currency on the spot market and simultaneously selling it forward. There are various
types of SWAPs such as Equity swap, Currency swap, Credit swaps, Commodity
swaps, Interest rate swaps etc. These can be used to create unfunded exposures to
an underlying asset since counterparties can earn the profit or loss from actions in
price without having to post the notional amount in cash or collateral. Swaps can be
used to hedge certain risks such as interest rate risk or to wonder on changes in the
expected direction of underlying prices.
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Reserve Money (M0): Currency in circulation + Bankers deposits with the RBI +
Other deposits with the RBI = Net RBI credit to the Government + RBI credit to the
commercial sector + RBIs claims on banks + RBIs net foreign assets +
Governments currency liabilities to the public RBIs net non-monetary liabilities.
M1 - Currency with the public + Demand deposits with the banking system + Other
deposits with the RBI. M2 - M1 + Savings deposits with Post offices. M3 - M1+ Time
deposits with the banking system = Net bank credit to the Government + Bank
credit to the commercial sector + Net foreign exchange assets of the banking sector
+ Governments currency liabilities to the public Net non-monetary liabilities of the
banking sector. M4 - M3 + Deposits with post office (excluding NSCs).
Hyper Inflation: An express growth in the rate of inflation whereby, money loses its
value to the extent where other mediums of exchange like barter or foreign currency
come into vogue.
Deflation: A sustained fall in the general price level of goods and services, usually
accompanied by fall in output and jobs.
Stagnation: It is a period during which economy does not grow or grows very
slowly. As a result, unemployment increases and consumer spending slows down.
Devaluation: A fall in the fixed official rate at which one currency is exchanged for
another in a fixed exchange rate system. While it is mostly by a deliberate act of
government policy, in recent years, financial speculation has also been identified as a
responsible factor.
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8 Holder - Definition
17 Ambiguous instruments
As per RBI guidelines, the validity period of Cheque/Draft is limited to 3 months with
effect from 01.04.2012.
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No Macro Rates %
1 Bank Rate (w.e.f. 29.01.13) 8.75
2 Cash Reserve Ratio (w.e.f. 29.01.13) 4.00
3 Statutory Liquidity Ratio (w.e.f. 31.07.12) 23.00
4 Repo Rate (w.e.f. 29.01.13) 7.75
5 Reverse Repo Rate (w.e.f. 29.01.13) 6.75
6 Marginal Standing facility (w.e.f.29.01.13) 8.75
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a) Savings Bank Account b) Simple Recurring Deposit Account c) Basic Savings Bank
Account d) None
2. The following advances are not covered under WTPCG. Which is not correct?
a) Non Resident Indian (NRI) b) NRI who returned to India permanently c) Any
Resident with local source of income d) Residents who have forex earnings e) None
a) Credit Risk b) Market Risk c) Liquidity Risk d) Operational Risk e) Technology Risk
5. As per IBA Model Education Loan Scheme, the minimum & maximum age criteria
for the borrower (student) is
6. As per extant guidelines, advance against book debts should not exceed . % of
working capital limits.
a) `50 per credit b) `12 per credit c) `65 per credit d) `60 per credit e) None
a) 15 days from the date of deduction b) 7 days from the date of deduction c) 15
days in the succeeding month d) 10 days in the succeeding month e) 7 days in the
succeeding month
a) Long Term Low Cost funds b) Short Term High Cost funds c) Long Term High
Cost funds d) Short Term Low Cost funds e) None
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13. Borrowers availing crop loans up to 3 lakh in the current year are eligible for
interest subvention of .. besides incentive of . for prompt repayment.
15. To consider housing loan, the age of building shall not be more than
a) Bond issued at face value b) Bond issued with face value & interest c) Bond issued
at discount from its face value with interest d) Bond issued at discount from its face
value without interest e) None
18. A counterfeit note is impounded by the branch at the time of receipt of cash.
The acknowledgement has to be signed by
20. As per recent guidelines, 40% of the total advances to micro and small
enterprises sector should go to micro (manufacturing) enterprises having investment
in plant and machinery up to .. Lakh and micro (service) enterprises having
investment in equipment up to .. Lakh.
21. For transfer of funds through NEFT (National Electronic Fund Transfer) and
minimum and maximum amount that can be transferred are
a) `1,000 and maximum `5 lacs b) `1,000 and maximum no limit c) `5,000 and
maximum `1 lacs d) No minimum & maximum amount e) None of the above.
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24. It is mandatory for banks to obtain Joint Lending Agreement where the
aggregate credit limits availed by the borrower from multiple banks exceeds.
a) Urban Savings Bank account b) Ultra Small Branch c) Uniform Savings Bank
account d) Unique Small Bank e) None
26. Whether borrower has any option to go forduring the currency of the loan?
a) Fixed Interest Rate to Floating Interest Rate b) Floating Interest Rate to Fixed
Interest Rate c) a & b d) Continue with sanctioned terms & conditions only e) None
28. Bank cant proceed against the borrower under SARFAESI Act where
a) Security is agril land b) Liability is less than `1 lac c) Liability is less than 20%
of the principal d) Pledge of movables e) All of the above
29. State which one of the following statement not true with regard to Disclosure
norms to be made at the footnote of Balance sheet as per RBI guidelines.
a) Movement of NPAs b) Large exposure Deposit & advances c) Capital structure &
Capital adequacy d) Industry wise exposure e) Market Risk in Trading Book
30. Under Direct Benefit Transfer (Subsidy) scheme every beneficiary should have
a) Basic Savings Bank Account b) Savings Bank account with Cheque Book c) Basic
Savings Bank Deposit Account with Aadhaar number d) KYC complaint Account
e) None
31. A cheque is received by the branch for payment issued by one of the customers.
Meanwhile a request is received by a public prosecutor informing that the person
issued the cheque is imprisoned for criminal activity and directs the branch not to
make payment of the said cheque. What is expected by the branch?
a) Branch should not make the payment b) Branch should ask for court order
regarding imprisonment of the customer c) Branch should insist written request from
the public prosecutor d) Branch can make the payment.
32. With regard to lockers, which of the following guideline is not issued by the RBI?
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a) 40% & 15% b) 30% & 15% c) 40% & 20% d) 80% & 50% e) No ceiling
34. As per the compensation policy of the bank with regard to collection of foreign
cheques, bank shall pay compensation @ .. to the customer if the delay is beyond
45 days.
35. Official Language Implementation Committee meetings are to be held once in.
36. In terms of direction of RBI & IBA on simplified procedure for settlement of
claims preferred by the legal heirs of the deceased constituents, bank has to settle
the death claims involving amount up to Rs
37. The minimum capital required to start a new private sector bank is
a) Multiple Bank Accounts b) `10 crores & above c) Fund & Non-fund based
d) Preserving viable corporates e) Account should be NPA
a) LC is restricted to our bank only, subject to the condition that the Proceeds will be
remitted to the regular banker of the beneficiary b) LC is not restricted and proceeds
will be remitted to the beneficiary c) LC bearing the clause without recourse d) None
40. X depositor approached the branch with term deposit receipt of `2 lakhs which
was due in the year 2008 and not interested for renewal of the matured deposit and
requesting for payment of interest for overdue period. How do you act?
a) No interest will be paid since the deposit is not renewed b) Term Deposit
applicable interest at the time of maturity will be paid for the overdue period
c) Interest rate at the time of maturity or at the time of renewal whichever is lower
will be paid for overdue period d) SB interest will be paid for the overdue period
41. What are the interest rates that are still regulated by RBI?
42. RBI imposing penalty on Currency Chests for incorrect reporting of daily cash
position because..
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45. A term deposit of `50000/- in the name of individual with one year tenor is
cancelled prematurely. The penalty for premature closure is.
46. In case of Gold Loans by Scheduled Commercial Banks, the LTV ratio should not
be more than
47. The Banking Laws (Amendment) 2012 has facilitated the Public Sector Banks in
increase of voting rights from.to..
48. Maximum Project cost under USEP of SJSRY for individual borrower
49. A bank can prefer appeal on the award passed by Banking Ombudsman within
30 days from the date on which the bank receives
a) Purchase and distribution of inputs for the allied activities such as cattle feed,
poultry feed etc., with loan amount up to `100 lakh per borrower b) Loans for
setting up of Agriclinics and Agri business centres c) Loans for construction and
running of storage facilities d) a & b e) all
52. What is the standard provision on the assets other than SME/Agriculture?
53. A customer's cheque realized for `2 lakh is credited to his account by mistake as
`2000. Subsequently cheque presented for `20000 returned unpaid by the bank.
What is the responsibility of the banker?
a) Meant for Two lakh & above remittances only b) Remittance should be through
account transfer only c) Maximum charges should not be more than `50 per
remittance d) Charges to be collected from the Beneficiary only
a) It should be revoked only after 12 months b) Yes he can revoke at any time
c) Revoked with the consent of the power of attorney holder d) Yes he can revoke
with the consent of the Banker e) None
56. Authorized Dealers are allowed to open EEFC account in the name Foreign
Exchange Earners with . of their foreign exchange earnings.
57. As per recent guidelines, the Banks are advised to bring down Bulk/Certificate of
Deposits to below of total deposits during the current year.
58. Revised guidelines on Priority Sector have come into force based on the
recommendations of Committee.
59. The minimum deposit required to open No Frill / Basic Saving Account
60. With regard to nomination to Illiterate account, which of the following statement
is correct?
61. SARFAESI sale notice to debtor by creditor within how many days?
62. The company has its registered office in Mumbai and its factory is at Kolkatta.
The Company has availed credit facilities from banks branch in Hyderabad. The
equitable mortgage of company's immovable property is to be created at
a) Pay the cheque as he signed in fiduciary capacity b) Stop payment c) Pay the
cheque on receipt of confirmation from the company d) None
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a) `15 lakhs & 10 lakhs b) `20 lakhs & 15 lakhs c) `25 lakhs & 15 lakhs
d) `25 lakhs & 10 lakhs e) None
65. Under Cheque Truncation System, the instrument deposited by the customer for
collection remain with..
66. In case where the instrument is obtained by unlawful means, the holder of the
instrument will not get any title as per ..
a) Borrower consent to disclose the same in notes to account in Banks annual report
b)Approval of Board c) Charging additional interest @2% d) a & b e) a, b & c
69. Composite loan limit of .. can be sanctioned by banks to enable the MSME
enterprises to avail of their working capital limit requirements through single window
70. Amount allowed to be transferred abroad by any resident without RBI permission
for purchase of fixed assets in a financial year.
71. Family Income criteria (per annum) for DRI loans in Rural & Urban areas.
a) `18000/- & `24000/- b) `15000/- & `24000/- c) `18000/- & `36000/- d) `24000/-
& `36000/- e) None
72. What is the floor limit (Min & Max) in case of CRR?
a) 100% & 50% b) 50% & 50% c) 50% & 100% d) No limit e) None
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78. Crossed cheque, presented over the counter through the authorized agent of
collecting banker for his valued customer for cash payment. Will you pay?
a) Bank can pay b) Payment cant be made since it is a crossed cheque c) Payment
can be made on cancellation of crossing duly signed by the drawer d) None
a) Yes b) No c) Will be paid with the consent of legal heirs of the deceased d) None
80. Banks are required to submit return Unclaimed Deposit every year in the
month of . within days from the close of the reporting month.
a) March & 30 days b) December & 30 days c) December & 15 days d) March & 15
days e) None
83. Under Financial Inclusion Plan of the bank, the agents appointed by the bank to
collect money and make payments to the depositors are called as
85. What is the maximum loan amount to EWS & LIG under ISHUP scheme?
a) 1 lakh & 1.60 lakh b) 0.50 lakh & 1 lakh c) 1 lakh & 2 lakh d) No limits e) None
86. In case where counterfeit note is found at the branch, FIR is to be filed by
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a) Lessor & Lessee b) Prinicpal & Agent c) Bailor & Bailee d) Assignor & Assingee
e) None
90. Provision on Standard Advances to be shown under which head of Balance sheet
of the bank
a) Advances & Other Assets b) Provisions & Other Assets c) Liabilities d) Provisions
& Other Liabilities e) None
91. As per RBI guidelines, if Bill discounted became NPA, the income already booked
but not realized is to be
a) Reversed b) Need not be reversed but 50% provision is to be made c) Need not
be reversed but 100% provision is to be provided d) None
92. What is the maximum loan amount that can be given under Small Manufacturing
Units under MSME?
94. What is the age criterion for individuals to open New Pension System (NPS)?
95. Innovative Perpetual Debt Instrument should not exceed . of Tier-I Capital and
the investments by FIIs should not exceed .
a) 10% & 49% b) 15% & 55% c) 15% & 49% d) 20% & 49% e) None
97. Your customer approached with Fixed Deposit of other Bank with a value of `5.50
lakh (including accrued interest) and due for payment in next 24 months and
requested for a loan against the deposit. As Branch Manager how you deal with it?
a) Loan can be allowed up to 75% value of the deposit b) Loan can be allowed up
to 80% value of the deposit c) Loan can be allowed only on receipt of confirmation
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99. Interest subsidy is available to all eligible Educational Loan Borrowers for a
period of
a) First one Year b) First Two Years c) During Study Period d) Till closure of
the loan e) None
100. What is the maximum loan and repayment period is allowed for farmers to avail
loans against pledge of agricultural produce?
a) `5 lakhs & 6 months b) `25 lakhs & 12 months c) `10 lakhs & 6 months
d) No limit on amount but should be repaid within 12 months e) None
101. A customer with a bearer cheque came for withdrawing the amount of cheque
for `4000/-. The counter clerk expressed that the amount is not sufficient to pass the
cheque as the balance is short by `700/-. The bearer of the cheque deposited `700/-
and withdrawn the amount. Further account holder objected for revealing the
balance in the account. In such a situation what is his liability?
103. Unspent foreign currency should be submitted with in how many days after
returning to India?
104. The minimum education qualification stipulated for borrower availing credit limit
of `15 lakhs under PMEGP.
106. As per RBI guidelines, the exposure norms for Single and Group borrowers
including infrastructure projects are stipulated at & of Banks Capital Funds
respectively
a) 10% & 20% b) 15% & 40% c) 20% and 50% d) 20% & 40% e) None
111
a) 10% of Gross Income b) 15% of Gross Income of the last 2 years c) 15% of
Gross Income (average of last 3 years) d) 15% of Net profit e) None
a) 2 years & 1 year b) Once in two years c) 5 years & 2 years d) 2 years & 5
years e) None
109. Joint account operated either or survivor, the number of nominees can be
a) Joint depositors are allowed to nominate one each b) Only one nominee is allowed
c) No nomination facility is available for Joint Accounts d) None
110. Premium payable on pre-shipment and post shipment whole turnover post
shipment packing credit.
a) 5 & 10 ps per month b) 5.50 & 6.00 ps per month c) 6.00 ps per month
d) 6.00 & 5.50 ps per month e) None
111. Short term crop loan treated as NPA if it remains unrecovered for
a) One Crop Season b) Two Crop Seasons c) One Crop Season + 90 days
d) Existing NPA norms that are applicable for Term Loans e) None
113. Women granted a loan of `80 lakhs under CGTMSE, what is the amount of claim
in case of default?
114. Banks can extend Education loans to the students to pursue studies in India
and Abroad with a maximum amount of
a) `5 & `10 lakhs b) `10 & `20 lakhs c) There is no cap on maximum amount
d) 80% of education cost without any cap on maximum loan e) None
116. Post dated cheque presented in clearing paid by the bank and at the same time
another cheque presented was returned as there is no sufficient balance in the
account. Customer claimed for damages. What is the liability of the bank?
a) Bank can make payment of post dated cheque, if the instrument is otherwise in
order b) Bank is not in order in making payment of post dated cheque c) It is the
responsibility of the depositor to mention correct date while issuing cheque and
hence banker is not liable d) Issuing cheque without adequate balance is the
responsibility of the customer and hence banker is not liable e) None
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121. Once the guarantor repays the loan and he attains the status of
123. Banks obtain photograph at the time of opening of the account with a view to
a) Avoid benami accounts b) Verify the identity of the customer c) Verify with police
records d) a & b e) a to c
127. Banks are required to submit CTR (Cash Transaction Report) to ------- within --
--- of succeeding month.
a) FIU, 30 days b) FIU, 15 days c) FIU, 7 days d) RBI, 7 days e) RBI, 15 days
113
133. Deposits which are exempted from Tax Deduction at Source (TDS) are
134. Which statement is not correct with regard to advances against shares?
a) Maximum loan allowed is `10 lacs against physical shares b) Maximum loan
allowed is `20 lacs against demat shares c) Margin requirement is 50% for physical
shares & demat shares d) None of the above
136. As per RBI guidelines, banks need to register the charge over the property with
CERSAI within . days from the date of creation of charge.
140. As per Basel-II norms, banks to move to new approach to assess Operational
Risk with effective from 01.04.2010
114
144. A person appointed by the court to look after the properties of the insolvent
person is called
147. What is the maximum amount Branch can extend instant credit to the
customers against outstation cheques?
148. Which of the following statements are not correct with regard to MSME?
150. Your customer requested to include his wife and daughter as nominees after
one year of opening of the account. Will it be accepted?
a) It can be accepted since the nominees are the family members of the depositor b)
Cannot be considered since the request is not received at the time of opening of
account c) Can be considered with 50% share each d) Nomination should be made
only in favour of single name. Hence cant be considered e) None of the above
151. What is the relationship between the Bank and Overdraft Customer where the
account is showing credit balance?
152. What is the maximum period for which FCNR deposit can be opened?
a) One Year b) Two Years c) Three Years d) Five Years e) Ten Years
115
155. Bank has right to cancel the allotment of locker, if the customer does not
operate or surrender within . despite notice sent to the locker holder.
156. Borrowers who are having satisfactory dealings with bank for a minimum period
of . Years are allowed to avail LUCC facility.
157. National Payment Corporation of India (NCPI) has setup payment network to
enable the member banks to issue Domestic Payment Cards with a brand
a) Bank transactions (cash) of `50000/- & above b) Purchase and sale of shares /
debentures / bonds of `50000/- & above c) Purchase and sale of immovable
property where the value of the property is `5 lakh & above d) a & c e) All
160. X Company approached the Bank for sanction of working capital limit of `800
lakhs and the Current Ratio of the company is 1.15:1. What is the course available to
the branch?
161. Which of the following statement is not true with regard to Capital Gains
Deposit Scheme?
a) Income Tax Assesses who are eligible for exemption under section 54 of the IT
Act are alone can open account with Banks b) Accounts can be opened under
Savings, Fixed and Term Deposits c) Cheque book can be issued to eligible accounts.
d) No lien or deposit loan is allowed against such deposits e) None of the above
162. Which of the following statement is not correct with regard to Tax Saver
Scheme of Banks?
a) Tax exemption is available for the deposit amount under section 80C of IT Act b)
Period of deposit is allowed up to 5 Years c) TDS is applicable, if interest payment is
above `10000/- in a financial year d) Maximum amount of deposit allowed is `5 lakhs
e) c & d
163. A fall in Quick Ratio in comparison with Current Ratio indicates
a) High Inventory Holdings b) Low Inventory Holdings c) Decrease in Current
Liabilities d) None of the above
116
165. Banks are permitted to take over borrowal accounts from other Banks &
Financial institutions provided
a) Account should be Standard Asset with positive net worth b) Copy of the borrowal
account for preceding 6 months is to be obtained c) P&C report is to be obtained
from other bank before disbursement d) Branch to take approval from next
sanctioning authority e) All above
a) Allowed in fund and non-fund based limits b) Can be allowed maximum of 3 times
during the validity of limit and the maximum period allowed is 3 months for each
adhoc limit c) Adhoc Limit can be allowed up to 20% of the sanctioned working
capital limits to all eligible borrowers d) a & b e) b, c & d
167. Which of the following statement is not true with regard to Temporary
Overdrafts?
a) 3 Acres of Wet / Double cropped land b) 6 Acres of Dry / Single cropped land c)
Minimum of 2000 working hours per year on borrower land d) a & b e) b & c
169. The applicable net interest rate on loans sanctioned under Surya Shakthi
Scheme is
170. With regard to lending to farm sector, the guidelines on obtention of No Due /
No Objection certificate are
a) Banks should not insist for the above certificate for loans up to `50000/- b) No
charges are to be levied for issuance of certificate c) Self declaration from the farmer
is to be obtained d) All above e) None of the above
171. Unsecured exposure is one where realizable value of tangible security is not
more than . of the outstanding exposure.
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a) Charges should not exceed `100 in a year b) Charges should not exceed `500 in a
year c) Bank has discretion to levy any amount of charges d) No charges should be
levied as Bank is not paying any interest to the customer on Current Account deposit
e) Banks are allowed to levy reasonable charges but should be known to the
customers through proper communication
a) The rent for A type locker is `1000/- p.a. at all branches b) Rentals for in-built
lockers shall be 25% more than the approved rents c) Levy additional charge of
`50/- per transaction where the operations are beyond 10 in a quarter d) Staff
/Retired staff hiring the lockers eligible for 20% concession in rent e) None
176. Under the liberalized norms, a NRI can remit abroad money from his NRO
account, up to
a) One Million US Dollar Per Year b) US Dollar of Two Million Per Year c) US Dollar of
5000 per year without any declaration or certificate d) US Dollar of One Million per
year on the basis of undertaking and certificate e) None of these
177. Branch sanctioned OCC limit of `10 lakhs against hypothecation of stocks worth
`15 lakhs with 30% margin. What would be the notional drawing power when the
present value of stocks is `20 lakhs?
179. The funds available under short term sources is greater than short term uses,
which indicates
a) Low Current Ratio b) High Debt Equity Ratio c) Higher Current Ratio d)
Low Debt Equity Ratio e) None
180. What would be the applicable interest rate payable to the legal heirs of the
deceased on overdue period of matured Term deposit, if not renewed?
118
183. Banks are empowered to take possession of securities (other than rural
properties) under provisions ofAct, when the borrower fails to repay the loan
as per the agreement.
a) Indian Contract Act b) Revenue Recovery Act c) DRT Act d) SARFAESI Act e)
Banking Regulation Act
184. What is the net interest rate (Interest Rate minus Interest Subvention)
applicable for short term agriculture production loans (Crop Loans) up to `3 lacs?
186. While renewing the credit limits of the company, you find that the Debt Equity
Ratio is 3 compared to that of 2.5 in the previous year. It indicates
187. Banking Codes and Standards Board of India (BCSBI) deals with
189. How long the counterfeit notes can be kept with the bank after having reported
to police.
190. RBI advised banks that a Business Correspondent Agent has to be made
available within a radial distance of and a branch within a radial distance of ..
191. What is the insurance coverage available to the borrowers for natural death and
death due to accident under SGSY scheme?
a) `6000 & `12000 b) `5000 & `10000 c) `6000/- only d) `10000/- e) None
192. Having furnished PAN, NRO Term deposit attracts TDS on interest income at
119
194. Branches should keep the PMEGP backend received in and should be
adjusted to the loan account only after completion of months.
a) Fixed Deposit & 36 months b) Savings Deposit & 36 months c) Savings Deposit
& 24 months d) Fixed Deposit & 24 months e) None
195. Garnishee order is by _____ and the customer and bank relation_____to it.
a) Income Tax Authorities & Debtor and Creditor b) Police & Debtor and Creditor
c) Court & Judgment Debtor and Judgment Creditor d) Court & Judgment Creditor
and Judgment Debtor e) None
196. Which is the first district where 100% coverage is achieved in opening of Bank
accounts for adult population?
a) Bank Rate b) Repo Rate c) Reverse Repo Rate d) Market forces e) None
198. Interest rate charged by the banks to exporters should not fall below. after
taking applicable interest subvention.
199. Firm X and Y are having accounts with Bank and the both the firms are
represented by A, B and C as partners. Firm X showing a debit balance of 2.20 lakh
and there is a credit balance of 3 lakh in Firm Y. Bank adjusted the debit balance of
X account with available balance in Y account.
a) Branch can exercise right of set-off b) Right of set-off cant be exercised as the
accounts are different c) Right of set-off can be exercised by issuing a notice d)
None
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a) 1 lakh for Rural/Semi urban & 2 lakh for Urban/Metro centres b) 2 lakh for
Rural/Semi urban & 5 lakh for Urban/Metro centres Housing Loans c) 2 lakh at all
places d) Not more than 10% cost of the dwelling unit e) None
205. Housing Loan of `80 lakh where the LTV is below 75%, it attracts Risk weight @
206. A cheque was issued for `8000/- leaving blank space both at figures and words
column, and the bearer of cheque made it `80000/- and withdrew amount. Customer
made a claim for `72000/- against the bank.
a) Bank to reimburse the amount since the cheque was issued for `8000/-only
b) Customer is liable since he is negligent having left blank space at figures and
words column c) Bank and Customer equally responsible d) Bank to file case against
the bearer for making alternations of cheque e) None
207. The least discussed aspect by a financial analyst while appraising proposal
211. In case of deceased borrower, what is the extent of liability of the legal heirs?
a) Limited to the extent of property inherited b) Not liable at all c) Unlimited and
unconditional d) 50% of liability e) None
121
216. Foreign tourist who visits India can hold US dollars (currency) maximum of
217. Why Banks prefer to reverse the contra entry immediately on expiry of Bank
Guarantees?
a) LIBOR + 100 basis points b) LIBOR + 75 basis points c) LIBOR + 175 basis
points d) Discretion of the Bank e) None
220. Loans sanctioned to, are exempted from exposure ceilings.
222. Delay in collection of cheque > 90 days, bank to pay Interest at applicable
224. On receipt of possession notice (SARFASEI) issued by the Bank, if the borrower
raises objection, the same should be replied within
226. What is the limitation period for public to approach Consumer forum for
redressal of their grievances against Bank?
a) No limitation period b) One year from cause of action c) Two years from
cause of action d) Ten Years from cause of action e) None
122
a) At the request of the borrower before closure of the account b) After 3 years
provided if there are no recoveries in the account c) Discretion of the Bank
d) A & B e) None
228. Account opened in the name of A&B jointly and nomination is given in favour of
C . Branch received request from the nominee for payment of deposit as A expired.
What is the course of action?
a) 50% of deposit can be paid to the nominee b) Nominee has no right since other
joint depositor is alive c) Amount will be paid to nominee with the consent of legal
heirs of A d) Nomination facility is not available to Joint accounts e) None
229. Cheque signed by the drawer as R N Das instead full signature and paid in
due course. Drawer demands for return the amount as signature differs.
a) Bank is liable to pay the amount to the customer since the payment made is not
in due course as signature on the cheque differs from specimen signature on record.
b) Bank is not liable on the ground that the amount was paid to the customer and
the contention of the customer is not tenable since it is not a forgery. C) Bank to
share 50% of the amount since there is negligence on the part of the official passed
the cheque. d) None of the above
230. What is the discount for inclusion of Subordinate Debt under Tier-II capital
where the Sub-ordinate Debt maturity is less than18 months?
a) Credit facility from bank b) Direct Benefit Transfer benefit (subsidy) c) Interest
subvention Housing Loan d) None
234. What is the time limit to furnish the requested information under Right to
Information Act (RTI) and what is the penalty for non-compliance of the said norm?
a) 30 days & `100 per day b) 60 days & `100 per day c) 30 days & `250 per day
maximum of `25000/- d) 60 days & `250 per day e) None
235. Received request from your borrower for a loan of `300 lakhs for purchase of
equipment @ 12% interest repayable in 60 months. The estimated Net Profit and
depreciation is `100 and `20 lakhs respectively. What is the DSCR?
123
a) Dilution of credit rating norms for the Issuers b) Allowing the Issuers to buyback
CPs before maturity c) Relaxation in minimum amount d) a & b e) All
a) Buy stressed assets from banks b) Buy stressed assets from banks and sell it to
others for profit c) Buy the stressed assets from banks at discount and share the
recoveries with the banks d) Act as Recovery Agent for the Banks e) None
238. Loans to food and agro-based processing units with investments in plant and
machinery up to ------ is treated as priority sector advance.
240. After taking possession of the immovable property, copy of the possession
notice is to be published in two local newspaper not later than ----- days
241. Interest Subsidy on Housing Loans (1%) for the first year is available provided
the loan amount does not exceed ------ and the cost of house should be within ------
a) 15 days&1 year b) 30 days&1 year c) 7 days&1 year d) 7 days & no limit e) None
244. Customer not kept Cheque book under lock and key and one cheque leaf was
stolen. Bank made payment of the said cheque which was forged.
a) Customer is liable since he is negligent b) Bank is not liable as the cheque was
stolen c) Bank is liable since the payment is made on forged signature d) None
246. Under UCP 600, bank can accept/reject documents within maximum of --- days.
124
a) 15% & 25% b) 10% & 20% c) 5% & 10% d) 25% irrespective of tenor of
the deposit e) Discretion of the Bank
248. Visually challenged persons are allowed to avail the following banking facilities?
250. In case of payment of Fake DD, who has to lodge complaint with police, when it
is identified as fake upon presentation as per recent IBA guidelines?
a) Interest burden is less b) Company can meet its obligations c) Company may not
meet its obligations d) Increased Networth e) None
252. Why A/c Payee cheques are to be credited the payees account only.
255. Current Assets 48 lakh, Networking Capital 12 lakh. What is the Current Ratio?
256. Mr Sandeep left India on 1st August 2003 for taking up employment in a
software company in USA. In this context, which of the following statement is true?
a) He would be treated as NRI from 1st August 2003 onwards b) However, till that
date, he would be treated as a Resident c) His existing account will continue as a
resident account d) All the above e) (a) and (b) are correct
258. What is the Annual Guarantee Fee (CGTMSE) payable for accounts with credit
limits of above `5 lakh to women for the units located in North Eastern region?
125
a) `10 lakh b) `15 lakh c) `25 lakh in Metro with population above 10 lakh &
`15 lakh in other centres d) `25 lakh at all places e) None
a) Return the note to the remitter b) Destroy the note c) File FIR d) a & b e) None
264. Loans to Bank staff backed by terminal benefits attracts Risk Weights @
265. Balances under Cash Reserve Ratio (CRR) earn interest @....
266. Under Rajiv Gandhi Equity Savings Scheme, the investor is entitled to claim tax
relief under section 80 CCG of IT Act up to of investments with maximum of ..
a) 100% & one lakh b) 20% & One lakh c) 50% & `50000/- d) 50% & One lakh
e) 50% of investments without any cap
267. In the recent years, Indias GDP growth rate shows signs of
269. Banks are allowed to accept deposits under Capital Gains Scheme in .
270.
126
127
Andhra Bank was founded by ardent freedom fighter and a great intellectual and
multifaceted genius, Dr.Bhogaraju Pattabhi Sitaramayya. Andhra Bank was
registered on 20th November 1923 and commenced business on 28th November
1923. The Milestones of Andhra Bank are as under:
Year Event
1923 Commenced operations at Machilipatnam
1943 Attained status of Scheduled Bank
1964 Opened 100th Branch and attained the status of A class Bank
1964 Amalgamation of Bharat Laxmi Bank with Andhra Bank
1969 Largest Private Sector Bank in the country
1969 Bank was entrusted with Lead Bank responsibility in five districts
1976 Bank opened its 500th Branch
1980 Nationalization of the Bank
1981 Sponsored the first Regional Rural Bank (Rushikulya Grameena Bank)
1981 First Bank in India to introduce Credit Cards
1983 Diamond Jubilee Celebrations & surpassed Business of ` 1750 crore
1984 Became convenor of State Level Bankers Committee in AP State
1988 Introduced Insurance Linked Savings Deposit Scheme (Abhaya)
1989 Bank opened its 1000th Branch
1997 Surpassed `10000 crore mark in Total Business
1998 First Bank to introduce farmer friendly Kisan Credit Card (AB Pattabhi Card)
2001 Initial Public Offer (IPO)
2002 Introduction of New Delivery Channel - First Networked ATM
2003 Achieved 100% Branch Computerization
Banking Technology Award for use of IT for customer service in Semi-Urban
2005
and Rural areas by IDRBT, Hyderabad
2006 Follow-on Public Offer (FPO)
2006 First Representative Office abroad (Dubai)
2006 Banking Technology Award 2006 for Payment Initiatives from IBA
2006 Conducted BANCON 2006 Inclusive Growth A New Challenge
2007 Ranked 532 among Top 1000 Banks in the world
2008 Opened Representative Office at New Jersy, USA
2009 100% implementation of Core Banking
2009 Crossed ` 1 lakh crore Total Business
2009 Entered Joint Venture with IndiaFirst Life Insurance Company Limited
2010 Crossed ` 1000 crore Net Profit
2010 Best Bank Award for Quality of Assets, CAMEL Rating and Mid-size Bank
Andhra Bank, Bank of Baroda & Indian Overseas Bank has entered into a tie
2010 up for setting up a banking subsidiary in Malaysia India International Bank
(Malaysia) Bhd and is in the process of commencing business
Best Bank and Financial Institution Awards by CNBC TV18 - Editorial Board
2011
Roll of Honour under Mid-sized Banks Category
2012 RSETI Rajahmundry adjudged as Best RSETIs in the country
2012 Special Jury Award for ATM Operations Excellence by NPCI
2012 Crossed Two Lakh Crore Business by 31st December 2012
128
The Blue pointer on the top represents the philosophy of a Bank that is always
looking for growth and newer directions.
Vision
Statement
Mission
Statement
Corporate Slogan
129
Important Initiatives:
The total delivery channels stood at 3040 with 1816 Branches, 15 Extension
Counters, 37 Satellite Offices and 1172 ATMs as on 31st December 2012
spread in 25 States and 3 Union Territories.
Our Rajahmundry RSEIT adjudged as Best RSETI in the country. Bank got a
Special Jury Award by NPCI for excellent performance in key parameters in
respect of ATMs and Switch connected to NFS ATM Network.
130
Banks have been introducing various innovative deposit schemes to provide value
added services to the customers with an objective to retain existing clientele and to
expand the base further. Besides extending existing generic deposit products such as
Current, Savings, Recurring, Fixed and Kalpataruvu deposits, Bank introduced many
new deposit schemes in the recent past and the brief details of the schemes are
furnished here under:
The scheme provides features of both Savings and Term Deposits to the customers.
When SB account is opened, Fixed and Reinvestment deposit accounts also will get
opened for the customer with the same account number but without any balance. All
individuals (single/joint), Clubs, Associations, Trusts, Hospitals, Schools and colleges
are eligible to open Flexi accounts. However, special minors are not allowed to open
accounts under this scheme. Minimum balance prescribed for AB Freedom SB
account is `5,000/- and the minimum period of deposit is 15 days and maximum
period is 12 months for FDs/RIP Deposits. The customer is required to specify tenor
option while opening the account. In case where the customer does not exercise
option, system takes 15 days for FD and 6 months for RI as default tenor. The rate
of interest is as applicable to domestic term deposits. The depositor can choose
either FDR or Reinvestment deposits. The depositor can change his choice from FDR
to Reinvestment Deposit or vice versa for the future bunches of units to be opened.
Whenever, the balance in the SB account exceeds `5000/-, system transfers the
balance in to Fixed or Re-investment Deposit with a minimum deposit of `5000/- or
multiples thereof. Similarly, whenever the customer presents a cheque in excess of
SB balance, system cancels the term deposits (`1000/- or multiples thereof) to meet
the requirement. No penalty for premature withdrawal of deposit units under this
scheme. After cancellation of units in a bunch of units, the remaining units will
continue to earn interest at the contracted rate. No deposit loan is allowed against
Flexi Deposits. Deposit Receipts will not be issued for the units opened under the
scheme. Statements will be issued for SB as well as Fixed Deposit/ Reinvestment
Deposit transactions. (Circular no. 159 Ref 44/20 dated 27.08.08 & Cir.no.381 Ref
27/55 dated 07.02.11)
It helps the branches to improve the CASA Deposits. (Circular no.238 Ref 44/30
dated 16.10.2008)
131
This scheme is meant to built-up corpus fund for individuals / firms / institutions /
companies through regular monthly deposits over a period of time to meet their
future financial requirements. The salient features of the scheme are as under:
The other guidelines (Nomination, Payment of maturity amount, Claims etc.,) that
are applicable to existing RD Scheme holds good to AB RD Plus scheme also.
(Circular no.081 Ref 44/09 dated 20.06.2009)
It is a new scheme with a built-in overdraft facility of `500/-, aimed at to offer basic
banking services to the financially excluded sections of the society using Smart Card
and Biometric authentication technologies through Business Correspondents. No
minimum balance and no service charges are applicable. Simplified KYC norms are
applicable. No cheque book and ATM/Debit cards will be issued. Overdraft facility of
`500/- would be extended immediately on opening the account and the interest rate
is Base Rate+3.5%. (Cir.no.319 dated 06.12.10 & 364 Ref 19/20 dt.14.01.11).
132
Capital Gains Scheme: The scheme is aimed at Income Tax Assesses to extend
relief of tax on long-term capital gains for different assets provided the assesses
purchase another specified assets within a certain time frame. The assesses are
eligible for exemption under section 54, 54B, 54D, 54F or 54G of the IT Act 1961. All
branches except Rural Branches can open SB and Term Deposit (FD/KTD) accounts
of the said category depositors. Accounts should be opened in individual names only
and no joint accounts are allowed. No cheque book is issued to SB accounts.
Depositors are required to submit withdrawal form along with form C to withdraw
amount from the account. Similarly, Term Deposit funds can not be directly paid to
depositor and they should route through respective SB account only. To close
account, depositor has to submit application in form G along with written approval
from the assessing officer having jurisdiction of the depositor. Deposit loans are not
allowed and no lien should be allowed on the said accounts. (Circular no.453 Ref
44/25 dated 16.01.2006)
All staff deposit accounts earns 1% extra interest while they are in service as well as
on retirement/resignation. Further, in case of senior citizens (staff) they continue to
earn applicable senior citizen deposit rate plus 1% extra. (Cir.no.4 Ref 3/1 dated
05.04.2011)
133
134
Abhaya Savings Bank (ASB) - The scheme is in force since 1988. This scheme is
having features of Savings Bank coupled with insurance coverage (Group Janata
Personal Accidental Insurance Cover). It is meant for all individual depositors,
specially those whose lives are exposed to accidental risks on account of their
profession / employment / occupation. M/s.United India Insurance Company is
undertaking the risk coverage. Individuals and Joint Account holders can open. All
Joint accountholders are compulsorily covered. Age - 5 to 70 years. Accidental
Insurance cover is available to all depositors. `25000/- for death / total disability and
`12500/- for partial disability. Premium `9/-; Insurance year - 1st Sep to 31st Aug.
Nomination holds good for deposit balance and the insurance claim. Joint
accountholders can specify their nominees separately.
Abhaya Savings Plus (ASB+) - The scheme was introduced in our bank in the
year 2006. It is meant for all individual depositors, especially those whose lives are
exposed to accidental risks on account of their profession / employment /
occupation. Individuals and Joint Account holders can open. All Joint accountholders
are compulsorily covered. Age: 5 to 70 years. Cover: Group Janata Personal
Accidental Insurance Cover. `100000/- for death / total disability and `25000/- for
partial disability. Premium `36/-; Insurance year - 1st Nov to 31st October. United
India Insurance Company is undertaking the risk coverage. Nomination holds good
for deposit balance and the insurance claim. Joint accountholders can specify their
nominees separately.
Abhaya Gold Savings (ABG) - This scheme was introduced in the year 1996.
Individuals and joint account holders are eligible. All joint account holders are
compulsorily covered. Age 5 to 70 years. It is a Group Personal accident Insurance
Policy. M/s. United India Insurance Company is undertaking risk coverage. Death /
Total Disability `1.50 lakh. Partial disability `50000/-. Premia `70/-; Insurance
year - 1st November to 31st October. Separate nomination for insurance claim. Joint
accountholders can give separate nominations for the insurance amount.
AB Jeevan Abhaya (ABJ) - This scheme was launched in the year 2002. It is a
Savings Bank account that provides Life and Accidental death cover on payment
of nominal premium and simple health declaration. No medical examination is
required. Individuals in the age group of 18 to 55 years can open this account. SB
opening form can be used. The present premium rates are as under:
The insurance period is 1st Dec to 30th November. The risk is covered by IndiaFirst
Life Insurance Corporation Limited (IFLIC) and the amount of coverage is `1
lakh in case of normal or accidental death. Joint accountholders can be covered by
opening a joint account and by paying the applicable Premia. All accounts opened
under AB Super Salary (SB account) scheme will be covered under this scheme.
(Circular no. 294 Ref 51/25 dated 16.11.2010)
Insured Current Deposits (ICD) - Individuals, Joint A/cs, HUF, Sole Proprietors,
Partnership Firms, Ltd Cos., having CD/ODCC/Pattabhi Agricard accounts. However,
office bearers of clubs / societies / trusts / associations and account holders of
inoperative accounts are not eligible to join in the scheme. The age of the account
holder should be in the range of 5 to 70 years. ICD covers risk against accident
(death / disability). It also includes snakebite, electrocution, food poisoning, riots
135
AB Kiddy Bank Scheme (Kids Khazana) - Bank has re-launched the earlier the
earlier Kiddy Bank scheme under the new brand name AB Kiddy Bank Scheme in
the year 2007. It is meant for minors (even 1 day old minor) represented by
Guardians or by the minors themselves who have completed the age of 10 years. All
existing Kiddy bank accounts can be converted. Minimum balance to be maintained
is `100/-. Kid and parent/guardian (aged up to 70 years) both are covered under
Accidental Insurance. Accidental insurance coverage is available up to one lakh for
the kid and the parent/guardian. Insurance Premia is `54/- per annum (31st of
October). The risk is covered by United India Insurance Company. Free Doll.
Educational Grant of `5000/- (for age up to 10 years) / `10000 (for age of 11-18
years) as per the age of the child in case of accident risk of the parent in addition to
Non-Personalized Debit Cards (NPDC): Post CBS environment has enabled the
bank to issue NPDC to the customers on the opening day of the account itself. Bank
has taken this initiative to render faster customer service and to provide Any Time
Banking through ATM network across the country. Branch delivers the card along
with PIN. The card will be activated within 48 hours of the issue. It is a tool to
branches to attract new customers besides retaining the existing clientele for further
business development. The cards can be used on any ATM across the country to avail
the following services with free of charge.
SMS Alerts: Bank has launched Mobile Banking Services through SMS Push alerts
to the registered customers. A customer has an option to register for Mobile Banking
facility at branch or ATM or Internet. All Savings and Current Account holders who
owns mobile are eligible to avail the following services at free of cost.
A mobile registered customer has an option to enquire Balance Enquiry, Last Five
Transactions and Cheque Status Enquiry through SMS Pull alerts. However, the
service provider (Mobile Company) levies applicable charge.
Mobile Banking (mPAY): Bank is providing SMS based mobile alerts to the
registered customers to keep them informed of various transactions that occur in
their accounts. Further, bank is also using the SMS media to send specific or
common messages/information to the customers. In order to meet the customer
expectations, Bank has introduced mPAY which provides the customers a secure and
convenient means of banking from anywhere and at anytime. Under this, customers
can check their account balances, view mini account statement, know cheque status,
note stop payment of cheques, make donations and transfer funds (Mobile to Mobile
and Mobile to Account) on press of button. All Savings Bank and Current account
holders having ATM/Debit card are eligible to avail this facility. Customer has an
option to link any one account (CASA group) connected to the card with the mobile
number. Customer intending to avail mPAY facility should possess mobile handset
Java enabled or Windows Mobile 5.0 & above model or Windows Mobile Professional
137
Internet Banking: Our bank introduced Internet Banking with AB INFI-net brand
name in the year 2008. Bank is extending the following facilities to the registered
customers (Individuals and Corporate) free of cost:
On receipt of Internet Banking application from the retail customers, branch should
enter the details such as account number, mobile number and e-mail of the
customer in the system for registration. Internet Processing Center, Koti, Head Office
directly sends Login Password to the customer and transaction password will be sent
to the branch for onward submission to the customer with due acknowledgement.
However, branches to continue to forward the Internet requests from corporate
customers to Head Office for approval. (Cir 304 Ref 55/19 dated 15.12.09, Cir 263
Ref 55/21 dated 23.10.10 & Cir 119 Ref 55/8 dated 12.07.11)
138
AB e-trade (Online Trading): The scheme is meant for the customers who are
interested to carry stock market operations (Buying/Selling) at his convenience. It
offers the depositor to trade from his residence or office or while on move through
Internet. The salient features of the product are as under:
It enables the bank to improve low cost deposits besides earning fee based income
through maintenance charges/transaction charges. (Cir no.70 Ref 51/3 dt.10.06.09)
Tele Banking Call Center: Bank has launched Tele Banking & Call Center to
provide information to the registered customers about their accounts through
Interactive Voice Response (IVR). Further, it enables the customers to have desired
information without visiting the branch personally. IVR is available round the clock
throughout the year including Sundays and Holidays where as Call Center services
are available from 8 am to 8 pm on all days except on Sundays and National
Holidays. Call center is providing the enquiry related services such as Balance
Inquiry, Interest Rates, Product features etc., pertains to deposit and advance
accounts. Caller is required to contact Toll Free Number 1800-425-1515 for the
above information. However, the caller needs to furnish Customer ID and Personal
details to know his account related information. Besides the above, Call Center
disseminate information of various products of our Bank through Customer Service
Executives to the registered customers as well as other customers/general public.
Bank is not levying any charges for the said services.
Upset service: In order to minimize the customer complaints and to match the
customer expectations, bank has launched technology embedded service Upset
proactively wherein customers can send their grievance through SMS direct to HO for
immediate resolution. The salient features of the product are:
The aggrieved customer is required to type the word Upset in his/her mobile and
forward the same through SMS to 9666606060.
On receipt of SMS, the service provider sends acknowledgment to the
complainant and routes all inbound SMS received to Customer Service
Department, HO on daily basis. In turn, Customer Service Department calls back
the customer to elicit the details of the grievance/complaint and forwards the
same to the concerned branch/office through email for doing the needful.
Branch/Office is required to initiate necessary steps to resolve the grievance duly
following the extant guidelines and furnish the information through email to
resolution@andhrabank.co.in on the same day.
The status of complaint/grievance will be informed to the complainant within 48
hours by the Customer Service Department, Head Office.
The newly introduced service Upset is an opportunity to the bank to receive the
expectations of the customers online and enables the bank to initiate necessary
steps for speedy Redressal of the Grievances. (Cir.no.275 Ref 34/03 dated
29.10.2010)
140
Of late, credit card has become one of the means to make payments by majority of
house-holds and it is no longer a status symbol. Buy Now - Pay Later concept is
attracting and popularizing the credit cards in the market. It is easy to carry with a
limit and hassle free payment system. Cardholders undertake purchase of goods and
services without carrying currency and make payment at a later date. In a way,
Banks are extending short term unsecured personal loans by issuing Credit Cards to
their customers. Card business augments other income of the banks through annual
subscription, service charges and interchange fee. The salient features of credit cards
offered by our bank are furnished here under (cir.no.92 Ref 5/1 dated 28.06.11).
141
142
Credit Scoring Model: Card limit is fixed based on the rating arrived using Credit
Scoring Model, which covers six important factors pertaining to the applicant such as
Own House, Employment/Occupation, Proven income, Bank Account, Age and Risk
category (KYC norms). The minimum marks to be scored for eligibility and process
the application are 18 at the branch level. Zonal Manager may improve overall
scoring by not more than 2 points, depending on merits of individual case while
recommending. Where the score ranges 18 to 22 points, the cardholder is eligible for
Base limit. Higher limit may be considered by the sanctioning authority where the
score is above 22.
Corporate Cards: Banks are issuing Corporate Cards to the companies registered
under Companies Act 1956 and whose net worth should be minimum of `25 lakhs.
The cards will be issued to the Executives / Officers / Employees of the company. No
admission fee and the annual subscription fee is `2000/-. The aggregate limits under
various cards issued to a company should not exceed 25% of its net worth subject to
a maximum of `50 lakhs in total and not exceeding `10 lacs per card. Companies
availing credit facilities with Banks/DFIs are only eligible except where 100% liquid
security is offered as guarantee by way of lien on deposits / Govt. Securities for the
Corporate Credit Card limits. In case of non-customers, they are required to produce
status reports from their Financing Banks / Development Finance Institutions etc
while submitting the application for Corporate Cards. Company is required to submit
copies of Memorandum & Articles of the company, Board Resolution, Last two years
audited balance sheet, 2 colour Photographs of the card Applicants and undertaking
letter to the branch for sanction of corporate credit cards. Zonal Managers are
empowered to sanction the Corporate Cards.
143
Gift Card
Gift cards are available for denominations starting from `250/- to `50,000/-.
All ELBs, VLBs and select Large Branches are allowed to issue Gift cards.
The Card is valid in India and valid for ONE year from the date of purchase
Cards are Non-Relodable and not enabled for cash withdrawals
Branch issue cards with a service charge `25/- for the cards value up to
`1000/- and `50/- for cards beyond `1000/-
Wide acceptance in all Master Card affiliated merchants for transactions at
POS (Merchants), Online (Internet) and IVR (Mobile/Phone) payments
Customer will be provided with PIN for POS transactions to prevent misuse.
SMS alerts are sent for all transactions at Free of cost
Locking/Unlocking of card Account is enabled to the cardholder
No charges for Balance enquiry and Mini statement at Andhra Bank ATM
Cardholders can access the card information through Internet login
Lost/Stolen/Damaged Card Replacement at any Branch with charges
The Travel cards are accepted in all countries except India, Nepal and Bhutan
Travel cards are issued under USD, Euro and GBP currencies
Cards are enabled for transactions at POS Merchants. POS and ATM usage
require PIN for secured transactions
Travel cards are available from USD 200 to the maximum eligibility under
FEMA guidelines
Validity period of the card is 2 years from the date of issue
Cards are re-loadable from any select Branch
The Welcome Kit contains Two cards. Incase the existing card is misplaced /
damaged, the Second card can be Activated after Blocking the Primary card.
Unique feature of Locking/unlocking the card Account through IVR or through
Website self care portal system
An exclusive Internet login provided in the Website for balance enquiry,
viewing transactions etc.
No charges for Balance enquiry and Mini statement at Andhra Bank ATM
Withdrawal of cash at ATM is permitted in the upcountry at local currency
***
144
I. Mutual Funds are associations or trusts of public members who wish to make
investments in the financial instruments or assets of the business/corporate sector
for the mutual benefit of its members. Mutual Funds are launching various schemes
with different investment objectives from time to time to suit the requirement of the
investors. Mutual Funds are beneficial to their members in reducing risks and
maximizing income by proper selection of financial instruments, which will bring
income flow in the form of dividends as well as in the form of capital appreciation.
Our Bank has entered agreement with Mutual Funds viz., Principal Mutual Fund
(PNB), SBI Mutual Fund, TATA Mutual Fund, UTI Mutual Fund, Kotak Mutual Fund,
Reliance Mutual Fund, Sundaram BNP Paribas Mutual Fund, LIC Mutual Fund, Birla
Sun Life Mutual Fund and Baroda Pioneer Mutual Fund for distribution of their
products. It is a win-win situation to the Banks and customers since banks are
providing value added services to the customers and it is a source of other income to
the Banks.
145
IV. Sale of Gold Coins: Gold has become a preferred choice of investment for a
large number of investors across the globe in general and India in particular. In
order to provide the desired services to the customers and to improve the non-
interest income, our bank has entered the business of selling the famous Swiss
999.9 fine gold in round shaped coins of 2 grams, 4 grams, 5 grams, 8 grams, 10
grams, 20 grams and 50 grams denominations in the first phase. All gold coins are
embossed with the logo of our bank on one side and our name & weight of the coin
on the other side. A pre-requisite for selling of gold coins is to obtain VAT/CST
license. All branches are allowed to sell gold coins. Branch receive price quote every
day from IIB, Mumbai. Branch will get an income of `100/- per gram as commission.
No sale is to be effected against Credit card for purchase of coins. However,
branches can grant loan against Gold Coins under Gold Loan Scheme.
146
Features Particulars
All new and existing borrowers between 18 to 65 years of age for
Housing Loans / Education Loans Vehicle Loans. Coverage is available
Eligibility for Joint Borrowers of Housing Loans and Vehicle Loans. In case of
Joint Borrowers, any one of the borrower will be covered provided No
Objection Letter is obtained from the other borrower (s). Age Proof -
Copy of Date of Birth Certificate / Passport / Voters ID / PAN Card /
School Certificate etc. To arrive the correct age for the purpose of
calculation of premium, Age as on last birthday should be considered.
Up to `50 lakhs & `20 lakhs for Housing and Vehicle loan borrowers
Maximum respectively. In case of Education Loans in India, the maximum
Cover coverage available is `10 lakhs and `20 lakhs for abroad studies.
However, the policy is covered with the sanctioned limit or the liability
as on date, whichever is lower.
Amount Outstanding indebtedness of the borrower to the Bank which means
payable by the amount outstanding in the loan account on the date of entry in to
Insurance the scheme for the first year and for subsequent years the
company indebtedness as reduced by the amount deemed to have been repaid
through EMI towards the liquidation of the Principal and Interest on
such loan. The amount shall not include the default in payment, if any.
Recovery of In case the amount of claim settled by the insurance company falls
short fall short of the liability outstanding in the loan account, the short fall
amount should be paid by the joint borrowers / co-obligants / guarantors /
legal heirs of the borrower.
One time Single Premium. The premium will be calculated based on
Premium sanctioned limit / liability, age of the borrower and repayment period
of the loan. However, in case of existing borrowers, outstanding
liability and Residual Repayment Period as on the date of the policy is
to be taken into consideration while calculating premium amount.
Foreclosure On request of the borrower, LIC will refund the Proportionate premium
of the Loan basing on the Residual Repayment Period.
The insurance cover for a borrower is terminated once the borrower
Termination attaining the maximum permissible age (65 years for Housing Loan, 60
of cover years for Education & Vehicle loans) or on expiry of repayment period
of the loan or on complete repayment of the loan before the due date.
Cir.no.041 Ref 51/05 dated 20.05.2010
147
IndiaFirst Secure Save Plan: It is a traditional insurance cum savings plan which
enables the customer to build their savings systematically by paying regular
premium based on income and sum assured chosen. The minimum age at entry of
life insured is 5 years and maximum age is 65 years as on last birthday. However,
the minimum age stipulated for policy holder is 18 years, in case where the policy is
taken for minors. The minimum plan period is 10 years and maximum 30 years. The
investor has choice to choose payment mode Monthly/Half-yearly/Yearly. The plan
offers as maturity benefit, basic sum assured along with simple reversionary bonus
and terminal bonus declared by the company from time to time, will be paid to the
policy holder at the end of the plan term. However, in case of death, the sum
assured will be paid along with simple reversionary bonus accumulated till death, to
the nominee. Premium paid and benefits are eligible for tax benefits under sec 80C
up to ` 1 lakh from taxable income. (Cir.no.412 Ref 51/29 dated 01.03.2011)
Bank has entered MOU for distribution of Life Insurance products of the Joint Venture
Company as their Corporate Agents and bank earns commission on the policies
mobilized/sold. (Circular no. 214 Ref 51/15 dated 08.09.2010)
148
149
The objective of Loan Policy is to ensure balanced growth of credit across various
sectors and to avert credit to undesirable sectors. It is aimed at to improve the credit
off-take with quality with minimum risk and maximize profits. Further, it enables the
bank to continue to maintain thrust to priority sector advances in consonance with
Govt. of India / Reserve Bank of India guidelines. The exposure norms as per the
existing policy of the Bank are as under:
No Category Norms
1 Single Borrower 15% Banks capital fund*
2 Single BorrowerInfrastructure 20% Banks capital fund
3 Group 40% Banks capital fund
4 Group Infrastructure 50% Banks capital fund
5 NBFC 10% Banks capital fund
6 NBFC Infrastructure 20% Banks capital fund
7 NBFC - Asset Finance Company 15% Banks capital fund
8 NBFC - Asset Finance Company - Infrastructure 20% Banks capital fund
9 Public Limited companies (widely held) 15% Banks capital fund
10 Public Limited companies (widely held) Group 40% Banks capital fund
11 Public Limited companies (widely held) - Infra 50% Banks capital fund
*Banks Capital Fund = Tier-I & II Capital as per audited balance sheet of the
previous year. Single Borrower threshold limit & Substantial Exposures Limit can be exceeded
by Management Committee/Board. (Circular no.041 Ref 26/11 dated 11.05.2007 &
Cir.no.86 Ref 26/14 dated 17.06.2011)
No Category Maximum
1 BGs (including Letter of Comfort /
3 times of Net Worth of the Bank
Letter of Undertaking)
2 BGs to Banks / FIIs / Others 10% of Banks capital funds (Tier-I capital)
3 Letter of Credit 2 times of Net Worth of the Bank
4 Bills discounted (IDBI/SIDBI) 1% of Net Worth of the Bank
5 Foreign Exchange Commitments Equal to the Net worth of the Bank
150
Substantial Exposure Limit The sum total outstanding of all the borrowal
accounts, where the single borrower exposures is in excess of `750 crore,
shall not exceed `20000 crore.
Exposure Ceilings
Industry / Sector
Fund Based Non Fund Based
Power 22.00% 10.50%
Transport 11.00% 5.00%
Energy 23.00% 10.50%
Hospitals 3.00% 1.50%
Educational Inst. 2.00% 2.00%
Textiles 9.00% 4.00%
Petroleum products 10.00% 1.00%
NBFC* 10.00% 5.00%
Iron & Steel 10.00% 14.00%
Construction & Contractors 10.00% 50.00%
Housing Loans 15.00% -
Rice Mills 6.00% 2.00%
Commercial Real Estate 7.00% 2.00%
Diamond, Gems & Jewellery 5.00% 3.00%
*Sub-ceiling of 3% for NBFCs dealing in financing against gold collateral
Administrative clearance from H.O is required for credit facilities to Trust & HUF
borrowal accounts for the first sanction. For subsequent renewals & enhancements it
is not required provided there is no change in the composition / activity of HUF /
Trust. The extent up to which Interest & Non-interest bearing Unsecured Loans (from
promoters, friends and relatives) can be treated as Quasi Capital/Net Worth for
exposure norms is 50% and 100% respectively.
a) 20% of Net Worth of the Bank as per the last audited balance sheet (on
solo/consolidated basis) after netting exposure to Loans and advances to Individuals,
Loans & advances to corporates for meeting promoters contribution & Loans to
individuals for investment in IPOs/ESOPs.
b) For Individuals `20.00 crore, For Partnership firms `30 crore and for Private and
Public Sector Companies it is `80 crore and `100 crore respectively subject to 6
times of Net worth of the borrower for Individual, Partnership & Private Ltd.
Companies. (Cir.47 Ref 26/9 dated 27.05.11)
Exposure ceilings - Exemptions
Loans & Advances against security of banks own term deposits and LCs / BGs
covered by 100% cash margin.
Food Credit.
151
Due Diligence Report Conducting due diligence is a prerequisite for all new
borrowal accounts (`100 lac & above) by the branch. It helps the branch to assess
the credit worthiness of the prospective borrower and risks involved in the proposal.
The report covers the details of the prospective borrower / Promoters / Partners /
Directors, details of associate and group concerns and details of market enquiries
about the new borrower and the associate/sister/group concerns. Due diligence is to
be done by Zonal Office in case of accounts of `300 lac and above. However,
branches to obtain Credit Investigation Report for all advance accounts irrespective
of the credit limits sanctioned. However, Agrl, Weaker and Govt. Sponsored accounts
upto a limit of `25 lakh are exempted from the purview of Credit Investigation.
(Cir.no. 6 Ref 26/03 dated 07.04.2010)
All borrowers availing working capital limits are required to submit stock
statement as on the last Friday of the month before 10th of succeeding month.
Penal Interest of 1% for the period of default on working capital
outstanding.
The minimum working capital limit to accept Book Debts as security is above
`5 lakh.
Book Debt statement is to be certified by the borrower every month and it
should be certified by a Chartered Accountant every quarter.
MSOD
All accounts with working capital limit of `100 Lakh & above from the Banking
system is required to submit MSOD.
MSOD is to be submitted on or before 15th of next month.
Penal interest of 1% to be charged in case of accounts with fund based
working capital limits of `100 lakhs & above for the period of default.
QIS II is a Quarterly Statement showing the performance during the quarter. Time
stipulation for the submission of QIS II is within six weeks from the close of the
quarter. Cut-off limits for obtention of QIS form II.
152
QIS III is a Half-yearly Operating and Funds-Flow statement. Time stipulation for
the submission of QIS III is within two months from the close of the half year. Cut-
off limits for obtention of QIS form III.
Funded working capital limits of `3.00 cr and above (A and above rated)
C(B+ & B under CRRM) rated accounts, where fund based working
capital limits of `1.00 crore and above
B(B+ under CRRM) rated accounts, where fund based working capital
limits of `2.00 crore and above
Penal interest @ 1% p.a for one full quarter on the working capital
outstanding will be levied for non submission of QIS II/III. However, maximum over
all penal interest chargeable in an account for any reason should not exceed 2% p.a.
Bank Guarantees - Value of Agricultural Land and/or Rural Buildings should not
exceed 30% of total collateral security requirement in case of new accounts and 50%
in case of existing accounts that too in states where there is no ban on acceptance of
agricultural land as security for non-agricultural purposes.
Loans against NSCs/KVPs - 75% of the purchase value plus accrued interest of
NSCs / KVPs is eligible for bank finance. However, the loans should be extended only
where the date of maturity is less than 3 years from the date of finance except
where the facility of premature cancellation/surrender value is available.
Book Debts: The margin required for financing against book debts is 50% and in
case of MSME it is 30%. However, sanctioning authority can reduce margin to 25%
on book debts of Government departments. While arriving Drawing Power, only Book
Debts 90 days and below are to be taken in to consideration. With regard to MSME
advances the stipulation is 180 days & below.
Third party Collateral norms: Borrowers are required to furnish the collateral
securities in the form of immovable or movable properties as per the loan policy
guidelines of the bank. In the cases where the borrowers are not having sufficient /
adequate properties, the properties of third parties who are near relatives, friends
etc. are being accepted as collateral security. However, in view of the risks involved
in accepting the collaterals from third parties, now the branches are advised to
obtain administrative clearance from the next higher sanctioning authority for all
loans except loans against Bank Deposits. Third Party means any person other than
the borrower, borrowers spouse, father, mother, son and daughter, partner of the
firm or Directors of the Company or Trustees of a Trust. While accepting third party
collateral security, a savings account has to be opened in the name of the party
depositing title deeds with due KYC compliance. An attested photo should be kept
along with RF 255. Branch Managers or authorized officer should visit independently,
unaccompanied by the borrowers or their representatives and make their own
enquiries about ownership and valuation from the neighbours/office bearers of the
residents society, if any. The first visit should be along with the borrower and a
153
Stock Audit is to be done for all Cash Credit Accounts with limits of `50 Lakh &
above by the Concurrent Auditor.
Short Inspection is applicable to Advances of `100 lakhs & above. Short Inspection
will be conducted by Concurrent Auditors/Inspectors of Branches. In case of Fresh
Advances, Short inspection is to be conducted within 3 months from the date of first
disbursement. In case of Existing Advances, the periodicity is once in a year
preferably six months after the regular inspection of the branch.
Stock & Receivable Audit - Minimum Cash Credit Limit for conducting audit is
`2.00 Crore. Accounts for which conducting Stock & Receivable Audit is applicable:
C Rated Accounts `2 Cr. & above(with min. of 50% fund based limits)
B Rated Accounts `3 Cr. & above(with min. of 50% fund based limits)
A Rated Accounts `5 Cr. & above(with min. of 50% fund based limits)
NPA Accounts With balances of `5 Crore & above
New/Take-over Where Working Capital Limits enjoyed are `2 Crore &
accounts < 3 years above irrespective of Credit Rating.
W.C. Limits of `10 crore & above (fund based and non
To all accounts
fund) irrespective of rating.Cir.311 ref 26/37 dt 16.11.06
Credit Rating is required for Small Loans of above `2 Lakh and below `5 Lakh
Fund and Non-Funded (SSI, RT, BE, PSE, RTO); Credit Rating System (CRS) for
Fund Based Limits of `5 Lakh & above but less than `50 Lakh; Credit Risk
Assessment System (CRAS) for both Fund Based and Non-Fund based Limits of `50
Lakh & above up to `500 lakh; Credit Rating Model for New units without Audited
154
Review of Accounts:
Periodicity Reviewing
Parameter Time of review
of Review Authority
Term Loans up to `5 lakh
Housing Loans During III Quarter Branch
Education Loan Yearly of the financial year Manager
Deposit Loans
TL/DPG above `5 lakh and During III Quarter Sanctioning
below `100 lakh Yearly of the financial year Authority
Large Borrowal A/cs of Half Yearly Every 6 months
`100 lakh & above
(Cir.no.062 Ref 26/11 dated 04.06.2011)
Audited Balance Sheet of the latest financial year shall be the basis for arriving at
the various financial parameters at the time of renewal / sanction under CRAS /
CRS/CRRM. In the absence of audited balance sheet of the latest financial year, the
least of ratings arrived based on the latest provisional balance sheet
OR last audited balance sheet shall be awarded. In such cases, the audited balance
sheet for the latest financial year is to be obtained within 6 months to finalise credit
rating and re-fix interest accordingly. If the audited balance sheet of the latest
financial year is not submitted within 6 months from the date of closure of financial
year for arriving at credit rating in case of fund based advances of `100 lakh &
above, additional interest of 1% is to be charged for the non-submission period.
155
Legal Audit: All new/ renewal borrowal accounts with aggregate credit limits of `25
lakh and above are covered under Legal Audit. From limits of `25 lakhs to `100 lakhs
empanelled Advocate who has not given legal opinion or Law Officer at Zonal Office.
For limits above `100 lakhs law officer at ZO has to conduct the legal audit. It covers
other aspects such as documents relating to Primary & Collateral securities. Legal
Audit is to be completed before release of loan amount. After the completion of Legal
Audit, permission from Zonal Office is required, in respect of the borrowal accounts
with aggregate credit limits of `50 lakh & above (fund based & non fund based inland
and foreign business limits) for release of sanctioned limits.
Loan Delivery System - Borrowal accounts with fund based working capital credit
limits of `10 Crore and above from the banking system. The total disbursement for
WCDL and Cash Credit should not exceed 80% and 20% of the sanctioned limits.
However funds can be released either as Cash Credit or as Demand Loan basing on
the request of the borrower.
Trust Receipt Financing: A Trust Receipt is a bridging loan that provides a buyer
with financing to settle goods imported on sight terms. Under a Trust Receipt, the
applicant pledges the imported goods in favour of the Bank. This means that the
borrower takes possession of the imported goods, but holds them in trust for the
Bank. When the goods are sold, he has to use the proceeds of the sale to repay the
Bank. As security, the goods title will be vested with the Bank, and the borrower will
undertake to hold the documents, the goods and the sale proceeds in trust for the
Bank. Trust Receipt usually comes together with Import Letter of Credit or Import
Collection Bill Service.
Corporate Loans are sanctioned to meet margin requirement for Working Capital,
Margin for Long Term Project Finance, commitment of the Corporate or for any other
purpose related to the financial needs of the company. However, corporate loans
should not be extended to meet the financial commitments of sister concerns.
Maximum repayment period for a Corporate Loan is 60 Months.
156
First 3 months from the due date of the credit facility Penal interest of 1%
Beyond 3 months from the due date of the credit facility Penal interest of 2%
till submission of renewal application with full information
Adhoc Limits - Branch can allow adhoc limits maximum of 3 times during the
validity period of the Working Capital Limit. The maximum period for which adhoc
limit can be sanctioned is 3 months. Branch Managers (I, II & III) do not have any
powers to allow Adhoc limits for the sanctions made by higher authorities except in
case of A & above rated Micro, Small Enterprises borrowers. Up to 20% of the
Working Capital facility can be allowed as adhoc to the eligible accounts. The Adhoc
limit shall be regularized on or before due date either by adjustment or by
considering the need based regular limits where the Adhoc limit is also reckoned. The
concept of Adhoc Limit is not applicable to Non-funded limits. The details of Adhoc
limits allowed within the discretionary powers are to be reported in ADA - IX along
with monthly sanctions.
Excess Drawals: The general guidelines for allowing Excess Drawals / Adhoc limits
are as under:
The account should be standard performing one and allowed to the borrowers
enjoying regular sanctioned limits.
Both adhoc and excess drawals should not be allowed simultaneously.
Branches are allowed to extend excess drawals up to 20% of regular limit or
beyond the powers of specified for the branch manager as delegated powers
the branch has to obtain prior approval from controlling office.
Excess drawals should be allowed only to meet the urgent business
requirements such as payment of wages or urgent cash purchases, etc.
The maximum period for which Excess Drawals can be sanctioned is for a
period not exceeding 15 days.
Excess Drawals shall be allowed in a Working Capital account not more than 6
times during the validity period of the working capital limit.
Branch should obtain a letter from the constituent requesting for the Excess
Drawal facility specifying the amount; purpose and the time limit.
Excess Drawals/Adhoc limits attract 2% additional interest.
No adhoc limits are allowed in case of SOD against Real Estates. - ADHOC Not
permitted. However, Excess Drawls can be allowed.
Excess drawals are to be reported in ADA - X along with monthly sanctions.
Supplier Finance: Bank pays amount directly to the main operative account of the
supplier as per advise of the corporate by discounting the bills with maximum of 180
days tenor and the same will be recovered from Corporate on respective due dates.
If the supplier is enjoying working capital limits with another banker, the amount
shall be credited to the account maintained with the said bank. An undertaking letter
is to be obtained from the Corporate to pay the amounts on the due dates of bills
discounted by our Bank. Alternatively, wherever feasible, Post dated cheques of the
main operative account are to be obtained from the Corporate to enable the Bank to
realize the dues on the respective due dates of the bills.
Dealer Finance: In case sanction of Bill facility to the Dealer as per referral letter of
Corporate and agreed by the dealer(s), a suitable Bill discounting limit is assessed
and post dated cheques are obtained from the dealer(s). The particulars of deliveries
of the final products to the respective dealers are provided to the Bank with
supporting documents such as invoices, bills of exchange and other documents
evidencing delivery of goods to the dealers. The payment is made by the Bank to the
credit of main operative account of the Corporate and the same will be recovered
from the dealers on the respective due dates of the bills. If the Corporate is enjoying
working capital limits with another banker, the amount shall be credited to the
account maintained with the said bank.
Other miscellaneous:
The Cost/Capacity of proposed second hand machinery shall not exceed 25%
of total Cost/Capacity of machinery of the proposed scheme stipulated margin
on second hand machinery is 50%.
Sensitivity Analysis is made mandatory in respect of all Term Loans of `50
lakh & above.
Financing second hand vehicle under RTO loans is not allowed.
159
i) Pattabhi Agri credit Card (PAGCC): Bank has introduced this product in the
year 1998 to meet the production and consumption credit requirements of the
farmers. Loan amount is arrived for both the seasons Kharif (Financing from 1st April
to 30th September) and Rabi (Financing from 1st October to 31st March) based on
scale of finance approved by District level technical committee. Branches are allowed
to consider additional finance to the extent of 20% over and above the scales of
finance to meet post harvest, consumption and other contingencies of the farmer. It
is a revolving credit and valid for a period of 3 years subject to annual review. The
due date for the loan is 12 months in case of short duration crops and 18 months
with regard to long duration crops. Accidental insurance coverage is available up to
`1.50 lakh to the farmer and the premium payable is 69/- per year per head
(Cir.no.462 Ref 51/22 dated 19.02.2013)
ii) Kisan Credit Card (KCC): Government of India advised all Commercial Banks,
RRBs and cooperative Banks to implement the revised KCC scheme with an aim to
provide adequate and timely credit support to the farmers under single window for
their cultivation and other needs including consumption requirements. The details of
the scheme are available in page no.85.
iii) Kisan Sampathi (Produce Marketing loans) aims at preventing distress sale of
the farmers agricultural produce. The crops that can be financed under this scheme
include Paddy, Ground nut, Bengal gram, Turmeric, Maize, Millets, Yam, Black and
Green gram. Bank sanctions loan amount based on the 75% of procurement prices
or the minimum support prices issued by Govt. from time to time. Bank entered into
an agreement with NCMSL (National Collateral Management Service Ltd) for
extending produce loans up to `10 Lakh without collateral security provided the
produce is stored at Central Ware House/State Ware House/Food Corporation of
India/NCMSL approved ware Houses and branch should obtain personal guarantee of
two persons. In case where produce stored with the cultivator, loan up to `2 lakh can
be sanctioned with out collateral security, however, branch should take personal
guarantee of the borrower. For loans beyond `2 lakh branches should obtain
collateral security with value not less than 100% of bank loan component. These
loans are to be repaid within 12 months. Interest Rate for loans up to `2 lakh Base
Rate and loans above `2 lakh and up to `10 lakh Base Rate + 0.50% (cir.no.379
Ref 19/21 dated 07.02.11 & cir no.7 Ref 19/1 dated 08.04.2011)
iv) Agricultural Gold Loans are meant for meeting crop production expenses
and/or for creation of assets to be used in his farming operation or for allied
agricultural activities like Dairy, Poultry, Fisheries etc. & Agri related activities. Loans
may be granted as a Cash Credit/Overdraft or single transaction-Demand Loan with
one year tenor; linked to harvest. However, Term loans can be considered with
minimum 40% of margin and repayment period to be fixed 3-5 years repayable
annually, coinciding with the harvest and marketing season/generation of income
from the activity. The loan assessment will be based on scale of finance for crop
production and actual credit requirement by farmers for other investment purposes.
This shall be based on the declaration of the farmers in the application for limits up
to `1.00 lakhs. Loan eligibility will be computed at the rate per gram as decided by
bank (or) 80% of market value of Gold as stated by the appraiser whichever is
lower. Rate of Interest is as applicable to agricultural advances. Short term
Production Credit only is eligible for Interest Subvention as per GOI guidelines.
Appraising Charges - Up to `2.00 lakhs: 1% on limit sanctioned. Above `2.00 lakhs:
0.50% on limit sanctioned. In case of Demand Loan repayment should be fixed
based on the income generation coinciding with harvest and the marketing time,
total period not exceeding 12 months. With regard to term loans the repayment
period to be fixed 3-5 years in annual installments coinciding with the harvest and
marketing season/generation of income from the activity. Simple application cum
160
v) Kisan Chakra: Under the scheme, Vehicle loans are given to farmers for
supporting transport facilities. Two-wheeler loans up to `40000 and four-wheeler
loans up to `3 lakh can be sanctioned under this category. Loans to the children of
farmers having 2 acres of wet land or 5 acres of dry land are eligible.85% of onroad
price of vehicle is sanctioned to small and marginal farmers where as 75% is
sanctioned to Other farmer. Loan should be repayable in 5 years either yearly or half
yearly or quarterly as per the cropping pattern and income generation of the farmer.
vi) Kisan Bandhu (Finance to Tractors): Bank entered MOUs with all leading
tractor manufacturers for financing to Tractors. The borrower should have 3 acres of
wet/double cropped land or 6 acres of dry/single cropped land. No collateral security
is to be insisted for loans up to `3.5 lakh. Finance can also be extended for second
hand tractors aged up to 7 years. At present 7 companies viz., Eicher, Mahendra &
Mahendra, Bajaj Tempo, TAFE, New Holland, HMT and International Tractors, and
the dealer will offer one additional free service during the first year. Margin: For
small/Marginal farmers - 15%. For others 25%. Rate of Interest Base Rate +
3.75 + Term Premia. Minimum of 1000 working hrs per year on own farm/customer
land should be ensured. Under this scheme power tillers are also sanctioned to the
farmers having 1 acre of wet land or 2 acres of dry land.Minimum working hours are
600. Collateral security is not required for the loans up to `1 lakh.
ix) Rythu Mitra Groups (RMG): Optimum size is 15 farmers. Marginal, Small and
tenant farmers can become members of the group. Objective of RMG is to provide
technology transfer, market information and credit facilities to the farmers. Quantum
of eligible finance is 20 times of corpus of the group. Finance can be provided for
crop production. The maximum finance is `7.5 lakhs subject to scale of finance as
per land holdings of each member of the group and not exceeding `50000/- per
member. No collateral security up to `5 lakhs. Govt. of AP provides subsidy for term
lending taking by RMGs who undertake Dairy, Input Dealers/fertilizers and Compost
Pit/Vermi Compost activities. However, the maximum unit cost is `1 lakh and the
maximum subsidy available is `25000/-.
161
a) Agri Clinics are envisaged to provide expert advice and services to farmers on
various technologies including soil health, cropping practices, plant protection, crop
insurance, post harvest technology and clinical services for animals, feed and fodder
management, prices of various crops in the market etc. which would enhance
productivity of crops/animals and ensure increased income to farmers.
xii) Andhra Bank Rural Credit Card (ABRCC): A scheme to provide hassle free
credit to customers having more than 3 years banking with branches/having sizable
deposits - based on the assessment of income and cash flow of house holds. The
limit should not exceed 20% of eligible production credit and/or 20% of annual
income of the applicant from know sources or `25000 which ever is less. It is
overdraft/cash credit limit for 3 years with no end use stipulation and every year the
account is to be brought into credit. Maximum limit is `25000. Entire credit
outstanding under ABRCC shall be treated as Indirect Finance to agriculture.
xiii) Kisan Samraksha (Rural Godowns): The objective of the scheme is creation
of scientific storage capacity with allied facilities in rural areas to meet the
requirements of the farmers for storing farm produce, processed farm produce and
agricultural inputs. This scheme is meant for construction of Godowns in Rural areas
only (not in municipal areas) with capacity ranging from 100 metric tons to 10,000
metric tons. The project can be undertaken by individuals, farmers, growers,
Partnership / proprietary firms, SHGs, NGOs, Companies, Corporations, Co-
operatives and Local Bodies. Govt. of India through Directorate of Marketing and
Inspection (DMI) and NABARD administers Capital Investment Subsidy Scheme.
Government of India provides 25% of unit cost as subsidy subject to maximum of
`46.87 lakhs in case of farmers and with regard to others the eligible subsidy is 15%
of unit cost subject to maximum of `28.12 lakhs. Subsidy of 33.33% in case of
162
xiv) AB Kisan Rakshak: The objective of the scheme is to provide Bank credit to
the indebted farmers to repay loans taken from non-institutional lenders i.e., private
money lenders. It covers the Existing farmer borrowers of the bank, who have been
regular in repaying loans with interest in the past, except on occasions when they
could not do so on account of factors beyond their control and non-borrower farmers
in the service area of the bank branch also. The eligible finance under this scheme
for the existing crop loan borrowers is 50% of Pattabhi Agri Card sanctioned limit
subject to a maximum `50,000/- (or) to the extent of debt whichever is lower. The
maximum limit allowed to new borrowers is `25000/- (or) to the extent of debt
which ever is lower. The loan amount should be released by way of Cheque/Demand
Draft/Pay Order to the creditors who lent money to the farmer against the discharge
of the financial instrument. The discharged instrument should be kept along with the
documents. The rate of interest is Base Rate + 2.50% + TP. The loan is repayable in
7 years with a gestation period of one year. The yearly installment in Term Loan
should be recovered along with Pattabhi Agri Card Loan i.e., on or before 30th June
of every year or marketing the produce which ever is earlier. No collateral security is
needed for the aggregate limit of `100000/- and if it exceeds, branch to obtain
collateral security with value equivalent to bank loan shall be offered.
xv) Surya Shakthi Scheme: Under this scheme, banks are financing for Solar
Water Heater systems. The rate of interest charged for these loans shall be Base
Rate and interest subsidy is available for these loans. The net interest rate (after
adjustment of interest subsidy) should not exceed 2% for individuals, 3% for
institutions and 5% for industrial/commercial organizations. The interest subsidy is
to be claimed upfront within 180 days from the date of loan. The margin
requirement is 15% and repayment period 5 years.
163
iii) Kisan All Purpose Term Loan is introduced to create a hassle free single term
loan limit to Individual farmers, Group of farmers, SHGs/JLGs engaged in agriculture
and allied activities for all term loan requirements like Farm Mechanization, Land
Development, Minor Irrigation, Water Conservation, Horticulture etc. It shall be
single transaction Term loan limit Loan repayable within 9 years. The purposes for
which the limit is granted shall not be a part of the Kisan Credit Card limit and it shall
be a separate Single transaction account. However development projects with a long
gestation period more than 3-4 years may not be considered in view of the specific
tenor of this credit product. The quantum of loan shall be subject to 5 times of
Annual income of the farmer including allied activities or 50% of the value of land
mortgaged whichever is lower, with a maximum of `20 Lakhs. The margin required
for Small/Marginal farmers is 15% and for other farmers is 25%. Rate of interest is
as applicable to agriculture term loans. The loan shall be repayable within 9 years.
iv) Kisan Tatkal - An instant credit for farming community to meet the emergency
requirements for Agriculture and Domestic purposes for tiding over temporary
difficulties. Individual farmers/joint borrowers (not exceeding 4 farmers) who are
existing Kisan Credit Card (KCC) holders having satisfactory track record of at least
two years are eligible for the loan. It shall be single transaction Term loan limit Loan
repayable within 3-5 years. The minimum loan is 1000 and maximum loan `50000/-
subject to ceiling at 50% of KCC limit or 25% of annual income. No additional
securities to be obtained. The loan shall be repayable in 3-5 years in half
yearly/annual installments. Rate of interest is as applicable to Kisan Credit Cards.
v) Financing solar Pump set - Under this scheme loan will be granted for
installation of solar water pumping system. The farmers' land should have adequate
source of water. In case any Public/Government source is being used, water right
certificate from the concerned authority should be produced. In case of wells they
should have sufficient recouping capacity to irrigate area proposed to be brought
under irrigation. The borrower should own an economic land holding with a minimum
of 10 acres. However, in case where the farmer is able to sell surplus water,
relaxation may be given. The loan amount shall be 75% of the cost of the
equipment. These are eligible for subsidy, which may be treated as Margin Money
while disbursing the loans. Hypothecation of equipments and mortgage of land is the
security. The interest rate shall be Base rate + 0.75 + TP. The loan should be repaid
within 5 to 7 years by annual installments.
164
Interest Subsidy Scheme for Housing the Urban Poor (ISHUP) is introduced
by Government of India with an objective to enable the Economic Weaker Sections
(EWS) and Lower Income Group (LIG) segments in the urban areas to construct or
purchase houses by providing an interest subsidy of 5% on loan amount of
maximum `1.00 lakh. EWS and LIG are defined as households having an average
monthly income up to `5,000 and `5,001 to `10,000 respectively. The borrowers
under the scheme must have a plot of land for the construction or have identified a
purchasable house. The preference under the scheme should be given to
SC/ST/Minorities/Women/ persons with disabilities in accordance with their
population in the total population of the area as per 2001 census. The scheme will
provide a subsidized loan for 15-20 years for a maximum amount of `1 lakh for an
EWS individual for a house at least of 25 sq. mts, and `1.60 lakh for a LIG individual
for a house at least 40 sq.mts, will be admissible. However, subsidy will be given for
loan amount up to ` 1 lakh only. (Cir.no.316 Ref 28/09 dated 04.12.2010)
SLBC: The SLBC comprises of representatives of all Commercial Banks and Chairmen
of Regional Rural Banks operating in the state. Representatives of the state
Cooperative banks, Reserve Bank of India, NABARD shall also be invited to attend
the meetings of the committee. The level of participation is the Zonal/Regional heads
of banks stationed at the state headquarters, for expeditious decision-making. The
activities of SLBC are - Take up issues raised by member banks or State Government
authorities. Liaison with the state government authorities in the matters relating to
the implementation of Lead Bank Scheme/Government sponsored schemes; Analyze
the deposits and advances of banks and review the credit deployment position for
improving it wherever, it is unsatisfactory; Consolidate all the District Credit Plans
and prepare State Credit Plan, launch and monitor the progress of its
implementation; Review the progress made under various Government sponsored
programmes of poverty alleviation through Lead Dist. Managers; Maintains liaison
with Government departments on behalf of Banks in the State and represent
problems of the member Banks to the Govt. for solution.
Lead Bank: The main object of the scheme is a planning exercise for providing
credit to develop banking in Rural and semi urban areas and extension of credit to
neglected areas for balance regional development of district as a unit. Our Bank is
having Lead Bank responsibilities in Six Districts in the country, of which four are in
Andhra Pradesh viz. Srikakulam, East Godavari, West Godavari, Guntur and the
other two districts are in Orissa (Ganjam and Gajapathi)
165
166
167
168
Vehicle Loan
Any individual having minimum gross Income of `1.0 Lac p.a for 4 W,
Eligibility
`60000/- p.a for 2W & `40000/- p.a for battery operated e-bikes.
Eligible loan amount is to be worked out based repayment capacity. For 4
wheeler the maximum permissible EMI should not be more than 60%
net salary in case of employees and 70% in case of other than salaried
class. In case of second sale, the vehicle should not be more than 3
Loan amount
years old and 60% of garage value or `5 lakh whichever is lower.
For 2 wheelers 85% of Road Price (includes invoice price, Registration,
Life Tax, Insurance & accessories) for salaried class/SME/Corporate
borrowers with credit rating B and 80% for other borrowers. However
the upper ceiling is `1.5 lakh.
Security Hypothecation of vehicle purchased
Guarantee Good third party guarantee acceptable to the Bank.
Net Pay 40% after proposed installment
Monthly/Quarterly/Half-yearly/Annual Maximum period is 7 years for
Repayment
new vehicles and 5 years for second hand vehicles.
Interest 4 W- BR+3.25%. For loans repayable beyond 3 Yrs plus TP.
2 W - BR+4.25%. For loans repayable beyond 3 Yrs plus TP.
Proc. Fee 1% of loan maximum of `1000/-.
2 % flat on pre-paid amount, where the repayment is fixed beyond 36
Pre-payment
months. However, charges may be waived, incase the payment is from
charges
own savings / windfall gains.
Bank is extending the following concessions during campaign period i.e.
Special up to 31st December 2012. Interest Rate - 4 W- BR+1%. For loans
Campaign repayable beyond 3 Yrs plus TP. 2 W - BR+1%. For loans repayable
beyond 3 Yrs plus TP. Processing fee - 0.50% of sanctioned loan amount.
Cir no. 273 Ref 53/25 dated 04.10.2012
169
Clean Loan
Any individual having repayment capacity. Age not above 75 years in case
Eligibility
of Pensioners & 55 years in case of LIC Agents.
Salaried Persons: Fresh- 8 Times of gross salary or Maximum `1.00 Lac.
Renewals -10 Times or Maximum `1.50 Lac. ZO sanction 18 times
Non SalariedZO Sanction - 2 Times of average annual proven income
Loan amount
Pensioners - 8 Times of monthly Pension Maximum `1.00 Lac.
LIC Agents - 2 Times of average of last 3 yrs. annual renewal
commission for IT Assesses and 50% of average of 3Yrs. annual renewal
Commission for Non IT Assesses. Maximum `2 Lac
Security Nil
Renewals After payment of 1/3rd regular installments
Two third party guarantors acceptable to the Bank. In case of Clean loan
to Pensioners - Nominee of the pensioner/family pensioner shall join as
Guarantee/
Co-obligant / Guarantor. In case of Clean loan to LIC Agents- Spouse or
Co obligation
one of the family members and one LIC Agent.
Net Pay 40% after proposed installment
Repayment Maximum 60 EMI & 36 EMI for Pensioners aged > 65 yrs. & LIC Agents
Interest Base Rate+7%. Term Premia (TP) 0.25% for loans repayable > 3 Yrs
Consumer Loan
Any individual having repayment capacity. (Non-Salaried persons-
Eligibility
Minimum Income `30000/- pa
Loan amount Equal to 10 Months gross salary- 40 % on annual Income in case of
non-salaried persons or 75% of cost of articles, whichever is lower.
Security Hypothecation of goods purchased
Guarantee Good third party guarantee acceptable to the Bank.
Net Pay 40% after proposed installment
Repayment Max.60EMI
Interest Base Rate + 7.50% + TP 0.25% for loans repayable beyond 3 years
170
AB Doctor +
Individuals, Partnership firms/ Ltd co. /Trusts. Key promoters
Eligibility should be practicing qualified Medical practitioner and Doctors.
Minimum practicing experience should be 2 years.
To set up clinic / diagnostic labs (x-ray/pathology/songraphic),
purchase of medical equipments, Vehicles, Ambulance, medical
Purpose
software, furnishing of nursing homes, working capital
requirement for existing nursing homes.
Facility Term Loan / Overdraft or both
Loan amount Maximum 20 lakh
Margin 25% for equipments
No collateral security or Third Party Guarantee. To be covered
Security
under CGTMSE
Repayment Term Loan - Maximum 84 months - Gestation- 12 months
Interest Base Rate + 3.25 floating
Processing& Upfront 0.50%
Cir.no.8 Ref 53/1 dated 05.04.2012
Rent Receivable
Individuals, Sole Proprietorship, Partnership Firms, Public
Eligible Borrowers Limited Companies, Private Limited Companies, Trusts etc.,
owning properties including landlords of our branch premises.
Unencumbered Residential/commercial Properties at Urban /
Eligible Properties Metro areas. In case of Semi-urban areas, premises let out to
banks may be considered.
Reputed PSB/Multinational undertakings, Embassies/consulate
offices, Banks, National & International Airlines etc. In case of
Eligible Tenants
Private Sector Organizations, the Net Worth of the organization
should be above 5 crore.
Closure of the loan availed for development/construction of the
property. In case where the property is constructed with own
Purpose
sources, limits can be considered for the expansion /
development of existing business.
Minimum loan ` 25 lakhs and the maximum loan is ` 5 & ` 10
crore for individual and other borrowers respectively. In case of
Loan amount proposals from land lords of our bank premises, the stipulation
for minimum loan amount is relaxed to `5 lakhs. However,
limits beyond ` 10 crores falls under MC powers.
15% of rent receivable towards maintenance and 25% of
Margin
margin in collateral security of NSCs, Deposits etc.
171
Mortgage Loan
Any individuals holding house/flat in their/spouse/Major children's
Eligibility names. Age 21-65 yrs. Above 60 yrs, jointly with spouse or major
children.
The maximum eligible loan amount is calculated based on the
proportion of EMI to net income. For salaried class 50% of net
Loan amount salary; For non-salaried class 65% of monthly average income of
preceding 3 years as reflected by IT returns. However, the
maximum quantum of loan is restricted to `100 lakhs.
Security/Margin Mortgage of House/Flat Margin 50%
Guarantee/
Third party acceptable to Bank.
Co obligation
Repayment Maximum of 60 EMI
Interest Up to 36 months B.Rate + 5% > 36 months B.Rate+5%+TP
Processing fee 1% of the loan amount. Administrative charges as applicable
Cir.no.274 Ref 53/26 dated 04.10.2012
AB Anand Jeevan
Single or Jointly with spouse; Age - First borrower -Above 60
Eligibility
Years, Spouse- Above 55 Yrs.
Purpose To meet any genuine needs.
90% of realizable value of House/Flat i.e. 70% of Market value.
Min. `5 Lac. Maximum `100 Lac. Loan installment payable to
Loan amount the borrower in Monthly, Quarterly, and Lump sum @ `198/-,
588/- & 8335/-respectively per lac for loan tenor of 15 years
(max). Lumpsum maximum `15 lac only
Margin Not Applicable.
Equitable Mortgage of House/Flat, against which loan is
Security
sanctioned. (To be registered with Sub- Registrar)
Guarat/co-obligant Borrower has to execute a Will
Payable in Lump sum after the last surviving Borrower dies or
Repayment
opt to sell the home or permanently moves out the home.
Interest 10.75% Fixed (ROI will be reset at the end of every 3 years})
Pre-payment Allowed without any charges.
Processing& Upfront No
Cir 334 Ref 26/56 dated 28.12.11
AB Priority Gold Loans (Cir.no.275 Ref 53/27 dated 04.10.2012) - A new loan
product as a third variant captioned as AB Priority Gold Loan is introduced covering
various Micro / Small industries / Service enterprises, Retail Trade, industrial /
commercial purposes in addition to the existing Agricultural and Personal needs.
Features of Product
Nature of Facility Demand loan or Overdraft
Tenure of Loan 1 to 2 years
Maximum Loan `50 Lakh for advances wholly secured with Gold at the
field level for Micro and Small Enterprises- Manufacturing,
Services. `15 lakh for small business and retail trade.
Purpose Any genuine credit needs of activities falling under
Micro/Small industries or enterprises, Small Business/
Retail Trade
Repayment Bullet Payment in case of Demand Loans along with
interest
Rate of Interest The interest rates are same as applicable to Non-
Agricultural Gold Loans or SME whichever is lower.
Minimum purity of Gold 20 ct & above are only to be accepted
Rate Per Gram As applicable to agricultural gold loans
Assessment of loan Basing on turnover method restricted to 80% of the
appraised value of the Gold or as per Lending Rate per
Gram prescribed by the Bank from time to time
whichever is lower
Delegation of Powers Branch Managers JM-I `5 lakh; MM-II `10 lakh;
MM-III `15 lakhs; SM-IV & above `50 lakh
Documents to be a) Copy of any document which evidences existence of
obtained the unit like Municipal/Panchayath tax receipt, registration
certificate, Membership certificate of respective
Trade/Industry Association, Copy of C Book of vehicle for
road transport activity.
b) Declaration on Turnover and purpose of the loan
c) Declaration on proper end use of loan proceeds.
d) Application for Gold Loan suitably amended. An
additional clause to be incorporated enabling bank to
demand accelerated repayment/additional security in case
the market price of the gold falls down.
173
Other guidelines - Gold loans should not be extended for speculative purposes. The
maximum finance is restricted at the field level is `15 lakh for individual borrowers.
Ornaments subjected to domestic wear and tear only should be accepted. New
ornaments should not be accepted unless branch is satisfied with the trustworthiness
of the customer. Ornaments with large percentage of stones or other extraneous
material should be avoided. As a rule, ornaments like Kante, Addiga, Nagaram,
Ragidi should not be accepted. Very small ornaments also should not be accepted.
Right relinquishing letter is to be obtained from owner of the ornaments if any names
are there on the ornaments. Gold coins of our Bank with tamper proof Assay
certificate intact need not be appraised. Re-appraisal of gold pledged with limits of `5
lakh & above is to be done once in every six months. Further, all gold loans
outstanding beyond 18 months from the date of loan (including renewals) should be
re-appraised. Gold jewels pledged with the branches should be kept in transparent
and tamper proof seal packets and the cover should bear the signatures of the joint
custodians.
Note: All term loans where the repayment is fixed beyond 36 months attract
prepayment charges @ 2% on the advanced payments made. Similarly, all term
loans are to be levied with the following Processing and administrative charges
174
Features of Product
Eligibility All Practicing Chartered Accountants, Architects, Engineers, Valuers,
Management/Financial Consultants, Company Secretaries, Cost
Accountants etc., are eligible under this scheme. Individuals, Firms,
Limited Liability Firms, Companies or Societies engaged in rendering
professional services should be an assessee under income tax at least
for the last two years and be a registered member with their respective
professional Association/Board/Body.
Purpose To establish/renovate the office premises, Furnishing of office
premises, purchase of Tools, Equipments & Books, Expenses relating to
travel for professional purposes, Working Capital for carrying out day
to day operations. Branches can sanction Term Loan, Overdraft or
combination of both depending on the purpose of the loan. The
maximum amount allowed under this scheme is `10 lakhs.
Assessment Term Loan - 75% of the cost of asset proposed to be purchased.
Working Capital Limit - 75% of the revenue expenditure of the
previous year as per Profit and Loss account. Total exposure should not
exceed 2 times of average annual income of preceding two years.
Security Hypothecation of existing movable assets and asset/s purchased out of
loan and also obtain post dated cheques for initial 18 months. The
loans are to be covered under CGTMSE compulsorily. However,
CGTMSE premium to be borne by the borrower.
Interest Rate Base Rate + 3.25. Loan attracts 0.50% processing / upfront charges.
Repayment Not exceeding 60 monthly installments with a maximum repayment
holiday of 1 year for principal & interest for term loans and one year
for working capital limits.
Cir 377 Ref 53/18 dated 30.01.2012
Credit Rating for Personal Banking Schemes: In order to have better credit risk
management system, Bank introduced credit rating for Clean / Personal Loans,
Vehicle Loans, Housing Loans and Mortgage Loans. For all new loans the rating is
based on important parameters such as Age, Qualifications, Residence, Stay,
Transferability, Employment/Profession, Gross Income, Spouse employment, No. of
dependants, dealings with the bank, Net Take Home Pay, Loan recovery mechanism,
Repayment History, Margin contribution and Networth. The prospective borrower is
expected to score minimum of 40 marks out of 100 marks to entertain the credit
proposal. All existing personal banking schemes of the branches are subjected for
annual review during the month of December every year. (Cir.no.163 Ref 26/34
dated 06.08.2010)
Recovery Agents: All NPA accounts (including technical written-off accounts) with
Real Account outstanding of `5 lakh and above and which are more than 2 years old
will be entrusted to the Recovery Agents. However, in exceptional cases the
mandatory period of 2 years can be waived. The agency should be either Partnership
or Corporate entity with required expertise to handle NPA accounts. The agents
appointed under this scheme are required to be complied BCSBI code and Banks
Model Code of conduct for collection of dues and repossession of secured assets.
However, the agency shall not have any right to sub-delegate or appoint any sub-
agent. The engagement of agent is account specific and for a specified period only.
Bank also engaging the services of Investigation Agents for the purpose of locating the
whereabouts of borrowers/guarantors or details of assets other than charged /
mortgaged to the bank to expedite the process of recovery of suit filed accounts. (Cir.
no.343 Ref 45/09 dated 27.01.10 & Cir.no.244 Ref 45/11 dated 01.10.10)
175
Lending is an integral part of bank business. Borrower is expected to use the funds
for the purpose for which availed and pay interest and installments regularly. Some
times, default may arise due to business cycles, changed environment,
mismanagement and other external factors. Whenever a borrowal account slips to
Non-Performing Category, the account needs to be examined closely for analyzing
the systematic deficiencies if any, which has resulted in the failure of account. The
Objective of IAS will be to identify the causative factors for failure of the account and
to take appropriate corrective action for minimizing, if not eliminating systemic or
human failures. The exercise of Impaired Asset Study (IAS) would be primarily to
look into reasons for the failure of an advance account and to look into Staff
accountability aspects to know the acts of Commission and Omission of the staff that
might have contributed to such failure.
Branch Managers (other than the Branch Manager who sanctioned the loan) will
conduct IAS study for all NPA accounts of the branch with Real Account balance up to
`2 lakh. The IAS study should be initiated after 90 days from the close of the
respective quarter and completed within 6 months from the date of NPA. However,
for above `25 lakh & up to `100 lakh, the study should be completed within 120 days
and with regard to above `100 lakh loans it should be completed within 90 days. In
all the cases where accountability is ascribed shall be referred to Vigilance
Department, HO to examine vigilance angle. (Cir no. 51 Ref 26/9 dated 04.05.2012)
176
177
OTS for Small Loans: All NPA accounts including suit filed accounts but not decreed
with real account balance of `2.00 Lakh & below and classified as Doubtful/Loss
Assets as on 31.03.2012 are eligible under the scheme. Accounts technically written-
off on or before 31.03.2008 are also eligible under the scheme. Further, the scheme
shall not cover cases of fraud and decreed accounts. It shall also not cover accounts
backed by liquid securities or salary undertaking letters. The scheme is now made non-
discretionary and non-discriminatory. Settlement amount is linked to the date of NPA
as under:
Cash Discount of 10% on the settlement amount is available where the borrower pays
the amount in full at a time. Sanctioning authority of OTS proposal is Branch Manager
and reviewing authority is Zonal Manager. The settlement amount arrived at as above,
178
OTS for MSME Loans: The important features of the modified scheme are furnished
hereunder (Cir. No. 1 Ref 45/1 dated 02.04.2012):
In case of loan accounts with real liability of `10 lakh and above as on the date of
NPA, the settlement formula will be as above or Net Present Value (NPV) of available
securities Primary as well as Collateral and Securities Attached by the court Before
Judgement (ABJ), whichever is higher. NPV will be calculated with 3 years realization
period at prevailing Base Rate + 4%. Cash Discount of 10% on the settlement
amount is available where the borrower pays the amount in full at a time.
***
179
Bank is levying the following service charges w.e.f. 01.10.2009 (Cir.no.79 Ref 27/09
dated 15.06.2011 & Cir.no.293 Ref 27/28 dated 17.10.2012)
Service Charges
Non- Individuals Pensioners/
No Category / Type Individuals Sen.Citi./Indiv.
in Rural Areas
1 Cheque Issue / Return
Cheque Book SB `2.50 per leaf (25 leaves free in a year)
Cheque Book - CD `3/- per leaf (No free cheque leaves)
Cheque Stop payment Per leaf `60/- `55/- `50/-
Max.`250/- Max.`225/- Max.`200/-
Cheque Return - Inward
CD cheque Up to `20000/- `100/- `75/- `50/-
SB cheque Up to `20000/- `75/- `60/- `40/-
CD cheque Above `20000/- `200/- `150/- `100/-
SB Cheque Above `20000/- `100/- `80/- `60/-
Cheque Return - Outward `100/- plus other bank charges, if any plus out of
pocket expenses.
2 Balance Enquiry for an item more `115/- per `110/- per `100/- per item
than 12 months old Per item item item
3 Account closure
SB (closed within 12 months) `200/- `150/- `100/-
SB (closed after 12 months) `100/- `80/- `60/-
CD (closed within 12 months) `500/- `350/- `250/-
CD (closed after 12 months) `300/- `200/- `150/-
No account closure charges for AB Easy accounts (No frills account)
4 Signature verification (per attestn) `125/- `110/- `100/-
5 No Due Certificate (No charges for `150/- `125/- `100/-
weaker section loans)
6 Passbook / Statement charges
Issue of Balance Certificate `100/- per certificate
Duplicate Passbook / Statement `15/- per Passbook/Statement
with latest balance only
Duplicate Passbook / Statement Passbook - `75/- plus additional `50/- per bunch
with previous entries only of every 40 entries.
Statement `25/- for each 40 entries.
7 Collection of local cheques (Other than clearing cheques)
SB Group Accounts `50/- `35/- `30/-
CD Group Accounts `100/- `80/- `60/-
8 Collection of Cheques - Others No out of pocket expenses should be levied
Up to `5000/- SB accounts `25/- - Other accounts `50/-
`5001 to 10000/- `50/- for all accounts.
`10001 to `100000/- `100/- for all accounts.
Above `100000/- Maximum of `200/-
9 Safe Custody Charges
Scrips `100/- per scrip per annum
Sealed cover `500/- per sealed cover per annum
Sealed Boxes 20x20x20 c.m. `500/- per annum
30x30x30 c.m. `600/- per annum
180
Service Charges
Non-Individuals Individuals Pensioners/
No Category / Type
Sen.Citi./Indiv.
in Rural Areas
15 Cash handling charges Cash receipts under CD and ODCC accounts
Up to one bundle No charge
More than one bundle `100/- per bundle maximum of `10000/-
Note: OD a/cs of existing/retired staff are exempted from cash handling charges
16 Addition/Deletion of names `100/-
17 Change in Operation instructions `100/-
18 Record copy of cheque/DD/PO `100/- per item
181
Category Charges
Current Accounts `200/- per quarter
AB Premium Current Account `400/- per quarter
`100/- quarter - Metro/Urban/SU areas
Savings Bank Accounts
`50/- per quarter - Rural areas
AB Privilege SB Accounts `150/- per quarter
Safe Deposit Lockers: The rents on lockers have been revised as under w.e.f
01.10.2009 (Cir.no.170 Ref 44/20 dated 09.09.2009)
Other conditions: Rentals for built-in lockers shall be 25% more than the rents
noted above. The locker operations are restricted to 10 in a quarter. Any operation
beyond 10 in a quarter attracts a charge of `50/- per transaction. A concession of
20% in rent is allowed to our existing and retired staff members.
Note: All the above service charges attract tax @ 12.36% with effective from
01.04.2012.
182
183
Branches have to collect 25% of the normal processing/upfront fee in advance for
new accounts involving fund/non fund based credit limits of more than `2 lacs. If the
loan is sanctioned, this amount will be adjusted against processing charges/upfront
fee to be collected at the time of disbursement of limits. However, no charges will be
collected upfront before sanction of loan to Micro & Small Enterprises for the loans
up to `5 lakh. However, in the cases where borrowers come into our fold through
Loan Syndicate or on taking a share under consortium arrangement, processing
charges/upfront fee shall be collected on the share allocated to our Bank at the time
of documentation or at the time of disbursement of limits in line with other member
banks. (Cir no.163 Ref 26/26 dated 20.07.2012)
Upfront Fees: 1% of the term loan amount is to be collected for all categories of
borrowers and no ceiling is prescribed for collection of upfront fee on term loans.
Commitment charges are to be levied for term loans of above `5 crores at 1% p.a.
for delay in draw down schedule beyond one month. Similarly, working capital limits
of `1 crore and above to all corporate borrowers shall be levied @ 0.50% p.a.
commitment charges (exclusive of overall ceiling of 2% penal/additional interest) on
the unavailed portion of fund based working capital limits subject to a tolerance level
of 20% i.e. the utilization of the limit shall not be less than 80% of the sanctioned
limit. However, limits sanctioned to Sick/weak units, export credit, banks, public
sector undertakings and seasonal industries are exempted from commitment
charges. (Cir. no.143 Ref 26/29 dated 25.07.2007)
To claim the incentive, eligible employees are required to submit application (April to
December) along with proof of pass and continuation of studies to the branch/office
for onward submission to controlling office for sanction. Courses pursued under
Distant Education mode or in a Foreign Country are not covered under the
scheme. (Cir.no.118 Ref 03/24 dated 12.07.10)
185
7) Holiday Homes: All employees (including retired employees) of the bank, who
are proceeding on holiday or leave, can avail Holiday Home facility with nominal rate
at 14 centers viz., Bangalore, Bhubaneshwar, Chennai, Goa, Haridwar, Ooty, Manali,
Mysore, New Delhi, Shirdi, Tirupathi, Tirumala, Varanasi and Gagtok. At present the
tariff for the room is `10/- per day in case of Officer Staff and `5/- per day in case
of Award Staff. The maximum stay allowed is 4 days only. However, it is restricted to
maximum of 3 days with regard to stay at centres like Bangalore, Chennai, Mysore,
Shirdi and Varanasi. Employees desirous of availing the facility are required to send
an application through Branch/Office to Staff Welfare Department, Head Office for
allotment of room. Cancellation should be intimated to Staff Welfare Department at
least 2 days prior to the date for which the reservation is booked. In case the
employee who booked and availed or not intimated the cancellation in time, bank
imposes a penalty of `200/- per day. (Cir.no.16 Ref 03/1 dated 11.04.12)
8) General Health Check-up: All staff members/spouse who are on the rolls of the
Bank and who have completed 40 years of age are eligible to claim for
reimbursement of expenses for general health check-up subject to maximum of
`2500/- in Metros and `2000/- at other places. However, additional reimbursement
of expenses for Mammography test subject to maximum of `600/- is available to all
eligible women employees / spouse of employees (who have completed 40 years)
w.e.f. 24.03.2006. The reimbursement of expenses is subject to production of
relevant receipts/bills of approved Hospitals/Diagnostic centers. This scheme is
applicable to spouse of the staff members also. This facility can be availed by the
eligible staff once in 2 years. (Cir.no.346 Ref 3/45 dated 26.12.2008)
9) Eye Check-up & Spectacles: All staff members who are on the rolls of the Bank
are eligible to claim reimbursement of expenses for Eye Check-up and purchase of
spectacles subject to maximum of `1000/-. This is a one time reimbursement in
the entire service. (Cir.no.555 Ref 20/100 dated 29.03.2006)
11) Furniture Maintenance Charges: Officers who have availed the residential
furniture facility are eligible to claim reimbursement of maintenance charges incurred
on declaration basis after 3 years of purchase @ 5% of the original cost of the items
every year. However, items like mattresses and pillows are not covered under the
scheme. (Cir no.20 Ref 3/06 dated 21.04.2010)
186
13) Group Personal Accident Insurance (GPA): Bank has taken Group Accident
policy from M/s.United India Insurance Company Limited to cover the employees
against risks round the clock. It covers death, permanent disablement and partial
disablement. The risk coverage of various categories is as follows:
No Category Coverage (`
` in lakhs)
1 CMD 10.00
2 Executive Director 8.00
3 General Managers 7.00
4 Deputy General Managers 6.00
5 Asst. General Managers 5.00
6 Chief Managers 4.00
7 Senior Managers 3.00
8 Deputy Managers 2.00
9 Asst. Managers 1.50
10 Clerks / Pilots / Drivers 1.00
11 Sub-staff (including PTS/Security guards) 0.50
Monthly Premium
No Category Sum assured
(Savings plus Risk)
1 Scale IV & above 127.50 120000
2 JM-I to MM-III 95.63 90000
3 Clerks 63.75 60000
4 Sub-staff (including PTS) 31.88 30000
In case of expiry of an employee due to accident, double the sum assured will be
paid by LIC of India. (Circular no.113 Ref 20/23 dated 09.07.2008)
15) Silver Jubilee Awards: Employees who have completed 25 years of service are
honoured by presentation of an award with a cost not exceeding to `2000/- and the
same is to be presented in a staff meeting at branch/office.
16) Liability Insurance: It covers the lives of the employees to the extent of
liabilities outstanding in Housing / Vehicle Loan as on 31st March every year and also
on fresh disbursal by IFLIC of India. Premium is payable by the employee to the
debit of respective loan accounts and the details of the coverage is as under:
187
188
Taking care of family members is the sacred responsibility of the family head and he
is expected to take all possible care so that the spouse/children should not to face
financial problems even in his absence i.e. untimely demise. Bank has been
extending various facilities/benefits to the bereaved families through different
schemes. Hence, staff and their family members are necessarily to have an idea of
these schemes and the associated benefits thereon. The nominees/legal heirs are
entitled to avail the following financial benefits/facilities from Bank and other
organizations:
1) Family Pension: In case of an employee who opts for pension and expired after
completion of 7 years of service, higher family pension equal to 50% of pay last
drawn by the deceased employee or twice the ordinary rate of family pension
whichever is less is payable.
3) Gratuity: Employee is eligible for 15 days for every completed 26 working days
and accordingly the eligible amount will be paid subject to the ceiling, if any. This
amount will be paid immediately.
4) Future Service Gratuity Insurance: Bank has taken master policy for the said
purpose. In case of death of any employee, Bank submits the claim to LIC and the
same will be paid to the nominees of the deceased on receipt of claim amount from
LIC. Normally, the settlement of claim takes 3 to 6 months. (Cir.no.360 Ref 20/62
dated 01.01.2008)
5) Leave Encashment: Bank pays the amount for the unavailed Privileged Leave, if
any, subject to maximum of 240 days. The last drawn salary is the basis for
calculation and payment.
6) Exgratia: Bank pays an amount of `1.50 lakh towards exgratia to the families
(Nominees/Legal heirs) of the employee who die in harness. Advance amount of
`25000/- will be paid immediately to meet the funeral related expenses and the
same will be adjusted from the exgratia amount. (Cir.no.413 Ref 20/72 dt.29.02.08)
8) Educational Grant to the children: The children of the deceased are entitled to
claim reimbursement of `2000/- for X class, `2500/- for Intermediate and `4000/-
for Graduation/Post Graduation for each child every year subject to maximum of two
children. However, they are eligible to avail this facility only up to the age of 25
years or superannuation date of the deceased whichever occurs earlier. The
application is to be forwarded through the branch where the deceased employee
worked. (Cir. no.555 Ref 20/100 dated 29.03.2006)
12) Group Savings Linked Insurance Scheme (GSLI): Bank collects monthly
contributions from the members and remits to LIC of India. The monthly contribution
includes two components viz., Savings & Insurance Premia in the ratio of 70:30. In
case of death on account of accident, LIC pays the double the amount of assured.
Bank submits the claim to LIC as per the eligibility. The monthly premium payable
and risk coverage of various categories is furnished here under:
13) Compensation & Reward for resisting crime against Bank: To protect the
interest of the family members of the employee who dies on account of resisting
crime against bank, the following amounts will be paid to the bereaved family.
No Facility Remarks
1 Compensation Officers - ` 20 lakh
on death Clerical/Sub-staff - ` 10 lakh
Bank continues to pay last pay drawn by the deceased
Pay & officer, till one of the children attains age of 21 years or
2
Allowances normal retirement age of the deceased whichever is
earlier.
3 Education Exp. Up to Degree for children.
4 Employment Family member subject to eligibility.
In case of survival Cash reward of ` 2 lakh will be paid besides eligible for out
of turn promotion or advance increment. (Cir no. 223 Ref 3/50 dated 27.08.12)
14) Liability Insurance: All liabilities of staff members under Housing and Vehicle
loans are insured and bank claims the amount from LIC of India in case of death of
the employee and adjust the same to the respective loan accounts. The maximum
coverage for Housing and Vehicle loans is `20 lakhs and `4.50 lakhs respectively.
However, in case of two wheeler the maximum coverage available is `60000/- only.
(Cir.no.438 Ref 3/67 dated 15.03.09)
15) Other reimbursemens: The family members of the deceased are entitled to
claim the reimbursement of News Paper, Conveyance and Refreshments of the
current month/quarter and arrears if any from the branch.
190
No Category Coverage
1 Officers (JM-I to SM-VII) 375000
2 Clerks 200000
3 Sub-staff 100000
4 PTS wages 75000
5 PTS wages 50000
6 PTS 1/3 wages 33000
18) Group Personal Accident Insurance (GPA): Bank has taken Group Accident
policy from M/s.United India Insurance Company Limited to cover the employees
against risks round the clock. It covers death, permanent disablement and partial
disablement. The risk coverage of various categories is as follows:
1) Surety Loan: In case where the deceased employee availed loan from Andhra
Bank Employees Co-operative Bank Limited, the balance under Thrift and MMBF
contributions are adjusted to surety loan and the remaining balance will be written-
off through insurance cover. The family members need not to pay liability under
surety loan of Andhra Bank Employees Co-operative Bank. In case where there are
no outstanding dues by the member, a sum of `20000/- will be paid to the nominee
or dependants.
191
3) Insurance Claims: The family members of the deceased are entitled for the sum
assured mentioned below provided the deceased maintains/avails the
accounts/facilities.
Note: Claims will be settled by the respective insurance companies as per the
eligibility and Bank acts as facilitator only.
Important Points:
All staff members should ensure that nomination is submitted for Pension,
PF, Gratuity, FABF, GSLI, Credit card, Andhra Bank Employees Co-operative
Bank, Insurance Linked Accounts etc., to avoid delay in settlement of claims.
Wherever the deceased staff member has not submitted nomination, the
branch/office has to obtain claim forms from the legal heirs as per the
procedure laid down for payment of amounts by Bank. However, in such
cases, the claims will be settled only at HO.
With regard to Abhaya, Abhaya Plus, Abhaya Gold and Abhaya Jeevan, the
claim is to be submitted at the respective branches where the deceased
maintained said accounts.
Any expenditure under staff welfare has to be claimed before the expiry of
the following financial year failing which the same stands lapsed.
***
192
Exercise-1
Directions for questions 1 to 25: Choose the correct answer.
14. Ramesh helped me, but who helped you? The speaker is
1) asking for help
2) asking a question
3) making a statement
4) expressing a sudden feeling
3) an imperative sentence
4) an invitation
25. All the staff and students are requested to attend the function without fail. This is
1) a request
2) an invitation
3) an order
4) a question
Exercise-2
Directions for questions 1 to 25: Choose the appropriate answer.
7. A: Its surprising how your outlook towards life has become pessimistic!
B: Hasnt it?
1) B agrees with As opinion
2) B does not agree with A
3) B is surprised at As observation
4) B strongly rejects As statement
4) B things unlike A
23. A: The PM announced that there would be tough new restrictions on visas for citizens of certain countries
like India, Pakistan, etc.
B: Then, the PMs statements could be a dampener to tourist industry
1) Bs statement supports As statement
2) B disagrees with A
3) B is pointing out a possible fall out if what A says is true
4) B says that the tourist flow will be regulated
7. The UN has called on the warring factions to _____ aside their differences
1) keep
2) put
3) talk
4) give
11. We _____ the station in time but the train was an hour late
1) came
2) went
3) reached
4) returned
12. There was a sale going on; I _____ some clothes at throw away prices
1) bought on
2) picked up
3) stitched
4) caught
15. When I get home, my pet _____ at the door waiting for me
1) sits
2) has been sitting
3) will sit
4) will be sitting
4) will hear
21. Grandma was very, very _____ because the little boy broke the vase.
1) pleased
2) cross
3) hurt
4) hated
22. The bus was so _____ that there was no place even to stand
1) applied
2) needed
3) used
4) crowded
23. The Indian team won the toss and _____ to bat first
1) left
2) fought
3) thought
4) opted
1. Marijuna has few with drawl effects and this has given rise to the _____ belief that it is not an addictive.
1) mistake
2) mistaken
3) misunderstood
4) mitigating
7. The disappearance of the letter made the situation all the more _____.
1) piquant
2) pious
3) pioneering
4) pitiful
11. She writes equally well with both hands; she is _____.
1) ambivalent
2) ambiguous
3) ambidextrous
4) articulate
12. Mandelas release was a/an _____ event in South Africas history
1) pithy
2) pivotal
3) funny
4) interesting
15. They put up a/an I am sure they will be _____ to rational argument performance of King Lear
1) ambient
2) altruistic
3) amicable
4) sensible
16. She was tall, blonde and I am sure they will be _____ to rational argument looking.
1) interesting
2) beautiful
3) athletic
4) atavistic
17. Most refugees live in _____ conditions
1) worst
2) worse
3) dirty
4) atrocious
21. I pretended not to notice but I saw that he had given me a _____ look.
1) balding
2) baleful
3) balmy
4) bald
Exercise-5: Adverbs
Directions for questions 1 to 25: Fill in the blanks with suitable adverbs.
3. The Minister _________ stated that stringent action would be taken against the erring officials.
1) ambiguously
2) impudently
3) sarcastically
4) categorically
5. The man was so _________ dressed that he almost looked like a clown.
1) garishly
2) modestly
3) decently
4) suavely
8. The sluggard did nothing constructive, except rambling on the strets _________.
1) aimlessly
2) religiously
3) perversely
4) spuriously
9. A country can be termed truly secular when people of all religions lived _________.
1) surreptiously
2) comfortable
3) decently
4) harmoniously
5)
10. The wealthy old man _________ bequealthed a huge portion of his property to the orphanage.
1) magnanimously
2) courteously
3) graciously
4) covetously
11. He glanced _________ at the document, which was supposed to be kept confidential.
1) Stealthily
2) threateningly
3) dejectedly
4) benevolently
13. As she was thoroughly satisfied with her preparation, she entered the examination hall _________.
1) competently
2) adeptly
3) skillfully
4) confidently
14. Although I am averse to watching movies, I _________ visit the theatre to watch plays.
1) rarely
2) occasionally
3) fervently
4) specifically
17. I drove the car _________ while negotiating the curves on the ghat road.
1) cautiously
2) conveniently
3) fearfully
4) precariously
18. Many people wept _________ at the loss of their beloved leader.
1) exclusively
2) inconsolably
3) intensely
4) excruciatingly
22. As the Minister did not want to divulge the information, he replied _________ to the journalists queries.
1) mockingly
2) sarcastically
3) secretly
4) evasively
23. One cannot form an opinion about a person by _________ looking at his face.
1) trivially
2) merely
3) peculiarly
4) intently
24. The event was so _________ planned that there was no cause for complaint.
1) minutely
2) meticulously
3) intricately
4) nimbly
25. Although I was initially nervous to address a gathering, _________ I overcame my nervousness.
1) eventually
2) generally
3) casually
4) evidently
Exercise-6: Prepositions
Directions for questions 1 to 25: Fill in the blanks with appropriate prepositions.
12. Sheena and her friends quarreled ____ themselves without rhyme of reason.
1) between
2) among
3) about
4) around
13. She was ____ deaths door, when the man entered her life.
1) in
2) on
3) for
4) at
15. I never use a credit card; I always settle bills ____ cash.
1) by
2) with
3) in
4) to
17. Mahatma Gandhi worked very hard ____ the welfare of the country
1) by
2) with
3) for
4) towards
18. ____ his fathers death, lyotiraditya Sandia was crowned king.
1) Before
2) Within
3) Behind
4) After
21. ____ his children, his nephews and nieces were present.
1) Beside
2) About
3) Around
4) Besides
Exercise-7: Prepositions
Directions for questions 1 to 25: Fill in the blanks with appropriate prepositions.
5. As he was walking on the road, he was stunned ___ a blow on the head.
1) with
2) by
3) on
4) from
12. My brother was working for Telco ___ 1995, when he got a job at Siemens Nixdorf.
1) with
2) at
3) until
4) from
13. We spent the whole after noon walking ___ the town.
1) about
2) within
3) beyond
4) in
14. The fool has parked his scooter right ___ the entrance to the driveway
1) beyond
2) across
3) within
4) on
15. ___ the span of a year, three of the towns biggest factories have closed down.
1) Within
2) In
3) Behind
4) Beyond
19. They were suddenly plunged into darkness as the train went ___ the tunnel.
1) into
2) through
3) in
4) between
23. These families are living ___ the official poverty line.
1) below
2) under
3) beneath
4) beyond
24. Theves is a large international organization with offices ___ the world.
1) through
2) in
3) across
4) throughout
25. ___ the mist she could just make out his silhouette
1) Over
2) Beyond
3) Through
4) Across
Exercise-8: Conjunctions
Directions for questions 1 to 25: Fill in the blanks with appropriate conjunctions.
7. You must not tell lies ____ your mother will punish you.
1) or
2) but
3) and
4) unless
12. You will get late ____ you hurry to the meeting
1) because
2) unless
3) if
4) though
13. You must be tired ____ you have walked such a long distance.
1) though
2) than
3) but
4) since
14. Not ____ I loved Caesar less, but that I loved Rome more.
1) than
2) if
3) that
4) though
16. We judge ourselves by what we feel capable of doing ____ others judge us by what we have already done.
1) than
2) and
3) but
4) except
17. ____ I have no money to spend, you have no one to spend it on.
1) When
2) While
3) And
4) But
19. ____ she had given up smoking, she kept her lighter with her.
1) If
2) That
3) Although
4) Except
23. She has already packed all her belongings ____ I just have to take them to her new flat.
1) but
2) that
3) except
4) and
25. It was difficult to understand people for a long time ____ eventually I got used to them.
1) and
2) but
3) except
4) because
3. The social servant said. I have devoted all my life to the welfare of the people.
1) The social servant enlightened people that he had devoted all his life to the welfare of the people.
2) The social servant revealed that he had devoted all his life to the welfare of the people.
3) The social servant stated that he had devoted all his life to the welfare of the people.
4) The social servant said that he is devoted all his life to the welfare of the people.
7. The president said, The government has totally neglected the handloom sector.
1) The president abused saying that the government has totally neglected the handloom sector.
2) The president said that the government totally neglected the handloom sector.
3) The president told that the government has been totally neglecting the handloom sector.
4) The president said that the government had totally neglected the handloom sector.
9. He said, My tie is lime green in colour with figures of frogs painted on it.
1) He informed that his tie was painted with frogs and was lime-green in colour.
2) He said that his tie is of lime green and with figures of frogs painted on it.
3) He told his tie was of lime green in colour, with frogs painted on it.
4) He said that his tie was lime in green colour, with figures of frogs painted on it.
10. The traveler said, But on this visit, I notice a sea change!
1) The traveler exclaimed that on that visit, he noticed a sea change.
2) The traveler informed that on that visit, he notices a sea change.
3) The traveler perceived that on that visit, he had noticed a sea change.
4) The traveler said that but on this visit, he noticed a sea change.
12. The Policeman said to the politician, How are there elections rigged?
1) The Policeman questioned the politician if he had rigged these election results
2) The Policeman asked the politician how were those elections rigged.
3) The Policeman asked the politician how those elections ere rigged
4) The Policeman accused the politician that those elections were rigged.
14. The legal advisor said to the director, Amend the existing laws and plug all the loop holes.
1) The legal advisor told to amend the existing laws and plug all the loop holes.
2) The legal advisor warned the director to amend the existing laws and plug all the loopholes.
3) The legal advisor advised the director to amend the existing laws and plug all the loop holes.
4) The legal advisor tells the director that he shall amend the existing laws and plug all the loopholes.
15. The President said, My party is hopeful of reaching an accord with our political ally!
1) The President hoped to reach an accord with their political ally.
2) The President says that he was hopeful of reaching an accord with their political ally.
3) The President expressed that his party is hopeful of reaching an accord with his political ally.
4) The president said that his party was hopeful of reaching an accord with their political ally.
18. Are you coming home with me now? the brother asked his sister.
1) The brother asked his sister if she was going home with him then.
2) The brother questioned his sister if she was coming home with him then.
3) The brother enquired if his sister was going home with him then.
4) The brother called his sister if she was going home with him now.
20. The vexed shopkeeper told the fussy customer, You either buy it or walk out of may shop!
1) The vexed shopkeeper shouted at the fussy customer that she should buy it or walk out of the shop.
2) The vexed shopkeeper told the fussy customer that she should either buy it or walk out of his shop.
3) Te vexed shopkeeper told the fussy customer to leave his shop
4) The vexed shopkeeper told the fussy customer to buy it or to leave his shop.
4. The old man advised his sons that united they stand but divided they fall.
1) The old man told his sons, United you stand but divided you fall.
2) The old man advised his sons, You stand united but when divided you fall.
3) The old man said to his sons, Stand united and fall divided.
4) The old man told his sons, Stand united but fall when divided.
6. The Princess asked the mirror who the most beautiful lady on the earth was.
1) The Princes asked, Oh mirror! Who the most beautiful lady on the earth was?
2) The Princess asked the mirror, Who is the most beautiful lady on the earth?
3) The Princess questioned the mirror, Whom do you think is the most beautiful on the earth?
4) The Princess inquired from the mirror, Who will be the most beautiful lady on the earth?
9. Kamala asked Ravi who had taught him such tricks as those.
1) Kamala asked Ravi, Who has taught you such tricks as these?
2) Kamala questioned Ravi, By who were you taught tricks as these?
3) Kamala enquired from Ravi, who teaches you such tricks as these?
4) Kamala asked Ravi, Who taught you such tricks?
10. The Policeman asked me if I could park my car closer to the kerb.
1) The Policeman asked me, Can you park your car closer to the kerb?
2) The Policeman questioned, Will you park your car closer to the kerb?
3) The Policeman asked, Could you park your car close to the kerb?
4) The Policeman advised me, If you could park my car closer to the kerb?
11. The researchers say that beauty is in the eye of the beholder.
1) The researchers say, Beauty is in the eye of the beholder.
2) The researchers say, Beauty was in the eye of the beholder.
3) The researchers said, Beauty is in the eye of the beholder.
4) The researchers inform, The beauty is in the eye of the beholder.
12. The auction-in-charge said that the auction had gone very well and they were very pleased.
1) The auction-charge informed, The auction had gone very well and we are very pleased.
2) The auction-in=charge said, The auction has gone very well and we are very pleased.
3) The auction-in-charge stated, The auction has gone very well and they are very pleased.
4) The auction-in-charge said, The auction will go very well and will be very pleasing to us.
14. The President said that a lot of things had been done to accommodate them.
1) The President said, A lot of things are done to accommodate them.
2) The President said, A lot of things have been done to accommodate them.
3) The President said, A lot of things are done and accommodated them.
4) The President said, A lot of things are being done to accommodate them.
15. Walker said that he could not believe Jones had done anything that brutal.
1) I cannot believe that Jones has done anything this brutal, Walker said.
2) I cannot believe that Jones has done anything brutal, Walker said.
3) I cannot believe that Jones did that. Walker exclaimed.
4) I cannot believe that Jone can do anything that brutal, Walker shouted.
16. The members said that they would give a positive response.
1) The members said, We give a positive response.
2) The members told, We would give a positive response.
3) The members said, We will give a positive response.
4) The members informed, We can give a positive response.
17. The director said that they would have to adopt a cautious approach.
1) The director said, We will have to adopt a cautious approach.
2) The director said, We may have to adopt a cautious approach.
3) The director said, A cautious approach would have to be adopted.
18. The Indian Captain said that the pitch was more suitable for batsmen.
1) The Indian Captain said, The pitch was more suitable for batsmen.
2) The Indian Captain wished, The pitch is ore suitable for batsmen.
3) The Indian Captain remarked, The pitch is more suitable for batsmen.
4) The Indian Captain said, The pitch suits batsmen no more.
19. Mr. Mayo said that if they use celebrities, they give them an advantage.
1) Mr. Mayo argued, If we use celebrities, they given us an advantage.
2) Mr. Mayo said, If we use celebrities, they give us an advantage.
3) Mr. Mayo revealed, If they use celebrities, they would given them and advantage.
4) Mr. Mayo said, If they use celebrities, advantage is given to them.
20. She commented that the weather had been much better the previous day.
1) She said, The weather had been much better the previous day.
2) She said, The weather was much better yesterday.
3) She said, The weather has been much better yesterday.
4) She said, The weather was much better the previous day.
21. The teacher said that the sun rises in the east.
1) The teacher teaches, The sun rises in the east.
2) The teacher said, The sun rises in the east.
3) The teacher tells, The sun rose in the east.
4) The teacher explains, The sun has risen in the east.
22. The Minister said that he welcomed anyone interested in assisting him in his fight against communalism.
1) The Minister said, I welcome anyone against communalism.
2) The Minister said, I welcome everyone interested in assisting him in my fight against communalism.
3) The Minister said, I will welcome anyone against communalism.
4) The Minister says, I could welcome anyone interested in assisting me in fight against communalism.
23. The Professor remarked that the two sides could resume talks if they wanted to.
1) The Professor says, The two sides can resume talks if they wanted to.
2) The Professor remarked, The two sides can resume talks if they want to.
3) The Professor observed, The two sides could have resumed talks, if they wanted to.
4) The Professor said, the two sides will resume talks, if they want to.
24. The leader commented that people with empty stomachs did not indulge in corruption.
1) The leader said, People on empty stomachs do not indulge in corruption.
2) The leader said, People with empty stomachs will not indulge in corruption.
3) The leader said, People with empty stomach do not indulge I corruption.
4) The leader said, People with empty stomachs do not indulge in corruption.
16. The ship has been pushed to the shore by the wind
1) The wind pushed the ship to the shore
2) The wind had pushed the ship to the shore
3) The wind pushes the ship to the shore
4) The wind has pushed the ship to the shore
17. Many people are killed by an earthquake
1) An earthquake killed many people
2) An earthquake will kill many people
3) An earthquake kills many people
4) An earthquake has killed many people
1. Cows are amongst the gentlest of breathing creatures; none shows more passionate tenderness to their
A B C D
young.
2. Many a man have succumbed to this temptation, inviting his own downfall and destruction.
A B C D
3. Neither the chairman nor the directors is present at the crucial meeting between the workers and the
A B C D
officers.
4. If it was possible to get near when one of the volcanic eruptions takes place we should see a grand sight.
A B C D
5. Euclid proved that the sum of the three angles of a triangle are equal to the two right angles.
A B C D
6. No sooner did the ship touch the shore then a solider of the tenth legion leaped into the water.
A B C D
7. We have helped them not only with money and also with a body of workers, all well trained and
A B C D
experienced.
8. The doctor compelled the lady to drink such vile medicine that he all but killed she.
A B C D
11. Were an angle to tell me such a thing of you, I will not believe it.
A B C D
12. I will forgive you on one condition that you do not repeat the offence again
A B C D
13. Our professor recommended that we are present at the meeting this afternoon in order to meet the
A B C
representatives from other colleges.
D
14. Eventhough Miss India lost the beauty contest, she was still more prettier than the other girls in the pageant.
A B C D
15. It is essential that the pressure is not elevated to a point where the substance formed may become
A B C D
unstable.
16. Before the advent of television, the common man seldom never had an opportunity to see as well as listen
A B C
to his favourite singers live performances.
D
17. In order for one to achieve the desired results in this examination, it is necessary that he works as hardly as
A B C D
possible.
18. The purpose of the United Nations is to maintain peace and security and encouraging respect for human
A B C D
rights.
19. If the biennials like Chrysanthemums were planted this year, they will be likely to bloom next year and
every
A B C
two years thereafter.
D
20. I heartily congratulated him at his good fortune that favoured him after a long time.
A B C D
21. The introduction of tea and coffee and such other beverages have not been without some effect.
A B C D
22. The results of the recognition of this fact is seen in the gradual improvement of the diet of the poor.
A B C D
23. Theres Mr. Dutt, whom, they say, is the best portrait-painter in the entire country
A B C D
1. Anyone who wish to participate in our slogan competition may do so by filling the coupon supplied
A B
along with every bottle of our beverage purchased.
C D
2. The high protein content of various strains of soyabean plants, along with characteristically long root
A B
system, that enables them to survive long drought, make them particularly valuable in dry countries.
C D
3. Laxmi, accompanied by her brother on the piano were given a standing ovation at the talent search contest.
A B C D
4. Professor Sarcar told his class that the best way to achieve distinction in biochemistry is to practice the
A B C D
structures of the compounds.
5. The Supreme Court verdict of 14th January setting aside the Delhi high court judgement of 31st August last
A B C
year, partially vindicate the Union Railway Minister.
D
6. In an ambitious plan drawn out by the council for leather exports, total exports of leather goods from India
is
A B C
expected to touch billion dollars (U.S) by the year 2000 A.D.
D
7. The houses and all the contents were as a whole consumed by the fire.
A B C D
8. Dairying is concerned not only with the production of milk, but also with the finer aspects of the technology
A B
that is being used to preserve the quality of milk as well as other milk products.
C D
9. An organ is a group of tissues capable to perform some special function, as for example, the pancreas or
A B C D
the lungs.
10. Mohan Bagan, once the only contender for the national championship, is now being challenged by either
A B C
Mohammedan Sporting and other clubs from other states.
11. asked him many questions to illicit what had really happened during the night after the party.
A B C D
12. Though my father won a Maruti car in the lottery, but he remained humble.
A B C D
13. You cannot quench your thirst, as there is a little water in the tumbler.
A B C D
14. Yesterday Samir had a bad fall as one of the tables legs on which he was sitting broke under his weight.
A B C D
15. Either one of the three top rankers in the class is eligible for a scholarship only after going through
A B C
an elimination process.
D
16. Now-a-days Ravi is studying hardly, burning midnight oil, as his final examinations are fast approaching.
A B C D
17. Chand will probably buy some more computer software when he will get paid his annual dues.
A B C D
18. Every student needs an identification number so he can get a university library card made to gain access to
A B C D
valuable literature.
19. Inspite of our best efforts, she hasnt finished the assignment yet, and neither I have.
A B C D
20. During the annual literary competitions, Rama could have made herself understood if she spoke not louder
A B C
but only more slowly
D
21. The exterior most wall of the house is made of stone; the interior walls are of wood.
A B C D
22. The Marwaries are not least enterprising than any other business community in India.
A B C D
23. This is the question, the solution of whom has baffled philosophers of all ages
A B C D
24. She is a wonder and an example of what a human being in spite of infirm health is capable.
A B C D
25. It would not suit the rules of art, in spite of my own feelings to write in that style.
A B C D
2. The race driver accelerated to 190 miles per hour and qualifies
A B
for the Indianapolis 500, Americas most celebrated auto racing competition. No error
C D E
4. The professor told us that in order to remember details, it is important to take notes while listening to
the
A B C D
lecture. No error.
E
5. The fruit and vegetables at the corner store are always very fresh because they
A B
were shipped in every day form the local farm markets No error
C D E
6. The maid does not finish cleaning the rooms in the dormitory yesterday because she had to help scrub
A B C D
the floors in the kitchen and the cafeteria. No error
E
7. When the manager of the hotel suspicioned that their identification was not valid, he refused to serve
A B C
them. No error
D E
8. The condition of mankind has been improved recent technological advances No error
A B C D E
9. Although you must get off while the plane is cleaned you may leave your suitcases and other
A B C
belongings laying on your seats. No error
D E
10. The flag over the White House is risen at dawn every day by a guard from the United States armed forces.
A B C D
No error
E
11. The carefulness with which she prepared the report was evident to the committee No error
A B C D E
12. After trying without success to talk with them, Ms. Johnson lost her patience and gave them their papers
A B C D
No error
E
13. Since everyone would like to find an apartment nearer to the University, there are
A B C
very few vacancies In the area No error
D E
14. The suggested increase in the rate was neither a fair request and not a practical one. No error
A B C D E
15. They solved the problem by using a computer rather than to do it all by hand No error
A B C D E
16. To read literature and being introduced to a different culture are two excellent reasons for studying a
A B C D
foreign language. No error
E
18. The program used to include not only employees but their families. No error
A B C D E
19. Dr. Brown, the first elected president of the University, was int elligent, and awareness
A B C
of the problem yet to be solved No error
D E
20. Those of us who go during the semester should have their addresses changed at the registrars office.
A B C D
No error
E
21. The officials of the Election Commission asked each voter to preset their
A B
registration card and a valid drivers license before receiving a ballot. No error
C D E
22. Hong-Kong is one of the world cities that are noted for its busy harbour. No error
A B C D E
23. If one had considered the consequences carefully, you would not have agreed to sign a four - year lease
A B C D
No error
E
24. Inspite of his being a professor of chemical engineering, Dr. Bell also knows
A B C
the most about theoretical mathematics No error
D E
25. Neither of the two alternatives that had been outlined at the last meeting were acceptable to the executive
A B C D
committee. No error
E
1. The collapse of the Bronze Age civilizations of Greece came in the face of internal ____ and ____ of the
peloponnese and the southern islands.
1) dissentinvasion
2) disagreementconclusion
3) collusioncoercion
4) cohesionadhesion
2. An uncomplicated love for their own natural ___ emerges in the work of a succession of ___ painters.
1) featuresthick
2) landscapelife-size
3) scenerylandscape
4) selfconscious
3. The population in the ___ regions like Arctic circle is generally ___ although in a few favoured places it is
dense.
1) hostilethick
2) inhospitablesparse
3) favourablescantly
4) polarpopulous
4. Although the country is dominated by ____ winds, it is extremely ___ except for the southern slopes of the
Himalayas, which have moderate rainfall.
1) dryrain-bearing
2) gustydry
3) coolhot
4) rain-bearingwet
5. Pakistan is in general linguistically ____, and no single ____ can be said to be common to the whole
population.
1) mixedreligion
2) complexfaith
3) simpleliterature
4) heterogenouslanguage
6. ____ considerations strongly limit the dosage level of ____ employed for various experiments on human
beings.
1) Ethicaldrugs
2) Ethnicmedicines
3) Moraltablets
4) Spiritualcapsules
7. In public places, one must be careful of ___ of petty thieves in order to not to lose ones ____.
1) abilitybags
2) alacritypurses
3) legerdemainmoney purses
4) capacitychildren
9. The ___ caused by the Gulf war in the lives of ____ continues even to this day.
1) masspeople
2) confusionvictims
3) hurtcitizens
4) imbroglioimmigrants
10. My friend, who wanted to settle abroad, was denied ____ visa, as the embassy people had found some ____
in the information he provided.
1) emergencydisturbances
2) emigrantdiscrepancies
3) urgentdisbursements
4) immediateanonymity
11. Having been ____ once by a fast talking salesman, he was extremely ____ when he went to buy a used car.
1) fooleddangerous
2) helpedskeptical
3) hoodwinkedcautious
4) cheatedhumorous
12. Although he was ____ and blunt with most people, he was always _____ with children
1) adamantyielding
2) gruffgentle
3) garrulousjovial
4) guilelessgenial
13. This restaurant is famous because the proprietor is both ____ and ____, trying to make all the customers
happy.
1) gentlycurt
2) generousbrusque
3) bluntsarcastic
4) genialamiable
14. The _____ bronze statue reflected the lamplight after the _____ around the exposed corners of the statue
was removed.
1) burnedrust
2) shiningdirt
3) burnishedpatina
4) polishedfilm
15. His ____ demeanour during the meeting made us not to adopt _____ attitude towards the topics of
discussion.
1) strictstern
2) austerefrivolous
3) jovialboring
4) sincerebanal
16. The _____ legs of the Kangaroo are ____ for leaping.
1) stumpyhelpful
2) longadopted
3) curvedadept
4) sartorialsuitable
17. After the accident, ___ made her forget her identity and give _____ and unclear answers to the queries of
the police.
1) injuryproper
2) amnesiaambiguous
3) illnesssuitable
4) sicknesscorrect
18. Though the Oxford English Dictionary is undoubtedly the greatest dictionary ever ____, it is designed for
scholars and research workers rather than for the ____ dictionary user.
1) assembledassodipis
2) demonstratedamateur
3) compiled casual
4) published professional
19. The company continues to be ____ with problems of all kinds, but ____ managing director says that it is on
the road to recovery.
1) bedeviledan optimistic
2) hitan ideal
3) improvinga pessimistic
4) progressinga retrospective
20. Communal riots in Bombay have shaken _____ confidence in the countrys _____ capital.
1) peopleswholesale
2) carnalswholesale
3) exportersimportant
4) businesscommercial
21. _____ in this political party is _____ especially after several hopefuls were left out of the new cabinet and
some more dropped.
1) Suggestion increasing
2) Dissension snowballing
3) Agreement improving
4) Assertion down
22. Though she had made a visibly _____ statement, the _____ in it caused a misunderstanding among her
friends.
1) innocuous innuendo
2) harmless meaning
3) daring hint
4) bold insinuation
23. The post-Ayodhya riots exposed the minister as ____, who was unable to ____ the enormity of the
communal divide in the city.
1) a misanthropist measure
2) an administrator understand
3) a ditherer comprehend
4) a philanthropist gauge
24. Inspite of a ____ attached to it, tobacco has become ____ agri-export of India.
1) flavour a famous
2) name an agreeable
3) blame .. and expensive
4) stigma a leading
25. Indian industry is crying itself hoarse about ____ in demand, but is not ____ prices to attract buyers.
1) a slack reducing
2) a fall altering
3) an increase hiking
4) a dip announcing
Reading Comprehension
Exercise-1
Human being is a social animal and without society, he shall be either an angle or a beast was rightly remarked
by famous thinker Aristotle. The quality humanity can be achieved only through social living. We take social
living so much for granted that we fail to understand the immense influence society has over us. There is an
interaction between human beings and the society. But between the two, society is usually the dominant partner,
reason being that society existed long before we are born into it, and it exists long after we are gone. Society
gives us content, direction, and meaning to our lives and in turn we, in countless ways, reshape and leave the
same to the next generation. None had been and will be able to survive without society. No infant, could reach
maturity without the care and protection of other people and no adult could remain alive without using the
abundant information transmitted to him by society. Even the most rare individuals who escape from society
carry with them, into isolation, the recognitions, the ideas and the philosophies that they have learnt from others.
4. Between society and human beings, society is the dominant partner because
1) man does not exist without society
2) society existed before we were born and exists after we are gone.
3) Society is more powerful than an individual
4) Society exercises its influence even on future generation
Israeli astronomers say that black holes the remnants of a dying star can no longer be considered as
gateways to other universes, as was earlier believed. The research, which was carried out by Tsvi Piran and
Sachar Hod at the Racah Institute of Physics of the Hebrew University in Jerusalem, contradicts the belief held
by many physicists.
Black holes are debris of dying stars with infinite density and huge gravitational pull. They are called black
holes because even light cannot escape from them, making them really invisible. Within every black hole there
is a point-singularity in physicists parlance with infinite density. Anything reaching the points is utterly
devastated. However, in the late 60s British scientists Stephen Hawking and Roger Penrose showed that in some
black holes could serve as gateways to other universe or to other areas within our universes. Intact, in his best-
selling title, A Brief History of Time, Hawaking mentions about this possibility. However, by using super
computer-based calculations, Piran and Hod proved it was not possible to execute safe passage through black
holes as anything attempting to penetrate a black hole would itself become a point of blockage.
6. What was the belief that was proved groundless by the research conducted at the Hebrew University?
1) Blackholes are remnants of a dying star.
2) Blackholes have infinite density and huge gravitational pull.
3) Blackholes are gateways to other universes.
4) Blackholes are really not black.
9. Who were the two researchers who proposed that lack holes could serve as gateways to other universes?
1) Hawking and Piran
2) Piran and Hod
3) Stephen and Roger Rabbit
4) Hawking and Penrose
Trees plants which form forests are the life and blood of human civilization. Forests in India cover one fifth of
the land area. They have served mankind in various ways from the days of yore (ancient time). They have fed
numerous mouths and cured diseases since life began on the planet earth. The survival of the human species is
very much dependent on plants. A large portion of the food, medicine and materials we consume I our everyday
life is derived from some wild species of plants which grow in the tropics. Catharanthus rosens is on such
plant which originated in Madagascar and which enabled many children suffering from Leukemia stay alive. Dr.
Richard Evans of Harvard that University rightly pointed out, the drugs of the future grow in the primeval
jungle. Apart from feeding and protecting human lives, plants also protect fragile soil from erosion, regulate
atmosphere, maintain water supplies for agriculture and prevent formation of deserts. Despite the immense value
of plants, man has been destroying them simply due to ignorance and shortsightedness.
11. What are considered as the life and blood of human civilization?
1) Herbs
2) Trees and plants
3) Medicinal plants
4) Food yielding plants
12. Catharanthus rosens is a plant which enabled the survival of children suffering from
1) asthamaa
2) lung cancer
3) leukemia
4) arcoma
15. Besides feeding and protecting human lives plants protect mankind in which of the following ways:
1) Plants protect fragile sol from erosion
2) Plants regulate atmosphere
3) Plants maintain air water supplies for agriculture
4) all the above
Man is not born as person, Culture converts him from man to person. It is the variety of experiences and social
influences due to which he becomes a person and comes to possess personality. So socialization plays an
important role I the development of personality. The term personality as used in day to today language is
derived from the Latin word persona which means a mask. Two approaches for the study of personality have
been extended. These are (i) psychological and (ii) the sociological. Of course, there is third approach also and
that is bio-physical characteristic of personality. This exhibits physical outlook like height, health, features and
complexion of a person. These characteristics of individual organism is an inadequate representation of his
personality. The psychological approach enables us to understand personality in terms of mental trends,
emotions and sentiments. The sociological approach considers personality in terms of the status of an individual
in a group. The ideas, attitudes and values which a person holds comprise his personality.
17. Which of the following qualities play a major role in the development of mans personality?
1) social status
2) physical appearance
3) socialization
4) none of the above
18. Physical outlook like height, health, feature and complexion of a person makes up the ______ attribute.
1) psychological
2) bio-physical
3) sociological
4) all the above
Ancient manuscripts in different civilizations were written by hand before the introduction of printing. In fact,
the word manuscript comes form the Latin word manus meaning hand. Manuscripts were used not only for
religious purposes (most sacred books of different religious faiths were handwritten) but also to keep records of
important events, laws and accounts. Generally parchment, wood, clay tablets and dried leaves were used for
manuscripts. Quill pens were used to write with.
In India we find manuscripts illustrated with drawing. Some of the religious texts like the Bhagavata Purana or
the epics contain beautiful drawings besides the verses. There are illustrated manuscripts dealing with non-
religious themes also. Such manuscripts are generally housed in museums or Oriental manuscript libraries in
some cities of the country. When it comes to English, the first examples of upper and lower case letters can be
seen in early manuscript writing, like the beautiful Book of Kells written by Irish monks living on the Scottish
island of lona around 800 AD. At the same time,
Alcuin, an English monk, was employed by the French king Charlemagne to teach his officials how to write. He
developed a style which used mainly lower case letters because they were quicker to write. Alcuin also taught
them to put spaces between words and to finish off sentences with full stops, which led to the tradition of having
elaborate, decorative capital letters at the beginning of a page or paragraph, painted in gold, red, green and blue.
21. What kind of a document does the word manuscript refer to?
1) Documents written on parchment
2) Documents made of clay tablets
3) Ancient documents
4) Documents written by hand
22. What were the kind of materials used for manuscript writing?
1) Paper and bark
2) Stone and cave walls
3) Wood and clay tablets
4) Plastic and polythene
23. What was the mode that replaced manuscripts and was used instead to keep a record of things?
1) Museums
2) Libraries
3) Printing
4) Letters
24. Where does one see the first examples of upper and lower case writing in English?
1) in letters written by Scotsmen
2) Teachings of Charlemagne
3) Early manuscript writing
4) Paintings of Alcuin
25. What innovation led to the tradition of having elaborate, decorative capital letters at the beginning of a page
or paragraph?
1) Charlemagnes teaching aids
2) Alcuins initiative in using spaces and full stops
3) Book of Kells by Irish monks
4) Bhagavata Purana with beautiful drawings
Exercise-2
According to the State of the Worlds Children report published recently by the UNICEF, nearly a billion people
will enter the 21st century without the ability to either read or sign their names. In India, says the same report,
110 million children are out of school, of which 40 million have never been to school. As long as our politicians
consider such statistics simply as numbers to be quoted in their speeches, the possibility of their being jolted into
some urgent action remains bleak.
Education at the basic level should help people learn how to achieve fundamental and developmental right such
as health, nutrition and safe motherhood by constantly improving the quality of life. Besides, the right kind of
education could help the citizen of a diverse country such as ours to respect pluralism. It is not enough to have
access to basic education but also to be able to achieve meaningful and quality education. There is an urgent
need to ensure that when our children leave school they will have acquired the basic literacy, numeracy and life
skills, enabling them to continue to learn through life.
In India, the denial of education is all the more pronounced in the case of a girl child. Yet, it has been proved
beyond doubt that it is by providing education to the girl child that we can eventually hope to eradicate child
labour and achieve education for all.
Successive governments have reduced their concern for education to the status of a strident rhetoric and made
no sincere efforts in realizing an educational agenda that would lead to an optimum expansion of human
resources and talent. Young minds have only been allowed to be wasted in poverty and despair. Yet, the success
of primary education in China, or even a study of the achievement of a high percentage of literacy in Kerala
would show that it is possible to usher in literacy at the grassroots by a concerted, programme and a strong State
support for basic social service.
1. How does the State of the Worlds Children report concern India?
1) According to the report, 40 million children are out of school.
2) The report provides mere statistics for our politicians.
3) 110 million children are out of school in India, of which 36% have never been to school.
4) A billion Indians will enter the 21st century without the ability to either read or sign their names.
4. What has been the attitude of the Indian government in the past few decades, with regard to education?
1) Governments have reduced their concern to plain rhetoric.
2) Governments have made rapid strides for realizing an educational agenda.
3) Literacy has been ushered at the grassroots by a concerted programme.
4) Human resources and talent have been utilized.
This September, diplomats will gather in Montreal to mark the tenth anniversary of a landmark in international
environmental diplomacy: the Montreal Protocol on Substances That Deplete the Ozone Layer. The event will
provide a much-needed reminder that some of the daunting environmental problems confronting humanity can
be solved. And it will offer some important lessons about how to cope successfully with those global problems
that still loom.
The Montreal Protocol stands out a the one global environmental accord so far to produce clear results:
production of chlorofluorocarbons (CFCs), the most voluminous ozone-depleting substances, has plunged by
more than three-quarters from its peak in 1988. If all countries meet their commitments under the treaty,
scientists estimate the ozone shield will gradually begin to heal within the next few years, with a full recovery
expected by about 2050. Millions of skin cancer cases will have been prevented as a result, as well as untold
agricultural losses and ecological damage.
Coincidentally, this year the world also passed another important milestone the fifth anniversary of the Rio
Earth Summit. This occasion was marked by much hand wringing about the fact that most global environmental
trends continue to run rapidly in the wrong direction. Yet Earth Summit II produced discouragingly little in
the way of concrete action.
What can we learn from Montreals relative success? One lesson is the importance of the precautionary
principle. The decision to take action in Montreal before there was complete proof of the link between CFCs and
ozone depletion was an act of foresight that must be replicated with the problems of climate change, species
loss, and the proliferation of health-threatening toxic chemicals, among others.
Secondly, the Montreal Protocol demonstrated the pivotal role of industry. As public and scientific concern over
ozone depletion mounted, the business community decided to give up on blocking the accord and instead put its
energies into taking advantage of the new business opportunities opened up by the shift to substitutes for CFCs.
Many business then became advocates for further progress, rather than obstacles to it.
Finally, the experience with ozone depletion proves that North-South environmental partnerships can work.
Industrial countries have largely honoured their promises of financial and technological support to help
developing countries make the transition to ozone-begin technologies. Most developing countries, in turn, have
become strong participants, with many of them ahead of schedule in phasing out CFCs.
At a time when global environmental trends are so daunting, it is reassuring that the international community
has responded cooperatively to the challenge of rescuing the ozone layer. We now need to devote similar energy
to tacking the other pressing environmental challenges that cry out for attention. If this happens, by the tenth
anniversary of the Rio conference there will be some real progress to report.
6. What will be the message of the Montreal Protocol on Substances That Deplete the Ozone Layer?
1) Substances deplete the ozone layer.
2) Some of the daunting environmental problems can be solved.
3) Production of CFCs has to be banned.
4) Skin cancer cases result from pollution.
7. What is the expected positive outcome of the Montreal Protocol for the future?
1) Cure for skin cancer can be found.
2) Production of CFCs has come down by more than three quarters from its peak in 1988.
3) Ozone shield will heal if countries meet commitments.
4) Agricultural losses will increase
10. How does the experience with ozone depletion prove that North-South partnerships can work?
1) Ozone depletion in northern hemisphere can affect southern hemisphere.
2) Due to warming, ice-cups in the north melt, causing floods in the south.
3) Developed countries supported developing countries in making transitions.
4) CFCs were passed from industrial countries to developing countries.
Capital may be defined as anything made by man and can be used for further production. The prosperity of the
nation depends upon capital and its formation. Diversified capital is needed for faster economic growth and
development. The role of foreign capital is significant in this respect. Capital is broadly of four types viz., fixed
capital, circulating and floating capital, sunk capital and social capital or national capital. Capital formation or
accumulation is regarded as one of the important and principal factors in economic development. Vicious circle
of poverty can be broken through capital formation. The supply of machines, equipment and tools increase the
scale of production. Social and economic overheads are created. It is capital formation that leads to the fuller
utilization of available resources. Capital is also required to construct schools, hospitals, roads, railways etc.,
Investment in capital equipment not only increases production but also employment opportunities. Capital
formation leads to technical progress. A rapid rate of capital formation gradually dispenses with the need for
foreign aid. In fact, capital formation helps in making a country self sufficient and reduces the burden of foreign
debt.
12. Which of the following is needed for faster economic growth and development?
1) Diversified capital
2) Fixed capital
3) Circulating capital
4) National capital
Health education has traditionally been a one-way process, working on the assumption that local communities
need to learn from health educators. In developing countries, their messages often have little to do with local
practices which have evolved through centuries of trial and error. A processes
Of imposed education of this nature usually ends in frustration. We have also seen that these high pressure and
unempathetic educational process lead to a gradual erosion of some good local health practices.
For the Voluntary Health Association of India (VHAI), therefore, health education starts with an understanding
of local health traditions, food habits and the habitat. This will ensure that messages conveyed will be
understandable and acceptable to the local communities, and also that goals and milestones are set realistically.
There is always a two-way process of learning from the local community as well as offering them information
which has not hitherto been accessible to them. This process has led us to redicscover unrecorded knowledge
about food habits, effective traditional medicines which have no harmful side-effects, and refreshing patterns of
sustainable ecologically-friendly living. We feel that the holistic health of a community should be based on that
communitys own health traditions, many of which made a great deal of sense within the given context and are
truly sustainable.
We have equally found that current mainstream health education overemphasizes communicating through the
print media, even though in most developing countries a very large proportion of the people suffering from ill-
health cannot read. On the other hand, thee communities have vibrant, entertaining and ever-evolving methods
of communication such as local fairs, festivals, puppeteers, jugglers and magicians, and traditional theatre
groups.
After years of according too much importance to the role of print in communication, we are gradually realizing
the incredible potential of all thee other ways of communicating that have never ceased to be popular in the
community. Through our work with existing groups, we have seen how we can spread health and development
messages among the people in a much more effective manner. We have also seen that these alternative media
are much more interactive and closer to peoples hearts.
16. Why does health education end in frustration in the developing countries?
1) It leads to a gradual erosion of some good local health practices.
2) It considers local food habits.
3) Holistic health of a community is not considered.
4) It imposes education from health education from health educators.
17. what is necessary for health education to set goals and milestones that are realistic and acceptable to the
local communities?
1) Understanding of local health traditions, food habits and the habitat
2) A-2 way process of learning
3) A process to redicscover new methods of growing food
4) Refreshing patterns for eco-friendly living
18. What new discoveries in health education has the two-way process led to?
1) New student-teacher relationships
2) Unrecorded knowledge about food habits and traditional medicines
3) Communicating effectively through print media.
4) New form of local fairs and festivals
19. What is the drawback in the publicity programme of the current mainstream health education, in the context
of the developing countries?
1) It overemphasizes the importance of developing countries.
2) It overemphasizes communication through print media in developing countries
3) It lays stress only on illiterate people.
4) If forgets that a large section of the population is unemployed.
20. What are the alternative media that are much more interactive and closer to peoples hearts?
1) Movies and animation
2) Discotheques and publications
3) Fairs and festivals
4) Health clubs and gyms
Sociological research is very interesting and exciting. It is a form of systematic detective work. It has two sides:
theory and research. Both are essential. Facts without theory are meaningless and theories without facts are
unproved speculations of little use to anybody because there is no way to tell whether they are correct. Theory
and research are thus part of a constant cycle. A theory inspires research that can be used and are to verify, and
the findings of research are used to confirm, reject or modify the theory. Guess work and common sense play an
important role in sociological research. But these two issues do not play an important part in producing reliable
evidence on their own. Reliable evidence can be produced only by using a reliable research methodology.
Methodology refers to a system of rules, principles, and procedures that guide scientific investigation. Research
methodology provides guidelines for collecting evidence about what takes place, for explaining why it takes
place, and for doing so, in such a way that the findings can be checked by other researchers.
Exercise-3
AJET of molten lava arises from the womb of the earth, pierces through the seabed and gives rise to islands
amidst a turbulent ocean. In a rare feat of scientific endeavour, the birth throes of an emerging island in the
ocean were witnessed for the first time by scientists recently. Loihi, the young, undersea volcano 30 km south-
east of the main island of Hawaii, has suddenly become one of the worlds most active volcanoes.
Riding a submersible, a team of explorers under Alexander Malahoff of the Hawaii Undersea Research
Laboratory at the University of Hawaii, dived into the dark churning waters of the ocean. The aim was to probe
the cause of thousands of earthquakes that shock the area in the past months. The research ship carrying
Malahoff and his colleagues dove to the recesses of the undersea volcano and discovered that so much debris
had been thrown out by the eruption that they could hardly see more than a metre ahead.
But the most striking discovery was that the turmoil at the volcanos top had collapsed its summit, creating a
crater more than half-a-mile wide and 1,000 feet deep. Petes dome, an area on the southern rim of the volcano
that previously had been considered very stable, had simply vanished. Scientists discovered a riot of landslides,
toppled rock formations and bus-size volcanic boulders strewn around. The collapsed crater had vents spewing a
mixture of superheated water, dissolved minerals and microbes that thrive in the seabeds rocky substrate.
The tumult is part of the volcanos upward growth, say scientists. Lavaflows build it up and avalanches and
cataclysmic explosions knock it down. This widens the crater, creating a larger base for the next stage of
building. The fight is between construction and destruction, says Malahoff. The team estimates that the
collapse of the summit took two to three days and the slow collapse prevented generation of a huge tsunami, or
tidal wave, that could have caused large scale destruction in the adjoining islands.
The process by which islands are formed in this zone due to volcanic upheaval is dynamic. The great heat
engine within the earth stirs a sea of hot plastic rock that melts through the crust in places. A vast majority of
this action takes place in the hidden darkness of the deep sea. In certain places, the interior heat gives rise to jets
or plumes of lava that are stationary in relation to tectonic plates that move slowly overhead. The gigantic plates
that make up the earths crust move at the rate of a few centimeters a year, or about as fast as fingernails grow.
As a result of this slow movement, a single jet can, over the ages, leave a trial of extinct volcanoes in the plate
tens of thousands of years before Loihis fiery summit rises above the waves.
1. What is the source that contributes to the formation of an island from the ocean bed?
1) Islands are formed when flotsam on a sea coagulates.
2) Earthquakes result in lands breaking up to form islands
3) Lava from volcanoes forms islands
4) Meteors from outer space crash into the sea to form islands.
2. What was the original intention with which the research team set out to investigate the undersea volcano?
1) To find the reason for the turmoil at the volcanos top which collapsed its summit
2) To find out why Landslides occurred
3) To find the reason for the formation of islands
4) To find the cause of thousands of earthquakes that shook the Hawaii region
3. what was the most striking result of the changes in the volcanos stable surface?
1) An island had formed in the sea.
2) The summit of the volcano had collapsed, forming a crater.
3) Many earthquakes shattered the surrounding area.
4) The research ship carrying Malahoff sunk.
4. What is the process, as described by the scientists, through which the volcano grows upward?
1) Volcanoes grow because of intense earthquakes.
2) When islands emerge volcanoes grow upward.
3) Whenever a volcanos top collapses, it grows upward.
4) Lava flowing upward and widening the crater builds a volcano.
EARTHQUAKES hit an area with a ground shaking intensity. Therefore, a slow earthquake seems a
contradiction of sorts. Yet, US geologists have detected a quake on Californias San Adreas fault that lasted 10
days.
Occurring when rocks slip suddenly, earthquakes trigger sharp vibrations. As the quake advances, the fault
surfaces slip by several metres. The more slowly the fault slips, the less efficiently it generates seismic waves. If
the fault slip is slow enough, no waves are radiated and the earthquake is silent. If all earthquakes were slow
they would not be very hazardous.
Researchers led by Alan Linde of the Carnegie Institution, Washington DC, studied data from strain gauges
placed five km apart in San Juan Bautista, about 20 km inland from Monterey Bay in California. On the north of
this region, the fault remains locked and inactive for years on end. On the south of San Juan Bautista, tiny
quakes are caused due to the smooth movement of the tectonic plates past one another. According to Linde, the
whole pattern makes up a single, slow earthquake. It releases as much energy as a powerful quake of 4.8
magnitude.
Linde and his team were equipped with borehole strain gauges at the time the slow quakes occurred. The fault
slipped by just a few centimeters, which could hardly be detected by the most powerful satellite positioning
systems. He believes that some slow tremors may be precursors to major earthquakes. But until someone
collects systematic data on slow quakes, Linde says, I dont know if there is a real connection.
8. What were the instruments used by researchers to study the fault in the tectonic plates?
1) Satellites
2) Seismic waves
3) Strain gauges
4) Borchiles
9. What were the two variations of the fault pattern that made a single slow earthquake?
1) On the north, fault remains inactive while tiny quakes are caused in the south.
2) On the north, faults cause volcanoes while the earth slips in the south.
3) On the north, tiny quakes are caused, while the fault remains inactive in the south.
4) Two different seismic waves meet and cause a slow earthquake.
10. What is required to prove the connection between slow tremors and major earthquakes?
1) A tectome plate
2) A 4.8 magnitude earthquake
3) Systematic data on slow earthquake
4) Strain gauges
THREE-DIMENSIONAL (3-D) images rather, the illusion of viewing them-holds a certain fascination for us.
Whether it be special glasses to view stereo vision in cinema halls or the present day virtual reality headgear,
much effort has gone into creating 3-D effects. There are now reports of genuine 3-D images being traced out by
lasers inside a small cube made from special materials. Elizabeth Downing of Stanford University, California,
US, and her colleagues report the demonstration of a three-colour display in a rare earth doped metal fluoride
glass.
The underlying idea is almost a decade old. According to it, if a pair of infrared lasers are crossed in a suitable
transparent material, they could excite a fluorescence. The process is one of the absorption of two infrared
photons from the lasers by an atom and then emission in a single photons of visible light. The materials that
exhibit this properly are rare earth elements like erbium which absorb at two different frequencies and then emit
in the green region of the spectrum. The trick is to scan the crossing point of the lasers through a cube of glass
doped with rare earth and trace an image in three dimensions.
The device consists of a centimeter-sized cube of fluoride glass which is multiply sliced. Each slice has a
different rare earth dopant which fluoresces in red, green and blue. An array of lasers with movable mirrors are
arranged around the cube and these scan the whole volume of the cube.
The whole process hinges crucially on a compact, solid-state laser which produces the exact infrared
wavelengths which can be absorbed and the fluorescent material itself. The transparent substance should not
dissipate the energy absorbed into vibration energy. For the same reason, ordinary glass is not suitable for the
purpose. The recent development of powerful compact lasers and more importantly, of fluoride-based glass in
the 70s, provided the impetus needed to perform the experiment.
The fact that a simple device operating at room temperature, using commercially-available laser diodes, can
produce these images and can be viewed under ordinary room lighting conditions, is a significant step forward.
11. What are the presently available forms of 3-D images in the market?
1) Holograms in museum
2) Stereo vision in cinema halls
3) Deep sea divers vision equipment
4) Surgery viewing apparatus
12. What is the underlying principle behind genuine 3-D images being traced out inside a cube?
1) If light strikes any surface at a very high angle, it gets reflected back.
2) If a pair of infrared lasers are crossed, they could excite fluorescence.,
3) If protons are bombarded on a material, it emits radiation.
4) IF lasers are crossed in a rare medium, light waves are bent in a denser medium.
It is an experience most of us would have had many times. How come mosquitoes and other winged creatures
are partial in their biting habits? They seem to have distinct favourites, whose blood is selectively devourced.
While scientists always suspected that it is something to do with ones skin or, more specifically, its secretions
emitting odour, supportive evidence has been forthcoming only since the past few years.
The first conclusive evidence that people may vary in attractiveness to mosquitoes has been reported from
Tanzania by Burt G J Knols and colleagues from Department of Entomology, Wageningen Agricultural
University, Wageningen, Netherlands. Field trials have shown that men are distinct favourites particularly those
with large body- size; mercifully, children are targeted less frequently as compared to adults.
In the study of Knols, three volunteers slept in separate tents outfitted with a mosquito entrance and two exit
traps. The volunteers slept in the same tent, in the same bed and under the same unimpregnated bed net for some
days. Then over the next nine nights they moved between these three different sites. Analysis of mosquitoes
collected by the trap showed that one of the volunteers is significantly less attractive to two anopheles and one
culex species than were the other two. Knols etal conclude that three of the mosquito species that they collected
during the study period must have selected thei hosts on their specific body odour.
The effect of expired carbon dioxide, a known mosquito attractant, was effectively discounted since the three
volunteers were of approximately the same weight, size and age. The mosquitoes that were studied included
Anopheles gambae, Anfunestes giles, Culex quinquefasciatus and Mansonia spp in north east Tanzania. While
the anopheles species causes malaria, the culex and mansonia cause Japanese encephalitis.
Other recent experiments which have used wind tunnel bioassay, suggest that the bacteria and other microflora
present in the human skin may be responsible for attracting the mosquitoes. The human body odour secreted by
the two million odd eccrine sweat glands on the skin that release odourless sweat and a sparser number of
apocrine glands which secrete substances which vary from human to human in respect of smell or stink, as the
case may be. In fact, these scent glands produce a milky secretion that reacts with bacteria on the skin.
16. What was the common inference among scientists as to why mosquitoes bite some and not others?
1) Mosquitoes prefer men over women.
2) Mosquitoes attack people with thicker blood.
3) Mosquitoes are partial to a particular skin and its odour.
4) Mosquitoes attack children rather than adults.
18. How did the volunteers make sure that each one of them stood a fair chance of being bitten?
1) Equal number of mosquitoes were let into tents.
2) All volunteers were asked to apply mosquito repellents.
3) All volunteers shared similar features and they were moved between tents.
4) Volunteers were sent to eat Tarzarra.
Human genes are not for the asking, thus intoned the international Bar Association (IBA) and abut time too. For,
the field of human genome sequencing, though only five years old, has seen an almost runaway kind of research
explosion.
It was at the instance of the Human Genome Organisation (HUGO), a network of scientists working worldwide
on cracking the human genetic map, that the IBA set about drafting an international convention aimed at
establishing minimum legal standards for the use of human genetic information. The basic gist of the convention
requires that there will be no discrimination on the basis of genetic characteristics and genetic technology will
not be used to prevent births within any group of humans genetically disposed to conditions like sickle-cell
anaemia or Downs syndrome.
It also recommends rules on what should form the key element of genetics and sets standards for the use of
human genome information in developing new healthcare treatments and therapies. The convention will come
into effect after it is approved at the UN, where it will be presented in June next year. It was recently approved
during IBAs annual conference at Berlin, Germany. IBA will send copies of the convention to its 170bar
associations around the world.
Once governments approve the convention, they will be required to adopt laws which will guarantee that all
human genetic research in their countries will be conducted according to internationally accepted medical,
scientific and bio-ethical standards. Remarked Martine Rothblatt, chairperson of the IBAs bio-ethics
committee, The Human Genome Project is only about five years old and already there are numerous instances
of abuse being reported. The purpose of the treaty is to make sure that al the people in the world have the benefit
of legal protection.
21. Which area of research on human genes has witnessed a research explosion?
1) DNA formation
2) Human genome sequencing
3) Legal standards for use of genetic information
4) New healthcare treatments and therapies
22. What is the aim of drafting an international convention for gene research?
1) Establishing minimum legal standards for use of genetic information
2) For researching formation of genes
3) For understanding human genome sequencing
4) For finding a cure for sickle-cell anaemia or Downs syndrome
24. What steps are governments expected to take once the convention is approved?
1) They need to further research
2) Adopt laws which guarantee that research will be conducted in accordance with be conducted in
accordance with intentionally acceptable standards.
3) Governments need to bar further research on genetic dissection.
4) Governments need to pass information genetic disorders to people.
Exercise-4
For modernizing India, education has been considered significant determinant of aspiration, technology,
productivity and mobility. In fact, education has been considered important factor in accepting or rejecting
social change. In case of women, one of the major achievements, during the last hundred years has been the
growing favourable climate in support of womens education. There was a phase in our history, separate them
when it was believed that a girl does not need any education. Whatever she required in terms of housekeeping
could be learnt in the family. In fact there was a strong belief that if a girl is educated, she becomes a widow! In
this atmosphere of total apathy towards opening the doors of knowledge to girls, the social reformers in the
nineteenth century recognized the value of womens education in the stupendous task of reforming Indian
society. Of course, for them womens education meant studying upto middle school level. They had not
envisaged women extending their activities beyond the family. Education was looked upon as emancipating
women from age-old dominance of traditional values. In course of time this attitude changed and education of
woman has been valued not merely in terms of enhancing her familial role but also as a good lever for getting
employment.
1. Education is considered to be an important factor in
1) modernizing India
2) accepting or rejecting social change
3) emancipating women
4) all the above
2. Which of the following is regarded as one of the major achievements over the last hundred years?
1) Liberalizing India
2) Achieving total literacy.
3) Recognising the importance of womens education
4) Making India self-reliant
4. The social reformers of the nineteenth century promoted the cause of womens education because
1) they were against the decadent traditions.
2) They wanted to suppress male dominance.
3) They realized the value of womens education in reforming India or society.
4) They wanted women to become self-reliant.
5. The social reformers of the past believed that women should study only upto middle school level because
they
1) believed that an educated woman would decrease of employment for a man.
2) Were egoistic
3) Believed that higher education is not necessary for a woman
4) Had not envisaged women extending their activities beyond the family
Fish have evolved a multitude of deices to ensure their survival. Camouflage makes many species difficult to
detect. Streamlined bodies and smooth, closefitting scales enable others to move more swiftly through the water.
High-speed hunters, such as bonito, marlin and tuna, developed powerful muscles along their backbones to
enable them to whip their tails from side to side and propel themselves swiftly and tirelessly through the water.
The fish they hunted, a rich variety that includes many surface-feeding species, needed to find their own
answers to sudden raids by these marauders. If they couldnt outpace them they had to evade them.
Flying fish, of which as many as fifty species have been classified, have developed wing like pectoral fins; some
kinds also have broad ventral fins, notable for their striking patterns. When startled, the fish hurl themselves
from the water, spread their wings and glide at an average speed of about 56 km/h (35 mph).
Researchers have logged flights lasting thirteen seconds, during which the fish travel hundreds of metres to
elude their pursuers. The fish usually fly close to the water, but passengers on many ocean liners have been
startled by flying fish landing on decks up to 11 m (36 ft) above the tops of the waves.
For many years, argument continued about whether flying fish actually fly. To qualify as true, birdlike fliers,
these fish would need to vibrate their wings, not keep them rigid for gliding. High-speed photography has ended
the debate: most flying fish rarely flutter their wings, but hold them steady. Some kinds of South American
hatchet fish and an African freshwater species known as the butterfly fish really do fly, vibrating their wings on
leaving the water.
Another trick picked up by the high-speed camera is that sometimes in their flight flying fish change their body
angle so that their tails dip into the water. With a swift flick, they are airborne again, careering on in another,
and possibly life-saving, glide. Leaping in this way from the water may enable flying fish to escape seaborne
predators, but it gives another enemy sea birds better chance of a feast. Most flying fish live in the open
ocean, where there are usually few birds. But those that put on their flying circus closer to shore always risk
being snapped up in flight by the superior performers of the air.
8. What is the mystery about the flight of the flying fish that high-speed camera solved?
1) Whether flying fish are edible
2) Whether flying fish can camouflage
3) Whether flying fish can swim
4) Whether flying fish actually vibrate their wings
9. How does the fishs flight sometimes land it in a devil and deep sea predicament?
1) Escaping from water and burning up in air
2) Jumping onto land and asphyxiating
3) Escaping water pursuers and falling prey to birds
4) Swimming away from pursuers only to end up in fishing nets
10. Who are the superior performers of the air that pose a risk to flying fish?
1) Fishing trawler
2) Stronger swimmers
3) Sharks
4) Sea birds
Many of our sports and pastimes got their names in unusual ways. None, perhaps, is stranger than that of
snooker, which is said to have come from an insult. In 1875, British army officers at Jabalpur, India, were bored
playing billiards and took up a new game called pyramids, which used a number of red balls, Later, they devised
a variation, adding balls of different colours until there were twenty-two on the table, the current number for
snooker.
In the 1880s, Colonel Sir Neville Chamberlain (not the future British prime minister) intrduced the game at the
Ooty club in Ootacamfund. One evening, when a guest missed an easy shot, Sir Neville called him a snooker,
a term used at the Royal Military Academy in London to describe first-year (and unschooled) cadets. The
colonel, afraid that his guest might take offence, quickly added, We are all snookers when it comes to this
game. The name caused amusement, and caught on.
Badminton, the racket game of hitting a feather shuttlecock over a net, comes from a childrens game known as
battledore and shuttlecock. It is named after Badminton, a country estate in Gloucestershire, England, where the
game was once played by the family and guests of the Duke of Beaufort. Like snooker badminton became
popular with British army officers in India in the 1870s. The modern rules were first drawn up in Karachi in
1877.
Table-tennis was once, and sometimes still is, called ping-pong. An English engineer, James Gibb, helped to
pioneer the sport, which was played in the 1880s with a cork ball. Later, Gibb introduced an American celluloid
ball, called a Gossima, which made the game faster and more popular. In 1901, John Jacques, a British
manufacturer of table-tennis equipment, renamed the game ping-pong, based on the sound of the celluloid ball
striking one side of the table and then the other. Early this century, ping-pong enjoyed great popularity as a
game played on home dining tables. Later, special standard-sized tables were marketed. A Ping-Pong
Association was formed in Britain in 1922, and shortly after was renamed the Table Tennis Association.
Peering at the stars through a home-made telescope on Christmas night 1980, Roy Panther identified a new
comet, the first to be discovered by a British astronomer for fifteen years. Three weeks later, David Branchett,
viewing the night sky from his bedroom window and using only a pair of ordinary binoculars, saw a bright glare
in the sky. Still unidentified, it is called Branchetts Object.
Remarkably in an age when nations spend enormous sums on technology for exploring space, the worlds
amateur astronomers 15000 of them in Britain, 250000 in the United States continue to make outstanding
contributions to our knowledge of the stars.
Star-gazing is a rewarding pastime that offers a sense of adventure and excitement. A major discovery, such as
that of a comet, can bring immortality. Four comets are named after George Alcock, long acclaimed as one of
the worlds most famous amateur astronomers, who discovered them all through binoculars.
You dont need elaborate or expensive equipment to become a starwatcher. Most likely you already have the
essentials a reclining chair and a pair of binoculars. Star maps, to be found in many books, will help you to
sort order from chaos. Find somewhere away from the glare of street and house lights. Using a weak torch to
avoid dazzle, try to relate your star map to the patterns of the night sky. Several thousand stars are visible to the
naked eye, but binoculars will add clarity to your viewing.
If you have a camera almost any kind will do photographing star patterns will help your understanding, and
give valuable reference for future work. Clamp your camera to something firm, and use a cable release to avoid
camera shake. Experiment with time exposures of different lengths, anything from thirty seconds to ten
minutes, with your lens set on infinity. Work at first with black-and-white film. If you learn to develop your own
film and enlarge your prints, which is not difficult, you will get even more pleasure from your star-watching.
To speed your progress, join an astronomical society, where you will find experienced amateurs keen to give
advice, particularly about equipment. Some groups operate their own observatories for members who dont own
a telescope.
One glance at the sky on a clear and moonless night will demonstrate that it offers an infinite source of
fascinating and useful study, with the incentive that professional astronomers can never keep watch on it all.
16. Where do the outstanding contributions to the existing knowledge of the stars come from?
1) From professional researchers across the world
2) From amateurs using simple equipment
3) From the Hubble telescope in outer space
4) From the Royal Observatory, UK
18. how can you learn to understand the patterns of the night sky?
1) With the aid of a torch
2) Using intuition
3) With the naked eye
4) Binoculars and a star map
The United Nations is alarmed over the way the western pop music industry is making drug abuse seem
acceptable and even glamorous. The multi-billion dollar western pop music industry is under fire. It is being
blamed by the United Nations for the dramatic rise in drug abuse worldwide.
The most worrisome development is a culture of drug-friendliness that seems to be gaining prominence, said the
UNs 13-member International Narcotics Control Board in a report released in 1998. The 74-page study says
that pop music, as a global industry, is by far the most influential trend-setter for young people of most cultures.
Some lyrics advocate the smoking of marijuana or taking other drugs, and certain pop artistes start making
statements and setting examples as if the use of drugs for non-medicinal purposes were a normal and acceptable
part of a persons lifestyle, the study says.
Surprisingly, says the Board, the effect of drug-friendly pop music seems to survive even the occasional shock
of death by overdose. Such incidents tend to be seen as an occasion to mourn the loss of an idol, and not an
opportunity to confront the lethal effect of recreational drug use, it notes.
Since the 1970s, several internationally renowned singers and move stars including Elvis Presley, Janice
Joplin, John Belushi, Jimi Hendrix, Sid Vicious, River Phoenix, Jonathan Melvin and Andy Gibbs have died
of either drug abuse or drug related illnesses.
The US fashion industry another heavy drug-user in 1997 coined the term heroin chic adding an aura of
sophistication to the growing habit of drug addiction among the jet set. In late 1997, US President Bill Clinton
accused some of the fashion magazines and fashion photographers of glorifying drug use by playing up pictures
of heavily sedated male and female models.
The UN study also blames the media for its portrayal of certain drug issues especially the use of marijuana and
the issues of liberalization and legislation which encouraged, rather than prevented, drug abuse.
The Board says its concern was not so much coverage but the dissemination of knowledge on how to grow
cannabis indoors, or hot to make a range of designer drugs or which common plants contain hallucinogenic
properties. Over the last years, we have witnessed how drug abuse is increasingly regarded as being acceptable
or even glamorous, says Hamid Ghodse, president of the Board. Powerful pressure-groups run political
campaigns aimed at legalizing controlled drugs, he says. Ghodse also points out that all these developments
have created an environment which is tolerant or even favourable to drug abuse and undermines international
drug prevention efforts currently underway.
The present study, he says, focuses on the issue of demand reduction and prevention within an environment that
has become tolerant of drug abuse. The Board calls on governments to abide by their legal and moral
obligations, and to counteract the prodrug messages of the youth culture to which young people increasingly are
being exposed.
21. Why is the pop music industry being blamed for the rose in drug abuse?
1) Drugs are passed freely during music shows.
2) Drugs help people relax after pop concerts.
3) Pop music is making drug abuse seem glamorous.
4) The United Nations has accused the multibillion dollar industry
22. What is the ways in which pop music supports drug abuse?
1) Some lyrics are vulgar, and contain sexual innuendoes
2) Certain pop artists were jailed for drug abuse.
3) Music and drugs go together quite well.
4) Some lyrics advocate the use of drugs.
23. Why are cases of overdose not taken seriously and almost go ignored?
1) Such incidents are rare.
2) Such incidents are occasions to mourn the loss of an idol.
3) Death by overdose is an accepted fact and doesnt surprise anybody.
4) Such incidents are soon forgotten.
24. Which their industry is also responsible for hogging limelight through drug abuse?
1) Pharmaceutical
2) Entertainment
3) Agriculture
4) US fashion industry
25. What are the issues of focus for the preset study?
1) The reasons for use of drugs
2) How to cure addicts
3) Demand reduction and prevention
4) Economic effect of drug abuse
Exercise-5
Violence against women can only be curbed if men become conscious of their responsibilities and society as a
whole accords women their due place.
Empowering of women through rights and honoring them both I letter and spirit would go a long way in
tackling this serious and complicated issue, several activists of NGOs, United Nations and government officials
felt after working for the cause of womenfolk for a long time.
Sharing their experiences at a meeting convened by United Nations Development Fund for Women (UNDFW) I
New Delhi, the participants said rights to women were denied at every level starting from the family itself.
Countries around the world time and again ratified laws and rights for women but the society and the syste
lacked the will to implement them.
Gender-based inequities permeate almost every aspect of the growing girls socio-cultural environment. A girl
must be nurtured and groomed in an environment of dignity to become skilled and confident.
Gender violence caused more death and disability among women aged 15 to 44 than cancer, malaria, traffic
accidents or even war. The indirect costs of gender violence to development were extremely high, they felt.
The negative impact of gender violence on reproductive health is just beginning to be understood and
recognized.
The situation of women in terms of their conditions and position needs to be understood in the larger socio-
economic, cultural and political framework of the country.
Three main factors have contributed to the dis-empowerment of women, especially those in poverty. They are
viz patriarchal culture, discriminatory social hierarchy and division of labour.
The impetus for changing practices must begin now, they said and outlined a programme of action for the next
couple of months, including a 15-day campaign starting on November 25. The campaign coincides with
observance of the 50th anniversary of the Universal Declaration of Human Rights.
1. What was seen as the solution to violence against women, by several activists of NGOs, United Nations and
government officials?
1) Empowering men with more responsibilities
2) Empowering women through rights
3) Allowing women to work with NOGs and the UNDFW
4) Strict monitoring and prevention of violence against women by law enforcing agencies
3. Why are the ratified laws and rights for women in most countries ineffective?
1) The laws are not strict.
2) Law enforcing agencies are corrupt
3) Courts dont uphold appeals.
4) Society and system lack will to implement laws.
4. Why is the socio-cultural environment not conductive for the growth of a girl child?
1) Economic depravement
2) Inadequate academic facilities
3) Gender-based inequalities
4) Religious compulsions
5. What are the factors that lead to the disempowerment of women, coupled with poverty?
1) Religious compulsions
2) Physical limitations
3) Discriminatory social hierarchy and patriarchal culture
4) Corruption at various levels of society
Today, the world over, education is considered to be the best agent for promotion of rational and scientific
values and attitudes. While a total faith in educations modernizing role may be somewhat exaggerated,
nevertheless, State that are in the process of nation-building rely considerably on education to modernize the
outlook and world-view of their population.
Unlike In the past, when education was anchored in pathsals, gurukuls and madrasahs that emphasized religion-
traditional learning, modern education mainly provides scientific knowledge and superior technical skills. But,
at the same time, it directly or indirectly, also influences the minds of the learners, especially of those who are in
the younger generation. Since young minds are receptive to new ideas and values, education has its greatest
impact on young people. Also, the young tend to have questioning minds and are critical enough to evaluate
what is taught to them. Hence, faith is placed in them that they will usher in changes in society. In India, our
hopes of building a secular society, therefore, largely rest upon the millions of school and university students,
who are today being exposed to modern science, rationality and humanism.
9. The hope of building a secular society rests on todays school and university students because they
1) are exposed to modern science, rationality, and humanism.
2) Are more creative.
3) Have a scientific bent of mind.
4) Uphold moral values.
Radio telescopes may be turned to receive radio waves of the desire wavelength in the same way as we tune
radio t receive only the station we want. Radio telescopes not only give a view of the invisible universe, but
can also probe much deeper into space when compared with optical telescopes. Radio waves can propagate
through dust clouds in space, just as radio signals on the Earth can penetrate cloudy or foggy weather. Thus,
they enable radio astronomers to construct images of regions complete hidden from the view of optical
telescopes. However, radio telescopes normally receive radiation within a narrow band of wavelengths.
13. Why is a radio telescopes considered to be superior to an optical telescope? The former
1) more powerful.
2) Gives a view of even the smallest objects
3) Probes much deeper into space
4) Is expensive.
14. How do Radio waves help astronomers construct images, which are hidden from the view of optical
telescopes as they
1) can penetrate cloudy or foggy weather.
2) Are of a higher speed when compared to optical telescopes.
3) Emit radiations of all wavelengths.
4) Can penetrate through dust clouds in spare.
A continent that rose above the Indian Ocean at least three ties over 80 million years, only to disappear beneath
the waves again each time, has been discovered on the seabed about 4,000 kilometres south-west of Australia.
The events that raised the Earths crust above sea level are so unexpected that theories of how continents form
may have to be revised.
Geologists aboard the drilling ship Joides Resolution, which is working on the international Ocean Drilling
Program, have found that two submerged features, the Kerguelen Plateau and Broken Ridge, now about 2,000
metres below the surface, were once joined. Together, they formed a continental shelf of 2 million square
kilometres.
Only a small part no bigger than Britain actually protruded above the surface. This landmass probably
played a role in the migration of animals after the super continent of Gondawana broke up, which started about
130 million years ago. The new discovery shows that the breakup, which gave rise to Australia, Antarctica and
India, was much more messy than once thought, says Mike Coffin of the University of Texas at Austin, one of
the leaders of the drill team.
Marine geologists have suspected for more than a decade that the Kerguelen Plateau was part of an ancient
continent. Now samples drilled over the past two months have provided the first direct evidence. At Elan Bank,
on the western side of the plateau near Heard Island, the geologists found
Garnet-bearing metamorphic rock, which forms at the high temperatures and pressures found deep in continental
crusts.
At other drill sites, layers of sediment were found containing plant spies, seeds, pollen, wood fragments and
charcoal. If there are continental fragments below the Kerguelen Plateau, then that changes the way you
reconstruct the formation of the continents, says Philip Symonds of the Australian Geological Survey
Organization in Canberra.
Based n the plant remains and fossilized marie plankton, the researchers have identified three periods during
which the crust rose above sea level. The first was about 110 million years ago, when the southern end of the
plateau rose above the surface. Part of the crust broke the surface again about 85 million years ago each tie
farther to the north and involving a smaller amount of land.
The crust would have been pushed up by intense volcanic activity. As the magma plume that a caused this uplift
fooled and contracted, the crust slipped back below the waves once more. But because this part of the seafloor
Antarctic Plate was moving so slowly over the volcanic hot spot in the Earths mantle, this cycle repeated
itself. The volcanism was on a scale far greater than any in recorded history, Say Coffin. it is unknown for an
event of this magnitude to be repeated three times. It means we dont quite understand mantle plumes.
19. Why is the garnet-bearing metamorphic rock taken as sure evidence to say that Kerguelen Plateau was part
of an ancient continent?
1) Its age tallies with a continents age.
2) Garnet-bearing rocks are found only on continents.
3) On what basis have researchers identified three periods during which the crust rose above sea level?
4) None of the above
20. On what basis have researchers identified three periods during which the crust rose above sea level?
1) Martine plankton and volcanoes
2) Plant remains and marine plankton
3) Volcanoes and plant remains
4) Fossils and Volcanoes
Among the novel methods of combating cancer are some drugs that fight the disease by blocking blood supply
to the cancerous cells. These drugs stop angiogenesis the process by which new blood capillaries grow to
augment blood supply to growing tissues like tumours. Two new substances have been identified by Michael
ORely and his team from the Childrens Hospital, Harvard Medical School in Boston, US, that prevent the
endothelial cells, which line the walls of capillaries, from multiplying.
Malignant tumours are like revolting soldiers undisciplined and dangerous, refusing to obey any of the rules of
normal, organized and disciplined cellular growth. Arresting this unregulated growth has been the objective of
all cancer therapies. Anti-cancer drugs prevent such proliferation by stopping the division of cancerous cells, but
in the process they also tend to arrest the growth of normal cells. Not surprisingly, bone marrow, hair follicles
and the gut are seriously affected in people undergoing chemotherapy.
The inhibition of angiogenesis currently considered one of the hottest areas in cancer biology is offering new
hopes of cancer treatment. As many as nine drugs are undergoing clinical trials in various stages of
development. ORellys group is concentrating on angiostatin and endostatin, two very promising drugs. So far,
trials have shown that these drugs can decimate tumours (at least in mice). More importantly, they also seem to
play an important role in keeping at bay the so-called secondary cancers, often considered more lethal than
primary tumours.
Secondary tumours erupt in the body through a process called metastasis, which occurs when the proliferating
cancer cells go beyond simple over breeding. Once metastasis starts in the body of a cancer patient, it is nearly
always fatal. This is because a single tumour can either be excised by surgery or decimated through radiation;
secondary tumours, however, are too numerous and spared out to be dealt with by any of the conventional anti-
cancer therapies.
Surprisingly, some primary cancers actually suppress the formation of secondary cancers in the body through a
process known as dormancy. In such cases, the secondary cancers erupt only when the primary one is removed
from the body. Thus, such primary cancers are known t be more effective in checking the spread of secondary
ones than even the most potent drugs now known.
21. What is the target area of the new drugs?
1) Cardio-vascular arteries
2) Preventing angiogenesis
3) Cure malignant tumours
4) Keeping at bay secondary cancers
23. What is the measure of success being achieved by the new drugs?
1) These drugs decimate mice and other pests.
2) They prevent hair follicles from falling.
3) They decimate tumours, and arrest secondary cancers.
4) They obviate the need of surgery.
24. Why are secondary tumours, caused due to metastasis, always nearly fatal?
1) They cant be detected.
2) They are formed inside blood capillaries.
3) They dont respond to radiation
4) They are numerous and spread out.