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PARA BANKING
GROUP 3
Shraddha Damania Mihir Mehta Charmi Morakhia Vikas Mehta Noman Agashiwala
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What is Universal Banking? Universal Banking is a superstore for financial products under one roof. Corporate can get loans and avail of other handy services, while can deposit and borrow. It includes not only services related to savings and loans but also investments. Relationship between Para-Banking & Universal Banking?
PARA BANKING
Most of the rationales for regulating banks fall into broad categories:
Subsidiary Companies Equipment leasing, Hire purchase business and Factoring services Banks undertaking PD (Primary Dealer) business Mutual Fund Business Insurance business Underwriting of Corporate Shares and Debentures & bonds of Public Sector Undertakings Safety Net Schemes
Commercial Banking
Retail Banking
Merchant Banking
What Is Merchant Banking? A merchant bank deals with the commercial banking needs of a) international finance, b) long term company loans, and c) stock underwriting
I. II. III.
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2.
3.
Investments which are classified as 'Held for Trading' category. Banks participation in the equity subject to RBI approval.
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b) Leasing
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Finance Leasing : The leasing company recovers the full cost of the equipment, plus charges, over the period of the lease. Operating Leasing : The leasing company will lease the equipment, expecting to sell it secondhand. c) Hire purchase agreement After all the payments have been made, the business customer becomes the owner of the equipment
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Single Borrower & Group Borrower 15% of capital funds or up to 20% for infrastructure Projects.
Group Borrower- 40% & 50 % respectively
OTHER REQUIREMENTS
Balanced portfolio vis--vis aggregate credit - 10 %. Approval of the Boards to avoid asset liability mismatch.
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Banks cannot buy back units of mutual funds from their customers.
Proposal to extend any credit facility to individuals against the security of units of mutual funds. Banks holding custody of mutual fund units on behalf of their customers.
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ELIGIBILITY CRITERIA
Owned Capital of Rs 1000 crores
Minimum CAR of 9 % Net NPA of less than 3 %
PRUDENTIAL NORMS
Investment will be counted as a part of SLR. Separate SGL for their PD Subsidiaries with minimum balance of Rs 100 crores. Investment valuation of PD Portfolio. A proper MIS has to be maintained.
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CURRENT SCENARIO
Subsidiaries
Eg:- SBI LIFE INSURANCE LTD
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NEWS
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STANCHART TO HIRE 850 PEOPLE FOR PRIORITY BANKING RRBs embrace core banking solutions
In step with RBI's direction to implement 100% core banking solutions (CBS) by September 2011, United Bank of India (UBI)-sponsored regional rural banks in four states have started working on their IT-systems.
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SUUTI eyes Rs 7K cr from sale of 17% in Axis Bank The government has made the first move to use the surplus funds of commercial banks to meet its short-term cash needs
RBI allows cash withdrawal from merchant banker terminals IDBI Bank lowers interest rates on deposit, auto loans
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IndusInd Bank raises US$ 100 million through Qualified Institutional Placement (QIP) Housing Development Finance Corp, India's top mortgage lender, said on Tuesday it planned to raise Rs 40 billion ($820 million) through two- and three-year bonds.
SBI launches 'My Home' campaign for home loans Retired teachers, Traders can make to Banks Business Correspondent list. JPMorgan profits a strong sign for banking sector.
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BIBLOGRAPHY
PARA BANKING NORMS BY RBI (CIRCULAR) www.rbi.co.in www.dfhi.co.in AXIS BANK ANNUAL REPORT 2008-09 ECONOMIC TIMES MINT INDIAINFOLINE NEWSLETTER
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