Tagliness of Banks

1. State Bank of India (Group) :-

Pure banking nothing else ; With you all the way; The Nation

banks on us; A Bank to the common man; A banker to every

Indian.

2. IDBI Bank:- Banking for All; Aao Sochein Bada.

3. Bank of Baroda:-- India’s international bank.

4. United Bank of India:- The Bank that begins with U.

5. Punjab National Ban :- A Name you can Bank Upon

6. Allahabad Bank :- A tradition of trust.

7. Yes Bank:- Experience our expertise.

8. Axis Bank :- Badhti ka nam zindagi.

9. Citi Bank :- Let's get it done.

10. Standard Chartered Bank - Your Right Partner.

11. Andhra Bank :- Where India Banks

12. Bank of India:- Relationships beyond banking.

13. Bank of Rajasthan:- Together we Prosper

14. Bank of Maharashtra:-- One family one bank.

15. Canara Bank:- Together We Can ; It’s easy to change for

those who you love

16. Central Bank of India:- Build A Better Life Around Us; Central

to you since 1911.

17. Corporation Bank:- Prosperity for All.

18. Dena Bank :-- Trusted Family Bank.

19. Andhra Bank:- Much more to do; With You in focus.

20. Allahabad Bank :- A tradition of trust

21. DBS Bank :- Living, Breathing Asia

22. American Express Bank:- Do more

23. Indian Bank :-- Your tech friendly bank.

24. HSBC Bank - The World's local bank.

25. HDFC Bank :- We Understand Your World.

Headquarters of NATIONALIZED BANKS

• Allahabad Bank-Kolkata 
• Bank of India -Mumbai 
• Bank of Maharashtra -Pune 
• Canara Bank -Bangalore 
• Central Bank of India -Mumbai 
• Corporation Bank -Mangalore 
• Dena Bank -Mumbai 
• Indian Bank- Chennai 
• Indian Overseas Bank- Chennai 
• Oriental Bank of Commerce- New Delhi 
• Punjab National Bank- New Delhi 
• Punjab & Sind Bank- New Delhi 
• State Bank of India- Mumbai 
• Syndicate Bank- Manipal 
• UCO -Bank Kolkata 

IMPORTANT CODES USED IN BANKING

[1] IFSC (Indian Financial System Code):

Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system.

This is an 11 digit code with the first 4 alpha characters representing the bank, The 5th character is 0 (zero).and the last 6 characters representing the bank branch.

For ex: PNBN0014976 :

i. First 4 character PNBN – refers to Punjab National Bank.

ii. 0 is a control number.

iii. last six characters (014976) represents the PNB branch kurshi Road, Lucknow.

[2] MICR – Magnetic ink character Recognition :-

MICR is 9 digit numeric code that uniquely identifies a bank branch participating in electronic clearing scheme. 

Used to identify the location of a bank branch. 

City (3) Bank (3) Branch (3)

The MICR code is allotted to a bank branch is printed on the MICR band of cheques. MICR used for electronic credit system.

[3] SWIFT Code :-

Society for Worldwide Interbank financial tele communication India was 74th Nation to join SWIFT Network.

SWIFT Code is a standard format of bank Identifier code. This code is used particularly in International transfer of money

between banks.

A majority of FOREX related message are sent to correspondent banks abroad through SWIFT.

SWIFT Code consist 8 or 11 character when code is 8 digit, It is referred to primary office 

4 – bank code

2 – country code

2 – location code

3 – branch code (optional)

IMPORTANT BANKING CONCEPTS

Q16) Name the types of “Inflation”? 

•  Wage inflation 
•  Price power inflation 
•  Cost-push inflation 
•  Sectorial inflation
•  Stagflation 
• Mild inflation 
• Hyper-inflation

Q17) What are the effects of “Inflation”?

Following are the effect of inflation:-

•  It decreases the real value of money
• It discourage investment and savings
• It leads to shortage of goods
• Mitigate economic recessions
•  Reduces the level of debt

Banking Awareness

11) What is STRIPS?

Separate Trading for Registered Interest & Principal Securities.

12) What is KYC?

KYC is an acronym for “Know your Customer”, a term used for customer identification process. It involves making reasonable efforts to determine true identity and beneficial ownership of accounts, source of funds, the nature of customer’s business, reasonableness of operations in the account in relation to the customer’s business, etc which in turn helps the banks to manage their risks prudently. The objective of the KYC guidelines is to prevent banks being used, intentionally or unintentionally by

criminal elements for money laundering.

KYC has two components - Identity and Address. While identity remains the same, the address may change and hence the banks are required to periodically update their records.

13) What do you mean by term “CASA” related to bank?

CASA stands for Current Account Savings Account. The CASA ratio shows how much deposit a bank has in the form of current and saving account deposits in the total deposit. A higher CASA ratio means better operating efficiency of the bank because on current account there is no interest payable whereas on savings

account a tiny 3.5% interest is payable by the bank. CASA ratio shows how much of the deposit of the bank comes from the current and savings deposit.

IMPORTANT BANKING CONCEPTS

1) What is Asset Management Companies?

A company that invests its clients' pooled fund into securities that match its declared financial objectives. Asset management companies provide investors with more diversification and investing options than they would have by themselves. Mutual

funds, hedge funds and pension plans are all run by asset management companies. These companies earn income by

charging service fees to their clients.

2) What is Liquidity Adjustment Facility(LAF)?

A tool used in monetary policy that allows banks to borrow money through repurchase agreements. This arrangement allows banks to respond to liquidity pressures and is used by governments to assure basic stability in the financial markets.

3) What is Bancassurance?

It is the term used to describe the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell

insurance products.

4) What is Balance of Trade?

The value of a country’s exports minus the value of its imports. Unless specified as the balance of merchandise trade, it normally incorporates trade in services, including earnings (interest,dividends, etc.) on financial assets.

5) What is Balance of Payments?

A list of all of a country’s international transactions for a given time period, usually one year. Payments into the country (receipts) are entered as positive numbers, called credits;

Payments out of the country (payments) are entered as negative numbers called debits. A single numbers summarize all of a country’s international transactions: the balance of payments

surplus.

6) What is NOSTRO Account?

A Nostro account is maintained by an Indian Bank in the foreign countries.

7) What is VOSTRO Account?

A Vostro account is maintained by a foreign bank in India with their corresponding bank.

8) What is IMPS?

Immediate Payment Service. It is an instant interbank electronic fund transfer service through mobile phones. Both the customers must have MMID (Mobile Money Identifier Number). For this service, we don’t need any GPS-enabled cell phones.

9) What is BCBS?

Basel Committee on Banking Supervision is an institution created by the Central Bank governors of the Group of Ten nations.

10) What is LIBOR?

London InterBank Offered Rate. An interest rate at which banks can borrow funds, in marketable size, from other banks in the

London interbank market.

MUTUAL FUNDS

Mutual funds are investment avenues that pool the money of several investors to invest in financial instruments such as stocks, debentures etc. The profit earned on the investments is distributed among the investors on the basis of the units held by each of them.

Due to a large pool of investors, the individual risk is spread. So individually you take on low risk.

 The mutual funds in India are governed by Association of Mutual Funds in India, the umbrella body for mutual funds, which is in turn governed by the Securities and Exchange Board of India.

 Base Rate:-The Base Rate is the minimum interest rate of a Bank below which it cannot lend, except for DRI advances, loans to bank's own employees and loan to banks' depositors against their own deposits. (i.e. cases allowed by RBI).  

 Credit Authorization Scheme:-Credit Authorization Scheme was introduced in November, 1965 when PC Bhattacharya was the chairman of RBI. Under this instrument of credit regulation RBI as per the guideline authorizes the banks to advance loans to desired sectors

 Open Market Operations:-An open market operation is an instrument of monetary policy which involves buying or selling of government securities from or to the public and banks.

Moral Suasion:-Moral Suasion is just as a request by the RBI to the commercial banks to take so and so action and measures in so and so trend of the economy. RBI may request commercial banks not to give loans for unproductive purpose which does not add to economic growth but increases inflation.

 Special Drawing Rights (SDRs):-It is a reserve asset (known as ‘Paper Gold’) created within the framework of the International Monetary Fund in an attempt to increase international liquidity, and now forming a part of countries official forex reserves along with gold, reserve positions in the IMF and convertible foreign currencies.

Demat Account: The term "demat", in India, refers to a dematerialised account for individual Indian citizens to trade in

listed stocks or debentures.

Endorsement: When a Negotiable Instrument contains, on the back of the instrument an endorsement, signed by the holder or payee of an order instrument, transferring the title to the other person, it is called endorsement.

Merchant Banking : When a bank provides to a customer various types of financial services like accepting bills arising out of trade, arranging and providing underwriting, new issues, providing advice, information or assistance on starting new business, acquisitions, mergers and foreign exchange.

Mortgage: Transfer of an interest in specific immovable property for the purpose of offering a security for taking aloan or advance from another. It may be existing or future debt or performance of an agreement which may create monetary obligation for the transferor (mortgagor).



BPLR: In banking parlance, the BPLR means the Benchmark Prime Lending Rate.

Prime Lending Rate (PLR): The rate at which banks lend to their best (prime) customers. It is usually less than normal interest rate.

Wholesale Banking: Wholesale banking is different from Retail Banking as its focus is on providing for financial needs of industry and institutional clients.

BANKING ABBREVIATIONS

51. CCEA – Cabinet Committee on Economic Affairs

52. CECA - Comprehensive Economic Cooperation Agreement

53. CEPA – Comprehensive Economic Partnership Agreemeny

54. DTAA – Double Taxation Avoidance Agreement

55. ECBs - External Commercial Borrowings

56. EFSF – European Financial Stability Facility

57. FINO- Financial Inclusion Network Operation

58. FIPB – Foreign Investment Promotion board

59. FSLRC – Financial Sector Legislative Reforms Commission

60. CRAR: Capital to Risk-weighted Assets Ratio

61. LCR: Liquidity Coverage Ratio

62. TARC - Tax Administration Reform Commission

63. GIRO - Government Internal Revenue Order

64. FRBMA: Fiscal Responsibility and Budget Management Act

65. AMFI- Association of Mutual Fund in India.

66. TIEA – Tax Information exchange Agreement

67. GAAR - General anti avoidance rule

68. GSLV - Geo-Synchronous Launch Vehicle

69. PPP – Public Private Partnership & Purchasing Power parity

70. PSLV – Polar Satellite Launch vehicle

71. TAPI - Turkmenistan-Afghanistan-Pakistan-India.

72. QFI -Qualified Foreign Investors

73. AD-Authorized Dealer.

74. ASSOCHAM-Associated Chambers of Commerce and

Industry of India.

75. BCSBI-Banking Codes and Standards Board of India.

76. BIS-Bank for International Settlements.

77. CDS-Credit Default Swap.

78. CEPA-Comprehensive Economic Partnership Management.

79. FIMMDA-Fixed Income Money MARKETS and Derivatives

Association.

80. FPI-Foreign Portfolio Investment.

81. IBRD-International Bank For Reconstruction And

Development.

82. UIDAI-Unique Identification Authority of India.

BANKING ABBREVIATIONS

1. PSBs: PUBLIC SECTOR BANKS

2. SNBCs: SCHEDULE NON COMMERCIAL BANKS

3. SENSEX: SENSITIVE INDEX OF STOCK EXCHANGE

4. GNP: GROSS NATIONAL PRODUCT

5. KYC: KNOW YOUR CUSTOMER

6. RTGS: REAL TIME GROSS SETTLEMENT

7. NEFT: NATIONAL ELECTRONIC MONEY TRANSFER

8. EFT: ELECTRONIC FUND TRANSFER

9. CBS: CORE BANKING SOLUTIONS

10. LIBOR: LONDON INTERBANK OFFERED RATE

11. MIBOR: MUMBAI INTERBANK OFFERED RATE

12. MIBID: MUMBAI INTERBANK BID RATE

13. SARFAESI: SECURITISATION AND RECONSTRUCTION OF

FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY

INTEREST

14. CAMELS: CAPITAL ADEQUECY RATIO, ASSET QUALITY,

MANAGEMENT OF EFFECTIVENESS, EARNING OF

PROFITABILITY, LIQUIDITY, SYSTEM AND CONTROLS

15. CAR: CAPITAL ADEQUECY RATIO

16. FIIs: FOREIGN INSTITUTIONAL INVESTMENTS

17. FDI: FOREIGN DIRECT INVESTMENT

18. IPO: INITIAL PUBLIC OFFERING

19. MICR: MAGNETIC INK CHARACTER READER

20. BIRD: BANKERS INSTITUTE OF RURAL DEVELOPMENT

21. IBA: INDIAN BANK ASSOCIATION

22. BPLR: BENCHMARK PRIME LENDING RATE

23. ICICI: INDUSTRIAL CREDIT AND INVESTMENT

CORPORATION OF INDIA

24. HDFC: HOUSING DEVELOPMENT FINANCE CORPORATION

25. SWOT: STRENGETH, WEEKNESSES, OPPORTUNITIES AND

THREATS

26. SWIFT: SOCIETY FOR WORLDWIDE INTERBANK

FINANCIAL TELECOMMUNICATION

27. FERA: FOREIGN EXCHANGE REGULATORY ACT

28. FEMA: FOREIGN EXCHANGE MANAGEMENT ACT

29. CASA: CURRENT AND SAVING ACCOUNT

30. NDTL: NET DEMAND AND TIME LIABILITIES

31. NASDAQ: NATIONAL ASSOCIATION FOR SECURITIES

DEALERS AUTOMATED QUOTATIONS

32. CRISIL: CREDIT RATING AND INVESTMENT SERVICES

INDIA LIMITED

33. CIBIL: CREDIT INFORMATION BUREAU OF INDIA LIMITED

34. NAV: NET ASSET VALUE

35. ICRA: INDIAN CREDIT RATING AGENCY

36. CARE: CREDIT ANALYSIS AND RESEARCH LIMITED

37. WMAs: WAYS AND MEANS ADVANCES

38. ALM: ASSET LIABILITY MANAGEMENT

39. INFINET INDIAN FINANCIAL NETWORK

40. OLTAS - On-line Tax Accounting System (OLTAS) for Direct

Taxes

41. TIN - Tax Information Network (TIN)

42. IMPS - Interbank Mobile Payment Service (IMPS) or

Immediate Payment Service

43. CDR- Corporate Debt Restructuring

44. CAD- Capital Account Deficit

45. REITs: Real Estate Investment Trusts

46. InvITs: Infrastructure Investment Trusts

47. ALM- Asset Liability Management

48. ASBA: Application Supported by Blocked Amount

49. CBS: Core Banking Solution

50. PIN: Personal Identification Number

BASEL-3 NORMS

a) The Basel Committee is the primary global standard-setter for the prudential regulation of banks and provides a forum for cooperation on banking supervisory matters. Its mandate is to

strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability.

Stefan Ingves, Governor of Sveriges Riksbank (SWEDEN), is the Chairman of the Basel Committee.

b) Basel III or Basel 3 released in December, 2010 is the third in the series of Basel Accords. These accords deal with risk management aspects for the banking sector.

c) According to Basel Committee on Banking Supervision "Basel III is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector".

d) Basel 3 measures aim to:

 Improve the banking sector's ability to absorb shocks arising from financial and economic stress, whatever the source   Improve risk management and governance Strengthen banks' transparency and disclosures.

Three Pillars of Basel 3 

 Pillar 1: Minimum Regulatory Capital Requirements based on Risk Weighted Assets (RWAs):

Maintaining capital calculated through credit, market and operational risk areas (mainly that capital which can absorb risk.)

Pillar 2: Supervisory Review Process: 

Regulating tools and frameworks for dealing with peripheral risks that bank face.

 Pillar 3: Market Discipline: 

Increasing the disclosures that banks must provide to increase the transparency of banks 

Important Facts related to BASEL 3 

• Minimum Ratio of Total Capital To RWAs--10.50% 
•  Minimum Ratio of Common Equity to RWAs--4.50% to
• 7.00% 
•  Tier I capital to RWAs--6.00% 
•  Core Tier I capital to RWAs--5.00% 
•  Capital Conservation Buffers to RWAs--2.50% 
•  Leverage Ratio--3.00% 
• Countercyclical Buffer--0% to 2.50%

REVERSE MORTGAGE LOAN

The scheme of reverse mortgage has been introduced for the benefit of senior citizens owning a house but having inadequate

income to meet their needs. Some important features of reverse mortgage are: 

a) A homeowner who is above 60 years of age is eligible for reverse mortgage loan. It allows him to turn the equity in his home into one lump sum or periodic payments mutually agreed by the borrower and the banker.

b) NO REPAYMENT is required as long as the borrower lives, Borrower should pay all taxes relating to the house and maintain the property as his primary residence.

c) The amount of loan is based on several factors: 

• Borrower’s age,
• Value of the property
• Current interest rates and
•  The specific plan chosen.

As per the scheme formulated by National Housing Bank (NHB), the maximum period of the loan period is 15 years. The residual life of the property should be at least 20 years. Where the borrower lives longer than 15 years, periodic payments will not be made by lender. However, the borrower can continue to occupy.

Monitoring of Priority Sector Lending targets

To ensure continuous flow of credit to priority sector, there will

be more frequent monitoring of priority sector lending compliance of banks on ‘quarterly’ basis instead of annual basis as of now.

Non-achievement of Priority Sector targets

Scheduled Commercial Banks having any shortfall in lending to priority sector shall be allocated amounts for contribution to the

Rural Infrastructure Development Fund (RIDF) established with NABARD and other Funds with NABARD/NHB/SIDBI, as decided by the Reserve Bank from time to time.

The interest rates on banks’ contribution to RIDF or any other Funds, tenure of deposits, etc. shall be fixed by Reserve Bank of India from time to time.

Common guidelines for priority sector loans

Banks should comply with the following common guidelines for all categories of advances under the priority sector.

1. Rate of interest

The rates of interest on bank loans will be as per directives issued by our Department of Banking Regulation from time to time.

2. Service charges

No loan related and adhoc service charges/inspection charges should be levied on priority sector loans up to Rs. 25,000.

PRIORITY SECTOR LENDING

Highlights of PSL

It means provide credit to the needy sectors of the society. The sectors are:

• Agriculture

• Micro and Small Enterprises

• Education

• Housing

• Export

• Weaker Sections

• Social Infrastructure 

• Renewable Energy

Targets under PSL

• Agriculture: 18% of ANBC. Out of this 18%, a target of 8% of ANBC is for Small and Marginal Farmers, to be achieved in a phased manner i.e., 7% by March 2016 and 8% by March 2017.

• Weaker Sections: 10% of ANBC.

• Micro Enterprises: 7.5% of ANBC has been prescribed for Micro Enterprises, to be achieved in a phased manner

i.e. 7% by March 2016 and 7.5% by March 2017.

• Overall PSL Target for Domestic Bank/Foreign Bank with more than 20 Branches: 40% of Adjusted Net Bank Credit.

• Overall PSL Target for Foreign Bank with less than 20 Branches: 40% of Adjusted Net Bank Credit to be achieved in a phased manner-

2015-16                     32

2016-17                     34

2017-18                     36

2018-19                     38

2019-20                     40

• Farmers with landholding of up to 1 hectare are considered as Marginal Farmers. Farmers with a landholding of more than 1 hectare and upto 2 hectares are considered as Small Farmers.
•  Scheduled Commercial Banks having any shortfall in lending to priority sector shall be allocated amounts for contribution to the Rural Infrastructure Development Fund (RIDF) established with NABARD. For Renewable Energy, bank loans up to a limit of Rs.15 crore to borrowers for purposes like solar based power generators, etc. For individual households, the loan limit will be Rs.10 lakh per borrower.
• For Housing, banks can provide loans to individuals up to Rs. 28 lakh in metropolitan centres (with population of ten lakh and above) and loans up to Rs. 20 lakh in other centres for purchase/construction of a dwelling unit per family. 
•  Export credit will be allowed up to 32% of ANBC for Foreign banks with less than 20 branches in India.
• For Education, banks can provide loans to individuals for educational purposes including vocational courses upto Rs. 10 lakh for studies in India and Rs. 20 lakh for studies abroad.
•  Limits under Social infrastructure Bank loans up to a limit of ₹ 5 crore per borrower for building social infrastructure for activities namely schools, health care facilities, drinking water facilities and sanitation facilities in Tier II to Tier VI centres.

Capital Market

These are the financial market for buying and selling of funds for long terms, these consists of Shares, Debentures, equities etc.

Capital market is regulated by- SEBI (Securities and Exchange Board of India)

Capital Market consists of two main blocks, they are-

 Primary Market 

 Secondary Market

Primary Market (New Issue Market)-

It is a market where new securities are issued & traded. 

Companies, governments and other groups obtain financing through debt or equity based securities.

Secondary Market

Secondary market is basically a reselling market , Here the stocks that are already sold in the primary market are resold mostly by the stockholders or companies to gain more returns.

Shares/Equities

Companies usually divide their capital into small parts of equal value. This smallest part is known as a share. Companies usually issue shares in the public to raise capital. People who buy or are allotted shares are called shareholders.

ACRONYMS CORNER SEBI

Securities and Exchange Board of India IPO- Initial Public Offerings

i.e. 7% by March 2016 and 7.5% by March 2017.

• Overall PSL Target for Domestic Bank/Foreign Bank with more than 20 Branches: 40% of Adjusted Net Bank Credit.

• Overall PSL Target for Foreign Bank with less than 20 Branches: 40% of Adjusted Net Bank Credit to be achieved in a phased manner-

Certificates of Deposit

a) CDs are negotiable money market instrument issued in demat form or as a Usance Promissory Notes.

b) CDs issued by banks should not have the maturity less than seven days and not more than one year.

c) Financial Institutions are allowed to issue CDs for a period between 1 year and up to 3 years.

d) CDs are like bank term deposits but unlike traditional time deposits these are freely negotiable and are often referred to

as Negotiable Certificates of Deposit.

e) CDs normally give a higher return than Bank term deposit. 

f) All scheduled banks (except RRBs and Co-operative banks) are eligible to issue CDs.

g) CDs are issued in denominations of Rs. 1 Lac and in the multiples of Rs. 1 Lac thereafter.

h) Discount/Coupon rate of CD is determined by the issuing bank/FI.

i) Loans cannot be granted against CDs and Banks/FIs cannot buy back their own CDs before maturity

Treasury bills

a) Treasury Bills are short term (up to one year) borrowing instruments of the Government of India which enable investors to park their short term surplus funds while reducing their market risk.

b) They are auctioned by Reserve Bank of India at regular intervals and issued at a discount to face value.

c) Any person in India including Individuals, Firms, Companies, Corporate bodies, Trusts and Institutions can purchase

Treasury Bills.

d) Treasury Bills are eligible securities for SLR purposes.

e) Treasury Bills are available for a minimum amount of Rs. 25,000 and in multiples of Rs. 25,000 thereafter.

f) At present, RBI issues T-Bills for three different maturities: 91 days, 182 days and 364 days.

Cash Management Bills (CMBs)

a) Government of India, in consultation with the Reserve Bank of India, has decided to issue a new short-term instrument, known as Cash Management Bills (CMBs), to meet the temporary mismatches in the cash flow of the Government.

b) The CMBs have the generic character of T-bills but are issued for maturities less than 91 days. 

c) Like T-bills, they are also issued at a discount and redeemed at face value at maturity.

d) The tenure, notified amount and date of issue of the CMBs depends upon the temporary cash requirement of the Government.