Banking_Digest_Sept_2016

Monthly Rs. 55/- J. S. DIGEST OFBANKING & FINANCEVol. - XI Sep - 2016 Issue - 1 HIGHLIGHTS Banking & Finance Recent Banking Developments Concept Briefs Model TestJ. S . INSTITUTE OF BANKING AND FINANCE PVT. LTD.#19, 3rd Floor, Sneha Centre, Opp. BHS College, 12th Main,30th Cross, Jayanagar 4th Block, Bangalore - 560 011.E-mail : [email protected] : www.jsinstitute.co.in

J.S. DIGEST OF From the Editor’s Pen... CONTENTSBANKING AND FINANCE Three decades of the Banking Digest! Vol. - XI September-16 Issue - 1 Monthly MagazineVol.-XI Sep -16 Issue-1 Every issue has been a labour of love BANKING & FINANCE – bringing with it unfailing delight andAnnualSubscription-Rs. 660/- excitement. Whether in the earlier avatars September 2016 Corporate: for about 18 years or in its currentSingle Copy - Rs. 55/- monthly format for about a dozen years, Penalty for Cement Companies ......... 1 2 the “BD” has carried its cargo of relevant Published by information, news, facts and analyses to SBI: Sony’s Acquisition of Ten Sports ...... 1 2 J. S. INSTITUTE OF young and aspiring bankers. The BD hasBANKING AND FINANCE constantly been nurtured by generations SBI issues Bonds to Yes Bank ............... 7 Future Group Exits Online Venture . 1 2 of bankers with eager enthusiasm. I PVT. LTD. convey my personal gratitude to the The third annual Brandz .........................7 Reliance-Aircel Merger .......................... 1 2 #19, 3rd Floor, Sneha Centre multitude of subscribers for their support all these decades. Mahindra/Ola tie-up ............................ 1 2 Opp. BHS College, 12th Main, 30th Cross, Jayanagar I have been ably supported by the staff at RBI: British telecom major Vodafone4th Block, Bangalore-560 011. the Institute in the production of the BD. My special thanks to Ms.Anusha Hiring Retired Officials ...........................7 Group ......................................................... 1 2 Phone: 080-41307114 Chellappa whose contribution to the magazine in the area of Banking and Registration of Mobile Phone First Life Insurance IPO ....................... 1 3 Phone Finance and Concept Brief has been outstanding. Her precise and concise yet through ATMs ............................................7 E-Mail comprehensive presentation of various Please send messages in issues/information has enhanced the Large Loans to Single Groups ............... 8 Economy our new mail addresses utility of the Digest manyfold. Balance Sheet ..............................................8 Govt. imposes stock limit on sugar [email protected] This is the final issue of the Digest. [email protected] New Governor .............................................8 millers ......................................................... 1 3 The Digest wishes its readers well and Visit us at our new bows out. Stressed Assets’ Sale ................................8 Table of Key Statistics .......................... 1 3 Website G.Subramanian Tax Collection under IDS by Banks .... 9 www.jsinstitute.co.in Editor WG on Commodities Hedging .............. 9 NationalThis issue consists of total130 pages including cover. Singur Land .............................................. 1 4 Editor Banking/Other Banks: Nuclear Power ......................................... 1 4 G. Subramanian HDFC Bank’s Robot .............................. 1 0 PR for Foreign Investors ....................... 1 4 Qatar Bank in India ............................... 1 0 Corruption Case in Haryana .............. 1 4 Equitas Sma ll Financ e Bank Li mited Honour Killings ....................................... 1 4 commences operations ......................... 1 0 SC Directive to Real Estate Criteria for Recapitalisation ................ 1 0 Developers ................................................ 1 4 Robots to perform a fifth of internal jobs Railway Insurance and Surge at ICICI Bank ........................................... 1 0 Pricing ........................................................ 1 5 Scramjet Test ........................................... 1 5 Finance, SE Minimum Balance in Jan Dhan Avanti Finance ......................................... 1 1 Accounts ................................................... 1 5 Crowdfunding platforms Literacy in India ...................................... 1 5 under regulatory glare .......................... 1 1 OFS for divestments of PSUs ............. 1 5 ICICI Pru Life to issue / IPO ............ 1 1 GST Constitution Amendment Bill .. 1 6 Fund for Higher Equity Investment Kashmir Violence .................................... 1 6 under NPS ................................................ 1 1 Terrorist attack in army HOs at Commodities Market ............................ 1 1 Uri, J & K .................................................. 1 6 Monetary Policy Committee ............... 1 2 Smart Cities List ..................................... 1 6 JS Digest of Banking and Finance Sept. 2016 3 4 Contents

Spectrum Auction .................................. 1 6 Reliance Jio ................................................ 2 2 State Bank Buddy – Mobile Wallet .. 3 6 refusal ........................................................ 4 3Copyrights and Education .................. 1 6 Note 7 and 2 Banned on Flights ........ 2 2 Video Statement of Account .............. 3 7 Swiss Challenge Method ...................... 4 4Merged Budget ........................................ 1 6 Job Cuts ..................................................... 2 3 State Bank NO Queue Mobile App .. 3 7 Buy-Back of Financial Assets: ........... 4 5Spread of Dengue and Yahoo Accounts Hacked ..................... 2 3 Partial Credit Enhancement (PCE)Chikungunya ........................................... 1 7 C & I Business: to Corporate Bonds ............................... 4 5GSLV Rocket ............................................ 1 7 Personalities. ......................................... 2 3 Income Declaration Scheme, 2016 .... 4 5Arunachal Pradesh Government ....... 1 7 Working Capital Financing ................. 3 8 Risk- based Internal Audit .................. 4 6Cauvery Water Dispute ....................... 1 7 Sports. ....................................................... 2 3 RBI Guidelines: Definitions on Review of Prudential NormsWhatsApp Privacy Issues ................... 1 7 Enhancing Credit Supply for –Risk Weights for ExposuresSchool-going Children ........................... 1 8 Awards/Recognitions. ......................... 2 5 Large Borrowers through to Corporates, AFCs andRichest Indian .......................................... 1 8 Market Mechanism ................................ 3 8 NBFC-IFCs ............................................... 4 6GST Bill ...................................................... 1 8 Miscellaneous. ....................................... 2 5 Prudential Norms for Off-balanceMallya Case .............................................. 1 8 Sheet Exposures of Banks – Concept Brief - IJob Cuts ..................................................... 1 8 Appointments. ....................................... 2 6 Restructuring of derivative Indian Economy Roundup .................. 4 8Minimum Wages .................................... 1 8 contracts .................................................... 4 0 Recent Banking Developments:International PB Business: Human Resources: Model Test Based on Sep’16Impeachment of Brazil’s Personal Banking ................................. 2 7President .................................................... 1 8 SBI Pensioners ......................................... 4 0 Information. ............................................ 5 3Driverless Taxis ...................................... 1 9 Agri Business:Death by Air Pollution ......................... 1 9 General: Model Test (for Aspirants ofIndian PM’s Foreign Visits .................. 1 9 Rural Self Employment Training MM II Confirmation Exam) ............. 5 6Apple’s Tax to Ireland ......................... 1 9 Institutes (RSETIs) ................................ 2 7 RBI Guidelines on Sale of StressedCanonisation of Mother Teresa .......... 1 9 Pradhan Mantri Fasal Bima Assets by Banks ..................................... 4 1 Hints for Answering Banking -Powerful Women based Outside Yojna-Non-feeding of data by Disclosure of Investment in SRs ........ 4 3 Objective Questions -U S ................................................................ 1 9 bank branches in the Crop Debt Aggregation – First right of (Jan’16 to Aug’16) ................................. 9 2Nuclear Testing by N Korea ............... 2 0 Insurance Portal of MoA & FW ......... 2 7Bayer’s Acquisition of Monsanto ...... 2 0 Priority Sector Lending - Targets IMPORTANTDriverless Fleet in the US ..................... 2 0 and Classification: Lending toMasterCard sued in UK ....................... 2 0 non-corporate farmers – System Some of our subscribers have remitted amounts in ourADB Loan for Coastal Industrial wide average of last three years ........ 2 8 account but have not sent us the email regarding theirCorridor ..................................................... 2 0 Deendayal Antyodaya Yojana - requirement. We request such subscribers to immediatelyFATF Statement ...................................... 2 0 National Rural Livelihoods advise us the details to enable us to process their orders.Fed Res USA ............................................ 2 0 Mission (DAY-NRLM) –Embraer Jet Deal .................................... 2 0 Aajeevika - Interest Subvention Also, owing to technical issues, our email services wereClimate Pact ............................................. 2 1 Scheme ....................................................... 2 8 disrupted from 02 Aug 2016 to 06 Aug 2016. We requestHealth Indicators .................................... 2 1 our subscibers who have mailed us on these dates to re-Scorpene Submarine Data leak .......... 2 1 Advances: send the emails to enable us to process their requirements, Free Annual Credit Report to in case the books have not been received by them.Technology Individuals ............................................... 3 2Digi Locker ............................................... 2 1 6 ContentsApple’s Latest Products ...................... 2 2 Technology: SBI Quick – Missed Call Banking ..... 3 6 JS Digest of Banking and Finance Sept. 2016 5

BANKING & FINANCE – SEPTEMBER 2016  Large Loans to Single Groups: RBI has put in its website a draft Large Exposures Framework for comments.SBI: SBI issues Bonds to Yes Bank: SBI has raised Rs.2,100 crore by  issuing BASEL III perpetual bonds to Yes Bank. Perpetual bonds The salient features of the proposed Large Exposures (LE) have no maturity date and hence are treated as equity. The bank Framework include:  plans to raise Rs.11,100 crore through debt instruments. SBI has  also raised India’s first Additional Tier 1 bonds of US$ 300  The Large Exposure (LE) limit in respect of each million through its US Dollar perpetual bond issue at a coupon counterparty and group of connected counterparties, rate of 5.5%. Rating agency Moody’s has stated that this issue under normal circumstances, will be capped at 20 will give other banks alternative funding options and also set percent and 25 percent respectively of the eligible capital the standard for pricing to other issuers. base. SBI has issued the country’s first Additional Tier 1 bond and  The eligible capital base will be defined as the Tier 1 raised $300 m (about Rs.2000 cr). Originally it planned to raise capital of the bank as against ‘Capital Funds’ at present. $500 m. However, the limit has been pruned to $300 m to test waters. The coupon rate is 5.5%.  A group of connected counterparties will be identified on the basis of ‘control’ as well as ‘economic The third annual Brands: Top 50 most valuable Indian brands dependence’ criteria. report.  The proposed LE framework will be fully applicable with Top 3 most valued brands are HDFC Bank, Airtel and SBI. effect from March 31, 2019. SBI ranks 3rd.  Balance Sheet: RBI’s balance sheet was up 12.3% to Rs.32.43RBI: Hiring Retired Officials: RBI has permitted banks to hire former lakh crore for the year ended June 30, 2016 as compared to the  retired employees for the purpose of internal audit for a period of year-ago period. The increase in assets has been attributed to an up to 3 years for conducting Risk based Supervision. This is increase in domestic and foreign investments and the increase  because Public Sector Banks (PSBs) are facing a shortage of in liabilities to increase in notes in circulation and other liabilities experienced staff as a large number retired in the last year. The and provisions. RBI follows a July-June accounting year. board of banks must come up with a policy to hire these officials. They must not be employed for audit where they were working  New Governor: RBI Deputy Governor Urjit Patel has taken over while in active service to avoid conflict of interest. The final sign- the post of Governor from outgoing Raghuram Rajan, who will off on the internal audit reports should be done by existing full- return to his teaching job in the US. Urjit Patel has resigned from time employees. the review panel of the Fiscal Responsibility and Budget Management Act (FRBM). Deputy Governor R Gandhi will head Registration of Mobile Phone through ATMs: RBI has made it the monetary policy department at RBI that was headed by Urjit mandatory for banks to allow customers to register their mobile Patel earlier. The head of this department is expected to be part phones through any branch / ATM and also through internet of the Monetary Policy Committee (MPC) that will decide the banking. It shall not be restricted to Home branch only. interest rates in the country. Registering a mobile phone means that the number gets linked to the bank account. This enables banks to send SMS alerts to  Stressed Assets’ Sale: RBI has widened the market for sale of customers when transactions occur in customers’ accounts to stressed assets. Lenders with bad loans can now sell them to keep them aware and help check frauds. other banks, Non- Banking Finance Companies (NBFCs) and financial institutions. Currently, banks can sell these to Asset JS Digest of Banking and Finance Sept. 2016 7 Reconstruction Companies or Securitisation Companies (ARCs/ SCs). Banks’ boards will also be more accountable for stress resolution. Hitherto, banks were permitted to sell only NPAs to other banks. Banks are advised to adopt e-auction process; Min. of 2 weeks should be given to prospective buyers for due diligence; 8 Banking & Finance

also, if the exposure is above Rs.50 cr, banks should get at least 2 Banking/Other Banks: external valuation reports.  HDFC Bank’s Robot: HDFC Bank has launched Project AI To expedite the process, RBI has nudged banks to use the “Swiss (Artificial Intelligence) wherein a robot will greet customers and challenge method” to sell non-performing loans of recent vintage. perform the services of a receptionist. It will present customers Under this method, an entity (bank or lender) that receives an with a screen displaying cash withdrawal or deposit, foreign unsolicited bid for an asset or project has to publish the bid and exchange, fixed deposits and dematerialisation services. Once invite third parties to match or exceed it. The entity that submits the customer punches in his requirement, the robot will guide the unsolicited bid will be allowed to match or better the ensuing him to where he needs to go. The bank plans to increase its best bid. functions to include voice-recognition and facial recognition technologies. Last year, Bank of Tokyo-Mitsubishi launched a RBI has decided to restrict banks’ investment in security robot called Neo and Mizuho Bank one called Pepper. receipts (SRs) backed by their own stressed assets. This is being done to ensure that there is “true sale of assets,” said RBI.   Qatar Bank in India: Qatar National Bank has been given The central bank has said that from April 1, 2017, when SRs’ permission to set up operations in India. It already has branches value is above 50 per cent of the amount of assets in over 30 countries across the world. sold, banks need to make higher provisioning that should either be the net asset value declared by the SCs/RCs or provisioning  Equitas Small Finance Bank Limited commences operations: as if it was a direct loan. However, from April 1, 2018, the threshold will be reduced to 10 per cent. The Reserve Bank of India has issued a licence to Equitas Small Finance Bank Limited under Section 22 (1) of the Banking These ARCs or SCs will also have the first right of refusal in case Regulation Act, 1949 to carry on the business of small finance they have already acquired a significant share, 25-30 per cent, of bank (SFB) in India. Apropos the issue of licence, Equitas Small the asset. Finance Bank Limited commenced its operations as a small finance bank (SFB) from September 5, 2016. Lenders have been asked to set up a board for early recognition and sale of assets, which must conduct periodic review at least  Criteria for Recapitalisation: The Finance Ministry has revised once a year, and the board needs to be involved in the entire sale its criteria for allocating capital to Public Sector Banks (PSBs). process. Cost of operations and recovery and quality of credit based on Risk Weighted Assets (RWA) will determine which banks are According to the norms, banks need to adopt a “top-down” eligible for recapitalisation by the GOI. Earlier, it was based on process, which means their head offices will be involved in performance and profitability of the PSBs. identification of the assets. This is in line with several steps taken by RBI to tackle rising stressed loans, which at the end of  Robots to perform a fifth of internal jobs at ICICI Bank: the quarter ended June stood at 12 per cent of the total advances. ICICI Bank is employing robots to perform tasks like generating Tax Collection under IDS by Banks: RBI has directed banks to customer IDs, updating addresses and mobile numbers, accept cash deposits under the Income Declaration Scheme (IDS), resolving ATM-related queries, etc. 2016, irrespective of the amount of tax. The declarants have to pay the tax amount due plus 45% penalty plus surcharge. Till Claiming to be the first Indian bank to use software robotics, mid-August 2016, the GOI has only received Rs.4,000 crore in ICICI Bank said the technology has helped them in reducing declarations under this Scheme. response time by up to 60 percent. WG on Commodities Hedging: RBI has formed a Working Group “Currently, about 10 per cent of our internal transactions are (WG) to review the guidelines on hedging of commodity price being carried out via the software robots and by the end of this risk by residents in the overseas market. This WG will be headed year, we believe, this will go up to 20 per cent of our transactions. by RBI Executive Director, Chandan Sinha. This has helped us in improving productivity and efficiency and will help us in handling larger volumes as we continue toJS Digest of Banking and Finance Sept. 2016 9 grow.” (Chanda Kochhar, CEO, ICICI Bank) 10 Banking & Finance

Finance, SE: issued norms regarding early delivery and pay-in facility in the settlements in the commodity markets. There is also a penalty for  Avanti Finance: Tata Son’s Chairman Emeritus Ratan Tata, default in delivery by sellers. This is to strengthen the risk Infosys’ co-founder Nandan Nilekani and former finance management in commodities markets. secretary Vijay Kelkar have joined together to start a microfinance company called Avanti Finance to help the poor. It is expected to  Monetary Policy Committee: The GOI has appointed 3 members commence operations in December 2016. to the Monetary Policy Committee (MPC) – Chetan Ghate, Associate professor at Indian Statistical Institute, Pami Dua,  Crowdfunding platforms under regulatory glare: director, Delhi School of Economics and Ravindra H Dholakia, professor of economics at Indian Institute of Management (IIM), Crowdfunding is the use of small amounts of capital from a Ahmedabad. Along with RBI Governor Urjit Patel (who has a large number of individuals to finance a new business venture. casting vote), 2 other RBI members - R Gandhi, Deputy Governor and Michael Patra, executive director of RBI complete the 6- It makes use of easy accessibility of vast networks of people member MPC. through social media and crowdfunding sites to bring investors and entrepreneurs together. Information on prior investments in Corporates: crowdfunded markets includes a time stamp and the specific amount contributed.  Penalty for Cement Companies: The Competition Commission of India (CCI) has penalised 10 cement companies Rs.6,700 crore The Securities and Exchange Board of India (Sebi) is planning a for colluding to fix prices of cement, restrict production and crackdown on unauthorised crowdfunding platforms, which supply in the market. The companies include ACC, Lafarge, are gaining popularity in the country as alternative capital- Ultratech, Jayprakash Associates, Binani and Cement raising facilitators. Manufacturers Association among others. Similar to a stock exchange platform, crowdfunding websites  Sony’s Acquisition of Ten Sports: Sony Pictures Networks will act as a link between investors and companies, typically start- buy Ten Sports Network from Zee Entertainment Enterprises for ups. Rs.2,432 crore. Ten Sports has licences to broadcast cricket played by Zimbabwe, South Africa, Pakistan, Sri Lanka and West Indies Most of these entities are operating without any authorisation or as well as football, tennis, athletics, and golf tournaments. registration with Sebi and, as a result, are not being governed under any law.  Future Group Exits Online Venture: Indian Retail Company Future Group plans to exit online retail venture Big Bazaar Direct Not only electronic platforms, unauthorized prize money as it has become unviable. schemes and apps linked to the securities market, too, have come under the Sebi glare. (BS:7.9.16)  Reliance-Aircel Merger: Reliance Communications, owned by Anil Ambani, will be merged with Aircel. The joint asset size  ICICI Pru Life to issue / IPO: SEBI has approved the issue of the will be Rs.65,000 crore and the merged entity, where each biggest IPO surpassing Coal India’s. company will hold 50% stake, will be the fourth largest mobile phone operator.  Fund for Higher Equity Investment under NPS: The Pension Fund Regulatory and Development Authority (PFRDA) has  Mahindra/Ola tie-up: Mahindra & Mahindra is partnering with allowed private sector employees to increase the portion of their Ola for selling 40000 cars to Ola in the next two years. Drivers in National Pension System (NPS) in equity to 75% from the current the Ola platform will be able to avail low-cost financing for their 50% through the establishment of an additional fund. It will vehicles under the scheme. also set up another fund where investment in equity will be up to 25%. These choices will be available to private sector employees  British telecom major Vodafone Group has infused Rs.47,700 till they reach the age of 35 years; after this, the investment in cr fresh equity capital in its Indian arm. This is the largest ever equity reduces annually. 12 Banking & Finance  Commodities Market: Securities and Exchange Board (SEBI) has JS Digest of Banking and Finance Sept. 2016 11

foreign direct investment in rupee terms in the country. GOLD/10 g@ 30,978 SILVER/kg @ 45,494 First Life Insurance IPO: SEBI has approved the Initial Public Forex Reserves# US$ 369.60 bn Offer (IPO) of Rs.6,000 crore, by ICICI Prudential Life Insurance Current Account Deficit as a % of GDP^ 0.1 Company India’s first life insurance IPO. The IPO was over- subscribed 10 times. Industrial Output^^ -2.4%Economy: * August 2016 ** April-June 2016  Govt. imposes stock limit on sugar millers: *** April-June 2016 @ As on September 27 2016 To check spiralling price of sugar which has crossed Rs 40 per # As on September 16 2016 kg, the government has imposed stock limits on sugar ^ April-June 2016 mills during the festival season till October-end. The decision ^^ July 2016 to impose stock limit on millers would boost availability of sugar in the open market and help control the price rise. National: According to the decision, mills should not, at the end of  Singur Land: The Supreme Court has ordered that the Singur September, hold more than 37 per cent of their total sugar land in West Bengal, acquired by the Tata group in 2006 for available with them during the entire 2015-16 marketing year. setting up its Nano car factory, be returned to the farmers. The Tatas had acquired about 1,000 acres of land. The apex court At the end of October, the sugar stock should not be more than 24 has termed the acquisition of land ‘anti-farmer’. per cent of the total supply. Sugar marketing year runs from October to September.  Nuclear Power: India has achieved 6,000 MW of nuclear power. India has 22 nuclear power reactors and they are expected to “The stock limit on sugar at the end of September 2016 is 37 per generate 6,780 MW of power. cent of the total sugar available with sugar mills during 2015-16 sugar season. The stock limit on sugar at the end of October,  PR for Foreign Investors: The Union Cabinet has decided to 2016 is 24 per cent of the total sugar available with sugar allow foreign investors who invest Rs.10 crore in India over 18 mills during 2015-16 sugar season. months or Rs.25 crore over 3 years Permanent Residency (PR) status for 10 years. This is to increase foreign investment flows Stock holding limits are already in place on sugar dealers/traders. into the country. USA, Canada and the UK offer similar status to attract investors. Table of Key Statistics – September 2016  Corruption Case in Haryana: The former speaker of HaryanaCRR 4% assembly Satbir Kadian was sentenced to 7 years in jail for corruption involving Indian Farmers Fertilisers Co-operativeSLR 21% Limited’s funds by a Central Bureau of Investigation (CBI) court in Delhi. He was also fined Rs.50 lakh.REPO 6.50%  Honour Killings: According to data from the National CrimeREVERSE REPO 6% Records Bureau (NCRB), there were 131 cases of honour killings in 2015 as compared to 1 in 2014. This sudden jump is attributedMSF 7% to the increase in cases reported as honour killings as against general murder.BANK RATE 7%  SC Directive to Real Estate Developers: The Supreme Court hasINFLATION (CPI)* 5.05%FDI** US$ 4.1 bnFII *** US$ 2.1 bnSENSEX @ 28223NIFTY @ 8706Rs/$ @ 66.48 JS Digest of Banking and Finance Sept. 2016 13 14 Banking & Finance

ordered real estate developer Supertech to return buyers’ money. raise funds by issuing fresh shares or promoters can sell their It had directed the company to return 10% of the invested amount existing stakes, or both, OFS is used only when existing shares per month from January 2015 within 4 weeks. Earlier, it had are put on the block. Only promoters or shareholders holding asked another real estate developer Unitech to return Rs.15 crore more than 10 per cent of the share capital in a company can to buyers in its Noida and Gurgaon projects. come up with OFS. Railway Insurance and Surge Pricing: The Indian Railways (IR)  GST Constitution Amendment Bill: The President has given launched its travel insurance scheme wherein passengers can his Assent to the Bill. GST – Network (GSTN) has been set up as opt for insurance cover of up to Rs.10 lakh by paying 92 paise a private body for providing a common platform for registration, while buying a ticket online. Within a day of its launch about 4 filing returns and e-payment. GSTN has stated that it would lakh passengers opted for it. The IR has begun surge pricing on avail a loan of Rs.550 cr from IDFC Bank. its premium trains – Shatabdi, Rajdhani and the Duronto. Prices will increase by 10% for every 10% of tickets sold from September  Kashmir Violence: The 52-day curfew has been lifted in Kashmir 9, 2016. Amidst protests from public, the Minister has stated that though the area remains tense. Clashes between protesters and it is an experimental measure. the state have been going on since Hizbul Mujahideen’s commander Burhan Wani was killed by the Valley’s police. The Scramjet Test: Indian Space Research Organisation (ISRO) has area remains tense. So far, over 80 people have been killed during successfully tested its scramjet engines or air-breathing engines. protests. This will help it lower its launch costs as it reduces the amount of oxidiser that needs to be carried along with the fuel on rockets.  Terrorist attack in army HOs at Uri, J & K; 4 terrorists also attacked army headquarters in Uri. 19 soldiers were killed while Minimum Balance in Jan Dhan Accounts: The GOI has stated 32 others were injured in the encounter. The 4 terrorists were that the Prime Minister’s Jan Dhan Yojana (PMJDY) accounts also killed. Jaish-e-Mohammad is believed to be behind the attack. need not have a minimum balance. They can also be opened with zero balance. 24 crore accounts have been opened with  Smart Cities List: In the third list of the GOI’s proposed Smart Rs.24,000 crore deposits in them. The GOI has clarified that the Cities, the following cities have been included: Agra, Ajmer, benefits of direct transfer of subsidies will continue to exist despite Amritsar, Aurangabad, Gwalior, Hubli-Dharwad, Jalandhar, there being no balance in the account. Kalyan-Dombivilli, Kanpur, Kohima, Kota, Madurai, Mangaluru, Nagpur, Namchi, Nashik, Rourkela, Salem, Shivamogga, Thane, Literacy in India: Tripura claims that it has become No.1 in Thanjavur, Tirupati, Tumakuru, Ujjain, Vadodara, Varanasi and literacy rate (97.22%) overtaking Kerala (94%) and Mizoram Vellore. (92%).  Spectrum Auction: 7 telecom operators have deposited Rs.14,653 OFS for divestments of PSUs: With share prices of state-owned crore as earnest money for the spectrum auction that will begin companies going up in recent months, the government is on October 1, 2016. Reliance Jio deposited the maximum with rethinking on the plan for public sector units buying back their Rs.6,500 crore. Reliance Jio, Bharti Airtel, Idea Cellular and stocks from the Centre (promoter). Instead, it is now looking at Vodafone have been permitted to bid in any spectrum band in secondary market offering. any of the 22 telecom circles in the country. Some public sector undertakings (PSUs) where the government  Copyrights and Education: The Delhi High Court has ruled that was considering buybacks — such as MMTC, Bharat Heavy photocopying of textbooks for the purpose of imparting education Electricals and Regional Engineering Corporation — have seen is not illegal. This is in relation to law suit filed by the Oxford share prices rise 45-55 per cent from this year’s low. University Press, Cambridge University Press and Taylor Francis Group against the University of Delhi for selling books for their Investment bankers say that offer for sale (OFS) would now be courses based on compiled course books from copyrighted texts. the preferred disinvestment route.  Merged Budget: The Centre has approved the merger of the Unlike a follow-on public offering (FPO), where companies can 16 Banking & Finance JS Digest of Banking and Finance Sept. 2016 15

Railway Budget with the Union Budget. The 2 have been separate WhatsApp to completely erase users’ data once they delete the for the last 92 years. Also, From 2017, there will be a single budget app from their phones. WhatsApp had recently updated its only. The Budget will now be presented in the first week of privacy policy wherein it will share its database of users with February every year beginning 2017. So far, it has been presented Facebook. Users can choose to opt out of seeing targeted ads and in the last week of February. The advantage is the various friends suggestions based on WhatsApp information. Ministries / Depts. will known the funds allocated to them in advance so that they can start their activities in April itself.  School-going Children: According to data from Census 2011, 8.4 crore Indian children do not attend school while another 78 Spread of Dengue and Chikungunya: According to data from lakh have to earn on the side while they attend school. Directorate General of Health Services, till September 2016, the total number of dengue cases in the country was 36,100 with 70  Richest Indian: Reliance Industries Limited (RIL) Chairman deaths. West Bengal has had 24 deaths. The number of Mukesh Ambani (with net worth of US$ 22.7 billion) has been Chikungunya cases in India was 14,656 till September 11, 2016. named the richest Indian for the 9th year in a row as per Forbes’ Delhi has had 1,724 cases, followed by Maharashtra at 1,024. list of India’s 100 Richest People. GSLV Rocket: India Space Research Organisation (ISRO)’s  GST Bill: Odisha became the 16th state to ratify the Goods and geosynchronous satellite launch vehicle (GSLV-MkII) completed Services (GST) Bill. With the President’s assent, the Bill can now its first operational flight sending a weather communication become a law. The GST Council fixed the annual turnover limit satellite into space. India is now amongst an elite group of nations for exemption at Rs.20 lakh (this will exclude the hill area states that have sent their own communication satellites into orbit. and the NE states) in which the limit is Rs.10 lakhs; below this amount of annual turnover, there will be no GST. States will be Arunachal Pradesh Government: The ruling Chief Minister of responsible for assessees with up to Rs.1.5 crore turnover. The Arunachal Pradesh, Pema Khandu, has defected to the People’s Council has also resolved that all cesses will be subsumed in the Party of Arunachal, an ally of the BJP, along with 42 Members of GST. The GOI is running against a stiff deadline of April 1 2017 Legislative Assembly (MLAs), from the Congress. The Speaker, for implementation of the GST and is hence trying to fast track Tenzing Norbu, has also defected. decision-making and consensus-building. Cauvery Water Dispute: Since the Supreme Court’s order that  Mallya Case: Kingfisher Airlines Chief Executive Officer (CEO) Karnataka release 15,000 cusecs of water to Tamil Nadu for 15 Vijay Mallya continues as United Breweries (UB) Chairman. The days, there have been protests in different parts of Karnataka, Enforcement Directorate (ED) has issued an attachment order of particularly Mandya, where farmers claim that despite living on Rs.6,630 crore which increases the total attachment order on his the Cauvery basin they do not get drinking water. There have properties to Rs.8,041 crore. He owes over Rs.9,000 crore to the been bandhs in Karnataka and Tamil Nadu with several Indian banking system inclusive of interest charges. He has incidences of violence in both states. Since then, there have been stated to the Court that while he wishes to return, he cannot, reviews of the order that have reduced the quantum of water to since he does not have a passport. be released. While Karnataka’s Chief Minister has assured the state that it will not face water shortage till June 2017, he has  Job Cuts: Taxi aggregator Ola plans to lay off another 500 people. deferred implementation of the latest revised order to release It had already closed TaxiForSure and laid off 700 people in 6,000 cusecs water per day for a week. Karnataka has stated that August 2016. since it does not have adequate water for its own standing crops and other requirements, it can only release water to Tamil Nadu  Minimum Wages: The Centre has increased minimum wages for the purpose of drinking water and not for samba crops as from Rs.256 a day to Rs.350 per day. Trade unions had gone on demanded by the lower riparian state. strike demanding higher wages. WhatsApp Privacy Issues: The Delhi High Court has directed International: JS Digest of Banking and Finance Sept. 2016 17 o Impeachment of Brazil’s President: The Senate ousted Brazil’s 18 Banking & Finance

President Dilma Rousseff. She was the first female President of Banco Santander’s CEO Ana Botin, of Spain, was ranked No.1. the nation. She has been accused of manipulating the budget to conceal Brazil’s financial woes. Michel Temer, the former vice- o Nuclear Testing by N Korea: North Korea performed its 5th and President will take over as interim President. largest nuclear test recently; it has stated that it wants to be known as a legitimate nuclear state. US President Obama has called foro Driverless Taxis: Driverless taxis were run on trial basis in sanctions against it and warned it of ‘serious consequences’. 5 Singapore on 25.8.2016, the first time in the world. sets of United Nations (UN) sanctions have already been imposed against the nation since it first started testing nuclear weaponso Death by Air Pollution: 1.6 million people lost their lives due to in 2006. air pollution in China, (ranked 4th) and 1.4 million in India, (ranked 6th), in 2013 according to a report by the World Bank. o Bayer’s Acquisition of Monsanto: German chemical and Georgia (1st), Cambodia (2nd) and Hong Kong SAR, China (3rd) pharmaceutical company Bayer will buy global biotechnology have the worst statistics in terms of deaths per million. Air company Monsanto for US$ 66 billion. The combined entity will pollution is the 4th leading cause of death after metabolic risks, become the largest seed and pesticides firm in the world. dietary risks and tobacco smoke. o Driverless Fleet in the US: Uber has launched the first fleet ofo Indian PM’s Foreign Visits: Indian Prime Minister (PM) driverless cars in the US. The cars have been programmed to Narendra Modi visited Vietnam and China. He signed 12 pick up passengers and steer themselves with the help of cameras, bilateral agreements with Vietnamese counterpart Nguyen Xuan lasers and other such sensors. Phuc. These included exploration and uses of outer space for peaceful purposes, avoidance of double taxation, health o MasterCard sued in UK: A suit has been filed in UK againt cooperation, IT cooperation, cyber security and agreement on MasterCard claiming 14 billion pounds damages for allegedly contract and design, building of boats in India, equipment supply charging excessive fees to customers. This has been done for 16 and technology transfer. According to a defence agreement with years from 1992 to 2008. L&T, Vietnam will utilise US$ 100 million (out of total US$ 500 million) Line of Credit that India has offered it to build patrol o ADB Loan for Coastal Industrial Corridor: The Asian boats. The PM also attended the 2-day G-20 summit in Hangzhou, Development Bank ADB has approved a loan of US$ 631 million China. The BRICS nations’ leaders are scheduled to meet in Goa towards the construction of the Visakhapatnam-Chennai in October 2016. Industrial Corridor. This project is part of the coastal corridor from West Bengal to Tuticorin in Tamil Nadu.o Apple’s Tax to Ireland: The European Commission (EC) has asked Apple to pay US$ 14.5 billion in back taxes to Ireland. o FATF Statement: The Financial Action Task Force (FATF), an Apple is said to have paid less than 1% or even 0.0005% tax on inter-governmental body that was set up in 1989 by the UN., has its European profits over a decade as it has struck a beneficial asked its members to put in place counter-measures to protect deal with different countries. Apple and Ireland will contest the the international financial system from money laundering and verdict. Ireland had granted undue tax benefits to Apple. terrorist financing (ML/FT) risks arising from Iran and Democratic People’s Republic of Korea (DPRK). It has also pointedo Canonisation of Mother Teresa: Mother Teresa was canonised out that certain nations have strategic deficiencies - Afghanistan, (became a saint) by the Vatican on September 4, 2016. Bosnia and Herzegovina, Guyana, Iraq, Lao PDR, Syria, Uganda, Vanuatu and Yemen.o Powerful Women based Outside US: According to a list of 50 Most Powerful Women Internationally (based outside the US) o Fed Res USA: Though there was wide-spread expectation that compiled by Fortune magazine, SBI’s Chairman Arundhati Fed Res will raise interest rates, it has decided to hold it Bhattacharya has been ranked No. 2, ICICI Bank’s Chief unchanged (21.09.16). Executive Officer (CEO) Chanda Kochhar has been ranked 5th and Axis Bank’s CEO Shikha Sharma has been ranked 19th. o Embraer Jet Deal: Brazil and US are investigating corruption charges in the US$ 208 million Embraer jet deal signed in 2008 JS Digest of Banking and Finance Sept. 2016 19 between the Brazilian aircraft manufacturer and India’s Defence 20 Banking & Finance

Research and Development Organisation (DRDO) for three  Apple’s Latest Products: Apple unveiled its water-resistant aircrafts equipped with indigenous radars for AEW&C (airborne iPhone 7 with stereo speakers; it also released its Apple Watch early warning and control systems). The jet’s owners were Series 2. supposed to have paid bribes to get contracts in India and Saudi Arabia.  Reliance Jio: o Climate Pact: US and China have ratified the climate pact Reliance Jio launches mother of all telecom battles approved by 195 countries (including India) in the Paris COP 21 meeting in December 2015. This is an important step forward in Thirteen years after its first disruptive effort in telecom, popularly the climate talks. known as “monsoon hungama”, Reliance Industries (RIL) is seeking to change the rules of the game again. o Health Indicators: India is ranked 143rd out of 188 countries in the world on a range of health indicators, according to the first Jio announced “always” free voice calls and priced data at Rs annual assessment of Sustainable Development Goals’ health 50/GB, 80 per cent lower than the current industry average of Rs performance launched at the United Nations General Assembly 250/GB. The company also announced the launch in New York. India’s mortality rates, malaria hygiene and air of 4G handsets priced at Rs 3,999 and personal routers at Rs pollution levels were some of the factors considered. 1,999. By owning the entire ecosystem, Jio, backed by the might of Reliance’s footprint across retail and content programming o Scorpene Submarine Data leak: Details of French naval — news, entertainment and movies — is armed with a complete contractor DCNS’ Scorpene submarine, that India had ordered offering for the mobile broadband consumer. France to make, were published in Australian newspapers causing a major security breach for India. India had ordered 6 From September 5, everyone will be able to access the service, submarines but following the leak of sensitive information, it is which will still be free till the end of the year. unlikely to order another 3 that it requires from France. India is currently investigating the extent of leak and security Jio will offer data plans starting at Rs 19 a day for occasional compromise that has taken place. users, Rs 149 a month for low data users and Rs 4,999 a month for heavy data users.Technology: There will also be no national roaming charges for  Jio  users.   Digi Locker: Ambani  announced 25 per cent more data for students, one million Wi-Fi hotspots  across the country, “best-ever What’s Digi Locker? international calling rates”, unlimited subscription to Jio app and special solutions for enterprises. The platform, launched in July 2015 under the Centre’s Digital India initiative, helps citizens to digitally store passport, mark Corporate India cheered RIL’s disruptive move on Twitter, with sheets & degree certificates. The documents can be Anand Mahindra saying: “From 132 million to 650 million accessed anytime, anywhere, and can be shared online. mobile broadband users by 2020 needs a revolution. It’s begun with Reliance Jio.” Kiran Mazumdar Shaw joined in saying: Digi Locker: “India would have the largest telephony (sic) at the lowest rate - economies of scale.”Reliance, which has been at war with The Centre has integrated DigiLocker – the country’s first secured incumbents over interconnect bandwidth, hoped competitors cloud- based platform for the storage, issuance and would not impair consumer experience and grant them the verification of documents – with the Driving Licence & Vehicle requisite interconnect points. Bharti Airtel responded with a Registration System of the road transport ministry. It’s the biggest statement that said: “We welcome Reliance Jio’s call to leading integration of a govt department with DigiLocker since its operators to work together. As a responsible operator, we will launch last year. It will spare people the trouble of carrying fulfill all our regulatory obligations as we have always done.” licences & vehicle papers, which can be accessed on phones using the DigiLocker app. (ToI: 8.9.16)  Note 7 and 2 Banned on Flights: Samsung Galaxy Note 7 and Note 2 are banned on flights in check-in baggage by the Directorate JS Digest of Banking and Finance Sept. 2016 21 22 Banking & Finance

General of Civil Aviation (DGCA); Note 7 exploded in a man’s Games, was upgraded to a silver medal. This is because the silver pocket in the US while Note 2 caught fire in the baggage on an medallist, the late Besik Kudukhov of Russia was found to have international flight to India. Australia and the US have also used banned substances and was hence disqualified. banned it on flights. Passengers are allowed to carry it in hand Tennis: Sania Mirza of India partnered with Monica Niculescu of baggage only in switched off mode. They are not allowed to Romania to win the women’s doubles event at the Connecticut Open. charge these phones on board the flight. Samsung is, currently, Stan Wawrinka of Switzerland beat World No.1 Novak Djokovic of investigating these events. Serbia to win the 2016 US Open Men’s Singles title. Angelique Kerber of Germany beat Karolína Plíšková of the Czech Republic to win the  Job Cuts: Microsoft plans to fire about 400 employees of Skype women’s title. She has now become the World No.1. in London. Twitter plans to close its Bangalore development Arjuna Awards: Indian cricketers Rohit Sharma and Ajinkya centre where about 100 employees work. Dell Technologies plans Rahane have been awarded Arjuna awards for 2015 and 2016 to cut 2,000-3,000 jobs after its acquisition of EMC; the savings in respectively. Arjuna awards are given to sportspersons for consistent cut costs is expected to be about US$ 1.7 billion in the first 18 outstanding performance for 4 years preceding the year of award. months post transaction. Davis Cup: Spain defeated hosts India 5-0. Paralympics: 4 Indians won medals.  Yahoo Accounts Hacked: Yahoo CEO Marissa Mayer has stated that 500 million accounts have been hacked into; names, email o Deepa Malik won a silver medal at the shotput event at addresses, birth dates, security questions and answers and the Rio Paralympics. phone numbers have been compromised in 2014. It has urged its users to change their passwords in case they haven’t since 2014. o Javelin thrower, Devendra Jhajharia has won a gold medal in the men’s javelin throw. He has, earlier, won aPersonalities: gold medal in the 2004 Athens Olympics and is the first Indian to win 2 gold medals in the Paralympics.  Felipe Massa (35): The Brazilian Formula One driver announced his retirement from F1 racing at the end of the 2016 season. He o High jumper Thangavelu Mariyappan won a gold has won 11 Grand Prix races. He is driving for Williams medal in high jump, Bhati Varun Singh won bronze. currently. o The Sports Ministry has offered the gold medallists Rs.75  David Cameron (49): The former British Prime Minister has lakh, silver medallists Rs.50 lakh and bronze medallists decided to quit politics. He recently resigned as Prime Minister Rs.30 lakh for their achievements. after Britain voted to exit the European Union (EU). o China has won the most number of medals with 217  Edward Albee (88): The playwright who wrote ‘Who’s Afraid of followed by UK (126) and Ukraine (106). India stands at Virginia Woolf’, has passed away. He has won 3 Pulitzer prizes. 38th place tied with Croatia. Formula One: Nico Rosberg of Germany, driving theSports: Mercedes, won the 2016 Belgian, Italian and Singapore Grand Prix. Cricket: India and West Indies played 2 T20 matches in Florida, Cricket: India was placed 3rd in One Day Internationals US, a non-cricketing nation to promote the game there. The West in the ICC ODI rankings behind Australia and New Indies won the first match while the second was partially washed Zealand. Indian cricketer Virat Kohli was 2nd in the out and did not produce any result. batting rankings behind South African AB de Villiers. Retirement: 2008 Olympic gold medallist shooter Abhinav Bhindra 24 Banking & Finance (33) has announced his retirement from shooting. He stood 4th in the 10 m air rifle event in the 2016 Rio Olympics. Olympic Medal Upgraded: Wrestler Yogeshwar Dutt’s bronze medal, in the 60 kg freestyle category, in the 2012 London Olympic JS Digest of Banking and Finance Sept. 2016 23

Awards/Recognitions: If you are tax resident of India, all you have to do is fill a ‘No’ in the form where you are asked: Is your country of tax residency other  Honorary Oscar: Hong Kong actor, director, choreographer and than India? Someother details like gross annual income, occupation, martial arts expert, Jackie Chan, will be awarded an honorary whether you are a politically exposed person and other details are Lifetime Achievement award for his ‘extraordinary achievement’ also sought. You will have tofill the Fatca form separately for a in films. variety of financial institutions: mutualfunds, banks, insurance companies, brokers, depository participants, private equity fundsMiscellaneous: and others. Visit their web sites or call their customer service numbers. Get Fatca compliant at the earliest: If you don’t comply, your account could be closed. The term “closed” is being interpreted in two ways: one, the account is closed to further Many investors, in the recent months, have found that mutual fund investment but the amount already invested remains there. The houses have suddenly started seeking additional details of second, more drastic, interpretation is that money is redeemed from investments. The reason: The Central Board of Direct Taxes (CBDT) the account. “Mutual funds haverepresented to Sebi, which in turn had given a deadline of August 31 for investors to follow the has requested the government, to interpret closing of account as Foreign Account Tax Compliance Act or become Fatca compliant. non acceptance of further investment. But we have not received communication from the government on this,” says Rajiv Shashtri, However, while the deadline has been deferred recently, investors managing director and chief executive officer, Peerless Mutual Fund. should still go ahead and do it. Before things come to such a pass, fill up the required form. (BS: 8.8.16) Fatca is a law that has been enacted in the United States targeting people who are ‘USPersons’ for tax purposes with wealth in other Appointments: countries on which they wish to evade tax. The US government has  UIDAI Chairman: J Satyanarayana has been appointed as the entered into inter-governmental agreements (IGA) with many new part-time Chairman of the Unique Identification Authority countries, including India. Indian financial institutions are now of India (UIDAI) to succeed Nandan Nilekani. The Chief obliged to obtain self-certification from their customers Executive Officer (CEO) is Ajay Bhushan Pandey. According to about their tax residency status. If they come across persons who the recently-passed Aadhaar Act, the UIDAI must have a are US tax residents, they are required to report both their holdings Chairman (part-time or full-time), CEO and 2 part-time members. and transactions to the Indian tax authorities, which in turn will  SBI MF CEO: Former Deputy MD of SBI, Anuradha Rao was share this information with the Internal Revenue Service (IRS, the appointed Managing Director (MD) and Chief Executive Officer US tax authority). (CEO) of SBI Mutual Funds (MF). For the purpose of Fatca, an ‘US Person’, whose account needs to be 26 Banking & Finance reported, is all of the following: a US citizen; a green card holder; and a citizen of another country who has lived long enough in the US to qualify as a tax resident. Such persons get exempted from being reported under certain circumstances. “The US-based NRI will have to provide a self-certification saying that she/he is a US- based resident and provide additional details called for in the self- certification form, for example, US tax identification or social security number, US address and telephone number, etc,” informs Pranay Bhatia, partner-direct tax, BDO India. According to Arnav Pandya, those who have large investments in India need to show both the investment and the income arising from it in their US tax returns. In case of large amounts, the IRS may also be interested in the source of their wealth. JS Digest of Banking and Finance Sept. 2016 25

RECENT BANKING DEVELOPMENTS: difficulties in assessment of coverage of crops insured, premiums deducted, etc. Banks have therefore been advised to feed the relevant data in thePersonal Banking: portal at the earliest.SBI ties up with Tata Housing for a unique partnership for Tata Homes.This Joint Venture between two of India’s most trusted brands will help Priority Sector Lending - Targets and Classification: Lending to non-the large Indian middle class realize their dream of owning a home. corporate farmers – System wide average of last three years:Agri. Business:RURAL SELF EMPLOYMENT TRAINING INSTITUTES (RSETIs) RBI had communicated that the system-wide average of the last three years achievement with regard to overall direct lending to non-corporateSBI has set up 116 Rural Self Employment Training Institutes (RSETIs) farmers will be notified in due course, and thereafter at the beginning ofacross the country as an institution to mitigate the unemployment and each year.underemployment problems among the rural youth in the country. In this regard, RBI has advised that the applicable system wide average figure for computing achievement under priority sector lending for theRSETIs are non- profit institutions established with the support of State FY 2016-17 is 11.70 percent.Government and Central Governments. The objective of this institute isto generate self employment in rural areas through training for capacity Deendayal Antyodaya Yojana - National Rural Livelihoods Missionbuilding and by facilitating settlement in vocations. (DAY-NRLM) –Aajeevika - Interest Subvention Scheme:These RSETIs are imparting comprehensive quality residential training Interest subvention scheme for Women SHGs - Year 2016-17programs in personality and skill development areas to rural youth free ofcost. Close to 75,000 candidates are trained every year across the country I. Interest subvention scheme on Credit to Women SHG during theby our RSETIs. Post training, they are facilitated in gainful engagement in year 2016-17 for all Commercial Banks (only Public Sector Banks,the vocation. Private Sector Bank and Regional Rural Banks) and Co-operative banks in 250 districtsPradhan Mantri Fasal Bima Yojna-Non-feeding of data by bank branchesin the Crop Insurance Portal of MoA&FW. i. All women SHGs will be eligible for interest subvention onRBI has advised banks to ensure strict compliance of the provisions of the credit up to Rs. 3 lakhs at 7% per annum. SHG availing capitalPradhan Mantri Fasal Bima Yojna and ensure coverage of 100% of defined subsidy under SGSY in their existing credit outstanding willloanee farmers along with good number of non-loanee farmers to achieve not be eligible for benefit under this scheme.the defined objectives and targets fixed under the Scheme.As per the PMFBY operational guidelines of the Government of India banks ii. The Commercial Banks and Cooperative Banks will lend to allare also expected to capture all relevant data including land and crop the women SHGs in Rural areas at the rate of 7% in the 250details of all loanee farmers and non-loanee farmers availing crop insurance districts advised by Ministry of Rural Development, GOI.through the branches. iii. All Commercial Banks will be subvented to the extent ofMinistry of Agriculture & Farmers Welfare has since advised all banks to difference between the Weighted Average Interest Chargedenter farmer details in the unified portal for crop insurance which is (WAIC as specified by Department of Financial Services,available at www.agri-insurance.gov.in. It is stated that entries are not Ministry of Finance for the year 2016-17) and 7% subject to thebeing made by the bank branches in the portal. Resultantly MoA & FW, maximum limit of 5.5% for the year 2016-17. This subventionState Governments etc. are not able to cull out any data leading to will be available to all the Banks on the condition that they make SHG credit available at 7% p.a. in the 250 districts. JS Digest of Banking and Finance Sept. 2016 27 iv. Further, the SHGs will be provided with an additional 3% subvention on the prompt repayment of loans. For the purpose of Interest Subvention of additional 3% on prompt repayment, an SHG account will be considered prompt payee if it satisfies 28 Recent Banking Developments

the following criterion as specified by Reserve Bank of India information on the Nodal Bank’s portal as per the (RBI). required technical specification. Public Sector Banks should also submit the claims for 3% additionala. For Cash Credit Limit: subvention on the same portal. Public Sector Banks must submit the regular claims (difference between WAIC or i. Outstanding balance shall not have remained in excess lending rate and 7%) and additional claims (@ 3% on of the limit/drawing power continuously for more than prompt repayment) on a quarterly basis as on June 30, 30 days 2016, September 30, 2016, December 31, 2016 and March 31, 2017 by last week of the subsequent month. ii. There should be regular credit and debits in the accounts. In any case there shall be at least one customer induced x. In order to avail the interest subvention on credit extended credit during a month to the SHGs @7% and additional subvention claims of 3%, all Public Sector Banks and Private Sector Banks are iii. Customer induced credit should be sufficient to cover required to submit claim certificate on quarterly basis to the interest debited during the month. the nodal bank. The claims submitted by any bank should be accompanied by claim certificate (in original)b. For the Term loans: A term loan account where all of the interest certifying the claims for subvention as true and correct. payments and/or instalments of principal were paid within The claims of any Bank for the quarter ending March 30 days of the due date during the tenure of the loan, would be 2017 will be settled by MoRD only on receipt of the considered as an account having prompt payment. Statutory Auditor’s certificate for the complete FY16-17 from the Bank. The prompt payment guidelines would continue to be guided by RBI guidelines on the subject in the future. xi. Any remaining claim pertaining to the disbursements made during the year 2016-17 and not included during All prompt payee SHG accounts as on the end of the reporting the year, may be consolidated separately and marked as quarter will be eligible for the additional interest subvention an ‘Additional Claim’ and submitted to Nodal Bank by of 3%. The banks should credit the amount of 3% interest Public Sector Banks and Private Sector Banks latest by subvention to the eligible SHG loan accounts and thereafter June 30, 2017, duly audited by Statutory Auditor’s seek the reimbursement. certifying the correctness. v. The scheme is limited to Women Self Help Groups in xii. Any corrections in claims by Banks shall be adjusted from rural areas only later claims based on auditor’s certificate. For Public Sector Banks and Private sector Banks, the corrections vi. The funding for the scheme will be met out of Central must be made on the Nodal Bank’s portal accordingly. Allocation under DAY- NRLM II. Interest subvention scheme for Category II Districts (Other than vii. The interest subvention scheme shall be implemented for 250 districts). all Public Sector Banks and Private sector Banks through a Nodal Bank selected by the Ministry of Rural For category II districts, comprising of districts other than the above Development (MoRD). The Nodal Bank will 250 districts, all women S.H.Gs under DAY- NRLM will be eligible operationalize the scheme through a web based platform, for interest subvention to avail the loan facility at an interest rate of as advised by MoRD. For the year 2016-17, Canara bank 7%. The funding for this subvention will be provided to the State has been nominated as the Nodal bank by MoRD. Rural Livelihoods Missions (S.R.L.Ms) from the allocation for DAY- NRLM. In the Category II districts, Banks will charge the SHGs as viii. All Banks, who are operating on the Core Banking Solutions (CBS) can avail the interest subvention under 30 Recent Banking Developments the scheme. ix. In order to avail the Interest Subvention on credit extended to the SHGs @ 7%, regular subvention, all Public Sector Banks are required to upload the SHG loan account JS Digest of Banking and Finance Sept. 2016 29

per their respective lending norms and the difference between the a. For Cash Credit Limit:lending rates and 7% subjected to a maximum limit of 5.5% for the 1. Outstanding balance shall not have remained in excessFY16-17 will be subvented in the loan accounts of the SHGs by the of the limit/drawing power continuously for more thanSRLM. In pursuance of the above, the salient features and the 30 daysoperational guidelines in respect of the interest subvention for the 2. There should be regular credit and debits in the accounts.category II districts, for the year 2016-17 are as follows: In any case there shall be at least one customer induced credit during a month(A) Role of the Banks: 3. Customer induced credit should be sufficient to cover the interest debited during the month. All banks who are operating on the Core Banking Solution (CBS) are required to furnish the details of the Credit b. For the Term loans: A term loan account where all of the interest disbursement and Credit outstanding of the SHGs across all payments and/or instalments of principal were paid within districts in the desired format as suggested by the MoRD, 30 days of the due date during the tenure of the loan, would be directly from the CBS platform, to the Ministry of Rural considered as an account having prompt payment Development (through FTP) and to the SRLMs. The The prompt payment guidelines would continue to be guided information should be provided on a monthly basis to facilitate by RBI guidelines on the subject in the future. the calculation and disbursement of the Interest Subvention v. Women SHGs who have availed capital subsidy under amount to SHGs. SGSY in their existing loans, will not be eligible for benefit of Interest Subvention for their subsisting loan under this(B) Role of the State Governments: scheme. vi. SRLMs should submit Quarterly Utilization Certificate i. All women SHGs, are regarded as SHGs under DAY- indicating subvention amounts transferred to the Loan NRLM and will be eligible for interest subvention on accounts of the eligible SHGs. credit upto Rs.3 lakhs at the rate of 7% per annum on prompt repayment. III. The States with state specific interest subvention schemes are advised to harmonize their guidelines with the Central scheme. ii. This scheme will be implemented by the State Rural Livelihood Missions (SRLMs). SRLMs will provide Advances: interest subvention to the eligible SHGs who have Free Annual Credit Report to Individuals: accessed loan from Commercial and Cooperative Banks. RBI has directed that all Credit Information Companies (CICs) shall The funding for this subvention will be met out of the provide access, upon request and after due authentication of the requester, Central Allocation and State Contribution as per the to a free full credit report (FFCR) once in a calendar year to individuals norms of Government of India. whose credit history is available with the CIC. This report shall show the latest position of the credit institutions’ exposure to the individual as per iii. The SHGs will be subvented with the extent of difference records available with the CIC. The FFCR shall be in electronic format, between the lending Rate of the banks and 7% subject to and the procedure for accessing the FFCR shall be displayed on the CIC’s a maximum limit of 5.5% for the year 2016-17 by the website. The contents of the FFCR shall be the same as appearing in the SRLMs, directly on a monthly/quarterly basis. An e- most detailed version of the reports on the individual provided to credit transfer of the subvention amount will be made by the institutions, including the credit score. SRLM to the loan accounts of the SHGs who have repaid promptly. 32 Recent Banking Developments iv. For the purpose of the Interest Subvention, an account will be considered as prompt payee if it satisfies the following criterion as specified by RBI: JS Digest of Banking and Finance Sept. 2016 31

TIMELINES FOR CONVEYING CREDIT DECISIONS Home Loan sat Metro & Urban CentresPriority Sector Timeline for Loan Application Scenario Sourcing Processing Total TAT Disposal entities entities 6 days 12 daysLoans upto Rs.25,000/- Fortnight Under Builder tie-up (same 2 days 4 days 12 days centre) 16 daysLoans above Rs.25,000/- 8 to 9 weeks 10daysMicro & Small Enterprise Under Builder tie-up (other 2 days 10 days centre)Loans upto Rs.25,000/- 2 weeks Other than Builder tie-up 2 daysLoans above Rs.25,000/- and upto 4 weeks (same centre)Rs.5 lac Other than Builder tie-up 2 days 14 days (other centre)(As mandated by RBI in their Master Circular – Lending to Priority Sectordated 01.07.2014) Additional 2 days for Documentation & DisbursementSME Loans at all centres: Timelines for Loan Application All Loans at Semi Urban & Rural Centres Disposal (*)SME Loans at all Centres Regular Additional / Ad-hoc Limits Type of Loans Sourced by Sourced by MRT/RMRO Branch/Business Correspondent/BusinessAll loans upto Rs.25 lac 14 days 7 days FacilitatorLoans of Rs.25 lac and above 14 days 9 daysupto Rs.50 lac Home Loan 7 days 4 daysSanction in case of Take-over 14 days Car Loan 3 days 6 days 3 daysTime norms for RM (SE) Education Loan 6 days 6 daysLimits above Rs.50 lac upto 22 days 15 days Personal Loan 2 days 6 daysRs.5 crore Traders Loan 6 daysTime norms for RM (ME) Self employed / 6 days Transport operatorLimits above Rs.5 crore 22 days 15 daysRetail Loans at Metro & Urban Centres Mfg. Units 9 days 10 days 8 daysRent Plus 6 days Agricultural Loans 7 daysMortgage Loan 6 daysCar Loan 2 days (For HNIs-1 day) Stree Shakti Tractor 3 days 3 daysEducation Loan 6 days LoanPersonal Loan 3 days (With / Without Collateral) JS Digest of Banking and Finance Sept. 2016 33 34 Recent Banking Developments

The timelines start from the date of receipt of complete documents from SBI shall consider investments and debt/structured engagements of upthe applicant and the time taken by the applicant for submitting to Rs.3 crore to an Indian registered entity for promoting their businessdocuments and / or for furnishing information sought by the Bank will innovations using IT in India for banking and related technology.not be taken into account for the purpose of timelines indicated above”. The type of financial assistance can be in any one or combination of the“All timeline counts will be on the basis of full working days. Wherever following:there is a need for verification etc. with various authorities/ Govt. bodiesacross one or more centres, a minimum of 15 additional working days  Equity / Quasi Equity / Mezzanine Equity.will be applicable.  Loan of Long term / Structured Financing.We shall endeavour, at all times, to deliver within the indicated timelines,  Joint IPR / Restricted IPR.barring in situations and circumstances that are beyond the control of  Perpetual unlimited free license for use of technology across Statethe Bank.” Bank Group.Technology:  Resources and skilled manpower costs for POCs and innovation.One can now enable High Security through mobile OTP on SBI Corporate  Purchase of the product/service from the start-up.Internet Banking Saral Account also.  Any other form satisfying the objectives of the program.SBI onlinesbi.com portal is giving a option to see the PPF statement SBI QUICK – MISSED CALL BANKING                        financial year wise now. SBI Quick – MISSED CALL BANKING is a new service from the BankeTDR & eSTDR can be opened on  SBI Corporate Internet Banking which involves Banking by giving a Missed Call or sending an SMS withSaral also. pre-defined keywords to pre-defined mobile numbers. Services include:Now, no need to visit Branch for changing mobile number linked to yourBank account. It can be done online using ATM cum Debit card details,  Balance EnquiryOTP or through Contact Centre.  Mini Statement  Blocking of ATM CardState Bank of India IT Innovation Start-up Engagement Programme (IT-ISEP)  ATM Card Usage Configuration  Car and Home Loan EnquiryState Bank of India has launched an ‘IT Innovation Start-up Engagement  PM Social Security SchemesProgramme’ with the following objectives: This service can only be activated for the mobile number that is registered for a particular account with the Bank.  To gather deeper and collaborative understanding of the If you have an Android, Windows, iOS or Blackberry phone, you can startups. download the SBI Quick app from the respective App Store. That way you will not need to remember the various keywords and  To encourage IT start-ups to leverage the benefits of “Digital destination mobile numbers. India” and “Make in India’ programs and in the process Once installed, you don’t need an internet connection to use the app as contribute to the development of products and services for the the communication would happen over SMS or Missed Call banking sector. State Bank Buddy – Mobile Wallet  To harness the capabilities of innovative young entrepreneurs State Bank Buddy is State Bank of Indias mobile wallet on the for developing ground breaking ideas at a low cost to the Bank. smartphone. It is a semi-closed prepaid wallet which can be used to transfer money  Encourage these startups to transfer technology to SBI in to other wallet users and bank accounts, anytime, anywhere.  particular and to the industry and society at large. The following services will be available on State Bank Buddy mobile app.Highlights 36 Recent Banking DevelopmentsThe IT Innovation Start-up Engagement Programme (IT-ISEP) has beenestablished with an initial outlay of Rs. 50 crore. Under the programme, JS Digest of Banking and Finance Sept. 2016 35

However some of the features are yet to be activated on the app and will virtual token at your own convenience from any place without beingbe coming soon o Send money o View your statements physically present in the branch. With NO Queue app, one can book ao Add funds o Personalize your State Bank Buddy  virtual queue ticket for your nearest branch and get real time statusOne can visit the Apple App store or Google Play store depending on the notification of your position in the queue. Thus the customer can virtuallytype of phone and search for State Bank Buddy by using the keyword book a queue ticket to avoid long queues and spend valuable time before“State Bank”. One can click on install and download the app.  we let you know when to arrive at the branch.An active internet service (2G / 3G / 4G / Wi-Fi) to use State Bank Buddy.  Who can book a virtual ticket?An Indian national having a mobile number and above the age of 10 Any individual (SBI or Non SBI customer) who wants to visit SBI branchYears, is eligible to download and use the State Bank Buddy services. to avail a service and has a State Bank NO Queue mobile app installed on their Android phone can book a virtual ticket.Video Statement of Account:SBI presents SBI Video Statements – interactive, voice, accessible friendly. C & I Business: Working Capital Financing: In view of rising non-performing assetsOn 1st July 2016, SBI has launched ‘SBI Video Statement’ for HNI, Wealth (NPAs) in the corporate sector, State Bank of India (SBI) has movedManagement and Visually Impaired customers. towards a projected-cash-flow financing from the earlier practice of balance-sheet financing.Eligibility- SB accounts holders only RBI Guidelines: Definitions on Enhancing Credit Supply for Large- Valid email registered in Branch Borrowers through Market Mechanism:- Statement facility activated at account level 1. For the purpose of this Framework, the following terms shall haveBenefits: the meaning assigned to them herein below:- Animated statements which display data in analyzed format (i) Aggregate Sanctioned Credit Limit (ASCL) means the aggregate- Voiceover embedded with a personalization- Accessibility friendly initiative for visually impaired customers of the fund based credit limits sanctioned or outstanding,- Manage his fund efficiently whichever is higher, to a borrower by the banking system.- Collective and group wise analysis ASCL would also include unlisted privately placed debt with- Interactive account statement for quick understanding the banking system.- Effortlessly reading the statement (ii) ‘Specified borrower’, means a borrower having an ASCL of- Built in promotional offers more than- Customer Portfolio overview information of all accounts under CIF a) Rs.25,000 crore at any time during FY 2017-18; b) Rs.15,000 crore at any time during FY 2018-19; of customer c) Rs.10,000 crore at any time from April 1, 2019 onwards;- Funds inflow and outflow (Income (top 5 credits) & Outgoing (top 5 (iii) ‘Reference date’, means the date on which a borrower becomes a ‘specified borrower’. debits)) (iv) Normally permitted lending limit (NPLL), means 50 percent- Channel Usage – INB, Branch, ATM, POS, etc of the incremental funds raised by the specified borrower over- Detailed transactions list for Statement Period and above its ASCL as on the reference date, in the financial- Enhanced experience in reading statement of accouts years (FYs) succeeding the FY in which the reference date falls.- Secured – Password protected For this purpose, any funds raised by way of equity shall be deemed to be part of incremental funds raised by the specifiedState Bank NO Queue Mobile App borrower (from outside the banking system) in the given year;PURPOSE: Provided that where a specified borrower has already raisedThe State Bank “NO Queue” app empowers you to efficiently book a funds by way of market instruments and the amount JS Digest of Banking and Finance Sept. 2016 37 38 Recent Banking Developments

outstanding in respect of such instruments as on the reference subscription by the banking system to market instruments shall be date is 15 per cent or more of ASCL on that date, the NPLL will included except any subscription made by the banking system to the mean 60 percent of the incremental funds raised by the specified market instruments issued by a specified borrower in 2017-18 and held borrower over and above its ASCL as on the reference date, in within the permissible prudential limits by a bank, as derived from para the financial years (FYs) succeeding the FY in which the 5 below. reference date falls. 5. Banks may, at their discretion, subscribe to bonds issued by the (v) Banking system, means all banks in India including RRBs and co-operative banks and branches of Indian banks abroad. specified borrowers (over and above NPLL) in the first year of this (vi) Market instruments, shall include bonds, debentures, framework taking effect, i.e., 2017-18 subject to extant investment redeemable preference shares and any other non-credit liability, guidelines and these being divested in the subsequent three years other than equity. as per the following milestones: (i) Not less than 30 percent by March 31, 2019Scope: (ii) Not less than 60 percent by March 31, 20202. This guidelines will be applicable on all single counterparties of (iii) Not less than 100 percent by March 31, 2021. 6. All holdings by a bank of market instruments issued by a ‘specified Scheduled Commercial Banks (SCBs), except other SCBs, NBFCs borrower’ after the ‘reference date’ shall be held in the AFS/HFT registered with RBI, AIFIs (NHB, SIDBI, EXIM Bank and NABARD) category and marked to market as applicable thereto. However, and HFCs registered with NHB. Banks should apply their due- banks may, at their discretion, value their holdings of market diligence while deciding the NPLL for a single borrower in order instruments issued by the specified borrowers in 2017-18 at book that borrowers do not circumvent the cut-off ASCL criteria by value. borrowing through dummy/fictitious group companies. 7. RBI will review the entire guidelines including the ASCL limits3. This will come into effect from the financial year 2017-18 onwards. after a year of the guidelines becoming fully implemented, i.e. during The banking system shall ordinarily keep its future incremental FY 2019-20. exposures to the specified borrowers within the NPLL, else they will be subject to the prudential measures as detailed below. Prudential Norms for Off-balance Sheet Exposures of Banks – Restructuring of derivative contracts:Prudential Measures: As per RBI, where a derivative contract is restructured, the mark-to-market4. From 2017-18 onwards, incremental exposure of the banking system value of the contract on the date of restructuring should be cash settled. In this context, it is clarified that cash settlement of only the change in to a specified borrower beyond NPLL shall be deemed to carry higher mark-to-market value of the restructured derivative contract is required. risk which shall be recognised by way of additional provisioning It may, however, be ensured that the restructuring of the derivative contract and higher risk weights as under: is carried out at prevalent market rates, and not on the basis of off-market (i) Additional provisions of 3 percentage points over and above rates. the applicable provision on the incremental exposure of the Human Resources: banking system in excess of NPLL, which shall be distributed SBI Pensioners : MEDICLAIM: Email ID in the name of in proportion to each bank’s funded exposure to the specified [email protected] has been operationalized for sending complaints, borrower. queries, suggestions or any other issues pertaining to services of (ii) Additional Risk weight of 75 percentage points over and above Insurance Company or Third Party Administrators (TPAs) in respect of the applicable risk weight for the exposure to the specified the Family Floater Group Mediclaim Policy of SBI. All queries / issues borrower. The resultant additional risk weighted exposure, in / suggestions may be sent by members of Policy-A / Policy-B in this terms of risk weighted assets (RWA), shall be distributed in mail ID. proportion to each bank’s funded exposure to the specified borrower. 40 Recent Banking DevelopmentsExplanation: For the purpose of determining exposure beyond NPLL, JS Digest of Banking and Finance Sept. 2016 39

General: discovery;SBI is a proud recipient of the prestigious Oracle Global Excellence Award. * In order to attract a wide variety of buyers, the invitation forDMD & CIO Shri Mrutyunjay Mahapatra received the award at a glitteringceremony held in San Francisco (USA) on 21st September 2016. bids should preferably be publicly solicited so as to enable participation of as many prospective buyers as possible. InRBI Guidelines on Sale of Stressed Assets by Banks such cases, it would be desirable to use e-auction platforms.In order to strengthen banks’ ability to resolve their stressed assets An open auction process, apart from attracting a larger set ofeffectively, RBI has put in place an improved framework governing sale borrowers, is expected to result in better price discovery. Banksof such assets by banks to SCs/RCs/other banks/Non Banking Financial should lay down a Board approved policy in this regard;Companies/Financial Institutions etc. The guidelines are as under: * Banks must provide adequate time for due diligence byThe board of banks shall lay down detailed policies and guidelines on prospective buyers which may vary as per the size of the assets,sale of their stressed assets to Securitisation Companies (SCs)/ with a floor of two weeks;Reconstruction Companies (RCs). The policy, inter alia, shall cover the * Banks should have clear policies with regard to valuation offollowing aspects: assets proposed to be sold. It must be clearly specified where internal valuation would be accepted and where external i. Financial assets to be sold; valuation would be needed. However, in case of exposures ii. Norms and procedure for sale of such financial assets; beyond Rs.50 crore, banks shall obtain two external valuation iii. Valuation procedure to be followed to ensure that the realisable reports; * The cost of valuation exercise shall be borne by the bank, to value of financial assets is reasonably estimated; ensure that the bank’s interests are protected; iv. Delegation of powers of various functionaries for taking * The discount rate used by banks in the valuation exercise shall be spelt out in the policy. This may be either cost of equity or decision on the sale of the financial assets; etc. average cost of funds or opportunity cost or some other relevant2. In order to enhance transparency in the entire process of sale of rate, subject to a floor of the contracted interest rate and penalty, if any. stressed assets, it is decided as under: 3. Banks shall review the efficacy of their extant policies on sale of * Identification of stressed assets beyond a specified value, as NPAs, with focus on valuation of stressed assets, and rework their policies by appropriately adopting the above principles. may be determined by bank’s policy, for sale shall be top-down Investment by banks in security receipts backed by assets sold by i.e., the head office/corporate office of the bank shall be actively them. involved in identification of stressed assets, including assets 4. In order to make sure that sale of stressed assets by banks actually which are classified as Special Mention Account, to be put on result in ‘true sale’ of assets and to create a vibrant stressed assets sale. Early identification will help in low vintage and better market, it has been decided by RBI to progressively restrict banks’ price realisation for banks; investment in SRs backed by their own stressed assets. * At least once in a year, preferably at the beginning of the year, i) With effect from April 1, 2017, where the investment by a bank banks shall, with the approval of their Board, identify and list in SRs backed by stressed assets sold by it, under an asset internally the specific financial assets identified for sale to securitisation, is more than 50 percent of SRs backed by its other institutions, including SCs/RCs; ??At a minimum, all sold assets and issued under that securitisation, the provisions assets classified as ‘doubtful asset’ above a threshold amount held in respect of these SRs will be subject to a floor; this floor should be reviewed by the board/board committee on periodic shall be progressive provisioning as per extant asset basis and a view, with documented rationale, is to be taken on classification and provisioning norms, notionally treating exit or otherwise. The assets identified for exit shall be listed book value of these SRs as the corresponding stressed loans, for the purpose of sale as indicated above; assuming these had remained, without recovery of principal, * Prospective buyers need not be restricted to SCs/RCs. Banks may also offer the assets to other banks/NBFCs/FIs, etc. who 42 Recent Banking Developments have the necessary capital and expertise in resolving stressed assets. Participation of more buyers will result in better price JS Digest of Banking and Finance Sept. 2016 41

on the bank’s books. In effect, provisioning requirement on significant share (~25-30%) of the asset, for acquiring the asset by SRs will be higher of the: matching the highest bid. This requires the process of price discovery a. provisioning rate required in terms of net asset value via auction, as described, to be done first. declared by the SCs/RCs; and Swiss Challenge Method – Enabling Low Vintage and Debt aggregation: b. provisioning rate as applicable to the underlying loans, 7. In order to bring down the vintage of NPAs sold by banks as well as assuming that the loans notionally continued in the books to enable faster debt aggregation by SC/RCs, banks shall put in of the bank; place board approved policy on adoption of Swiss Challenge Methodii) With effect from April 1, 2018, the above threshold of 50 percent for sale of their stressed assets to SCs/RCs/other banks/NBFCs/ will stand reduced to 10 percent. FIs, etc. For this purpose, as indicated in paragraph 2 above, the board/committee of the board shall conduct periodic review (atDisclosure of Investment in SRs: least once in a year) of their stressed - asset portfolio, with a view to5. In addition to the existing disclosure requirements, banks shall make decide on the proposed course of action to resolve the portfolio in terms of their loan recovery policy. During such review, the bank following disclosures pertaining to their investments in security should identify the assets which will be offered for sale among receipts: prospective buyers and an authenticated list of such assets shall be maintained by the bank. The list may, at the discretion of the bank,Particulars SRs SRs issued SRs issued be disclosed to prospective bidder on entering into confidentiality agreement. The broad contours of the Swiss Challenge Method are issued more than 5 more than 8 as under: within years ago but years ago I. A prospective buyer interested in buying a specific stressed past 5 within past 8 asset may offer a bid to the bank; years years II. If the asset features in the list of assets for sale maintained by(i) Book value of SRs the bank, and if the aforesaid bidder offers more than the minimum percentage specified in the bank’s policy (say, 30backed by NPAs sold percent of outstanding loan) in the form of cash, the bank shall be required to publicly call for counter bids from otherby the bank as prospective buyers, on comparable terms; III. Once bids are received, the bank shall first invite the SC/RC, ifunderlying any, which has already acquired highest significant stake (as indicated at paragraph 6 above) to match the highest bid. CeterisProvision held paribus, the order of preference to sell the asset shall be as follows: i) The SC/RC which has already acquired highestagainst (i) significant stake; ii) The original bidder and iii) The highest bidder during the counter bidding process.(ii) Book value of SRs IV. Bank will have the following two options: i. Sell the asset to winning bidder, as determined above;backed by NPAs sold ii. If the bank decides not to sell the asset to winning bidder,by other banks / bank will be required to make immediate provision on the account to the extent of the higher of:financial a) The discount on the book value quoted by the highestinstitutions / non- bidder; andbanking financial 44 Recent Banking Developmentscompanies asunderlyingProvision heldagainst (ii)Total (i) + (ii)Debt Aggregation – First right of refusal:6. To enhance SC/RCs ability to aggregate debt faster, a bank offering stressed assets for sale shall offer the first right of refusal to a SC/ RC which has already acquired the highest and at the same time a JS Digest of Banking and Finance Sept. 2016 43

b) The provisioning required as per extant asset amount, over the counters from all declarants who desire to deposit cash classification and provisioning norms. at the counters, including deposits under the above Scheme through challan ITNS- 286. In this connection, banks shall comply with the KnowBuy-Back of Financial Assets: Your Customer requirements for customers and walk-in customers as8. The extant guidelines of Reserve Bank do not prohibit banks from contained in Master Direction – Know Your Customer Direction, 2016 dated February 25, 2016. taking over standard accounts from SCs/RCs. Accordingly, in cases where SCs/RCs have successfully implemented a restructuring plan Risk- based Internal Audit: for the stressed assets acquired by them, banks may, at their RBI has issued guidelines on Risk-based Internal Audit setting out the discretion, with appropriate due diligence, take over such assets scope and coverage of Risk-based Internal Audit (RBIA) system in after the ‘specified period’ (as defined in terms of extant guidelines commercial banks. In this connection some banks have represented to on restructuring) provided that the account performed satisfactorily RBI seeking approval for engaging services of retired officers of the bank during the ‘specified period’. Banks may frame a board approved for assisting in internal audit. policy containing various aspects governing such take over viz., type of assets that may be taken over, due diligence requirements, Keeping in view the change in demographic profile of the staff in banks viability criteria, performance requirement of asset, etc. However, a on account of retirement leading to shortage of staff to conduct internal bank cannot at any point of time take over from SCs/RCs the assets audit which is an important component of Risk Based Supervision (RBS), they have themselves earlier sold. it has been decided by RBI to permit banks to engage the services of its retired officials for assisting in internal audit subject to followingPartial Credit Enhancement (PCE) to Corporate Bonds conditions:As per RBI the aggregate exposure limit of all banks towards the PCE fora given bond issue has been capped at 20 per cent of the bond issue size. i. Each bank should formulate with the approval of their Board ofOn a review, it has been decided by RBI to increase the aggregate exposure Directors, a policy to engage the services of its retired personnel forlimit from the banking system to 50 per cent of the bond issue size, with a maximum tenure not exceeding three years in the areas where ita limit up to 20 per cent of the bond issue size for an individual bank. does not have enough expertise. The policy should interalia includeAs the purpose of PCE by banks is to enable wide investor participation the terms of engagement, review of performance, termination ofin the corporate bond market, banks are expected not to invest in corporate services, etc.bonds which are credit enhanced by other banks. ii. Banks need to ensure that the retired personnel so engaged, workIncome Declaration Scheme, 2016 – Acceptance of Cash Over the under the close supervision of the Management of the bank and theCounter final sign off of the audit reports would be the responsibility of theBanks were advised by RBI to ensure that their branches invariably accept serving bank officials.cash from all their customers who desire to deposit cash at the counters.Further, they were also advised to refrain from incorporating clauses, in iii. In order to avoid conflict of interest, the retired personnel so engagedthe terms and conditions, which restrict deposit of cash over the counters. may not be assigned branches/ sections, where they had worked while in active service with the bank.The Income Declaration Scheme, 2016 (the Scheme) has come into effectfrom June 1, 2016 and some declarants may like to pay their tax dues in Review of Prudential Norms –Risk Weights for Exposures to Corporates,cash. In this connection, it has been brought to the notice of RBI by the AFCs and NBFC-IFCsGovernment that banks are hesitant in allowing deposit of large amounts At present unrated exposures to the above entities attract a risk weight ofof cash by the declarants under the Scheme, with them, for credit to 100 per cent. On a review, it has now been decided by RBI to make theGovernment account. following modifications to the risk weights applicable to unrated exposures:RBI has advised that banks must invariably accept cash, irrespective of 46 Recent Banking Developments JS Digest of Banking and Finance Sept. 2016 45

• With effect from June 30, 2017, all unrated claims on corporates, CONCEPT BRIEF – I AFCs, and NBFC-IFCs having aggregate exposure from banking system of more than INR 200 crore will attract a risk weight of 150%. Indian Economy Roundup – September 2016• However, claims on corporates, AFCs, and NBFC-IFCs having Analysts around the world continue to pin their hopes on India being aggregate exposure from banking system of more than INR 100 crore the bright spot in a world of recessionary waves and subdued growth. which were rated earlier and subsequently have become unrated The GOI is making strenuous efforts to have the Goods and Services Tax will attract a risk weight of 150% with immediate effect. (GST) implemented by April 2017, a feat considered by many as very ambitious given the number of legislations required at the state and JS Digest of Banking and Finance Sept. 2016 47 central level. The International Monetary Fund (IMF), on its part, has stated that the GST will boost India’s growth. Growth Rate: India’s economy is likely to expand by 7.8% during the current financial year on the back of good monsoons, as per a survey of economists polled by industry body Federation of Indian Chambers of Commerce and Industry (FICCI). Data from the Central Statistics Office (CSO) shows that India grew by 7.1% in Q1 of 2016-17 as compared to 7.9% in Q4 of 2015-16 and 7.5% in the year-ago period. Manufacturing grew by 9.1% in the June 2016 quarter as compared to 7.3% in the year- ago period. Industrial Output: The industrial output as measured by the Index of Industrial Production (IIP) contracted 2.4% in July 2016 as compared to expansion of 2% in June 2016. The core sector grew by 3.2% in July 2016 as compared to 5.2% in June 2016. Car Sales: Domestic sales of passenger vehicles (cars, utility vehicles and vans) grew by 16.7% to 2.58 lakh units in August 2016 as compared to the year-ago period. Between April and August 2016 sales have grown by 11% as compared to the year-ago period. Inflation: Wholesale Price Index (WPI) inflation was 3.74% in August 2016 as compared to 3.55% in July 2016. Consumer Price Index (CPI) inflation, on the other hand was 5.05% in August 2016 as compared to 6.07% in July 2016. Retail food inflation was 5.9% in August 2016 as compared to 8.4% in July 2016. Monsoons: The India Meteorology Department (IMD) has stated that monsoons will be normal (from its earlier expectation of above average rains) – below 100% Long Period Average (LPA) at 97-98% of the LPA. Between June 1 and Sep 7 2016, it was 4% below normal. Trade: Exports contracted by 0.3% to US$ 21.51 billion in August 2016 while imports declined by 14.09% to US$ 29.19 billion as compared to the year-ago period. The resultant trade deficit was US$ 7.68 billion in August 2016, 38% lower than in the year-ago period. Cumulative exports 48 Concept Brief

were US$ 108.51 billion between April and August 2016 slightly lower up of credit. Rating agency Moody’s has stated that Indian banks maythan the US$ 111.85 billion in the year ago period. Cumulative imports have seen the worst of their bad asset cycle. State Bank of India (SBI)were US$ 143.18 billion in the same period as compared to US$ 170.23 Chairman Arundhati Bhattacharya has also stated that as capacitybillion in the year-ago period. The resultant trade deficit in this period utilisation increases, Non-Performing Assets (NPAs) are expected towas US$ 34.67 billion. decrease.Current Account Deficit (CAD): India’s CAD was 0.1% or US$ 0.3 billion NPAs: Finance Minister Arun Jaitley has stated that banks may have tofor the April-June 2016 quarter. It was 1.2% or US$ 6.1 billion in the deal with piles of bad loans as new promoters willing to take on the badJanuary-March 2016 quarter. The huge decline was attributed to the lower loans are difficult to find. The GOI also does not have enough funds totrade deficit. capitalise banks given fiscal deficit consolidation. Stressed assets amount to about Rs.8 lakh crore. SBI and PNB are auctioning properties online inTax Collections: Growth in indirect taxes was up 27.5% and in direct a bid to recover loans – SBI had 1,107 properties in its online auctiontaxes up by 15.03% in the first 5 months of 2016-17. India’s total tax with Rs.2,500 crore reserve price as on September 7, 2016.collections were up 23% in the April-August 2016 period to Rs.5.25 lakhcrore as compared to the year-ago period. The target for the fiscal is Black Money: Only Rs.4,000 crore have been disclosed till mid-AugustRs.16.26 lakh crore with 12.64% growth aimed for direct tax collections 2016 under the GOI’s Income Disclosure Scheme (IDS) whereas 40,000-to Rs.8.47 lakh crore and 10.8% growth aimed for indirect tax collections 50,000 crore were expected.to Rs.7.79 lakh crore. Investments:Fiscal Deficit: Fiscal Deficit was 73.7% of the BE for the first 4 months of2016-17 at Rs.3.93 lakh crore as compared to 69.3% in the year-ago period. o French power company EDF plans to invest US$ 2 billion throughThe target is Rs.5.33 lakh crore or 3.5% of GDP for FY17. projects in renewable energy in India.Divestment: The GOI expects to fulfil its disinvestment target of Rs.56,500 o The GOI’s Expenditure Department has come out with strictcrore because of Rs.21,000 crore expected through share-buyback of norms to ensure timely implementation of projects. The appraisalPublic Sector Units (PSUs). of projects to be implemented must be based on measurable indicators to enable fair and effective evaluation. This is also toStock Markets: The SENSEX closed at 28668 while the NIFTY closed at ensure that there is no overlap in proposed and current schemes.8831 as on September 23 2016. Large flows by Foreign InstitutionalInvestors (FII) pushed the SENSEX to an 18-month high on expectations o Vodafone plans to invest US$ 3 billion or Rs.20,100 crore intothat the Federal Reserve will not raise rates. The markets were buoyed India.with news that the US Federal Reserve has decided to hold interest rates.The US central bank has decided to tighten monetary policy by the end of Foreign Flows:2017 as employment figures are expected to improve and the US economyis growing consistently and reliably.  India’s net Foreign Direct Investment (FDI) moderated to US$ 4.1 billion in Q1 of 2016-17 from US$ 10 billion in April-June 2016Currency Markets: The Rupee closed at 66.65 against the Dollar as on quarter and US$ 8.8 billion in the preceding quarter i.e. Q4 ofSeptember 23, 2016. 2015-16.Gold and Silver Prices: Gold prices closed at Rs.31,287 per 10 grams and  There was a net inflow of portfolio investment of US$ 2.1 billionsilver prices closed at Rs.47,018 per kg as on September 23, 2016. in the April-June 2016 quarter as against a marginal outflow in the corresponding period of the last year; there was an outflowBanking: The Bank for International Settlements (BIS) has stated that of US$ 1.5 billion in the preceding quarter, mostly because of netamong the major economies of the world, India is less vulnerable to inflow in the equity component.banking distress; on the other hand, China faces higher risks. India’scredit-GDP ratio was the least for India in the January-March 2016 quarter  Foreign exchange reserves (on a BoP basis) increased by US$ 7at -2.9 as compared to -3 in the previous quarter. The credit-GDP ratio is billion in the April-June 2016 quarter as compared with anused as an indicator of impending financial crises as it measures build- accretion of US$ 11.4 billion in the year-ago period and US$ 3.3 JS Digest of Banking and Finance Sept. 2016 49 50 Concept Brief

billion in the preceding quarter. Forex reserves were US$ 369.6 retail trading of products with state-of-the-art and cutting edge billion as on September 16, 2016. technology. After this period, sourcing norms will apply. Global Stimulus: Organisation for Economic Co-operation and  Bankers have expressed confidence that they can handle the Development (OECD) Secretary General Angel Gurria has stated that the US$ 26 billion redemption of Foreign Currency Non Resident world’s central bankers have almost reached their limits to stimulate (FCNR) deposits expected between October and November 2016 growth. claiming they have prepared different strategies to counter the Employment: Sports good manufacturer Nike has closed about 35% of its adverse effects of the outflow. stores in India to cut its losses. It will also be reducing the number of its partners. It still has about 200 stores in India.  India has received US$ 11 billion remittance from the US in 2015 RBI Statements: out of US$ 68.9 billion world remittances. Only Mexico and  Former RBI Governor Raghuram Rajan has stated that inflation China have received more remittances from the US. projections are still high and cannot cut rates in this environment. He had also stated that India needs small reforms rather than  Commerce and industry minister Nirmala Sitharaman has stated big bang reforms. that India is not ready for 100% FDI in multi-brand retail (MBR).  RBI has cautioned Public Sector Banks (PSBs) from over-exposure India allows 51% FDI in MBR and 100% in single brand retail. to the retail sector. Stressed assets must be contained and banks must get back to internal accruals, according to RBI Deputy  Securities and Exchange Board of India (SEBI) has allowed Governor N S Vishwanathan. foreign portfolio investors to invest directly in corporate bond Growth Forecast: As the domestic consumption base has expanded, S&P markets without a broker. It has also allowed foreign investors Global Ratings expects India to achieve “steroid-free” growth of 8% over to invest up to 15% in Indian stock exchanges, up from 5%. It the next few years. S&P has stated that the momentum of India’s structural has eased norms for registration of foreign fund managers reform agenda has been strong boosting its growth prospects. National wishing to relocate to India. These foreign investors include Institution for Transforming India (NITI) Vice Chairman Arvind foreign central banks, sovereign wealth funds, banks and Panagariya expects 8% economic growth because of goods monsoons. mutual funds. RBI has forecast that India will grow at 7.6% in 2016-17. Infosys Chief Executive Officer (CEO) Vishal Sikka has stated that Britain’sFDI Reforms: The GOI has made it easier for Foreign Direct Investment exit from the European Union (EU) – Brexit - will hurt the Indian(FDI) to flow into the following sectors: Information Technology (IT) companies as more deals are likely to be cancelled. However, on the whole, India is more dependent on its ability  100% FDI is permitted with GOI approval for trading, (e- to reform its investment environment to enable flow of both domestic and commerce as well) for food products manufactured/produced foreign investments to crucial sectors such as infrastructure. The efforts in India. on the GST Bill are a positive step in that direction.  Foreign investment> 49% is permitted in defence through the 52 Concept Brief approval route when it results in access to modern technology rather than state-of-the-art technology.  100% FDI through the automatic route is allowed in the broadcasting sector; this was 49% earlier.  74% FDI is permitted in the pharmaceutical sector under the automatic route in the brownfield segment. Government approval was required earlier.  100% FDI is permitted under the automatic route in the civil aviation sector in brownfield projects up from 49% earlier.  The GOI has relaxed local sourcing norms for up to 3 years, with government approval, for those entities involved in single brand JS Digest of Banking and Finance Sept. 2016 51

MODEL TEST BASED ON SEPTEMBER 2016 c. July – June d. Oct – Sep INFORMATION: e. None of these 8) Who won the men’s singles title at the 2016 US Open tennis championships?1) Which Indian bank has launched Project Artificial Intelligence (AI)? a. Stan Wawrinka b. Novak Djokovica) HDFC Bank b) ICICI Bank c. Andy Murray d. Kei Nishikoric) Axis Bank d) SBI e. Rafael Nadale) Punjab National Bank 9) Who won the women’s singles title at the 2016 US Open tennis championships?2) Who was the President that was recently impeached for concealing the country’s financial problems by manipulating the budget? a. Serena Williams b. Venus Williamsa) Xi Jinping b) Dilma Rousseff c. Karolina Pliskova d. Angelique Kerberc) Shinzo Abe d) Vladimir Putin e. Caroline Wozniackie) None of the above 10) With which mobile operator has Reliance Communications recently announced merger plans?3) Whose medal (2012 Olympics) was upgraded recently because of a doping disqualification of the winner? a. Airtel b. Aircela. Yogeshwar Dutt b. Sushil Kumar c. Vodafone d. Tata DoCoMoc. Karnam Malleswari d. Saina Nehwal e. Idea Cellulare. Mary Kom 11) Which phone has recently been banned on flights by India for safety reasons?4) Perpetual bonds are considered as ______ for the purpose of calculating the Capital Adequacy Ratio that banks need to maintain a) Samsung’s Galaxy Note 7 according to BASEL III norms. b) Apple’s iPhone 7a. Debt b. Quasi-debt c) Xiaomi’s Redmi Note 4Gc. Equity d. Any of these d) Google’s Moto Xe. None of these e) None of the above5) The Chairman of UIDAI is ______. 12) Expand FATF in relation to international bodies.a. J Satyanarayana b. Ajay Bhushan Pandey a) Financial Authorities Task Forcec. Nandan Nilekani d. Arvind Panagariya b) Financial Action Task Forcee. None of these c) Federation of Associations’ Trade Fund6) Ratan Tata, Nandan Nilekani and Vijay Kelkar are joining together d) Financial Association of Traders’ Forum to form a microfinance company called _______. e) None of the abovea. Bandhan Finance b. Tata Finance 13) Recently Deepa Malik won a Paralympics medal in thec. SKS Microfinance d. Avanti Finance _______event.e. None of the above a) discus-throwing b) shotput7) What is RBI’s accounting year? c) javelin d) shootinga. April – March b. Jan - Dec e) archery JS Digest of Banking and Finance Sept. 2016 53 54 Model Test

14) ________ won the most number of medals in the 2016 Rio MODEL TEST Paralympics. For Aspirants of MM II Confirmation Exama) China b) USAc) Croatia d) UK Time: 1 ½ hours Marks: 100e) Ukraine PART – A - OBJECTIVE TYPE QUESTIONS15) In which field did India’s Thangavelu Mariyappan get a gold in Personal Banking the 2016 Rio Paralympics? 1. What is the maximum loan amount under SBI Global ED-VANTAGEa) Long Jump b) Shotput Scheme?c) Javelin- throw d) High Jump a) Rs.20.00 lacs b) Rs.30.00 lacse) Discus-throw c) Rs.50.00 lacs d) Rs.100.00 lacs16) The GST Bill required at least _______ states to ratify it before the e) Rs.150.00 lacs President’s assent to become a law.a) 12 b) 14 c) 16d) 18 e) 20 1. 2. LTV ratio of home loan amount above Rs.75 lakhs is______ %17) Which company’s email accounts (500 million) were hacked into in a) 80% b) 75% c) 90% d) 50% 2014 with account names and addresses, among other details, being compromised recently? 3. The minimum Limit for sanction under SBI Maxgain is Rs.______a) Yahoo Mail b) Gmail a) Rs.10 lacs b) Rs.3 lacs c) Rs.20 lacs d) No minimumc) Rediffmail d) Facebook 4. Power of Attorney executed outside India must be stampede) None of the above within _____months of its receipt in India18) Who, among the following, is the richest Indian according to Forbes’ a) 4 months b) 2 months c) 1 month India’s 100 Richest People? d) 3 monthsa) Anil Ambani b) Azim Premji 5. In respect of Medium Risk customers, the Due Diligence has to bec) Dilip Shanghvi d) Kumaramangalam Birla carried out by the branch every _____yearse) Mukesh Ambani a) 10 years b) 2 years c) 5 years d) 8 yearsAnswers: 6. A draft will be revalidated only if it is presented within _______ of its issue.1) a 2) b 3) a 6) d4) c 5) a 9) d a) 2 years b) 1 year c) 6 months 12) b7) c 8) a 15) d d) None of the above 18) e10) b 11) a 7. Can Term Deposit under Capital Gain Scheme be extended by the depositor as security for availing the following?13) b 14) a16) c 17) a a) Overdraft against Term Deposit b) Margin money for non-fund based business JS Digest of Banking and Finance Sept. 2016 55 56 Model Test

c) Collateral Security for Cash Credit/Term Loan a) 76 & 78 b) 74 & 76 c) 75 & 76 d) 75 & 78d) None of the above 18. The Maximum amount that can be transferred in a day through8. Senior Citizens get 0.25% extra interest above Term Deposit IMPS is _____. interest rate for Term Deposits above? a) Rs.2 lacs b) Rs.1 lac c) Rs.50,000a) Rs.1000 b) Rs.5000 c) Rs. 10,000d) Rs. 20,000 d) Rs.5 lacs9. Under NEFT money can be sent by the remitter to : 19. The minimum amount of deposit under Senior Citizen Deposit Scheme is Rs.______a) Nepal b) Bhutan c) Ceylon a) Rs.1,000 b) Rs.2,000 c) Rs.5,000 d) Rs.10,000d) None of these countries10. What is the maximum Tenure under SBI Flexi Deposit Scheme? 20. In respect of credit card complaints under Banking Ombudsman scheme the maximum award including penalty is Rs.______a) 5 years b) 7 years c) 8 yearsd) above 10 years a) Rs.1 lac b) Rs.10 lacs c) Rs.2 lacs d) Rs.20 lacs11. What is the minimum amount to be retained in Savings Bank under Savings Plus Scheme? 21. Which of the following is not correct in regard to nomination for deposit a/cs?a) Rs.10,000 b) Rs.25,000 c) Rs.35,000 d) Rs.50,00012. In respect of Basic Savings Bank accounts how many max a) Illiterate person can make nomination withdrawals are permitted including ATM withdrawals at own and other bank ATMs? b) Minor cannot nominate a persona) 4 b) 5 c) 6 c) Joint account holders can make two nominationsd) no restrictions d) only one person can be a nominee13. What is the minimum balance stipulation under Phela Kadam 22. Max. withdrawal allowed per month in BSBDA ? and Pehli Udaan? a) Rs.10,000 b) Rs.50000 c) Rs.20,000 d) None of thesea) No minimum b) Rs.50 c) Rs.100 d) Rs.50014. Under RTGS penalty under delayed settlement beyond 2 hours 23. In STDR interest is compounded at is____ above repo rate a) Monthly b) Bi-monthly c) Quarterly d) Half-yearlya) 1% b) 0.5% c) 2% d) Nil15. The Pre-payment penalty applicable for Home loan is _____ 24. Requirement of obtaining certified copy of title deeds & approved plan from sub-registrar is waived for house loan up to Rsa) Rs.25,000 b) Rs. 24,000 c)Rs. 10,000d) Nil a) 50 lacs b) 25 lacs c) 100 lacs d) 75 lacs e) None of these16. The minimum Loan amount that can be sanctioned as OD Facility under Xpress Credit Loan is ______ 25. Xpress Credit-Max EMI/NMI ratio is ________a) Rs.10,000 b) Rs.15,000 c) Rs. 24,000 a) 40% b) 50% c) 60% d) 30%d) Rs. 25,000 26. Housing Loan: Max Exposure to Individual is _______17. The Maximum age limit for Sanction and Repayment under a) 10 Cr b) 25 Cr c) 50 Cr d) 100 Cr Pensioners Loan respectively is ______. JS Digest of Banking and Finance Sept. 2016 57 58 Model Test

27. Min Loan under NRI HL is Rs________ crore during 2016-17 (Union Budget)a) 3.00 lacs b) 5.00 lacs c) 10.00 lacs a) 1,90,000cr b) 2,25,000cr c) 700000 crored) 25.00 lacs d) 9,00,000 crore e) 10,00,000 crore28. Min Loan under: SBI Top up loan: 6. ________ form is taken for conversion of crop loan into term loan.a) Rs.2 lacs b) Rs.10 lacs c) Rs.25 lacs a) AB1 b) AB3 c) AB5 d) AB7d) None of these e) None of these29. Visually impaired persons can issue third party cheques up 7. Maximum insurance cover under Personal Accident Insurance to_______ scheme for a KCC holder is Rs________a) 10 lacs b) 50 lacs c) 100 lacs d) a) 10000 b) 25000 c) 50000 d) 1.00 lacno limit e) None of these e) None of these30. Two credit reports to be taken for car loan for loans above Rs. 8. Maximum finance up to Rs ______ lacs can be granted to the _________. commission agents against their receivable from thea) 5.00 lacs b) 10.00 lacs c) 15.00 lacs farmers under Arthias plus scheme.d) 20.00 lacs a) 10 b) 15 c) 25 d) 50 e) None of theseDevelopment Banking 9. For all agriculture loan account (ACC/KCC/ATL) holiday period has to be incorporated and non- incorporation of this will result1. What is the maximum number of partners in partnership firm in: permitted under Rule (10) of Companies (Miscellaneous) Rules a) The account becoming Sub-standarda) 10 b) 20 c) 50 d) 100 b) The account becoming Technical NPAe) None of these c) The account attracting provision @100%1. 2. Target for Small and marginal farmers under agriculture is d) None of these _________ % of ANBC or CEOBE whichever is higher. 10. In modified new tractor loan scheme,branch has to levy a penala) 13.5 b) 8 c) 18 d) 25 interest @ _______% p.a for the period of failure to register the vehicle with RTA.e) None of these a) 2% b) 2.5% c) 3% d) 4%3. Realistic scale of finance for important crops grown by progressive farmers in the district is fixed by_________( SBI ) e) None of thesea) RBI b) NABARD 11. Can advances under Agricultural gold loans be called up?c) Dist level Technical committee a) Nod) DGM (RBU) LHO, e) c or d b) yes,when the value of gold ornaments are less than outstanding4. For Agriculture loans collateral security and margin is not insisted c) when the account becomes NPA d) both b & c. up to Rs. ________ lacs 12. For prompt repayment of loan additional interest subvention of_______% will be provided to women SHGs.a) 0.50 b) 0.75 c) 1.00 a) 3% b) 2% c) 1.5% d) 2.5%d) 2.00 e) None of these e) None of these5. Banks are required to increase agriculture credit by Rs. _________ 13. Sanjeevani scheme refers to JS Digest of Banking and Finance Sept. 2016 59 60 Model Test

a) KCC b) KGC c) Tractor upgradation a) Marginal Farmer b) Small Farmer c) Affluent Farmer d) None of thesed) Produce Marketing Loan e) None of these14. Collateral free loan for SMEs has been increased to Rs.______ 22. A customer has 2 loan accounts with the branch, home loan & car loan. Due to non payment of interest, home loan is NPA and cara) 1crore b) 15 lakhs c) 20 lakhs d) 50 lakhs loan is regular. What would be the treatment of these accounts in Annual Return?15. SME 2 is a document fora) Agreement letter b) Arrangement letter a) Standard Accounts b) N.P.A Accountsc) Agreement of loan cum hypothecation c) Doubtful Asset d) Irregular Account e) Loss Assetd) Supplemental Agreement of loan cum hypothecation16. Limitation period for the mortgage starts 23. A Co’s Registered office is in Chennai and its factory is at Bangalore. The co. availed a bank loan in Mumbai. Equitable mortgage of co.’s.a) From the date of execution immovable property located at Shimla can be created at....b) from the date of registration a) Chennai b) Bangalore c) Mumbaic) From the date the repayment is dued) None of these d) Shimla17. Packing credit is provided for e) Any notified centre as declared by State Govt.a) Pre-shipment facilities 24. CERSAI registration should be done within how many days?b) For setting up a joint venture abroad a) 10 days b) 30 days c) 45 days d) 60 daysc) Inland Bill finance d) Factoring Services 25. Rainbow Revolution relates to _________.e) None of these a) Flower Cultivation b) Vegetable Cultivation18. Paripassu charge means c) Apple Cultivation d) None of thesea) 1st charge b) 2nd charge 26. Review of SME Credit Card is done once in _________c) Equal charge proportionate to the outstandingd) Last charge e) None of these a) 6 Months b) a year c) 2 years d) 3 years e) None of these19. The Term hypothecation is specifically defined under 27. General Credit Card (GCC) max Loan;a) Indian Contract Act b) Companies Act a) Rs.25,000 b) Rs.50,000 c) Rs.100,000c) NI Act d) SARFAESI Act e) None of these d) Rs.5,00,000 e) None of these20. Minimum amount of loan outstanding for which notice can be issued 28. SHG concept came from which country? under SARFAESI Act 2002 for recovery of Bad debts is a) Pakistan b) Sri Lankaa) Up to Rs.1.00 lac b) Rs.1.00 lac and above c) Bangladesh d) None of thesec) Above Rs.1.00 lac 29. For used car, the maximum loan amount is ________d) Rs.5.00 lac and above e) None of these a) Rs.7.50 lacs b) Rs.10.00 lacs21. Farmers who own lands up to 1.25 acres wet land or 2.5 acres dry c) Rs.15.00 lacs d) None of these land are called 30. The maximum number of persons allowed in a Limited Liability Contd. P 67 JS Digest of Banking and Finance Sept. 2016 61 62 Model Test

JS Digest of Banking and Finance Sept. 2016 63 64

JS Digest of Banking and Finance Sept. 2016 65 66

Partnership is _________ d) Debit the respective branch through branch clearing and credit currency chest a/c.a) No maximum b) 50 c)100d) 200 7. Under Prevention of Money Laundering Act-2002 banks have to report suspicious transactions to ________, New Delhi.General Banking a) RBI b) CBI c) FIU-IND d) LHO1. What is the minimum daily maintenance of the Cash Reserve e) None of these Ratio under Sec 42(1) of RBI Act w.e.f. April, 16, 2016 8. Cash Transaction Report (CTR) should be submitted to FIU-IND bya) 90% b) 95% c) 85% d) 80% ________of next month by the Principal Officer of the Bank.e) None of these a) 7th b) 10th c) 15th d) 30th2. In case of packets of notes of denominations of Rs. 500 and above, e) None of these Asst (Cash) preparing the note packets will be responsible for _______ and Cash-in-Charge recounting the note packet will be 9. When 5 or more pieces of counterfeit notes are detected in a single responsible for the _______ of pieces. transaction the branch should _______a) Quality; Quantity b) Quantity; Quality a) Impound the notesc) Quality; Quality d) Quantity; Quantity b) Receipt should be issued to the tenderer.3. Branches should conduct customer service committee meeting c) File FIR with the local police station. at__________ intervals irrespective of staff strength. d) Follow all of the abovea) Monthly b) Quarterly c) Half Yearly 10. Premature closure of PPF account needs approval ofd) Yearly a) Controlling authority b) RBI4. Maximum penalty for giving false compliance certificates in the rectification of irregularities in RFIA is——marks. c) CBDT d) GOIa) 20 b) 50 c) 60 e) None of thesed) 70 e) None of these 11. With whom has SBI entered into an agreement for setting up a Payments Bank Joint Venture?5. Customer Service Committee (CSC) at the Branch will consist of a) Reliance Industries Ltd. following _______. b) Tata Financea) Branch Manager (Convenor cum chairman) c) Birla Cements Ltd.b) 2 officials (50% of the strength) d) Sundaram Finance Ltd.c) 3 Award staff member (50% of strength) and one subordinate staff, 2 customers (one of whom should be a senior citizen) e) Ashok Leyland Ltd.d) a+b e) all of these 12. Which Bank has launched ‘SME Bank’ that will provide complete digital banking services?6. Entries passed when treasure (i.e currency) is sent from one currency chest to another currency chest will be: a) ICICI Bank Ltd.a) Debit the currency chest a/c and credit the receiving branch b) HDFC Bankb) Debit link branch c) Kotak Mahendra Bankc) No entries passed d) Axis Bank JS Digest of Banking and Finance Sept. 2016 67 68 Model Test

e) Yes Bank b) keep as Safe deposit under joint custody13. RBI has proposed that in case a customer’s involvement in a fraud c) Leave the gold loan as it is d) None of these is not established and he reports it within 4 to 7 working days, his liability will be ________. 21. Under Consumer Protection Act 1986 the jurisdiction of state commission is over cases involving amounts up to Rs________a. maximum of Rs.10,000 b. unlimited a) 50 lacs b) 20 lacs c) 100 lacs d) 200 lacs e) None of thesec. limited to Rs.5,000 d. Not liablee. None of the above 22. Interest from which is tax free?14. If a person is missing for more than 1 year we may dispose the a) PPF b) S.B c) TDR balance in the account without insisting on death certificate for d) STDR e) None of these balances up to 23. 2 minors 8 &9 years of age approach your branch & request toa) 50000/- b) 25000/- c) 100000/- d) 10000/- open saving bank account with your branch. In this case you will15. Which one of the following rate is not controlled by RBI?a) LAF b) CRR c) MSF d) MCLR a) Not open A/c b) Open A/c c) Open Jt A/ce) None of these d) open E or S A/c16. RBI has set up which of the following under financial inclusion 24. A person may be declared legally dead by a court if for period of initiative? more than________years persons who would have normally known of his existence have not heard of him /known his existencea) Facility Management Centre b) Financial Hubc) Financial Management Centre d) Financial literacy centres a) 5 b) 7 c) 10e) None of these d) 12 e) None of these17. Relationship between banker & customer who has kept safe deposit 25. Who can stop payment of cheque? article with the bank is a) Drawer b) Payee c) Endorsee d) None of thesea) Debtor-Creditor b) Creditor-Debtorc) Principal-Agent d) Bailee-Bailor 26. Performance of Mutual Fund is assessed based on________e) None of these a) Net Asset Value b) Net Present Value18. Number of locker operations per year allowed free of cost for locker c) Current Value d) None of these holder is 27. Mutual Fund is regulated bya) 6 b) 12 c) 24 d) No limit a) RBI b) SEBI c) IRDAe) None of these d) AMFI e) None of these19. Current validity period of cheques & bank draft is 28. The Bank’s right to adjust the credit balance in the account of a customer against debit balance his in another account is calleda) 3 month b) 6 month c) One year ________d) None of these20. Gold loan has been liquidated but gold ornaments are lying with a) Right of set off b) Lien c) Pledge bank, action taken by bank d) None of thesea) Keep in Safe Deposit Locker 29. ASBA - Expand: JS Digest of Banking and Finance Sept. 2016 69 70 Model Test

a) Application Supported by Blocked Amount through Five Turbulent Years’?b) Account Serviced by Blocked Amount a) Bimal Jalan b) Y V Reddyc) Account Stopped by Blocked Amount c) D Subbarao d) C Rangarajand) None of these e) None of these30. In how many months an account will become inoperative? 6. The GOI’s inflation target is ________ over the next 5 years.a) 18 M b) 12 M c) 24 M a) 4% plus or minus 2% b) 5% plus or minus 1%d) 6 M c) 4% plus or minus 1% d) 5% plus or minus 2%General Awareness e) None of the above1. The two Banks, SBI and ICICI Bank, named by RBI as Domestic- 7. Most bitcoin trading happens in __________. systemically important banks, have to maintain additional common equity Tier I (over and above the capital conservation buffer to be a) US Dollars b) British Pounds maintained) as percentage of risk weighted assets w.e.f from 01.04.2019 as under_________ c) Singapore Dollars d) Chinese Yuan e) Japanese Yena) 1.00; 0.8% b) 0.8%; 0.6% 8. RBI’s accounting year isc) 0.6%; 0.4% d) 0.6% 0.2% a) April-March b) January-Decembere) None of these c) July-June d) August-July2. What is true about Unified Payment Interface (UPI)? e) None of the abovea) It has gone live w.e.f Aug 2016 9. India’s is ranked __________ on UN’s Global Innovation Index forb) 21 Banks are on board and SBI will join after a month 2016. c) It will boost mobile money transfer as it will enable transfer a) 81st b) 65th c) 66th d) 25th of money through a Unique Virtual address. e) 50th f) None of the above d) The payee need not share his bank account details with the transferor 10. Shareholders will get ________ shares of SBI for _________ shares of SBBJ according to the swap ratio proposed. e) All of these a) 22;10 b) 28,22 c) 28;10 d) 22;1 e) 28;13. Who is the Prime Minister of Britain? 11. Which is not a direct tax?a) Theresa May b) David Cameron a) Income tax b) sales tax c) wealth taxc) Andrea Leadsom d) corporate taxd) Boris Johnson e) Stephen Crabb 12. Max age criteria to be eligible to be part of new pension scheme of Govt of India4. The new Chief Economist of the World Bank is __________a) Kaushik Basu b) Paul Tomer a) 50 years b) 55 years c) 52 years d) 60 years.c) Raghuram Rajan d) Arvind Panagariyae) None of these 13. “The reports on Trend and Progress of Banking Sector” is issued by5. Who wrote ‘Who Moved My Interest Rate-Leading the Reserve Bank which institution? JS Digest of Banking and Finance Sept. 2016 71 72 Model Test

a) Ministry of Finance b) RBI d) 1000 Crc) Government of India d) SEBI 22. KYC day is observed on ________14. “Brown Project” refers to________ a) 1st Aug b) 1st July a) Existing Project taken up for development, expansion etc. c) 30th November d) None of theseb) Project for other than agriculture 23. Head of World Bank is ________.c) Project for high capital input a) Christine Lagarde b) Jim Yong Kimd) Project for urban area/ city c) Janet Yellen d) Banki Moone) None of these 24. Which is not a domestic credit rating agency?15. Yuan is the currency of which country? a) CARE b) CRISILa) Japan b) China c) Korea d) Thailand c) ICRA d) ARCIL16. SBI has tied up with which company for the general insurance 25. Fiscal Policy is framed by: business? a) GOI b) RBI c) SEBI d) NITI Aayoga) Cardif S.A. b) Insurance Australia Group c) MetLifed) Societi Generale 26. AS-2 in Accounting Standards is for:17. Difference between value of export and import of the country is a) Valuation of Inventories called as: b) Charging depreciation on Fixed Assetsa) Trade Deficit b) Current Account Deficit c) Making Provision for NPAs d) Classification of assets e) None of thesec) Currency Deficit d) Capital Account Deficit18. Who undertakes Reinsurance Business? 27. Which is not a money market instrument?a) General Insurance Corporation of India a) Commercial Paper b) Certificate of Depositsb) Life Insurance Corporation of India c) New India Assurance Co.Ltd. c) Treasury Bills d) Shares and Bonds e) None of these d) Oriental insurance Co.Ltd. 28. When a term loan for more than 3 years is sanctioned by the bank19. Certificate of Commencement of business is required in case of the major risk is________a) Pvt.Ltd Co b) Public Ltd Co c) a+b a) Credit Risk b) Operational Riskd) Partnership firm e) None of these c) Liquidity Risk d) Market Risk e) None of these20. Income Tax exemption limit for an individual is Rs________ 29. When an officer is arrested by Police authorities and is put in lock up for more than 48 hours, which of the following is true?a) 2.50 lacs b) 3.00 lacs a) He/She is deemed suspended from services from the date ofc) 2.00 lacs d) None of these detention.21. Min capital required for Small Banks and Payment banks is b) He/She is deemed as dismissed from services from the date Rs._______ of detention.a) 100 Cr b) 300 Cr c) 500 Cr c) The RM has to decide whether he/she should be suspended or not JS Digest of Banking and Finance Sept. 2016 73 74 Model Test

d) He/She has to be treated on leave and decision to be taken 9. Disaster recovery site of our bank is at...... ….by RM a) Mumbai b) Koltaka c) Chennai30. How many Indian languages are found on bank note_________ d) Delhi e) None of thesea) 12 b) 15 c) 10 10. Incremental data backup periodicity …isd) 20 e) None of these a) daily b) fornightly c) weeklyTechnology in Banking d) monthly e) quarterly 11. Finacle software developed by1. SBI plans to offer banking services through Facebook and Twitter. a) Wipro b) Infosys c) Oracle This service is called _________ d) Mphasis e) None of thesea) Mingle b) Jingle 12. EXIM Bills soft ware isc) SBI Buddy d) SBI Digital Villagese) None of these a) Saral b) China System c) Mobicash2. SBI Debit Card is also known as ________ d) State Bank Buddy e) None of thesea) Cash Plus b) Cash Smart 13. Operation Chaitanya meant for ________customersc) Cash Ready d) Cash Bank a) INB b) ATMe) None of these c) Mobile Banking d) None of these 14. Address of Online Banking Site of SBI is ________3. In Mobile banking the password MPIN consists of_________ a) onlinesbi.com b) onlinesbi.co.ina) 4 Numbers b) 6 Numbers c) rbi.org.in d) none of thesec) 6 Alphabet and Numbers and special character(s)d) 4 Numbers and alphabets 15. E-Invest is for investing in_________4. What is the name of SBI mobile banking facility? a) IPO only b) IPO & Mutual Funds a) SBI Mobile Banking Services b) Mobicash c) IPO, Stock markets & Mutual Funds d) none of thesec) SBI freedom d) State Bank FreedoM5. How many accounts can be mapped through Mobile banking C & I Banking: service? 1. If projected debt/equity ratio is 2:1 equity contribution isa) 3 b) 4 c) 5 d) 6 a) 67% b) 33% c) 50% d) GPRS6. SBI introduced POS first through: d) None of thesea) 3G b) broadband c) Internet 2. Contribution =7. The software used in foreign branches of SBI is a) Sales-variable cost b) Sales-Fixed costa) Finance one b) Bancs@link c) Sales-Net profit d) None of thesec) Finacle d) None of these 3. Credit Conversion Factor (CCF) for Financial Guarantee is ________8. Computer security day is observed on: a) 50% b) 75% c) 100 %a) 1st August b) 30th November d) 125% e) None of thesec) 1st July d) None of these JS Digest of Banking and Finance Sept. 2016 75 76 Model Test

4. Simple Mortgage is also known as _________ 12. At the Bank level, Non fund based limit can be maximum _______% of FBL.a) Equitable Mortgage b) Regd Mortgagec) Usufructuary Mortgage d) English Mortgage a) 100 b) 200 c) 300 d) None of thesee) None of these 13. If there is no production, the following costs are incurred5. Goods and Services Tax is applicable for ________. a) Fixed b) Variable c) Fixed and Variable d) None of thesea) Manufacturing Enterprises b) Service Enterprisesc) Both a & b d) Exports Units 14. Which is not a CINB facility?e) None of these a) Khata b) Vyaapar c) Vistaar6. Crystallisation means________ d) Broadvisiona) Conversion of INR to Forex 15. As per MSMED Act 2006, Maximum Investment in P& M for Microb) Crystallisation of Letter of Credit Enterprises is.c) Conversion of Forex liability to INR liability a) Rs.25.00lacs b) Rs.15.00lacsd) realisation of LC c) Rs.10.00lacs d) None of these7. Working capital Gap meansa) Current Liabilities- Current Assetsb) Current Assets- Term Liabilitiesc) Current Assets- Current Liabilities other than Bank borrowingsd) Term Liabilities – Current Assets8. The Benchmark ratios for Gross DSCR and Net DSCR fixed by the Bank are _________a) 1.75: 2.00 b) 2.00: 1.75 c) 1.33: 1.75d) 1.75: 1.509. Method of working out working capital requirement of seasonal industries –a) Nayak Committee Method b) Projected Balancesheet Methodc) Cash Budget Method d) None of these10. Risk weight for ECGC claim receivable :a) 20% b) 30%c) 40% d) 50%11. Margin money kept for LC and Bank Guarantee is considered as:a) FA b)CA c)Cashd) Intangibles JS Digest of Banking and Finance Sept. 2016 77 78 Model Test

PART – B: DESCRIPTIVE QUESTIONS has heard from his friends that SBI will take over advances from Time: 2 hours other institutions with favourable terms. Please explain to him the requirements of the bank in this regard.1. Rationale: 10X2=20 4. A drew a cheque favouring B or order and despatched it to him after1. TATKAL Tractor Loan (Mortgage free) scheme has been introduced adding the general crossing. One C interupted the cheque and forged by the Bank. B’s endorsement; he delivered it to D for value who took it in good faith and without any knowledge of forgery. D got the cheque cleared2. Cash budget is invariably obtained and studied while through his Bank. What are the rights and liabilities of (i) the opening L/C Collecting Banker (ii) the Paying Banker and (iii) D?3. Penalty in the form of negative marks is awarded in the RFIA report 3. Communication: 1X10=10 for false compliance certificates. 1. You are the Chief Manager (Administration) of Region I at Zonal4. The Bank’s right to exercise ‘recompense’ should be included in the Office. Some of the coastal branches under your control were badly sanction letter to a borrower of a restructured account. affected by the recent heavy rains/ floods disrupting normal services at these branches. The affected branches have reported the5. SBI Exclusif services have been started developments narrating the problems faced by them and the steps taken for restoring normalcy at the branches. Please put up a note to6. Sovereign gold bond scheme 2015-16 has been launched by GOI. the AGM/DGM in this regard for their information.7. SBI is making focused thrust in Personal segment advances. 4. Comprehension: 1X30=308. The five Associate Banks of SBI and Bharatiya Mahila Bank are 1. Please read the passage and answer the questions given below. being merged with SBI. The Three KY Principles9. Goods and Services Tax (GST) will be implemented w.e.f 01.04.201710. SBI Privilege Home loan has been introduced.2. Situational Analysis: 04X10=40 When banks are faced with frauds, their financials are expected to bear the immediate impact. Because of this implication, and if1. Mr. P.K Singh has availed a loan which was guaranteed by M.K. uncontrolled it can cause systemic risk, the regulators usually have Singh. M K Singh also availed a loan which was guaranteed by P.K an extra oversight on banks about frauds. More often than not, the Singh. Mr. P.K Singh’s account was regular but Mr. M.K Singh’s frauds lead to tighter regulations. These aim towards bringing in account was not regular. Mr. P.K Singh informed the bank about the both corrective and preventive measures. As I said earlier, if a bank irregularity of Mr. M.K Singh’s a/c and has revoked his guarantee. has to prevent fraud, it must follow the three KY Principles. It must How will you proceed? know its customer; it must know its employee and it must know its partner i.e., Know Your Customer, Know Your Employee and Know2. An SME unit is having C/C Hypothecation A/C for Rs.4 lakhs and Your Partner, the Three KYs. Bill limit of Rs.6 lakhs. It has approached you with a request that it should be allowed excess drawings of about Rs.1,50,000 as and The First KY – Know Your Customer (KYC) when required by it. It also undertakes to adjust the excess drawings so allowed within 40/45 days. This is needed in view of severe When one thinks of KYC norms frequently the emphasis is on the competition from imported goods as well as sluggish demand. different type of documents to be obtained from an account holder Discuss. which will establish that KYC norms have been followed. In a scenario where many frauds are committed by submitting forged3. Mr. X has availed a housing loan of Rs.12 lakhs from ABC Bank. He JS Digest of Banking and Finance Sept. 2016 79 80 Model Test

and fabricated documents, such an emphasis is too narrow and The Second KY – Know Your Employeewill result in us missing the wood for the trees. Several frauds are insider jobs; or at least with the abetment of insiders. Bankers are generally people of integrity. The selectionA bank, apart from obtaining the relevant documents, should make process is highly sensitised in this respect. Still, some bad applesan effort to ‘know the customer’ in the real sense – his background, do escape or become rotten. Banks have to take extra care to havehis stated activities/profession, what his signature style of operation continuous vigil on their staff. Background checking for antecedents,is or digital foot print is, in case of online transactions, etc. A robust checks and balances, periodic rotations, vigilance assessments,KYC system envisages such an understanding. This observation of internal audits, etc. techniques will have to be employed to knowhis pattern of transactions will let the bank draw up a customer the employees better and as preventive measures.profile. Once this is established any exception to the norms canraise a red flag and tracked or confirmed with the customer. Banks The Third KY – Know Your Partnershould become adept in pattern recognition and do discreet Modern day banking necessitates that a bank join hands withinvestigations on the suppliers/buyers to check if they are in the partners, agents, vendors. Outsourcing peripheral and severalsame line of business or are bogus entities. Such timely checks help operational activities involves deploying and trusting somebodyidentify frauds at an early stage. else’s employees. Varied activities as diverse as cash logistics to IT and data management are being entrusted to third parties. BankingBanks need to invest in data analytics and also intelligence gathering correspondents and banking facilitators are emerging as anotherto make fraud detection as near to real time as possible. Data set of persons closely associated with a bank. If frauds are to beanalytics solutions can crunch huge data and give us the patterns, prevented effectively, banks have to know their partners.that too in a visual, easily understandable format. (From the speech delivered by Shri R. Gandhi, Deputy Governor atAnother strong trend in the future would be the profiling of the “2nd National Conference on Financial Frauds Risks & Preventions”customer across different channels or medium – online, offline, organised by ASSOCHAM on June 26, 2015 at New Delhi)corporate loans, personal loans, etc. At least in respect of customersperceived to be of high risk, very large advance accounts, we need to Questions:use Big data for analysing information from disparate sources e.g., 1) The speaker refers to three “Know Your” (KY) norms to guard banksdata available with the banks, the social network activities,identifying relationships that are usually invisible. This way we against frauds. What are they?may be able to analyse transactions and be able to predict the 2) Why does the speaker feel that the emphasis on documents alone islikelihood of a fraud happening. too narrow?On a bank level, each bank should segment its customers based on 3) What are the additional efforts suggested by the speaker that a banktheir risk profile and transaction patterns and develop appropriateresponse systems for exceptional patterns noticed and fortify should make to fulfil KYC Requirements in the real sense?systemic level controls. 4) Study of the pattern of transactions of a customer leading to aBut one word of caution. I don’t think banks can sit back after drawing up of a customer profile is recommended by the speaker.investing in a software or establishing a fraud risk management Why?system. The business landscape is generally dynamic and with 5) What precautions are suggested by the speaker to prevent employee-ingenious fraudsters we are dealing with people who always related frauds?change their strategies to be one step ahead of bankers and regulatorsand the police. As such, when it comes to fraud risk management, a 6) Why has “Know Your Partner” assumed importance in the currentbank has to be like a referee in a football game, always moving with banking scenario?the players and be alive to changes in the game and take action. 82 Model Test JS Digest of Banking and Finance Sept. 2016 81

PERSONAL BANKING 9. c Technology in C&I 10. c 1. b 1. e 4. c 7. c Banking 2. a 2. b 11. b 3. c 3. c 5. d 8. c 12. d 1. a 4. b 4. d 13. b 2. a 5. c 5. d 6. d 9. d 3. c 6. c 6. b 14. a 7. c 7. d 7. c 10. d 8. a 8. c 9. c 9. a 8. d 11. a 15. b 4. d 10. d 10. b 16. b 5. c 11. b 11. b 9. b 12. b 17. a 6. d 12. a 12. a 13. c 18. a 13. a 13. a 10. a 14. c 7. c 14. d 14. c 11. d 15. d 19. e 8. b 15. a 15. d 12. a 16. d 20. a 16. c 13. c 17. d 21. a 9. c 17. a 14. a 22. a 10. a 18. c 23. b 11. b 19. d 15. c 18. b 12. b 20. a 21. c 16. c 19. a 22. a 23. c 17. a 20. b 24. d 13. a 24. a 25. b 18. c 21. c 25. a 14. a 26. c 27. a 19. d 22. a 26. a 15. b 28. a 29. d 20. c 23. a 27. d 30. a 21. a 24. b 28. cDevelopment Banking 1. c 22. b 25. a 29. a 2. b 3. d 23. e 26. a 30. b 24. b 27. b 25. a 28. a Rationale: 26. b 29. a 1. * Aimed at improving our market share in Tractor financing. 27. d 30. c * To ensure prompt delivery of loan to HNW Agriculturists who score 28. c 61 and above 29. c General Awareness in tractor scoring model who otherwise purchase tractor by cash. 30. a 1. d * Special features are: mortgage free, 100% loan (TDR will be kept as General Banking 2. e margin with 1. a 3. a 2. a 4. b lien marked), lower interest rate, differentiated EMI (monthly/qly/ 3. a 5. c Hy), no upfront fee, personal accident insurance cover for Rs.4.00 4. b 6. a lac,(first year premium free), etc. 5. e 7. d 6. c 8. c 2. The bank has to ensure that the borrower has the ability to generate adequate funds to effect payment of bills drawn under the LC when they are received for payment. If he is unable to pay, it would result in devolvement of such payments on the bank. JS Digest of Banking and Finance Sept. 2016 83 84 Model Test

3. To ensure that branches rectify the irregularities pointed out in RFIA business. Duplication of technology, infrastructure etc. will be meticulously as part of risk mitigation measures. False compliance avoided. The benefits of all synergies will accrue to the Bank. certificates reflect the inaction and negligence on the part of the branch and will erode the credibility of the branch. Negative marks 9. will act as a deterrent against these lapses. False compliance a) There will be no differentiation in goods and services in levying the certificates carry maximum negative marks of 50. tax. GST will make the products cheaper as only the final consumer4. When a restructuring package is sanctioned to a sick / weak unit, will be taxed on the last stage of supply chain. the Bank makes sacrifice of interest through reliefs/ concessions. b) GST will increase investments in the country as single tax across As per ROR (Right Of recompense) clause the unit undertakes to the country will ensure ease of doing business. repay the sacrifices once it attains viability; also this clause is c) Exports will get boost from better tax structures and domestically activated if the unit gets extra- ordinary income. In case legal action produced goods will become more competitive compared to is taken, this amount is also included in the Bank’s claim imported goods and this will spur GOI’s Make in India efforts. d) GST is expected to increase GDP by 2 Percent points and this system5. With increasing number of HNIs in India, many foreign/ private will be easier for the government to administer tax and plug leakage sector banks are offering wealth management services to HNIs. SBI in the system has entered this area by opening an exclusive outfit at Bangalore/ 10. Delhi. The brand image and outreach will enable the Bank to book a) It is meant for employees of central/ state governments including more business under this category and provide stiff competition to PSBs/PSUs of Central government and other individuals with foreign/ private sector banks. The Bank earn good income thereby pensionable service. increasing the profits. b) The privileges like reduced burden of servicing EMIs as lower EMI would need to be serviced during post retirement term, extended6. It will enable customers to purchase these bonds which is linked to repayment up to age of 75 years, full waiver of processing fee, the price of gold. It saves them the hassles involved in securing, benefit of lower interest as concession of 5bps over Home loan Card buying and storing physical gold as well as determining its purity. rate wherever check off facilities extended by Govt, and option for It will enable govt. to divert funds in the hands of public from customers of other banks/ FIs to switcher are available in the SBI physical gold to financial asset since gold is idle asset and does not privilege loan making it attractive. It will enable the Bank to exploit contribute to economic activity. It would result in decrease in import the potential and augment its home loan Portfolio. of gold and reduce the current account deficit for the country. Answer to Situational Analysis:7. The credit offtake in the C&I segment has been very sluggish in the 1. There are 2 loan a/cs as under: past 1 year. The demand for home loans, car loans and education i) P.K.Singh’s a/c: It is regular. ii) M.K.Singh’s a/c: It is irregular; the loan has been very brisk. Will improve interest earnings for the bank. Some portion of the loans form part of priority sector also. guarantor P.K.Singh wants to terminate his guarantee. The following actions have to be initiated.8. a) Merger will result in economies of scale and lower cost for the M.K.Singh’s a/c: M.K.Singh would be advised to regularise the Bank. Bigger size will enable the Bank to have more resources at its account and offer alternative acceptable security. If the a/c is not command and follow better risk, asset-liability, treasury regularised or alternative security is not available, we have to freeze management policies etc. the operations on the a/c so that the guarantor’s liability is determined. Thereafter, steps have to be taken to recover the duesa) The reach of the Bank will further improve and Bank can meet competition effectively. The balance sheet size of the bank will go 86 Model Test up and the ranking of the Bank among global banks will also increase.b) Many overlaps between the Bank and Associates can be eliminated such as multiple branches in the same area eating into each other’s JS Digest of Banking and Finance Sept. 2016 85

from M.K.Singh and P.K.Singh. administrative clearance. A/c of P.K.Singh: The account is regular and the guarantee is The prospective borrower should address a letter to the institution continuing. However, once the other a/c wherein he is the guarantor from which finance has been availed asking them to deliver the title is called up and coercive / legal action is initiated, P.K.Singh will deeds and other securities, if any, direct to our Branch upon receipt become a defaulter to the bank, if he does not pay up the dues as of the loan amount. guarantor. Hence, if he does not pay the dues as guarantor, he will be advised to repay the loan failing which coercive / legal steps The following procedure will have to be adopted by the branch: will have to be initiated on his a/c also.  Statement of Account for the period of loan or for 1-12 months (where2. The unit requires ad hoc finance for short periods over and above the loan has run for longer period) to be obtained. the sanctioned limits to meet unforeseen situations. The unit may be financed under SME Credit Plus subject to the following terms  The lending institution should confirm that they are holding an and conditions. equitable mortgage over the property. a) It should have excellent track record and highest standing and  The customer should authorize the branch to debit his loan a/c and integrity. repay his outstanding loan to the other institution. b) It should be a standard a/c as at 31.3 of last 2 consecutive years.  Where considered necessary, during the period between granting of loan and creation of equitable mortgage on the house/flat being c) 20% of aggregate fund based working capital limits subject to a financed, some security including third party guarantee may be maximum of Rs.25 lakhs can be sanctioned. obtained. The security to be released after creation of a valid equitable mortgage at the earliest. d) The limit can be utilized 12 times a year; to be adjusted within 2 months each time; fresh loan will be sanctioned only 15 days after  The repayment of the loan should be made direct to the institution the complete repayment of the previous loan. stipulating that the amount should be appropriated towards the loan only and the title deeds be handed over to authorized e) A separate clean cash credit a/c called SME Credit Plus a/c will representative of the Bank only. be opened; utilization of the limit is left to the complete discretion of borrowers.  On receipt of documents from the institution, the title deeds to be verified to ensure that the documents are complete and in order and The borrower needs Rs.1.50 lacs as against his eligibility of Rs.2.00 that they convey clear, absolute and marketable title. lacs. Hence his request can be considered favourably under SME (credit) plus.  Equitable mortgage must be created by the borrower for the loan sanctioned by us.3. The following conditions must be fulfilled for the takeover of housing loans generally:  The borrower should be advised about the details of documents/ securities received from the institution. This is important. i) Possession of the house / flat has been taken by the borrower. These liberalizations have been effected with a view to boost housing ii) Repayment of the existing loan has already commenced and finance. The Bank’s housing loan scheme is very liberal, customer- friendly; and the interest rates are among the lowest rates of interest iii) Instalments have been paid as per terms of sanction and the a/ charged in the market. c is a standard assset and 4. The Collecting banker will get protection if he has collected a crossed iv) The owner has valid documents evidencing his title to the house cheque for a customer in good faith and without negligence. The / flat. paying banker will get protection if he has paid the cheque in due course as per Section 85 and Section 10 of NI Act even though the In case of any deviation from the above conditions, the branch has endorsement is a forged one as long as the endorsement appears to to obtain administrative clearance from the appropriate authority. be in order. But D will not get a good title over the cheque and Considerations like larger business interest, valuable connection, become a holder in due course since he has received the cheque safety of the advance etc. would be examined before granting 88 Model Test JS Digest of Banking and Finance Sept. 2016 87

with a forged endorsement. Therefore D will remain liable to the by this office to confront the disaster. Accordingly followingtrue owner of the cheque. measures were initiated by the branches.  On receipt of information of the havoc caused at the branches, theANSWER TO COMMUNICATION: Manger ITS at this office was immediately deputed to the affected branches and he arranged for restoration of services at theseDeputy General Manager Note No._____; 02.07.2016 branches.  Meanwhile, the ATM card holders were requested to avail cashAssistant General Manager-I withdrawal facility from the nearest ATM. The Cash Administration Cell was requested to arrange for adequate cash at all ATMs to meetCyclone/Flood Havoc in the State the cash requirement for a week to tide over the emergency. The ATMs were not affected by floods.Disruption of Normal Banking Services at coastal area branches  The Branch managers have managed to ensure services of UPS vendors, electrical department staff for regular power supply. AllClippings from Newspapers reports about the recent cyclone and floods branches have been provided with diesel generating set.which have caused heavy loss of life and property in the coastal area are  The branches have since posted the vouchers when the system wasplaced below. Banking services have been severaly disrupted at five of activated. All the instruments received have been sent for collectionour coastal branches. While most of the branches have restored normal by speed post.services, a few are still providing skeleton services to the customers. The  As the BSNL phones and IP phones started functioning after 3 days,reports received from the five branches (Branch A,B,C,D,E) where the the branches have ensured that all credits received through e-banking services were severely affected are also placed below for your realisation have been put through for credit of customer’s accounts.kind information. The nature of disruption is summarized as under: The branch managers have confirmed that all that was possible has been done to keep inconvenience to customer to the minimum. There The branches were inundated due to heavy rains; flood water had were no customer complaints. Some of the staff at these branches, entered the premises. The branches became inaccessible on account did what best they can do to help those who were rendered homeless of water-logging around the premises and damage to approach by distributing clothes, eatables, basic OTC medicines etc. roads. The branch managers have since confirmed that necessary steps have been taken to restore full-fledged banking services. Subject to For one day, on 26.06.2016 there was no power supply at most of your approval, a senior official from this office will be deputed to the branches. In other branches (flag-A) the power was restored visit these branches and submit a detailed report about the progress after 3 days. after one week. The postal service was affected for 3 days. Dispatch work had to be Submitted for Information. suspended in most of the branches. (Signature) On the day of floods, no customer visited the branch. However, a Chief Manager (Administration) few officers and clerical staff managed to come to the branch; but no transaction could be put through as the system could not be switched 90 Model Test on. Clearing house operation was suspended for 3 days. The telecommunication link was cut-off. No electronic remittance transferAction initiated to restore the servicesThe branch premises have been cleaned up. The approach road to the branches is also now clear. There was, however, no damage to the contents in chest, locker and record rooms at these branches. All the branches have Disaster Recovery Management Plan duly approved JS Digest of Banking and Finance Sept. 2016 89

ANSWERS TO COMPREHENSION: HINTS FOR ANSWERING BANKING –1) To prevent fraud, a bank must follow these three KYs - Know Your OBJECTIVE QUESTIONS: (JAN – AUG’16) Customer, Know Your Employee, and Know Your Partner. Jan’162) Because many frauds are committed by submitting forged and 1. SBI Tiny RD a/c: Multiple a/cs can be opened. fabricated documents to satisfy KYC norms. Max: aggregate balance : Rs.50,000/-.3) The bank should make efforts to know the account holder’s Min Period: 6 months; max 60 months. background, his activities/profession, his particular method of 2. Fxout: Outward remittance product of SBI. Now, remittances can be conducting his operations, his digital footprint in online made in 4 currencies – US D, GBP, Euro and Au D . transactions, etc., as these will make the KYC system more robust.4) Once the profile of a customer based on the pattern of his 3. EEFC deposits: Now a/c can be opened in 11 currencies. transactions is drawn up, any deviation from the normal 4. NRO a/c: RBI has advised that transfer of funds from one NRO a/ transaction can raise a red flag for the bank to follow up to see if the transaction is genuine. c to another NRO a/c not permitted; also, transfer of funds from one5) Background checking of the employees’ antecedents, rotation of seats NRO a/c to another a/c of the same NRI is also not permitted. periodically, vigilance assessments, and internal audits are the 5. RBI’s Roadmap for opening brick and mortar branches: Banks measures suggested by the speaker in respect of employees. have to focus on villages with population above 5000 but without a6) Modern day banking involves outsourcing of many operational bank branch of a scheduled commercial bank branch. The opening activities such as cash movement, IT, data management, etc. Also, of bank branches under this Roadmap should be completed by BCs are becoming closely associated with the activities of the bank. 31.3.17. For effective prevention of frauds involving any such individuals 6. Cheque Truncation System (CTS): or agencies, banks have to know its partners. - CTS has now been extended to central Govt. cheques also. - These cheques have to be paid based on their electronic images. JS Digest of Banking and Finance Sept. 2016 91 - The presenting bank will retain the physical cheques and preserve them for 10 years. - If the drawee branch wants to verify the govt. cheque before passing it for payment, the image would be returned unpaid under the reason “Present with document”. The presenting bank should ensure that the instrument is presented again without any reference to the account holder (payee). Financial Literacy Centres (FLC) Minimum of one outdoor camp per month should be held by FLC and the rural branch of the Bank. Financial education should be customized to meet the requirements of different target groups. Form 15G & 15H – Income Tax: Simplification (w.e.f.1.10.15) - A payee can submit the self-declaration either in paper form or electronically. 92 Hints for Answering Banking

The deductor will not deduct tax and will allot a Unique SHG account will be considered prompt payee if it satisfies the Identification Number (UIN) to all self – declarations. following criterion as specified by Reserve Bank of India (RBI).- The deductor should advise the particulars of self declarations along Possession of Foreign currency notes and coins (RBI – 29.12.15) with UIN in the quarterly TDS statements. (i) Any person can possess foreign coins without limit.- The deductor need not submit physical copy of Form 15G / 15H to (ii) Foreign currency Max: US $ 2000 or its equivalent, provided that I.T. authorities; but retain the forms for 7 years. such foreign exchange is in the form of currency notes, bank notesRFIA: Penalty for submission of false/delayed compliance to OTMS and travellers cheques.Alerts: a. Also the forex was acquired by him while on a visit to any placeS.N. PARAMETERS NNEETGAATTIVIVEE outside India by way of payment for services not arising from any business in or anything done in India, or MMAARRKKININGG b. was acquired by him, from any person not resident in India and1 False Compliance observed during RFIA -5 who is on a visit to India, as honorarium or gift or for services rendered or in settlement of any lawful obligation; or2 More than 90% alerts responded after 7 days -4 c. was acquired by him by way of honorarium or gift while on a3 More than 50% but less than 90% responded -3 visit to any place outside India; orafter 7 days d. represents unspent amount of foreign exchange acquired by him from an authorised person for travel abroad.4 50% or less responded after 7 days -2 A person resident in India but not permanently resident thereinFeb’16 may possess without limit foreign currency in the form of currency notes, bank notes and travellers cheques, if such foreign currencyNational Rural Livelihoods Mission (NRLM) – Aajeevika Interest was acquired, held or owned by him when he was resident outsideSubvention scheme India and, has been brought into India in accordance with the regulations made under the Act.i. All women SHGs will be eligible for interest subvention on credit up to Rs. 3 lakhs given at 7% per annum. SHG availing capital Explanation: for the purpose of this clause, ‘not permanently subsidy under SGSY in their existing credit outstanding will not be resident’ means a person resident in India for employment of a eligible for benefit under this scheme. specified duration (irrespective of length thereof) or for a specific job or assignment, the duration of which does not exceed three years.ii. The Commercial Banks and Cooperative Banks will lend to all the women SHGs in Rural areas at the rate of 7% in the identified 150 Interest Equalisation Scheme on Pre and Post Shipment Rupee Export districts. Credit: (The earlier Interest subvention scheme discontinued.)iii. All Public Sector Banks will be subvented to the extent of difference between the Weighted Average Interest Charged (WAIC as specified The Government has approved the Interest Equalisation Scheme for Pre by Department of Financial Services, Ministry of Finance for the year and Post Shipment Rupee Export Credit with effect from 1st April, 2015 2015-16 and 7% subject to the maximum limit of 5.5% for the year for 5 years. 2015-16. This subvention will be available to all the Banks on the condition that they make SHG credit available at 7% p.a. in the 150 The details of the Scheme are as follows: districts. a) The rate of interest equalization @3% per annum will be availableiv. Further, the SHGs will be provided with an additional 3% on Pre Shipment Rupee Export Credit. subvention on the prompt repayment of loans. For the purpose of Interest Subvention of additional 3% on prompt repayment, an b) The scheme would be applicable w.e.f 01.04.2015 for 5 years. JS Digest of Banking and Finance Sept. 2016 93 94 Hints for Answering Banking

c) The scheme will be available to all exports under 416 tariff lines [at rendered, whether in or outside India, or in settlement of any ITC (HS) code of 4 digit] and exports made by Micro, Small & lawful obligation, or an income on assets held outside India, Medium Enterprises (MSMEs) across all ITC (HS) codes. or as inheritance, settlement or gift, within seven days from the date of its receipt;d) Scheme would not be available to merchant exporters. ii) in all other cases within a period of ninety days from the datee) Banks are required to completely pass on the benefit of interest of its receipt. equalization, as applicable, to the eligible exporters upfront and submit the claims to RBI for reimbursement, duly certified by the Period for surrender in certain cases:- external auditor. (1) Any person not being an individual resident in India who hasf) Ministry of Commerce and Industry will place funds in advance acquired or purchased foreign exchange for any purpose mentioned with RBI for a requirement of one month and reimbursement would in the declaration made by him to an authorised person under sub- be made on a monthly basis through a revolving fund system. section (5) of Section 10 of the Act does not use it for such purpose or for any other purpose for which purchase or acquisition of foreigng) All eligible exports under the scheme would have to meet the criteria exchange is permissible under the provisions of the Act or the rules of minimum processing for the goods to be called as Originating or regulations or direction or order made thereunder, shall surrender from India. such foreign exchange or the unused portion thereof to an authorised person within a period of sixty days from the date of its acquisition To start with, remittances on the basis of online submission alone or purchase by him. will be available for transactions with an upper limit of USD 25,000 (or its equivalent) for individuals and USD 100,000 (or its (2) Notwithstanding anything contained in sub-regulation (1), where equivalent) for corporates. the foreign exchange acquired or purchased by any person not being an individual resident in India from an authorised person is for theR-Returns and FETERS (RBI): purpose of foreign travel, then, the unspent balance of such foreign exchange shall, save as otherwise provided in the regulations made- w.e.f April’16, R-Returns data and export related information is under the Act, be surrendered to an authorised person - submitted to RBI through its web-portal. (i) within ninety days from the date of return of the traveller to- Form A2: Submitted in physical form for remittances. RBI has since India, when the unspent foreign exchange is in the form of currency advised banks that online submission of Form A2 may be allowed notes and coins; and to customers enjoying internet banking facilities. (ii) within one hundred eighty days from the date of return of theTo start with, remittances on the basis of online submission alone will be traveller to India, when the unspent foreign exchange is in the formavailable for transactions with an upper limit of USD 25,000 (or its of travellers cheques.equivalent) for individuals and USD 100,000 (or its equivalent) forcorporates. Mar’16Cards to be treated as currency:- RBI has notified that Debit Cards, ATM Period for surrender of received/realised/unspent/unused foreign exchangeCards or any other instrument which can be used to create a financial by Residentliability may be defined as currency.RBI instruction on surrender of foreign exchange to Authorised Person. individuals.-Period for surrender of realised foreign exchange:- A person being an individual resident in India shall surrender the received/ realised/ unspent/ unused foreign exchange whether in the A person not being an individual resident in India shall sell the realised form of currency notes, coins and travellers cheques, etc. to an authorised foreign exchange to an authorised person, within the period specified person within a period of 180 days from the date of such receipt/ below:- 96 Hints for Answering Banking i) foreign exchange due or accrued as remuneration for services JS Digest of Banking and Finance Sept. 2016 95

realisation/ purchase/ acquisition or date of his return to India, as the Sr. Time of Settlement at the Reserve Bank Time varying chargecase may be. No. of India per outwardPayment of Agency Commission on pension accounts: FromAgency banks are given commission at Rs. 65 per transaction for To transaction (inhandling pension computation, payment and related services on behalfof Central and State Governments. As per the norms followed by the addition to flatGovernment, a pensioner’s account should not have more than 14 credittransactions in a calendar year attributable to pension and related arrear processing charge)payments, if any.RBI has reiterated that number of commissionable transactions for (exclusive of servicepayment of agency commission on account of pension in a year shouldnot exceed 14. This includes one monthly credit for payment of net pension tax)and a maximum of two per year for payment of arrears on account ofincrease in DR, if applicable. 1 08:00 hours 11:00 hours NilAny payment of arrears on account of late start/restart of pension shouldbe effected in a single credit transaction instead of separate monthly 2 After 11:00 hours 13:00 hours Rs.2.00credits. 3 After 13:00 hours 16:30 hours Rs.5.00MMTC: Govt has authorized it to manufacture India Gold Coins (IGC)with Ashok Chakra and supply these to domestic market. The designated 4 After 16:30 hours Rs.10.00banks under Gold Monetization Scheme are authorised by RBI to sellthese coins to public. As there is no change in the minimum or maximum time varying charge, the maximum charges that can be recovered by a member (if it so desires)Currency Chest branches: from its customers will remain unchanged as under:Service charge for cash deposited by non-chest bank branch: Increasedto Rs.5 per packet. RTGS Transaction Maximum Custom er Ch a rg esSaka Samvat. It is the National Calendar starting from March 22, 1957. A (exclu sive of service tax)cheque can be dated under the Saka Samvat. After verifying that such a Inward transactions F re echeque has not become stale, it should be paid. Outward transactions Rs.2 lakh to Rs.5 lakh Rs.25 + applic able time varyingRTGS service charges for members and customers – Rationalisation charge, subject to a maximum of(RBI): Above Rs.5 lakh Rs.30/-.Processing charge per transaction: Every outward transaction will attract Rs.50 + applic able time varyingflat processing charge at the earlier cap of Rs.0.50 (exclusive of service charge, subject to a maximum oftax) and a time varying charge as under: Rs.55/-. JS Digest of Banking and Finance Sept. 2016 97 Customers should not be charged for inward transaction, as hitherto. Central Fraud Registry, RBI: Changes: - Frauds of Rs.50 m & above: monitored by CFMC, Bengaluru - Frauds of Rs.0.1 m and above but below Rs.50 m: by respective Regional Office of RBI. - Flash Reports to be sent to the CGM-i-C, DBS, CO RBI (with copy to CFMC, Bengaluru: in cases of Rs.50 m & above). Gold Monetisation Scheme, 2015. Changes made by RBI in Jan’16. - Principal and interest to be denominated in gold in the case of STGD. - Principal to be denominated in gold, interest in Re, in the case of 98 Hints for Answering Banking

Medium Term Govt. Deposit (MTGD) their bank accounts opened and the banks have to focus on supporting these farmers in getting crop insurance including guiding them through- The quantity of gold to be expressed up to 3 decimals of a gram. the entire process.- MTGD: 5-7 years; Long Term Govt. Deposits: 12-15 years. A Crop Insurance Portal www.agri-insurance.gov.in has been- Interest: Decided by the Central Govt and notified by RBI – Presently. operationalised by GOI for effective administration of the Crop Insurance Programme but its integration with banks is essential for capturing the Medium Term Deposit: 2.25% requisite data/information on real time basis. In view of the above Government of India has proposed to initiate development of an Long Term Deposit: 2.50% integrated platform on a pilot basis for providing real time information at one place for use by all agencies.- Payment before maturity: Medium Term deposit can be withdrawn after 3 years; TGD after 5 years. Grant of EDF Waiver for Export of Goods Free of Cost: The Status Holders shall be entitled to export freely exportable items on- Penalty is applicable for premature withdrawal. free of cost basis for export promotion subject to an annual limit of Rs 10 lakh or 2% of average annual export realization during preceding three- The rupee equivalent. licensing years whichever is lower (RBI).Agriculture Banking Business: Govt. Business: Recovery of excess payments made to pensioners:Pradhan Mantri Fasal Bima Yojana: RBI has laid down a uniform procedure: a) As soon as the excess/wrong payment made to a pensioner comesGovernment of India has recently approved Pradhan Mantri Fasal BimaYojana (PMFBY) which would replace the existing schemes of National to the notice of the paying branch, the branch should adjust theAgricultural Insurance Scheme (NAIS) & Modified National Agricultural same against the amount standing to the credit of the pensioner’sInsurance Scheme (MNAIS) from Kharif 2016. PMFBY would be available account to the extent possible including lumpsum arrears payment.to the farmers at very low rates of premium which would be maximum b) If the entire amount of over payment cannot be adjusted from theup to 1.5% for Rabi and up to 2% for Kharif for Food crops, Pulses and account, the pensioner may be asked to pay forthwith the balanceOilseeds and up to 5% for Annual Horticulture/ Commercial Crops. amount of over payment.This scheme would provide insurance cover for all stages of the crop c) In case the pensioner expresses his inability to pay the amount, thecycle including post-harvest risks in specified instances. same may be adjusted from the future pension payments to be made to the pensioners. For recovering the over-payment made to pensionerFurther, Weather Based Crop Insurance Scheme (WBCIS) has also been from his future pension payment in instalments 1/3rd of netmodified and the premium payable by the farmers as also its (pension + relief) payable each month may be recovered unless theadministrative provisions and operationalisation process have been pensioner concerned gives consent in writing to pay a higherbrought on par with PMFBY. In addition, a Unified Package Insurance installment amount.Scheme (UPIS) has also been approved for implementation on pilot basis d) If the over payment cannot be recovered from the pensioner due toin 45 districts of the country to cover other assets/activities like machinery, his death or discontinuance of pension then action has to be takenlife, accident, house, student-safety and crops etc. of farmers. as per the letter of undertaking given by the pensioner under the scheme.Banks have a vital role to play in increasing the coverage under thescheme. As the scheme is compulsory for loanee farmers availing Seasonal 100 Hints for Answering BankingAgricultural Operational (SAO) Loans/Kisan Credit Card (KCC) holdersfor the notified crops in notified areas, 100% coverage of loanee farmersin notified areas growing notified crops is required to be done by allconcerned bank branches. This scheme is voluntary for non-loaneefarmers, but there is a prerequisite in the scheme that they should havean account to be eligible for coverage. Under the Pradhan Mantri JanDhan Yojana (PMJDY), most of these poorest of the poor farmers have got JS Digest of Banking and Finance Sept. 2016 99