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e) The pensioner may also be advised about the details of The Reserve Bank will regulate and supervise the activity of account overpayment/wrong payment and mode of its recovery. aggregation with a view to ensuring that the services provided and the terms at which these are provided conform to prescribed standards.KYC Guidelines: Record preservation Only companies registered with the Reserve Bank as NBFC – AA will beBanks should able to undertake the business of an account aggregator.(a) maintain all necessary records of transactions between the Regulated The Net Owned Fund of such companies should not be less than Rs. 2 crore. Entities (RE) and the customer, both domestic and international, for Ways and Means Advances limit for Govt. of India (RBI) Limit fixed for at least five years from the date of transaction; Apl’16 – Sep’16: Rs.50,000 cr.(b) preserve the records pertaining to the identification of the customers The Reserve Bank may trigger fresh floatation of market loans when the and their addresses obtained while opening the account and during Government of India utilises 75 per cent of the WMA limit. the course of business relationship, for at least five years after the business relationship is ended. The interest rate on WMA/overdraft will be: a) WMA: Repo RateBasel III Capital Regulations – Revision: b) Overdraft: Two per cent above the Repo RateRevaluation reserves arising out of change in the carrying amount of a The minimum balance required to be maintained by the Government ofbank’s property consequent upon its revaluation may, at the discretion India with the Reserve Bank of India will not be less than Rs.100 crore onof banks, be reckoned as CET1 capital at a discount of 55%, instead of as Fridays, on the date of closure of Government of India’s financial yearTier 2 capital under extant regulations, subject to meeting the following and on June 30, i.e., closure of the annual accounts of the Reserve Bank ofconditions: India and not less than Rs.10 crore on other days. As per the provisions of the agreement between the Government of IndiaTreatment of foreign currency translation reserve (FCTR) and the Reserve Bank of India, overdrafts beyond ten consecutive workingBanks may, at their discretion, reckon foreign currency translation reserve days will not be allowed.arising due to translation of financial statements of their foreignoperations in terms of Accounting Standard (AS) 11 as CET1 capital at a April’16discount of 25% subject to meeting the following conditions: SBI Global Ed-vantage scheme:Also, some changes have been made in the treatment of deferred tax - For studies abroad onlyassets and deferred tax liabilities. - Min loan: Rs.50 lacs; Max: Rs.1.5 cr - Processing Fee: Rs.10,000/-Account Aggregators: - Simple interest during the course period and moratorium period.At present, persons holding financial assets, such as, savings bankdeposits, fixed deposits, mutual funds, insurance policies, do not get a Skill Loan Scheme:consolidated view of their financial asset holdings, especially when the For skill – based course (eg ITI, Polytechnics etc).entities fall under the purview of different financial sector regulators. - Loan Amt: Min.: Rs.5,000/-; Max:Rs.1,50,000/-Account Aggregators would fill this gap by collecting and providing the - Disposal of application: Max. 6 days. Wherever these is need forinformation of customers’ financial assets in a consolidated, organisedand retrievable manner to the customer or any other person as per the verification with various authorities / Govt bodies: A min. of 15instructions of the customer. The investors will be able to avail the service additional working days.of an Account Aggregator purely at their option. 102 Hints for Answering Banking JS Digest of Banking and Finance Sept. 2016 101

Moratorium Period: FDI in insurance sector: increased to 49% under automatic route. Priority Sector Lending Certificates – Scheme:Course Duration Moratorium Period i) Purpose: To enable banks to achieve the priority sector lending targetCourses of duration upto 1 year 6 months from the completion of the course and sub-targets by purchase of these instruments in the event ofCourses of duration above 1 12 months from the completion of shortfall and at the same time incentivize the surplus banks; therebyyear the course enhancing lending to the categories under priority sector. ii) Nature of the Instruments: The seller will be selling fulfillment ofRepayment Tenure: priority sector obligation and the buyer would be buying the same. There will be no transfer of risks or loan assets.Loan Amount Repayment Period in Years iii) Modalities: The PSLCs will be traded through the CBS portal (e-Loans upto Rs.50,000 Upto 3 years Kuber) of RBI. The detailed operational instructions for carryingLoans between Rs.50,000 to Rs.1 lakh Upto 5 years out the trades are available through the e-Kuber portal. iv) Sellers/Buyers: Scheduled Commercial Banks (SCBs), RegionalLoans above Rs.1 lakh Upto 7 years Rural Banks (RRBs), Local Area Banks (LABs), Small Finance Banks (when they become operational) and Urban Co-operative Banks whoSBI Happy Home Loan: have originated PSL eligible category loans subject to such- Available to working professionals / executives. regulations as may be issued by the Bank.- Loan amt: up to 1.2 times more than eligibility amount under HL v) Types of PSLCs: There would be four kinds of PSLCs :– i) PSLC Agriculture: Counting for achievement towards the total Schemes agriculture lending target.- Min. Rs.20 lacs ii) PSLC SF/MF: Counting for achievement towards the sub-target- Age: 21-45 (salaried persons with 2 years experience) for lending to Small and Marginal Farmers.- Moratorium: 36 – 60 months (as opted by the borrower; only interest iii) PSLC Micro Enterprises: Counting for achievement towards the sub target for lending to Micro Enterprises. to be paid during the moratorium period). iv) PSLC General: Counting for achievement towards the overall priority- Longer repayment period of 25 – 30 years. sector target.Max. No of partners in a partnership firm 100 (as per S 464 Companies Thus, a bank having shortfall in achievement of any sub-target (e.g.Act). SF/MF, Micro), will have to buy the specific PSLC to achieve theHowever, as per Companies Rules fixed at 50. target. However, if a bank is having shortfall in achievement of the overall target only, as applicable to it, may buy any of the availableRemittances abroad: PSLCs.NRI / PIO may remit abroad an amount not exceeding us D 1 million per vi) Computation of PSL achieveisets or cash year. ix) Expiry date: All PSLCs will expire by March 31st and will not beImport of Rough, cut and polished diamonds. valid beyond the reporting date (March 31st), irrespective of theADs can give clean credit for a max. period of 180 days from the date of date it was first sold.shipment. RBI has now permitted additional period of 180 days indeserving cases. 104 Model Test JS Digest of Banking and Finance Sept. 2016 103

S.No Types of Representing Counting for and 0.60% for 3 years. Option for Interest Payment: STBD: Non-1. PSLCs Cumulative (on 31st March) every year or Cumulative (On Maturity)2. PSLC All eligible Agriculture Achievement of Agriculture loans except loans to SF MLTGD: 5-7 years: 2.25% p.a.3. / MF for which separate agriculture target4. PSLC – SF / certificates are available. 12-15 Years: 2.50% pa. MF All eligible loans to and overall PSL small / marginal The principal and interest on STBD shall be denominated in gold. In the PSLC – farmers. target case of MLTGD, the principal will be denominated in gold. However, the Micro interest on MLTGD shall be calculated in Indian Rupees with reference Enterprises All PSL Loans to Micro Achievement of SF / to the value of gold at the time of the deposit. Enterprises PSLC – MF sub-target, General The residual priority sector loans i.e. other agriculture target than loans to agriculture and micro enterprises and overall PSL for which separate certificates are available. target Acceptance of gold: Achievement of Gold i.e. Gold bars, Coins, Jewellery etc. will be accepted in scrap form only. Customers to submit Application Form, Identification Proof, micro-enterprise sub- Address Proof and Inventory Form. target and overall PSL target Achievement of overall PSL target Issue of Gold Deposit Certificate:Lot Size: The PSLCs would have a standard lot size of Rs.25 lakh and  Gold Deposit Certificate will be issued by Nodal Branch (i.e. Bullionmultiples thereof. Branch, Mumbai).  The certificate will be issued for pure gold contents (i.e. in 995 fineness) Gold Deposit Certificate (GDCs) will be sent to the depositor by Nodal Branch i.e. Bullion branch, Mumbai.Revamped Gold Deposit Scheme (R-GDS): Premature payment:-It is in the nature of a fixed deposit in gold. Customers can deposit idle STBD: Premature payment permitted after a lock-in period of 1 year withgold under R-GDS. a penalty on applicable interest rate.Min. quantity: 30 gms (gross); No maxShort Term Deposit (STBD): 1-3 years; redemption in rupee equivalent or MLTGD: A Medium Term Government Deposit (MTGD) is allowed to begold. withdrawn anyMedium Term: 5-7 years;Long Term: 12-15 years; time after 3 years and a Long Term Government Deposit (LTGD) after 5Redemption on maturity in rupee or gold. years. Premature penalty will be as per RBI Notification dated 21.01.2016.Rate of Interest & Payment: Miscellaneous: : 6.5% Bank Rate: 7% (wef 5.4.2016)STBD: Marginal Standing Facility: 7% The current interest rates are: 0.50% p.a. for 1 year, 0.55 % for 2 years LAF: Repo Rate JS Digest of Banking and Finance Sept. 2016 105 106 Hints for Answering Banking

Reserve Repo Rate : 6.0% a. A single entity should directly or indirectly hold below 10% equity; Minimum Daily Maintenance of CRR : 90% b. Any acquisition in excess of 1% will have to be reported to RBI as a (16.04.2016) mandatory requirement;Forex:Remittance abroad for buying property: RBI’s financial incentives to banks for providing exchange of notes & coins to public.RBI has advised that a property purchased overseas has to be in thename of all the members who are making the remittance. Hence, remittance Sr. Nature of Service Particulars of Incentivescannot be made by different members of a family to buy property in the of one member. i) Opening of and a. Capital Cost: Reimbursement of 50% of capital expenditure subjectLiberalised Remittance Scheme (LRS): maintaining currency to a ceiling of Rs.50 lakh per chests at centers currency chest. In the NorthResident individuals can freely remit up to US D2,50,000 overseas every having population of Eastern region up to 100% of capitalfinancial year for a permissible purpose like overseas education, medical less than 1 lakh in expenditure is eligible fortreatment; purchase of shares and property etc. under banked States reimbursement subject to the ceiling of Rs.50 lakh.Investment: b. Revenue cost: Reimbursement of 50% of revenue expenditure for theInvestment in Credit Information Companies: first 3 years. In the North Eastern region 50% of revenue expenditureInvestments made, directly or indirectly by any person, whether resident will be reimbursed for the first 5or otherwise, in a CIC, shall not exceed ten percent of the equity capital of years.the investee company. ii) Exchange of soiled a. Exchange of soiled notes – Rs.2Notwithstanding the above, the Reserve Bank may consider allowing notes/ adjudication per packet for exchange of soiledhigher FDI limits as under to entities which have an established track of mutilated notes up to denomination Rs.50record of running a Credit Information Bureau in a well regulated banknotes over the b. Adjudication of mutilated notesenvironment: counter at bank – Rs.2 per piece branchesa. up to 49% if their ownership is not well diversified (i.e., one or more i. Rs.25 per bag for distribution of shareholders each hold more than 10% of voting rights in the iii) Distribution of coins coins over the counter. company) over counter ii. The incentives would be paid on the basis of withdrawal fromb. up to 100% if their ownership is well diversified 108 Hints for Answering Banking currency chest, without waiting for claims from banks. or iii. Banks may put in place a system of checks and balances to ensure If their ownership is not well diversified, at least 50% of the directors that coins are distributed to retail of the investee CIC in India are Indian nationals/ Non-Resident customers in small lots and not to Indians/ Persons of Indian Origin subject to the condition that one bulk customers. third of the directors are Indian nationals resident in India. iv. The distribution of coins shall be verified by RBI Regional Officesc. The investor company should preferably be a listed company on a through inspection of currency recognised stock exchange. chest / incognito visits to branches etc. FII/FPI investment would be permitted subject to the conditions that: JS Digest of Banking and Finance Sept. 2016 107

iv) Installation of of checks and balances to ensure Age: 21 and above (No proof of income needed) that coins are distributed to retail Margin: 35%Machines which customers in small lots and not to Repayment: Max 12 months. Bullet repayment. Interest will be charged bulk customers. monthly; but payable along with principal on maturity.extend cash related iv. The distribution of coins shall be LTV Ratio: verified by RBI Regional Offices * (i) The loan will be sanctioned with a margin of 35%retail services to the through inspection of currency * (ii) LTV of 75% has to be maintained throughout the tenor of the chest / incognito visits to branchespublic like – etc. loan. The maximum amount of * (iii) The LTV ratio has to be computed against total outstanding in1. Cash Recyclers; reimbursement for the machines will be as follows – the account including accrued interest. (Interest would be charged2. ATMs dispensing For Metro / Urban areas – to the account at monthly rests but would become due for paymentlower denomination 1. Cash Recyclers – 50% of the along with principal only at maturity i.e. after 12 months).notes (i.e. up to actual cost of the machine or ` * (iv) The LTV ratio will be computed against the current value ofdenomination Rs.100) 2,00,000 whichever is lower gold. * (v) In case the LTV Ratio crosses the stipulated limit of 75% onNote - ATMs 2. ATMs dispensing lower account of fall in gold prices, customer will be intimated to replenishdistributing higher denomination notes (up to the margin either by way of cash deposit or additional gold denomination Rs.100) – 50% of the ornaments / coins.denominations of actual cost of the machine orRs.500 and above are Rs.2,00,000 whichever is lower) SBI Green Home Loan: Interest concession: 0.10% Agri Banking:not eligible for this For Semi-urban / Rural areas – New product: Financing Farmers’ Receivables under Corporate Tie upreimbursement 1. Cash Recyclers – 60% of the has been formulated to provide liquidity and remunerative price to the actual cost of the machine or Rs. farmers for their Agri. produce. 2,50,000 whichever is lower Rupay Cards: 2. ATMs dispensing lower Rupay cards are enabled for ATMs & POS machines. These are issued to denomination notes (up to KCC holders. denomination Rs. 100) – 60% of the actual cost of the machine or SME Business: Rs.2,50,000 whichever is lower Charging of Annual Service Fee / Annual Guarantee Fee by CGTMSE at differential rates depending upon NPA levels of Member LendingKrishi Kalyan Cess (KKC): Institutions: Now, the Trust is levying guarantee fee on 5 slabs linked to NPA level ofThe Finance Act, 2016 has introduced a new cess named ‘Krishi Kalyan the banks. The above revised fee structure shall be applicable forCess’ (KKC) on all taxable services at the rate of 0.5% of the value of such Guarantees approved by the Trust on or after July 01, 2015. Also, Trustservices. This cess would come into force from 01.06.2016 and would belevied and collected ‘as service tax’ on the value of all taxable service. 110 Hints for Answering BankingThe service tax rate will be 15 per cent from June 1 for all practicalpurposes. (Service tax 14 per cent, Swachh Bharat cess: 0.5 per cent, KKC:0.5 per cent.)SBI Personal Gold Loans:Loan Amount Max: Rs.20 lakhs; Min Rs.10,000 JS Digest of Banking and Finance Sept. 2016 109

shall levy ASF / AGF as per the revised structure on all Guarantees live a) They will intimate the exporters about their caution listing,as on March 31, 2016 while issuing Demand Notices for ASF / AGF for giving the details of outstanding shipping bills. When cautionFY 2016-17. NPA level of the MLI shall be computed as a percentage of listed exporters submit shipping documents for negotiation /guarantees issued on and up to March 31 every year and accordingly, purchase / discount / collection, etc., the AD Category – Ithe fee structure shall be decided every year by the Trust which may vary bank may accept the documents subject to followingfrom year to year. conditions:-However, changed rates are not applicable for credit facilities up to Rs.5 i. The exporters concerned should produce evidence of having receivedlakh. The old rate continues, as under: advance payment or an irrevocable letter of credit in their favour covering the full value of the proposed exports;0.75% for women, micro enterprises and units in NER; 1% for others. ii. In case of usance bills, the relative letter of credit should cover fullCaution / De-caution Listing of Exporters – since automated (RBI) export value and also permit such drawings. Besides, the usance bills should also mature within prescribed realisation periodTo streamline the procedure, cautioning / de-cautioning of exporters reckoned from date of shipment.has been automated. The AD category – I banks can access the updatedlist of caution listed exporters through EDPMS (Export Data Processing iii. Except under the above mentioned conditions given in iv (a) (i) andand Monitoring System) on daily basis. The list of all caution listed (ii) above, AD banks should not handle the shipping documents ofexporters would also be made available to AD category – I banks through caution listed exporters.their registered e-mail. Criteria laid down for cautioning / de-cautioning b) AD Category – I banks should obtain prior approval of theof exporters in EDPMS are as under: Reserve Bank for issuing guarantees for caution-listed exporters.i. The exporters would be caution listed if any shipping bill against them remains open for more than two years in EDPMS provided no EDPMS (Export Data Processing and Monitoring System): Has replaced extension is granted by AD Category –I bank / RBI. Date of shipment the XOS will be considered for reckoning the realisation period. Return (Export Bills Outstanding Statement.)ii. Once related bills are realised and closed or extension for realisation FEMA: FEMA violations are punishable with fine. The quantum of fine is granted, the exporter will automatically be de-caution listed. shall not exceed 3 times the amount involved in the contravention effective 01.06.16.iii. The exporters can also be caution listed even before the expiry of RBI has decided to put in its website the compounding orders passed by two years period based on the recommendation of AD banks. The it in various cases in its website. This measure will bring about more recommendation may be based on cases where exporter has come transparency and greater disclosure. RBI has also put up a Guidance to adverse notice of the Enforcement Directorate(ED) / Central Note on the computation of the amount imposed under the FEMA Rules. Bureau of Investigation (CBI) / Directorate of Revenue Intelligence (DRI) /any such other law enforcement agency or the case where Risk Management in Advances: exporter is not traceable or not making any serious efforts for The bank has taken several new risk initiatives towards enhancing its realisation of export proceeds. In such cases, AD may forward its risk management. Some key actions taken include: findings to the concerned regional office of RBI recommending Adoption of an IT platform for credit appraisal process through a Loan inclusion of the name of the exporter in the caution list. Originating Software/Loan Lifecycle Management system (LOS/LL MS). This is steadily being augmented to cover the entire credit portfolio, whichiv. Reserve Bank will caution / de-caution the exporters in such cases are interfaced with CIBIL’s and RBI’s defaulters list. based on the recommendation of AD Category – I banks. 112 Hints for Answering Banking AD Category – I banks should follow the procedure mentioned below while handling shipping documents in respect of caution listed exporters: JS Digest of Banking and Finance Sept. 2016 111

The reporting and MIS capabilities of the LOS/LL MS system are being amortise the shortfall over a period of only four quarters from the quarteraugmented, in order to allow the monitoring of Bank’s industry / exposure in which the sale took place.limit to be on a real time basis.An independent, second look is being given on all the sanctions through Further, where a bank chooses to make the necessary provisions overan Early Sanction Review for all loans having exposure between Rs.1.00 more than one quarter and this results in the full provisioning remainingcrore and Rs.5 crore and through the Loan Review Mechanism (LRM) for to be made as on the close of a financial year, banks should debit ‘otherloans above Rs.5 crore. reserves’ [i.e., reserves other than the one created in terms of Section 17(2)In order to focus on capital conservation and maximisation of return on of the Banking Regulation Act 1949] by the amount remaining un-capital, Bank has introduced these steps.   provided at the end of the financial year, by credit to specific provisions.The above is as per 2015 Audit report.  Now ESR is increased to Rs.5 However, banks should proportionately reverse the debits to ‘othercrore. reserves’ and complete the provisioning by debiting profit and lossThe objectives of ESR are: account, in the subsequent quarters of the next financial year.* To capture the critical risks in the proposals sanctioned, at an early Banks shall make suitable disclosures in Notes to Accounts with regard stage and apprise the Controllers of such risks for mitigation thereof to the quantum of provision made during the year to meet the shortfall in at the earliest. sale of NPAs to SCs/RCs and the quantum of unamortised provision* Improve the quality of pre-sanction process / sanctions in respect debited to ‘other reserves’ as at the end of the year. of exposures falling in this category.* Improve the quality of sourcing of loan proposals. Exchange of Pre-2005 Banknotes at Select Offices of RBI from July 01, 2016:Simplified Cash Credit Facility (SCCF):To ensure realistic assessment of WC limits, a new CC product Simplified The Reserve Bank of India has observed that a major portion of the pre-Cash Credit Facility (SCCF) has been developed for limits above Rs.5 2005 banknotes have been withdrawn from circulation and only a smallcrore and up to Rs.20 crore for manufacturing units. percentage of these notes remains in circulation. On a review, therefore, the Reserve Bank has decided that from July 01, 2016 the facility ofPrudential Norms on Income Recognition, Asset Classification and exchanging the pre-2005 banknotes will be available only at the 20 officesProvisioning pertaining to Advances – Spread Over of Shortfall on Sale of the Reserve Bank of India as under:of NPAs to SCs/RCs:As an incentive for early sale of non-performing assets (NPAs) to Ahmedabad, Bengaluru, Belapur, Bhopal, Bhubaneswar, Chandigarh,Securitisation Companies/Reconstruction Companies (SCs/RCs) created Chennai, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata,under the Securitisation and Reconstruction of Financial Assets and Lucknow, Mumbai, Nagpur, New Delhi, Patna, ThiruvananthapuramEnforcement of Security Interest Act, 2002, banks were allowed to spread and Kochi.over any shortfall, if the sale value is lower than the net book value (NBV),over a period of two years for NPAs sold up to March 31, 2015 (further The Reserve Bank of India had, in December 2015, set June 30, 2016 asextended up to 31.03.2016) and was subject to necessary disclosures in the last date for public to exchange pre-2005 banknotes at the identifiedthe Notes to Account in Annual Financial Statements of the banks. bank branches and Issue Offices of the Reserve Bank of India.On a review, RBI has extended the dispensation of amortising the shortfallon sale of NPAs to SCs/RCs up to March 31, 2017. However, for assets The Reserve Bank has also clarified that these pre-2005 banknotes willsold from April 1, 2016 to March 31, 2017, banks will be allowed to continue to remain legal tender. JS Digest of Banking and Finance Sept. 2016 113 CDD Procedure and sharing KYC information with Central KYC Records Registry (CKYCR) REs (Reporting Entities) shall capture the KYC information for sharing with the CKYCR in the manner mentioned in the Rules, as required by the revised KYC templates prepared for ‘individuals’ and ‘Legal Entities’ 114 Hints for Answering Banking

as the case may be. Government of India has authorised the Central EMIs to be serviced during the post-retirement term are capped at 50% ofRegistry of Securitisation Asset Reconstruction and Security Interest of the current NetIndia (CERSAI), to act as, and to perform the functions of the CKYCR. Monthly Income.The ‘live run’ of the CKYCR would start with effect from July 15, 2016 in Extended repayment up to the age of 75 years.phased manner beginning with new ‘individual accounts’. Accordingly, The maximum loan term, however, shall remain capped at 30 years.REs shall take the following steps: Full waiver of Processing Fee.(i) In the first phase, Scheduled Commercial Banks (SCBs) may upload Benefit of lower interest rate as a concession of 5 bps. the KYC data with CERSAI, in respect of new individual accounts SME Business: opened on or after July 15, 2016. Factoring transactions:(ii) REs other than SCBs may also participate in the live run of CKYCR Factoring transactions on ‘with recourse’ basis shall be eligible for from July 15, 2016. priority sector classification by banks, which are carrying out the business(iii) Those REs which are not yet ready to join CKYCR process of factoring departmentally. immediately, shall take steps to prepare their systems for uploading The factoring transactions taking place through TReDS shall also be the KYC data in respect of new individual accounts so that the eligible for classification under priority sector upon operationalization same is complete as soon as possible in a time bound manner. of the platform.(iv) REs shall prepare a plan for uploading the data in respect of existing individual accounts and include the same in their KYC Policy. Lending to MSE (Micro and Small Enterprises):(v) Operational Guidelines (version 1.1) for uploading the KYC data Composite Loan: have been released by CERSAI. Further, ‘Test Environment’ has A composite loan limit of Rs.1 crore can be sanctioned by banks to enable also been made available by CERSAI for the use of REs. the MSE entrepreneurs to avail of their working capital and term loan requirement through Single Window.SBI SHAURYA HOME LOAN:Defense Personnel belonging to Army, Navy and Air force. Credit Linked Capital Subsidy Scheme (CLSS)Reduced EMIs during the post-retirement term. EMIs to be serviced during Government of India, Ministry of Micro, Small and Medium Enterprisesthe post-retirement term are capped at 50% of the current Net Monthly had launched Credit Linked Capital Subsidy Scheme (CLSS) forIncome. Technology Upgradation of Micro and Small Enterprises subject to theExtended repayment up to the age of 75 years. following terms and conditions:The maximum loan term, however, shall remain capped at 30 years. (i) Ceiling on the loan under the scheme is Rs.1 crore.Full waiver of Processing Fee. (ii) The rate of subsidy is 15% for all units of micro and small enterprisesBenefit of lower interest rate as a concession of 5 bps over the Home LoanCard Interest Rate is available wherever check-off facility is extended by up to loan ceiling at Sr. No. (i) above.the Government under tie-up arrangement with the Bank. Agri Business:SBI PRIVILEGE HOME LOAN: Interest Subvention Scheme:Eligible applicants: Employees of Central / State Governments includingPSBs, PSUs of Central Government, and other individual(s) with i) A subvention of 2 % per annum will be made available topensionable service. Public Sector Banks (PSBs) and in respect of loans given by the JS Digest of Banking and Finance Sept. 2016 115 116 Hints for Answering Banking

rural and semi–urban branches of Private Sector Scheduled months. This period can be extended depending on the time required Commercial Banks, for short term crop loan upto Rs.3,00,000/ for the certification. - per farmer provided the lending institutions make available b. To address the issues of mis-selling and to minimise customer short term credit at the ground level at 7% per annum to farmers. complaints, the employees involved in marketing third party retail products and wealth management products must necessarily ii) An additional interest subvention of 3 % per annum will be undergo an appropriate certification process. Where other financial available to the prompt payee farmers from the date of sector regulators have prescribed any certifications, these must be disbursement of the crop loan upto the actual date of repayment complied with. by farmers or upto the due date fixed by the bank for repayment of crop loan, whichever is earlier, subject to a maximum period Deposits: of one year from the date of disbursement. This also implies SB A/c: that the farmers paying promptly would get short term crop RBI has already advised banks not to levy any charge on a SB a/c, if the loans @ 4% per annum during the year 2016-17. balance touches zero. Hence, there should not be any negative balance in a SB a/c, on account of levy of any charge. If any charge is levied the iii) In order to discourage distress sale by farmers and to encourage customer can approach ombudsman to redress the grievance. them to store their produce in warehouses against warehouse receipts, the benefit of interest subvention will be available to Priority Sector Lending –Targets and Classification- Bank loans to MFIs small and marginal farmers having Kisan Credit Card for a for on-lending - Qualifying asset - Revised loan limit: further period of upto six months post-harvest on the same Institutions (NBFC-MFIs) for which the tenure of the loan shall not be rate as available to crop loan against negotiable warehouse less than 24 months, has been raised to Rs. 30,000/- from the earlier limit receipt for keeping their produce in warehouses. of Rs. 15,000/-. iv) To provide relief to farmers affected by natural calamities, the RBI has now made the following changes in Exchange procedure for interest subvention of two percent will continue to be available Soiled / Mutilated / Imperfect Notes: to banks for the first year on the restructured amount. Such Exchange of soiled notes restructured loans may attract normal rate of interest from the Notes presented in small number: Where the number of notes presented by a second year onwards as per the policy laid down by the RBI. person is up to 20 pieces with a maximum value of Rs.5000 per day, banks should exchange them over the counter, free of charge.Human Resources: Capacity Building in Banks and AIFIs: Notes presented in bulk: Where the number of notes presented by a person exceeds 20 pieces or Rs.5000 in value per day, banks may accept them,Recommendations of G.Gopalakrishna Committee: against receipt, for value to be credited later. Banks may levy service charges as permitted in RBI Master Circular on Customer Service ina. Banks should identify specialised areas for certification of the staff Banks. In case tendered value is above Rs.50000, banks are expected to manning key responsibilities. To begin with, the banks should make take the usual precautions. acquiring of a certificate course mandatory for the following areas: Exchange of mutilated and imperfect notes • Treasury operations – Dealers, mid-office operations. While designated branches may continue to follow the procedure as laid down in Part III of NRR, 2009 ( ! Publications ! • Risk management – credit risk, market risk, operational risk, enterprise-wide risk, information security, liquidity risk. 118 Hints for Answering Banking • Accounting – Preparation of financial results, audit function. Credit management – credit appraisal, rating, monitoring, credit administration. Banks are free to require certification for other areas of work also. The employees working in the aforementioned areas should be asked to acquire certifications within a specified period, say, 6 JS Digest of Banking and Finance Sept. 2016 117

Occassional) for exchanging mutilated and imperfect notes and issue Sr. Nature of Irregularity Penaltyreceipt for the notes presented for adjudication, non-chest branches are No.required to follow the following procedure for notes presented in small i. Shortages in soiled note For notes in denominationnumbers and in bulk. up to Rs.50 remittances and currency Rs.50/- per piece inNotes presented in small number: Where the number of notes presented by a chest balances addition to the lossperson is up to 5 pieces per day, non-chest branches should normally For notes in denominationadjudicate the notes as per the procedure laid down in Part III of NRR, ii. Counterfeit notes detected in of `.100 & above2009 and pay the exchange value over the counter. If the non-chest soiled note remittances and Equal to the value of thebranches are not able to adjudicate the mutilated notes, the notes may be denomination per piece inreceived against a receipt and sent to the linked currency chest branch currency chest balances. addition to the loss.for adjudication. The probable date of payment should be informed to Shortages of 100 piecesthe tenderers on the receipt itself and the same should not exceed 30 iii. Mutilated notes detected in and above per remittancedays. Bank account details should be obtained from the tenderers for soiled note remittances and shall be debitedcrediting the exchange value by electronic means. immediately. Penalty may currency chest balances be levied on reaching aNotes presented in bulk: Where the number of notes presented by a person limit of 100 pieces in ais more than 5 pieces not exceeding Rs.5000 in value, the tenderer should iv. Non-compliance with cumulative advised to send such notes to nearby currency chest branch by insured Penalty on account ofpost giving his / her bank account details (a/c no, branch name, IFSC, operational guidelines by detection of counterfeitetc) or get them exchanged thereat in person. All other persons tendering notes by RBI from soiledmutilated notes whose value exceeds Rs.5000 should be advised to currency chests detected by note remittance of banksapproach nearby currency chest branch. Currency chest branches and in currency chestreceiving mutilated notes through insured post should credit the RBI officials balances shall be levied inexchange value to the account of sender by electronic means within 30 terms of the instructionsdays of receipt of notes. a) Non-functioning of issued by DCM vide circular dated August 26,Tenderers aggrieved with the service provided by the banks in this regard 120 HintsCfoCr ATnsVwering Banking 2015.may approach Banking Ombudsman concerned. Rs.50/- per piece irrespective of theScheme of Penalties for bank branches based on performance in denominationrendering customer service to the members of public: Mutilated notes of 100 pieces and above per1. The scheme of Penalties for bank branches including currency chests remittance shall be debited has been formulated in order to ensure that all bank branches immediately. Penalty may provide better customer service to members of public with regard to be levied on reaching a exchange of notes and coins, in keeping with the objectives of Clean limit of 100 pieces in a Note Policy. cumulative manner. Penalty of Rs.5000 for each2. Penalties irregularity. Penalty will be enhanced to Penalties to be imposed on banks for deficiencies in exchange of Rs.10,000 in case of notes and coins/remittances sent to RBI/operations of currency repetition. chests etc. are as follows: Penalty will be levied immediately. JS Digest of Banking and Finance Sept. 2016 119 b) Branch cash/documents kept in strong room

iv. Non-compliance with Penalty of Rs.5000 for each custody thereof and by the officials from the Controllingoperational guidelines by irregularity. Office once in six months.currency chests detected by Penalty will be enhanced to d) Denial of facilities/services to linkedRBI officials Rs.10,000 in case of branches of other banks. e) Non acceptance ofa) Non-functioning of repetition. lower denomination notes (i.e. denomination of Rs.50CCT V Penalty will be levied and below) tendered by members of public andb) Branch cash/documents immediately. linked bank branches. f) Detection of mutilatedkept in strong room /counterfeit notes in re- issuable packets preparedc) Non-utilization of NSMs by the currency chest branches.for sorting of notes (NSMs 122 Hints for Answering Bankingnot used for sorting of highdenomination notes receivedover the counter or not usedfor sorting notes remitted tochest/RBI)v. Violation of any term of Rs.10,000 for any violationagreement with RBI (for of agreement or deficiencyopening and maintaining of service.currency ches ts) or Rs.5 lakh in case there aredeficiency in service in more than 5 instances ofproviding exchange facilities, violation ofas detected by RBI officials agreement/deficiency ine.g.. service by the branch. Thea) Non-issue of coins over levy of such penalty will bethe counter to any member placed in public domain.of public despite having Penalty will be leviedstock. imm edi atel y.b) Refusal by any bankbranch to exchange soilednotes / refusal by anycurrency chest branch toadjudicate mutilated notestendered by any member ofpublicc) Non conduct of surpriseverification of chest balances,at least at bimonthlyintervals, by officialsunconnected with thecustody thereof and by theofficials from the ControllingOffice once in six months.d) Denial JSofDigest of Banking and Finance Sept. 2016 121facilities/services to linkedbranches of other banks.

2016/2017 EXAMS NEW IC / JMG / TO / CAIIB – Optional Paper(GR. A/B/MM II ASS. BKS) Retail Banking & (Objective Questions Digest)MMII Confirmation Exam /  Retail Banking is a favourite MM II / MM III optional paper for CAIIB exam among aspirants. Banking Guide (Jan’16) Rs. 800  The Objective Questions Digest JAIIB / CAIIB Objective Questions Digest covers the entire syllabus exhaustively.We are accredited by Indian Institute of Banking & Finance (IIBF), Mumbai  Developments since 2010 till date covered (RBI instructions, courtOptional Subject: (Available) judgements, new schemes / products, etc)Retail Banking Rs. 250  Concept capsules on important(Objective Questions Digest) topics provided for clearer understanding. Our AccountNo. - 32118249209 Price: Rs. 250/-(SBI, J P Nagar Br., 124 Bangalore)JS Digest of Banking and Finance Sept. 2016 123

Good News for IMPORTANT ANNOUNCEMENTaspirants preparingfor IBPS Exam Dear Readers,for Recruitment?POs / Clerks. Due to unavoidable circumstances we are unable to continue the publication of Banking JS Digest of Banking and Finance Sept. 2016 125 Digest. Sep’16 issue is the last issue. We thank our readers for the overwhelming support over the years. We wish our readers successful banking career. We deeply regret the inconvenience. Refund of moneyfor the unexpired subscription period is being taken up. The amount will be credited to the account from which the subscription was received. As refund has to be made to thousands of subscribers, the exercise would be completed by end 15th Oct. Please mail us by 20th Oct in case the amount is not credited by then. Please see our website for details / clarifications. Director J. S. Institute. 126

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