Oct 12

BANKING POLICY : 4
Migration to CTS-2010
Investment in Pakistan
FDI ceilings
Bank loans to Factor Companies
BANKING FEATURES : 4-8, 20
CTS 2010 standards
Mechanised cheque processing
Banking Problems - Ombudsman cases
Banking Supervision
Call & Notice money
Diary of events - Sep, 2012: 9
Policy, Economy
Banking Developments
Capital Markets & Insurance
General Awareness : 13
Multi-Option questions:15-19
Data Bank : 20
The
Journal of
Institute of Banking
Career & Studies,
Chandigarh
Contents of this Issue
Editor - Ms Ritu Singh, Executive Editor - S. Chand Singh, Editor in Chief - Sh. N S Toor
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Registration RNI No.67802/98
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Banking events updatE October 2012 2
(COMPILATION- MANJOT KAUR, in Chandigarh - on the basis of information available on RBI Website)
Devote
"A few days in a month, to do something better;
something speedier; something of high quality;
something which will make you proud; something which
will make a poorer person's life a little better ".
........ Dr. APJ Abdul Kalam, Ex-President of India
facility to their customers to issue only CTS-2010 standard cheques in a time
bound action plan not later than September 30, 2012. To ensure the time-
bound migration to CTS-2010 standard cheque formats, all banks have been
advised (Sep 03, 2012) to adhere to the procedures indicated below:
i. Arrange to issue only multi-city/payable at par CTS-2010 standard cheques
not later than September 30, 2012.
ii. Arrange to withdraw the non-CTS-2010 Standard cheques in circulation
before December 31, 2012 by creating awareness among customers through
SMS alerts, letters, display boards in branches/ATMs, log-on message in
internet banking, notification on the web-site etc. Progress in this regard may
be submitted to this department by November 30, 2012.
iii. Banks holding post-dated EMI cheques (received on their own behalf or on
behalf of their NBFC clients) may arrange to ensure to replace non-CTS-2010
Standard cheques with CTS-2010 standard cheques before Dec 31, 2012.
Capital Adequacy Framework - Eligible Credit Rating Agencies
In terms of extant guidelines of RBI, 5 domestic credit rating agencies viz.
CARE, CRISIL, FITCH India, ICRA and Brickwork have been accredited for
the purpose of risk weighting the banks claims for capital adequacy purposes.
RBI has decided (Sep 13, 2012) that banks may also use the ratings of the
SME Rating Agency of India Ltd. (SMERA) also.
Foreign investment
The extant FDI policy has since been reviewed(Sep 21, 2012) as follows:
a) FDI up to 100%, is permitted in SingleBrand Product Retail Trading by
only one non-resident entity, whether owner of the brand or otherwise,
under the Government route.
b) FDI up to 51% is permitted in Multi-Brand Retail Trading under Govt route.
c) Foreign airlines are permitted FDI up to 49% in the capital of Indian compa-
nies in Civil Aviation Sector, operating scheduled and non-scheduled air trans-
port, under the automatic/Government route.
d) Up to 49% in Power Exchanges registered under Central Electricity Regu-
latory Commission (Power Market) Regulations, 2010, under the Govt route
Overseas Investment by Indian Parties in Pakistan
In terms of Regulation dated Jul 07, 2004 investment in Pakistan is not permit-
ted. RBI has decided (Sep 07, 2012) that the overseas direct investment by
Indian Parties in Pakistan shall be considered under the approval route.
OTC Foreign Exchange Derivatives Cost Reduction Structures
Under the extant instructions, use of cost reduction structures, i.e., cross
currency option cost reduction structures and foreign currency INR option
cost reduction structures are permitted to hedge exchange rate risk arising
out of trade transactions and the External Commercial Borrowings (ECBs).
On a review, RBI has decided (Sep 12, 2012) to permit the use of cost
reduction structures for hedging the exchange rate risk arising out of foreign
currency loans availed of domestically against FCNR(B) deposits.
Trade Credits for Import into India
As per the extant guidelines, for import of capital goods as classified by DGFT,
AD banks may approve trade credits up to USD 20 million per import transac-
tion with a maturity period of more than 1 year and less than 3 years (from the
date of shipment). No roll-over/extension is permitted beyond the permissible
period. AD banks are also permitted to issue LC/guarantees/Letter of Under-
taking (LoU) /Letter of Comfort (LoC) in favour of overseas supplier, bank and
financial institution, up to USD 20 million per transaction for a period up to 3
years for import of capital goods, subject to prudential guidelines issued by
the Reserve Bank from time to time. The period of such LC / guarantees / LoU
/ LoC has to be co-terminus with the period of credit, reckoned from the date
of shipment. AD banks shall not, however, approve trade credit exceeding
USD 20 million per import transaction.
RBI has decided (Sep 11, 2012) to allow companies in the infrastructure
sector, to avail of trade credit up to a maximum period of 5 years for import
of capital goods as classified by DGFT subject to the following conditions: -
(i) the trade credit must be abinitio contracted for a period not less than 15
months and should not be in the nature of short-term roll overs; and
(ii) AD banks cannot issue LC/guarantees/LoU/LoC favouring overseas sup-
plier, bank and FI for the extended period beyond 3 years.
ECB Bridge Finance for infrastructure sector
As per the extant guidelines, Indian companies in the
infrastructure sector have been allowed to import capi-
tal goods by availing of short term credit (including buy-
ers / suppliers credit) in the nature of bridge finance,
under approval route, subject to following conditions:-
(i) bridge finance shall be replaced with a long term ECB;
(ii) the long term ECB shall comply with all the extant ECB
norms; and
(iii) prior approval shall be sought from the Reserve Bank
for replacing the bridge finance with a long term ECB.
RBI has decided (Sep 11, 2012) to allow refinancing of
such bridge finance (if in the nature of buyers/suppliers
credit) availed of, with an ECB under the automatic
route subject to the following conditions:-
(i) the buyers/suppliers credit is refinanced through an
ECB before the max permissible period of trade credit;
(ii) the AD evidences the import of capital goods by veri-
fying the Bill of Entry;
(iii) the buyers/suppliers credit is compliant with the ex-
tant guidelines on trade credit; and
(iv) the proposed ECB is compliant with all the other
extant guidelines relating to availment of ECB.
The borrowers is to approach RBI under the approval
route only at the time of availing of bridge finance.
AD bank shall monitor the end-use of funds and banks in
India will not be permitted to provide any form of guar-
antees for the ECB. All other conditions of ECB, shall
remain unchanged and should be complied with.
ECB Policy USD 10 billion scheme
As per extant guidelines, the maximum permissible ECB
that can be availed of by an individual company under
the scheme is limited to 50% of the average annual ex-
port earnings realised during the past 3 financial years.
RBI has decided (Sep 11, 2012):
(a) to enhance the maximum permissible limit of ECB that
can be availed of to 75% of the average foreign ex-
change earnings realized during the immediate past three
financial years or 50% of the highest foreign exchange
earnings realized in any of the immediate past 3 financial
years, whichever is higher;
(b) in case of Special Purpose Vehicles, which have com-
pleted at least one year of existence from the date of
incorporation and do not have sufficient track record/
past performance for 3 financial years, the maximum
permissible ECB that can be availed of will be limited to
50% of the annual export earnings realized during the
past financial year; and
(c) The maximum ECB that can be availed by an indi-
vidual company or group, as a whole, under this scheme
will be restricted to USD 3 billion.
Bank Finance to Factoring Companies
Subsequent to the issue of the circular dated Feb 12,
2008, the Factoring Regulation Act, 2011, which regu-
lates factoring companies. The Act has also given pow-
ers to RBI to stipulate conditions for principal business
in terms of assets and gross income as also powers to
give directions and collect information from factors.
RBI had introduced (Jul 23, 2012) a new category of
Migration to CTS-2010 Standards
RBI had advised (Dec 27, 2011) all banks providing cheque
ANKING
POLICY
B
NBFCs viz.; Non-Banking Financial Company Factors .
RBI has decided (Sep 11, 2012) that banks can extend financial assistance for factoring
business of Factoring Companies which comply with the following criteria:
(a) The companies qualify as factoring companies and carry out their business under the
provisions of the Factoring Regulation Act, 2011 and Notifications issued by the Reserve
Bank in this regard from time to time.
(b) They derive at least 75% of their income from factoring activity.
(c) The receivables purchased / financed, irrespective of whether on with recourse or
without recourse basis, form at least 75% of assets of the Factoring Company.
(d) The assets / income referred to above would not include the assets / income relating
to any bill discounting facility by Factoring Company.
(e) The financial assistance extended by the Factoring Companies is secured by hypoth-
ecation or assignment of receivables in their favour.
Non-resident guarantee between two resident entities
As per extant rules, the borrowing and lending of Indian Rupees between 2 persons
resident in India does not attract the provisions of the FEMA, 1999. In case where a
Rupee loan is granted against the guarantee provided by a person resident outside
India, there is no transaction involving forex until the guarantee is invoked and the non-
resident guarantor meets the liability under the guarantee. RBI has granted general
permission to a person resident in India, being a principal debtor, to make payment to a
person resident outside India, who has met the liability under a guarantee.
RBI has decided (Aug 29, 2012) to extend the facility of non-resident guarantee under
the general permission for non-fund based facilities (such as LC/guarantees/Letter of
Undertaking (LoU) /Letter of Comfort (LoC) ) entered into between 2 persons resident in
India. The method of discharge of liability by the non-resident guarantor under the
guarantee and the subsequent repayment of the liability by the principal debtor would
continue, as hitherto (Circular No. 28 dated March 30, 2001).
RBI has also decided to introduce a reporting format to capture such guarantees issued
and invoked. AD banks are to furnish such details by all branches, in a consolidated
statement, during a quarter, to reach RBI not later than 10th of the following month.
Issue of Indian Depository Receipts (IDRs) - Limited two way fungibilty
Further to the guidelines as per circular Jul 22, 2009, RBI has decided (Aug 28, 2012) to
allow a limited 2 way fungibility for IDRs (similar to the limited 2 way fungibility facility
available for ADRs/GDRs) subject to the following terms and conditions:
i. The conversion of IDRs into underlying equity shares would be governed by the
conditions mentioned in Circular No. 5 dated July 22, 2009.
ii. Fresh IDRs would continue to be issued as per Circular No. 5 dated July 22, 2009.
iii. The re-issuance of IDRs would be allowed only to the extent of IDRs that have been
redeemed /converted into underlying shares and sold.
iv. There would be an overall cap of USD 5 billion for raising of capital by issuance of IDRs
by eligible foreign companies in Indian markets. This cap would be akin to the caps
imposed for FII investment in debt securities andwould be monitored by SEBI.
White Label ATMs (WLAs) in India - Guidelines
RBI has clarified (Aug 31, 2012) that non-bank entities that wish to infuse capital after
audit of balance sheet can do so provided they submit a certificate from a Chartered
Accountant that additional capital has been infused to satisfy the criterion of net-worth
of Rs. 100 crore. The certificate is to be submitted from existing Chartered Accountant
who audited last balance sheet or a Chartered Accountant who has conducted a limited
review of the accounts of the last quarter / half-year along with.
NPA Management Effective Mechanism and Granular Data
RBI has observed that existing MIS on the early warning systems of asset quality in
banks, needed improvement. Banks have been advised (Sep 14, 2012) that they should
review their existing IT and MIS framework and put in place a robust MIS mechanism for
early detection of signs of distress at individual account level as well as at segment level
(asset class, industry, geographic, size, etc.). The early warning signals should be used
for putting in place an effective preventive asset quality management framework, in-
cluding a transparent restructuring mechanism for viable accounts under distress for
preserving the economic value of those entities in all segments.
The banks IT and MIS system should be robust and able to generate reliable and quality
information with regard to their asset quality for effective decision making. There should
be no inconsistencies between information furnished under regulatory/statutory report-
ing and the banks own MIS reporting. Banks are also advised to have system generated
segment wise information on non-performing assets and restructured assets which may
include data on the opening balances, additions, reductions (upgradations, actual re-
coveries, write-offs etc.), closing balances, provisions held, technical write-offs, etc.
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Banking events updatE October 2012 4 BANKING FEATURES

Compilation : Arundeep Toor (Sydney - Australia) (Source-RBI Website)
On recommendations of RBI Working Group on
Standardisation of Cheque Forsm, RBI had decided (Feb
22, 2010) to prescribe certain benchmarks towards achiev-
ing standardisation of cheques issued by banks. These
include provision of mandatory minimum security fea-
tures on cheque forms and standardisation of field
placements on cheques. In addition, certain desirable
features are also being suggested which could be imple-
mented by banks based on their need and risk percep-
tion. The set of minimum security features would ensure
uniformity and also help presenting banks while scrutinis-
ing / recognising cheques of drawee banks in an image-
based processing scenario.
Mandatory features
1. Paper (At Manufacturing Stage) : The paper
specifications as it exists currently under Mechanised
cheque processing using MICR technology Procedural
Guidelines, is to be followed. Additionally, paper should
be image friendly and have protection against alterations
by having chemical sensitivity to acids, alkalis, bleaches
and solvents giving a visible result after a fraudulent attack.
CTS-2010 Standard paper should not glow under Ultra-
Violet (UV) light i.e., it should be UV dull. This shall ensure
that the feel of cheques is uniform across banks.
2. Watermark (At Manufacturing Stage) : All cheques shall
carry a standardised watermark, with the words CTS-
INDIA which can be seen when held against any light
source. This would make it difficult for any fraudster to
photocopy or print an instrument since this paper would
be available only to security printers handling cheque
printing. The watermark should be oval in shape and
diameter could be 2.6 to 3.0 cms. Each cheque must hold
atleast one full watermark.
3. VOID pantograph (At Printing Stage): Pantograph with
hidden / embedded COPY or VOID feature shall be
included in the cheques. This feature should not be visible
on the scanned image at the resolution specified in CTS
but should be clearly visible in photocopies and scanned
colour images as resolution used in such cases would be
above the prescribed CTS standards. This would act as a
deterrent against colour photocopy or scanned colour
images of a cheque.
4. Banks logo printed with invisible ink (ultra-violet ink)
(At Printing Stage) : Banks logo shall be printed in ultra-
violet (UV) ink. The logo will be captured by / visible in
UV-enabled scanners / lamps. It will establish genuineness
of a cheque.
5. Field placements of a cheque : Placement of significant
fields on the cheque forms shall be mandated. However,
placement of additional fields shall be left to banks. This
will enable data capturing by Optical / Image Character
Recognition (OCR / ICR) engines in offline mode and help
banks in automating their payment processes.
6. Mandating colours and background : Light / Pastel
colours shall be mandated for cheques so that Print /
Dynamic Contrast Ratio (PCR / DCR) is more than 60% for
ensuring better quality and content of images.
7. Clutter free background : Background of cheques shall
be kept as clutter free as possible for improving quality
and clarity of images.
8. Prohibiting alterations / corrections on cheques : No
changes / corrections should be carried out on the
cheques (other than for date validation purposes, if
required). For any change in the payees name, courtesy
amount (amount in figures) or legal amount (amount in
words), etc., fresh cheque forms should be used by
customers. This would help banks to identify and control
fraudulent alterations.
9. Printing of account field : All cheques should, as far as
possible, be issued with the account number field pre-
printed. This should be considered must for current
account holders and corporate customers.
10. Use of UV feature on cheque images : Though banks
logo in UV ink is a strong deterrent for forgery and
duplicate cheques, there are challenges in terms of
increased image size, stabilisation of UV technology in
CTS environment, availability of UV-enabled scanners, etc.,
in implementing this feature. Presenting banks can subject
instruments beyond a threshold value to UV verification
using the UV lamps currently available for currency note
verification. In case UV technology stabilises in future,
the UV image view could be incorporated as an additional
image view or by dropping one of the existing image views.
Desirable features
(i) supplementary watermark containing their own logo,
(ii) embedded fluorescent fibres, (iii) fugitive ink, (iv)
secondary fluorescent ink, (v) micro-lettering, (vi) toner
fusing, (vii) check-sum, (viii) patterns, (ix) floral designs,
(x) bleeding ink, (xi) structural magnetics, (xii) security
thread, (xiii) hot stamped holograms on multi-city cheques
and demand drafts, (xiv) auto-detection tools, (xv) use of
UV band on sensitive and key areas of interest on a cheque
such as Legal Amount Recognition (Amount in Words),
Courtesy Amount Recognition (Amount in Figures),
Signature, Beneficiary Name, (xvi) pre-encoding of amount
field on the MICR band for demand drafts / pay orders
(above a self-decided cut-off) before issue to customers,
(xvii) use of check-sum on the face of demand drafts /
pay orders (other than the MICR band), etc.
Banks should take care that :
i. The additional security features do not overlap or be
very close or clash against the prescribed minimum
security features.
ii. The features are compatible with CTS specifications.
iii. The features are not image heavy, i.e., increase the
image size.
iv. They should not block any important data on images or
hinder payment processing.
v. Presenting banks are not expected to verify the
additional features.
CTS-2010 Standard for Cheque Forms
Current Status of CTS implementation : As per RBI directive
dated dated Sep 05, 2012, Banks are to arrange to withdraw the
non-CTS-2010 Standard cheques in circulation before December
31, 2012 by creating awareness among customers through SMS
alerts, letters, display boards in branches/ATMs, log-on message in
internet banking, notification on the web-site etc.
On recommendations of the Working Group to Examine the Proce-
dures and Processes of Agricultural Loans (Chairman: Shri C. P.
Swarnakar), RBI had advised the SLBC convenor banks on May 10,
2007, to set up a FLCC on a pilot basis in any one district in the
State/ UT. Subsequently (Feb 04, 2009), a Model Scheme for Finan-
cial Literacy and Credit Counseling Centres was formulated by RBI.
The summary of which is provided:
Objectives: The broad objective of the FLCCs will be to provide free
financial literacy/education and credit counselling. FLCCs should
not act as investment advice centres /marketing centres for prod-
ucts of any particular bank/banks. Counsellors may refrain from mar-
keting / providing advice regarding investment in insurance policies,
investment in securities, value of securities, purchase/ sale of secu-
rities, etc., or promoting investments only in banks own products.
Organisational / Administrative Set-up : Banks can set up Trusts/
Societies for running the FLCCs, singly or jointly with other banks. A
bank may induct respected local citizens (and senior citizens) on
the Board of such a Trust/Society. Serving bankers may not be in-
cluded in the Board.
To begin with, FLCCs may be fully funded by the bank/s.
Coverage: The credit counselling services can be provided in rural,
semi urban, urban and metropolitan areas and banks can adopt a
segmented approach specific to different categories of borrowers
rather than broad-based generalized one.
Charges: Counselling and debt management services may be pro-
vided free of charge to the customers so as to put no additional
burden on them.
Types of Credit Counselling: The counselling can be both preventive
and curative.
In case of preventive counselling, the centres could provide
awareness regarding cost of credit, availability of backward and
forward linkages, where warranted, etc. The clients could be
encouraged to avail of credit on the basis of their repaying capacity.
Preventive counselling can be through the media, workshops and
seminars. The FLCCs should give due emphasis to customers rights
under fair practices code, benefits of nomination facilities, operation
of accounts, etc.
In the case of curative counselling, the clients may approach the
counselling centres to work out individual debt management plans
for resolving their unmanageable debt portfolio. The centres could
work out effective debt restructuring plans that could include re-
payment of debt to informal sources, if necessary, in consultation
with the bank branch.
Preventive counselling may be made mandatory for individual bor-
rowers based on their income level or size of loan. Such mandatory
credit counselling could be made a part of fair lending practice of
banks.
Counsellors : Individuals such as retired bank officers, ex-service-
men, etc. may be allowed to be appointed, among others, as credit
counsellors. Credit counsellors should have sound knowledge of
banking, law, finance, requisite communication and team building
skills, etc.
Monitoring: The functioning of the FLCCs in each State may be moni-
tored by a Committee headed by the Regional Director of the Re-
serve Bank of India and feedback provided to the banks on a regular
basis. The Committee may comprise SLBC convenor bank, other banks,
NABARD, IBA, consumer organizations, NGOs working in the area,
etc.
Banks at their discretion, can allow additional interest
of maximum 1% p.a., subject to following conditions,
in case of a savings or a term deposit account opened
in the name of:
(a) a member or a retired member of the banks staff,
either singly or jointly with any member or members of
his/her family; or
(b) the spouse of a deceased member or a deceased
retired member of the banks staff; and
(c) an Association or a fund, members of which are
members of the banks staff;
The bank should obtain a declaration from the depositor,
that the monies deposited or which may, from time to
time, be deposited belong to the staff as above.
Scope of the term Staff member :
(i) a member of the banks staff means a person
employed on a regular basis, whether full-time or part-
time, and includes a person recruited on probation or
employed on a contract of a specified duration or on
deputation and an employee taken over in pursuance
of any scheme of amalgamation, but does not include a
person employed on casual basis.
(a) In the case of employees taken on deputation from
another bank, the bank from which they are deputed
may allow additional interest in respect of the savings
or term deposit account opened with it during the same
period of deputation;
(b) In the case of persons taken on deputation for a
fixed duration, or on a contract of a fixed duration, the
benefit will cease to accrue on the expiry of the term of
deputation or contract, as the case may be.
(ii) A retired member of the banks staff means an
employee retiring whether on superannuation or
otherwise as provided in the banks Service/Staff
Regulations, but does not include an employee retired
compulsorily or in consequence of disciplinary action;
(iii) Family includes the spouse of the member/retired
member of staff and the children, parents, brothers
and sisters of the member/retired member of the banks
staff, who are dependent on such member/retired
member, but does not include legally separated spouse;
Conditions for payment of additional interest:
(i) Additional interest is payable only till the person
continues to be eligible for that and in case of his ceasing
to be eligible, till the maturity of a term deposit account;
(ii) In the case of employees taken over pursuant to
the scheme of amalgamation, the additional interest is
allowed only if the interest at the contractual rate
together with the additional interest does not exceed
the rate, which could have been allowed if such
employees were originally employed by the bank.
(iii) For Domestic deposits, banks can give their resident
Indian retired senior citizen staff, the benefit of higher
interest rates as paid to senior citizens over and above
the additional interest of max 1% p.a. payable to them
by virtue of their being retired members of banks staff.
(iv) For Non-Resident (External) deposits interest rate
including additional interest for being staff members,
should not exceed the ceiling stipulated by RBI.
(v) Bank Employees Federations in which employees
are not direct members are not eligible for addl interest.
Financial Literacy & Credit Counselling Centres
Additional Interest to Staff Accounts
RBI had issued a set of comprehensive guidelines (Dec 06,

2002) for operating the mechanised cheque processing
systems using Magnetic Ink Character Recognition (MICR)
technology. This technology has brought in its wake
quicker realisation of cheques, improved customer service
and more effective housekeeping at banks.
Standardisation of Cheque Forms: To facilitate MICR based
Cheque Processing, instruments passing through clearing
are required to be issued in standard format and defined
size of 8' x 3 2/3'. The instruments should be printed on
MICR grade quality paper with a read band of 5/8' in
width reserved at the bottom on which essential
particulars occur in special MICR ink in the E-13B Font.
Cheques are printed by approved security printers forming
part of a panel which is maintained by IBA.
MICR Code Line Structure: The code line occurring in the
Read Band is divided into 5 fields with distinct delimiters
separating each field, the details of which are as under:
i). Cheque serial number of 6 numeric digits preceded and
followed by a delimiter. The alpha-numeric prefix to the
serial number normally used by banks should be printed
outside the code line in close proximity, just above the
read band, in normal ink.
ii). Sort field or the city/bank/branch code
number consisting of 9 digits followed by a delimiter. The
first 3 digits represent the city, the next 3 indicate the
bank and the last 3 digits signify the branch. The 9 digit
sort code is unique for any bank branch in the country.
The bank code is a 3 digit code number allotted to the
bank on an all-India basis.
The branch code is the last 3 digits of the 9 digit sort
code and is unique to a branch in a city. Allotment of
branch codes is by the President of the Clearing House of
which the Bank is a member. Generally the service branch
of a bank is allotted the branch code of 001.
A sub-member is treated as if it were a branch of the
sponsoring bank. It would have the bank code number
allotted to the sponsor bank to be followed by the branch
code which would normally commence from 251.
A full list of 9 digit code number allotted to each bank/
branch along with the 3 letter alphabetical abbreviations
for the clearing stamp, could be obtained from the
President of the concerned Clearing House.
iii).Account number field consisting of 6 digits followed
by a delimiter is an optional field. In the case of
Government Cheques issued by RBI alone, the account
number is of 7 digits. The Government Account number is
10 digits in length-7 digits occurring in the Account number
field and 3 in the transaction code field.
iv). Transaction code field comprising of 2 digits is in all
instruments except Government cheques drawn on RBI
which have a 3 digit transaction code. Control documents
- batch and block tickets have a 3 digit representation in
the transaction code field.
v). The last field represents the amount field and consists
of 13 digits bounded on both sides by a delimiter. The
amount is encoded in paise without the decimal point.
MICR CHEQUE PROCESSING EQUIPMENTS
(i) MICR Document Encoder: The encoder is a table top
machine which can print the coded particulars of cheques
and other payment instruments in magnetic ink on the 5/
8' read band at specified position. The conventional
encoder has a keyboard and a programmable journal
printer (i.e. lister). It endorses on the reverse of the
instrument a fixed or variable stamp. The encoder has
the facility to proof the pay-in-slip amount or control
totals simultaneously by marking off successive amounts
of encoded cheques thus arriving at a zero balance when
all the cheques are encoded and bringing out
discrepancies, if any, in the totals or errors during
encoding. The figures are cumulated to enable encoding
of the control documents viz., Batch and Block tickets.
The encoders are also programmed to simultaneously affix/
print the Clearing Endorsement Stamp on the reverse of
the instrument, in the format prescribed. Encoders with
compatibility to PCs are available, as also are power
encoding machines and encoders with limited sorting
facilities. Encoding work could either be decentralised
at branches or centralised at the Service branch
depending on the logistic in the bank.
(ii) Reader Sorter: A Reader/Sorter is a device that reads
the MICR encoded documents and sorts (direct) them to
one of the many pockets as per the pre-determined sort
pattern/programme. Most reader/sorters can operate on
off-line mode as well as on-line with a host computer.
Documents are fed automatically from an input hopper,
which can handle documents of various sizes
simultaneously. The documents travel past an electronic
field which magnetises the characters and symbols in the
MICR read band and generates distinct wave patterns
intelligible to the machine. The physical sorting of cheques
on the machine is carried out under the control of a
computer program. This sort program, while directing the
documents to the designated pockets, simultaneously
captures and stores the information in the MICR code
line on the cheques. The information captured from the
documents is simultaneously stored on disk/tape, etc.
and used for further processing. In case certain
information is not read due to defective printing, encoding,
etc., the cheque is directed to a Reject pocket along
with the control documents. These are taken out and
the missing information is completed by manually keying
in the data.
(iii) Image Capture: Through image capture and image
processing the image of a payment instrument is captured
simultaneously when it is processed on reader/ sorters
by adding an image capture module and related software.
The images so captured are stored on magnetic media for
retrieval and processing. The images can be displayed on
a screen and copies can be printed. It is also possible to
transfer the image data to banks through magnetic media
or through the communication backbone. The availability
of image files enhances the processing quality and speeds
up reject recapture, balancing, etc. The stored images
could also be retrieved at a later date to facilitate quick
reconciliation of clearing differences.
Mechanised Cheque Processing System
1. Illegal internet transfers : The complainant alleged that 4 illegal transfer transactions
to 2 different accounts, were conducted from his SB account through internet banking in a
day, for total amount of Rs.102000. He also informed that on receiving SMS for the first
transaction, SMS for the 2nd transaction was received when he was lodging a complaint
with banks Call Centre. The remaining 2 transactions were made while he was still discussing
the matter with the Call Centre. He requested the Call Centre to block the ATM cards. The
bank blocked ATM card of one account with its Delhi branch, but failed to block the account
with Bangalore branch facilitating withdrawal by the fraudster. The complainant lodged an
FIR and got part refund leaving a balance of about Rs. 50,000. After a lot of persuasion,
he could get back another Rs. 26,000 with unsettled balance of Rs.24,802.
As the bank did not refund the balance, he approached BO. On referring the matter to
bank, it informed that the accounts to which the funds were unauthorisedly transferred
were frozen on receipt of call from the complainant. It maintained that the cyber fraud was
done by hacking the password of the complainant. To resolve the matter amicably, a
conciliation meeting was called. During the meeting, one of the account holders was caught
by Delhi Police and he paid Rs. 26,000 to the complainant. It was observed that KYC
documents for beneficiary account with banks Delhi branch were complete but with
Bangalore branch these were incomplete. The latter account holder was not traceable. The
internal investigation report of the bank admitted that it was a cyber-fraud. BO ordered the
bank to pay the remaining amount of Rs. 24,802 to the complainant.
2. Claim for card dues despite complete payment & deactivation of card: The
complainant had taken a loan of Rs. 30,000 in June 2008 repayable in 24 EMIs on his credit
card. There was some confusion in payments, which resulted in excess payment to the card
company. He paid the difference but the bank did not make required adjustments in his card
statement. He requested intervention of BO to resolve the matter. On taking up the matter
with the card company, it confirmed having reversed the amount of excess billing. The
company also confirmed that the card was inactive for usage and no dues were payable
thereon. Later on, in Nov 2010, the bank had again sent him EMI bill. The Card Company
told to ensure that its system reflected correct position of the card and confirm to BO and
wash out CIBIL reporting, if any, else the Card Company would be liable to pay compensation
of Rs. 5, 000. The complainant again received a fresh bill with extra charges in Feb 2011.
The complaint was re-registered due to harassment and misreporting to BO. The Card
Company was ordered to pay Rs. 5,000 as a compensation.
3. Dispute about interest rate differential: The complainant had alleged that he was
sanctioned Cash Credit limit for Rs. 40.00 lakhs @ 3.5% below SBAR with a minimum of
9.25% on March 31, 2007. Bank had started charging interest at higher rate from Jan 2009
which was revised upwards without notice to him. On taking up the matter with the bank,
it informed that the complainant was enjoying cash credit limit under Indirect finance to
Agriculture. It further advised that bank had decided to dispense with interest rate differential
between direct and indirect agriculture borrowers w.e.f. Jan 01, 2009. Accordingly, the
revised rate applicable to Direct agricultural finance, which was 2.5% above SBAR, was
applied. The revised rate had been displayed on the notice board of the branch. However,
the branch failed to apply revised rate of interest and the borrower had been charged
lower rate of interest. On realizing the mistake, the bank had made recovery of interest
with retrospective effect according to the revised rate of interest.
A perusal of the records revealed that he was sanctioned loan at 3.5% below SBAR and the
sanction letter provided for renewal of the limit at every 6 month or on expiry of 12 months
from the date of sanction. Further, there was no provision to change the linkage to SBAR
although changes in SBAR were at the discretion of the bank. Bank could not provide any
evidence about the fact that revised rate of interest as applicable to direct agriculture
borrowers will also apply to indirect borrowers w.e.f. Jan 01, 2009, which was intimated to
the borrower. The BO observed that the clause in the sanction letter and terms & conditions
as to revision in rate of interest linked to SBAR, did not empower bank to effect any
changes in interest rate. In the absence of any notice given to the complainant or renewal
of the loan limits, the old terms & conditions shall prevail till the date of next renewal.
BO ordered that the date of application of new rate of interest based on renewal shall be
treated as effective date of notice and the excess interest charged as a result of the
above, should be credited back to complainants account. In compliance with the directions
issued by BO, the bank refunded a sum of Rs. 95,208 to the complainant.
Banking Problems based on Ombudsman Decisions
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RBI has been entrusted with the responsibility of

supervising the Indian banking system under Banking
Regulation Act, 1949 and RBI Act, 1934. This responsibility
is discharged by RBI through the Department of Banking
Supervision (DBS) through its 16 Regional Offices.
Set up: The Board for Financial Supervision (BFS) came
into existence under RBIs (BFS) Regulations 1994 u/s 58
of RBI Act, wef Nov. 16, 1994. It is the apex body responsible
for Consolidated Supervision of the financial sector under
the jurisdiction of RBI (commercial banks, financial
institutions and non-banking finance companies). The
Governor, RBI is the Chairman, the Deputy Governor in
charge of banking regulation and supervision, is the Vice-
Chairman, other deputy governors are ex-officio members
and 4 directors from the Central Board of the RBI are co-
opted as members. W.e.f. 1.4.2011, it has been reorganized
as Financial Conglomerate Monitoring Division of RBI.
Its functions include empanelment and selection of
Statutory Auditors for banks and exercise integrated
supervision over commercial banks, FIs and NBFCs and
other para-banking financial institutions.
Types of supervision : The supervision is the on-site
supervision (through inspection of banks undertaken by
RBI under section 35 of B.R. Act.) and off-site supervision
(through DSB returns introduced wef April 01, 1996).
The majority of the offsite supervision work is undertaken
from central office of DBS. The regional offices of the
DBS assist the Central Office by undertaking AFI of banks
under their respective jurisdictions.
Evolution of Supervision: Since 1988 Basel-I Accord, RBI
has been taking steps to realign its supervisory and
regulatory standards with international best practices in
a phased manner taking into consideration the economic
conditions. Few expert groups have conducted reviews
of the supervisory processes which include:
1. Working Group to Review the System of On-site
Supervision over Banks (Chairman: S. Padmanabhan, 1995):
It recommended a strategy of periodical full-scope on-
site supplemented by an in-house off-site monitoring
system in between two statutory examinations. The
Working Group recommended CAMELS based rating model
for Indian banks and a CALCS model for foreign banks.
2. Working Group on Consolidated Accounting and Other
Quantitative Methods to Facilitate Consolidated
Supervision (Chairman: Vipin Malik, 2001): It recommended
a framework for Consolidated Supervision.
3. Working Group on Monitoring of Systemically Important
Financial Conglomerates (Convener: Smt. Shyamala
Gopinath, 2004): It recommended establishment of a
monitoring system for Financial Conglomerates (FCs).
Offsite Supervision : The off-site monitoring system for
surveillance over banks was operationalized in RBI in March
1996 in the form of Offsite Surveillance and Monitoring
System (OSMOS) which consists of a set of structured
returns that capture prudential and statistical information
of banks at periodical intervals. The information enable
RBI to undertake prudential analysis of banks Capital,
Assets, Earnings, Liquidity, etc.
List of Important DSB returns:
DSB return no. I - Report on assets, liabilities and exposures
(Indian offices)
DSB Return no. II-report on capital adequacy
DSB return no. III- report on quarterly operating results
DSB return no. IV- report on asset quality
DSB return no. V - report on large credits
DSB return no. VI-report on connected lending
DSB return no. VII -report on ownership and control
DSB return no. VIII-statement of structural liquidity
DSB return no. IX-statement of interest rate sensitivity-rupee
DSB return no. X- report on maturity and position (forex)
DSB return no. XI-statement of interest rate sensitivity (forex)
Banking Supervision
Hedging Facilities for Qualified Foreign Investors
(QFIs)
As per extant guidelines, QFIs are allowed to invest in rupee
denominated units of domestic Mutual Funds and listed equity
shares and allowing SEBI registered FIIs to invest in to be listed
debt securities. As per circular dated Jul 16, 2012, QFIs have
been permitted to purchase on repatriation basis debt securities.
QFIs are permitted to hedge their currency risk on account of their
permissible investments (in equity and debt instruments). RBI has
decided (Aug 31, 2012) to allow QFIs to hedge their currency risk
on account of their permissible investments (in equity and debt
instruments), as per the details below:
Purpose
i.To hedge the currency risk on the market value of entire invest-
ment in equity and/or debt in India as on a particular date.
ii.To hedge Initial Public Offers related transient capital flows un-
der the Application Supported by Blocked Amount mechanism.
Products : Forward foreign exchange contracts with rupee as
one of the currencies and foreign currency-INR options. Foreign
Currency INR swaps for IPO related flows.
Operational Guidelines, Terms and Conditions
a.QFIs are allowed to hedge the currency risk on account of their
permissible investments with the AD Category-I bank with whom
they are maintaining the Rupee Account opened for the purpose
of investment.
b.The eligibility for cover may be determined on the basis of the
declaration of the QFI with periodic review undertaken by the AD
Category I bank based on the investment value as provided /
certified by QDP of the QFI at least at quarterly intervals, on the
basis of market price movements, fresh inflows, amounts repatri-
ated and other relevant parameters to ensure that the forward
cover outstanding is supported by underlying exposures.
c.If a hedge becomes naked in part or in full owing to contraction
of the market value of the portfolio, for reasons other than sale of
securities, the hedge may be allowed to continue till the original
maturity, if so desired.
d.The contracts, once cancelled cannot be rebooked. The for-
ward contracts may be rolled over on or before maturity.
e.The cost of hedge should be met out of repatriable funds and /
or inward remittance through normal banking channel.
f.All outward remittances incidental to the hedge are net of appli-
cable taxes.
g.For IPO related transient capital flows
i.QFIs can undertake foreign currency- rupee swaps only for hedg-
ing the flows relating to the IPO under the ASBA mechanism.
ii.The amount of the swap should not exceed the amount pro-
posed to be invested in the IPO.
iii.The tenor of the swap should not exceed 30 days.
iv.The contracts, once cancelled, cannot be rebooked. Rollovers
under this scheme will also not be permitted.
Banking events updatE October 2012 9 Financial Events
FDI FOR FOREIGN-OWNED BANKS: The consolidated Foreign Direct
Investment Policy has been amended for downstream investments by a foreign-
owned and controlled banking company to the effect that their investments in
corporate debt restructurings or for the acquisition of shares due to loan
default will not count as indirect foreign investment. The investments of these
banking companies in subsidiaries, joint ventures and associates would continue
to count as indirect foreign investment.
RIDERS FOR BANK FUNDING OF ROAD PROJECTS: The Finance Ministry
has asked the public sector banks to disburse loans only after NHAI (National
Highways Authority of India) or State Governments have acquired 100% Right-
of-way for the road projects. The Finance Ministry has also suggested that
that promoters be asked to bring upfront, at least 50% of their contribution to
the Special Purpose Vehicles (SPVs).
BANKS TO GET MORE TIME TO MEET PRIORITY SECTOR TARGET: RBI
may relax some of the priority sector target for bankers on a case-to-case
basis but has asked the banks to ensure that the funds are reaching the
beneficiaries. As per revised guidelines by RBI, indirect lending to housing
finance companies and most NBFCs, no longer qualifies for priority sector
lending. Foreign banks in India and having more than 20 branches are to be
treated at par with domestic banks and they must lend 40% of their net credit
to the priority sector. Only 4 foreign banks have more than 20 branches which
have been given 5 years starting April 2013, to meet the new norms.
AUTHORITY FOR ADVANCE RULINGS ON FOREIGN COMPANIES: The
Authority for Advance Rulings (AAR) has held that provisions pertaining to
transfer pricing and filing of income return in India are applicable to the foreign
company even if the income is not taxable in India under a favourable tax
treaty. The AAR further held that Minimum Alternate tax provisions also apply
irrespective of whether or not the foreign company has a permanent establish-
ment in India.
AUTHORITY FOR ADVANCE RULINGS ON INTER-CORPORATE GIFTS:
The Authority for Advance Rulings, in its recent rulings, held that inter-corpo-
rate gifts would not be covered under the term Gift contemplated under
Section 47(iii) of the IT Act.
AUTHORITY FOR ADVANCE RULINGS VERSION ON CAPITAL GAINS
TAX: The Authority for Advance Rulings has ruled that vesting of shares of an
Indian Company on account of an overseas upstream merger was not liable to
capital gains tax in India. The ruling has come in the case of Credit Suisse
(International) Holding AG (The Applicant) , a company incorporated in Swit-
zerland. In this case, there would be no capital Gains Tax arising on Credit
Suisse (international) Holding AG in India as a result of its overseas merger into
its parent, another Swiss incorporated company.
SUPREME COURT RULING ON FORECLOSURE: The Supreme Court has
ruled that when a person encashes the demand draft, being the refund of
earnest money cum advance towards the price of property, under the protest
with the express words Without prejudice to his rights , he is not debarred
form pursuing his remedies against the seller for non-performance.
AAR RULING ON TREATY BENEFITS TO PARTNERSHIP FIRMS: Accord-
ing to an order given by the Authority for Advance Rulings (AAR), the quasi
judicial body for deciding tax disputes involving foreign companies, Partner-
ship Firms are not eligible to Treaty Benefits. Though the ruling was in relation
to India-Switzerland tax treaty , the principle can be applied to cases involving
tax treaties with other countries as well.
IT APPELLATE TRIBUNAL VERSION ON TAX
PENALTY: According to Delhi bench of the In-
come Tax Appellate Tribunal, penalty ranging from
100% to 300% of tax avoided should not be im-
posed mechanically each time the assessing
officers addition to ones taxable income.
GOVT. ACCEPTS PERFORMANCE BASED INI-
TIATIVE TO EMPLOYEES: The Government has
accepted, in principle, the recommendations of
the 6th pay commission for introduction of a Per-
formance Related Incentive Scheme (PRIS) in the
form of pecuniary benefit over and above regular
salary, based on the targeted performance and
performance parameters, out of the Non-plan
Budgetary savings for the Central Government
employees.
RULES FOR ADVANCE PRICING AGREEMENTS
NOTIFIED: The Government has announced the
operational guidelines for Indian Advance Pricing
Agreements (APA). Indian APA programme allows
for bilateral and multilateral arrangements. Uni-
lateral APAs will be decided by the office of the
Director General of International tax. An APA is
an agreement between a taxpayer and the tax
authority concerning the transfer pricing method
and the rate applicable to the tax payer's inter-
company transactions and normally covers mul-
tiple years.
SHOME PANEL RECOMMENDATIONS ON
GAAR: The Shore Committee on GAAR has pro-
posed a threshold of Rs.3 Crore of tax benefit to
a tax payer in a year for applicability of GAAR
provisions. The Committee has also recommended
the concept of Negative List. Further the Nega-
tive List may include payment of dividend or
buyback of shares by a company. Also amalgam-
ations and de-mergers as approved by the High
Court should form part of the Negative List.
SUPREME COURT RULING ON WINDING UP
PETITION: The Supreme Court has held that wind-
ing up petition against a company would not be
maintainable in a tenancy dispute in the absence
of any specific finding in the rate of rent and the
period of default committed by the tenant com-
pany.
NO ACCOUNTING RELIEF SHORT TERM
FOREX LOANS: The Centre has turned down in-
Financial Financial Financial Financial Financial
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dustry request to extend an accounting relief granted to long term debt to
short term debt as well. Corporate India would have to take their forex
losses, if any, on short term foreign currency loans to the profit and loss
account every quarter/year. The Centre has taken this decision as per the
recommendations of the National Advisory Committee on Accounting Stan-
dards (NACAS). NACAS had, in July, decided not to extend any accounting
relief to India Inc on short term foreign currency loans, despite the signifi-
cant rupee downslide.
BCG REPORT ON FRESH RECRUITMENTS IN PS BANKS: Management
Consulting Firm BCG has observed in its report that contrary to popular
perception, public sector banks are not losing their fresh hires in large num-
bers. PSBs may not be facing attrition today because relative compensation
at junior levels is good. However the Firm cautioned that as the new hires
reach middle management levels, the threat of losing the best people will be
very high due to compensation mismatches.
ICICI BANK TO ADD FACEBOOK AS TRANSACTION PLATFORM: The
countrys largest Private Sector Bank was the First Bank in India to use the
social media site to provide services such as account enquiry and request for
cheques. Now it is preparing for another initiative by offering transaction
services, such as deposit, or transfer of money to its Facebook Customers.
This is part of its efforts to provide next-gen banking solutions, in line with its
Khayaal Apka (Your Care) philosophy.
PNB DEAL WITH METLIFE INDIA GETS IRDA APPROVAL: IRDA has
approved the deal of Punjab National Bank with MetLife India under which
the Bank will acquire a 30% stake in the MetLife India Insurance directly for
the existing shareholders including MetLife International. The Bank had an-
nounced the plan to pick 30% stake for an undisclosed amount. The
Regulators nod has, however, come with certain conditions such as the
appointment of directors on the Board of MetLife by PNB, reduction in equity
stake by some of the existing shareholders and maintaining solvency margin
as per IRDA directions.
RBI SUGGESTS GOVT. TO DILUTE STAKE IN PSBs MEET BASEL-III
NORMS: RBI suggested that the government should consider bringing its
stake down to 51% to the 21 state-run banks to help them meet Basel-III
requirements. The Government holds more than 60% stake in some public
sector banks such as SBI, CBI and Indian Bank. If the Govt. opts to maintain
its shareholding pattern at the current level, the burden of recapitalization
will of the order of Rs.90, 000 Crore but if it decides to reduce shareholding
in every bank to a minimum of 51%, the burden reduces to under Rs.70, 000
Crore. As per RBI estimate the banking sector will need an additional Rs.5Lakh
Crore to meet the Basel-III norms by March 31,2018.
GOVERNMENT RAISES BORROWING LIMIT AGAINST FCNR FOR NRIs:
Non-resident Indians will be able to borrow more against their foreign cur-
rency deposits in the country so as to encourage them to park their more
funds in India helping the country build Exchange Reserves. New limit is to be
decided in consultation with RBI by the Government. At present, NRIs can
take a maximum loan of Rs.1 Core against their Foreign Currency Non-
Resident or FCNR (B) deposits, popular non-taxable deposits that have seen
a net outflow in the recent months.
E-PAYMENT MADE MANDATORY FOR CUSTOMS DUTY: E-payment fa-
cility at customs locations was introduced in 2007 and is available through
more than one authorized bank at all major customs locations having ICES
facility. So far, using this had been on a voluntary basis. Now any importer
paying customs duty of Rs.1 Lakh or more will have to use electronic pay-
ment method compulsorily from September 17. Such a move aims to reduce
the transaction cost. As per instructions issued by the CBEC, E-Payment will
be mandatory for importers registered under Accredited Clients Programme
also.
CBDT PANEL RECOMMENDS TAX ACCOUNTING STANDARDS: The Cen-
tral Board of Direct Taxes (CBDT) had in December 2010 set up the commit-
tee to study the harmonization of accounting standards issued by the CA
institute with the direct tax laws in India. Now the CBDT appointed Commit-
tee has recommended as many as 14 tax accounting
standards. These standards also known as TAS, if
and when adopted , will have a significant impact on
computation of income chargeable to tax.
GOVT. NOTIFICATION ON IMPORT DUTY RE-
LIEF FOR POWER PROJECTS: The Finance Minis-
try has notified a new duty structure that prescribes
an effective duty of over 22%, including education
cess. However the new duty will not be imposed on
ultra mega power projects, mega power projects and
expansion of existing mega projects which had re-
ceived certificate of approval from the power minis-
try till July 19, 2012, the date on which the cabinet
took the decision. 7 Ultra Mega Power Projects and
106 mega power projects will not have to pay higher
duty for importing equipment.
PANEL DECISION ON RELIEF FOR RURAL JOB
SCHEME AND CROP LOANS: To offer some relief to
farmers in draught-affected states, a ministerial panel
has decided to increase the number of guaranteed
work days under MGNREGA to 150 days from exist-
ing 100 days of work every year to each household
in rural areas. It has also been decided to cut inter-
est rates on crop loans to 7% for one year. These
decisions have been approved by the EGoM on
Draught-affected states by the Agriculture Minister
Sharad Pawar.
GOVERNMENT PUSH FOR BASEL-III DEFERRAL:
India will push for deferral of the stringent banking
capital requirements under Basel-III norms if both
the US and Europe fails to arrive at a consensus on
the issue. The Government stands to save about
Rs.90, 000 Core over the next 5 years if the norms
are deferred. According to RBIs estimates, the Gov-
ernment will have to allocate this amount in state-
run banks over the next 5 years to meet the Basel-
III standards i f i t wants to retai n i ts 58%
shareholding.
GERMAN COURT PAVES WAY FOR EUROPEAN
STABILITY FUND: Germanys Federal Constitutional
Court has cleared the way for the creation of the
European Stability mechanism; the Regions much
delayed 500 billion bailout fund, as well as the fiscal
compact imposing greater budgetary discipline across
the region. The ruling was not without caveats.
Germanys liability has been capped at 190 billion.
Any further increase will have to be approved by the
Parliament, which must be kept abreast of all devel-
opments within the fund.
RBI FOR A BANK SUPERVISION OVERHAUL: At
present, RBI uses the CAMELS (Capital adequacy,
Asset Quality, Management, Earnings, Liquidity and
Systems and Control) method, to assign ratings to
Indian Banks. Now it would be evaluated under a
dynamic risk based mechanism, an aspect the present
CAMELS rating system lacked. RBI proposes to re-
place CALELS with INROADS (Indian Risk-Oriented
and Dynamic rating System) from the next round of
annual financial inspection in 2013.
IRAN MECHANISM FOR USE OF RUPEE PAY-
MENTS: Iran wants to use the rupee payments it
receives for exporting to oil to India to buy govern-
ment securities as well as for financing its imports for the third countries. After
RBI scrapped a long-standing mechanism of setting payments through the Asian
Clearing House mechanism, India pays 55% of the value of oil it imports from
Iran in Euro payments through Turkeys Turkiye Halk Bankasia. The balance 455
of crude payments are made in rupees through UCO Bank.
APPROPIRATE METHOD FOR SETTING UP LIBOR: In the wake of the LIBOR
scandal, a global poll of CFA Institute members has suggested that rates set on
actual inter-bank transactions is the most appropriate methodology for setting
LIBOR. It is currently based on estimated rates only. The administration of
LIBOR should stay with the banking industry, but should be subject to formal
regulatory oversight. The regulators should also be endowed with powers to
pursue criminal sanctions over LIBOR manipulation.
INTER-BANK MOBILE PAYMENT SERVICE: IMPS (Inter-bank mobile pay-
ment service) offers an instant 24x7, inter-bank electronic fund transfer service
through mobile phones. There are two types of IMPS services. A person-to-
person (P2P) service and a person-to merchant (P2M) service. While the P2P
service was launched some 18 months ago, P2M service was made available
only recently.
SIDBI LAUNCHES WEBSITE FOR ENTERPRENUERS: The Small Industries
Development Bank of India (SIDBI) has launched a website SmallB.in for
young entrepreneurs in the country, which aims to be a single source of informa-
tion for those aspiring to set up a venture. The mix of resources and information
on the site can help can provide simplified process of establishing a business in
India. The website also explains prevailing laws and regulations, policies and
technical standards applicable for various sectors.
GOVERNMENT TOOK BOLD DECISIONS TO REFORM PUSH: The govern-
ment took a slew of bold decisions, including the politically contentions one of
the allowing majority FDI in multi-brand retail. Apart from throwing India open to
foreign-owned and operated super markets, the government also allowed for-
eign airlines to pick up equity in domestic airlines. Now, foreign investors can buy
into Indias nascent power trading exchanges, as well as cable and satellite
distributors of broadcast televisions. To narrow the widening fiscal deficit and
stave off a possible rating downgrade, the Government also followed up diesel
price hike and LPG subsidy cuts with an equity sell off plan in four major public
sector units.
US FEDERAL RESERVE TO RESCUE US ECONOMY: The US Federal Reserve
launched another aggressive stimulus programme, saying it will buy $40 billion of
mortgage-backed debt every month until the outlook for jobs improves substan-
tially as long as inflation remains contained. If the outlook for Labour market
does not improve substantially, the committee will continue its purchase of
agency mortgage-backed securities, undertake additional asset purchases and
employ its other policy tools as appropriate, until such improvement is achieved
in a context of price stability.
OBC FIRST BANK TO LAUCNH 2 RUPAY CARD VARIANTS: Oriental Bank of
Commerce (OBC) became the First Bank to offerRuPay Kissan Card and Aadhar
Authentication. The Aadhar number (unique identification number of the farmer)
is stamped on the card and on the magnetic strip behind it, making its use easier
on micro-ATMs. This is expected to provide a further thrust to the financial
inclusion initiatives of the bank. RuPay Kissan card will be issued by OBC to a
select group of customers who now avail of the Kissan credit card facility from
the bank. OBC became the 25
th
Bank to use RuPay, a domestic card network set
up by the National Payment Corporation of India. The NPCIs debit card platform
was lunched in March last year.
SUPREME COURT RULING ON STOP PAY-
MENT: The Supreme Court has ruled that those
who had accepted the offer of commercial plots
in public auction with a super-imposed condition,
that is, on As is where is , can not stop payment
on the basis that infrastructure for the land had
not been provided.
RBI TO BANKS FOR NOT PASSING BENEFITS
OF RATE CUTS: RBI Deputy Governor,
K.C.Chakraborty said that banks are not passing
on the benefit of cut in policy rates to the bor-
rowers. Reduction in policy rates will not serve
any purpose unless the banks bring down their
spreads and pass on the benefits to borrowers.
If the spread does not come down people will not
get the benefit. Unless within the institution there
is reform, it will not be able to derive the benefit
of policy reform.
DRAFT IPO NORMS FOR GENERAL INSUR-
ERS ISSUED: Insurance Regulator IRDA has
come out with draft regulations for general insur-
ance companies to raise capital through public
issue of shares. Once firmed up, the norms could
pay the way for the Central Government to shed
stake in state-owned general insurers. The draft
regulations provide promoters of general insur-
ance compani es to di vest thei r excess
shareholding in such companies through public
offer for sale.
NEW NORMS FOR CONVERTING CO-OP SO-
CIETY INTO PRODUCER COMPANY: The Min-
istry of Corporate Affairs has decided to impose
conditions for conversion of ordinary society into
Producer Company. As per Circular, if a co-op-
erative society is seeking conversion into a pro-
ducer company, the Registrar of Companies (ROC)
will seek a written consent from the local co-op-
erative department of the state concerned, cer-
tifying the society seeking to convert itself into a
producer company under the compani es
Act,1956.
BANK OF JAPAN LAUNCHES STIMULUS: Bank
of Japan unexpectedly expended its asset pur-
chase fund by 10 trillion Yen ($126 billion), seek-
ing to counter an increasing danger of contrac-
tion in the worlds third largest economy. The bank
removed the minimum bidding yields for purchase
of government and corporate bonds after the
Bank of Japan failed to secure targeted amounts
at some of its buying operations. It pushed back
Pri nci pl es of
Banking 5th Edn
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Accounti ng &
Finance 6th Edn
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General Mgmt
4th Edn Rs150
Fi nanci al Mgmt
4th Edn Rs.125
Risk Management
4th Edn Rs.150
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Banking 6th Edn
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12 Banking events updatE October 2012
the completion of purchases under the asset programme to
December 2013 from June 2013.
FINMIN TO RBI ON PRIVATE SECTOR BANKS: The fi-
nance Ministry has told the RBI that for the next three
years no private sector bank will get the Agency business of
the Centre and states, pegged at about Rs.20,000 Crore.
The business could rise exponentially as the Government
shift to direct transfer of social benefits. The Ministry has
also threatened to gradually stop the Government business
handled by HDFC bank, ICICI Bank and Axis bank if they fail
to meet the specified conditions.
GOVT. GIVING INTEREST FREE LOANS TO ENTREPRE-
NEURS: The Union government was giving interest free
loans to Entrepreneurs setting up Emu Farms, which have
now turned into a multi-Crore scam in Tamil Nadu. These
loans were granted under the Central governments Poultry
Venture Capital Fund and were routed through the NABARD
and commercial banks. NABARD was just acting as an inter-
mediating agency to pass on the subsidy. The loans were
given not only by public sector banks but by all commercial
banks. NABARD was only giving refinance to them and pass-
ing on the subsidy.
ECGC NOT TO COVER ANY LOSS FOR EXPORT SHIP-
MENTS TO IRAN: ECGC has stipulated that it would not
cover any loss incurred by an exporter in situations when
there is not sufficient rupee balance in the Vostro account
(in UCO Bank) or for some reason the exporter does not
receive payment. A Vostro account is the local currency
account maintained by a local bank for a foreign (correspon-
dent) bank. For the foreign bank it is a Nostro account.
RBI ANALYSIS ON DEBT RESTRUCTRING: According the
Anand Sinha, RBI Dy. Governor, citing the rise in debt re-
structuring, an analysis of cases by RBI has found that
banks financed highly leveraged corporates, some of which
have open positions in the forex market in spite of cautions
from the RBI that there has been diversion for purpose of
loans. There are so many controllable factors which can
change a situation considerably, can soften the blow. Sinha
said that debt restructuring is a very legitimate way of deal-
ings with stress, but advised banks to be prudent and do it
only when needed.
FINMIN STRICT GUIDELINES ON EDUCATION LOANS
TO BANKS: The Finance Ministry has asked public sector
banks to put in place a three-tier grievance Redressal mecha-
nism to sort out problems being faced by students in obtain-
ing education loans. Banks have also been asked to make
education loan applicants aware of the mechanism (at the
branch level, Zonal office and Head Office levels) at the
time of loan application. Besides the Ministry wants banks to
introduce a system of review by the next higher authority
where application for education loan is rejected.
NEW ADB FACILITY TO PROVIDE CO-GUARANTEE FOR
INFRA-BONDS: The Asian Development Bank (ADB) has
launched a $128 million facility to provide partial credit guar-
antee on rupee-denominated bonds issued by Indian com-
panies to fund infrastructure projects. Providing partial guar-
antee will boost the credit rating of an infrastructure project
from BBB-or A to AA. It would lower the cost of borrowing
for the special purpose vehicle.
TAX BOARD FIXES COST INFLATION INDEX FOR THIS
FISCAL: The Central Board of Direct Taxes (CBDT) has speci-
fied a new value for the cost inflation index for 2012-13.
The index last year was 785 and this year it is 852. This would
mean that there has been an 8.5% rise in the cost inflation index
for 2012-13. The index is useful for income tax assesses in the
computation of tax on long term capital gains (for indexation pur-
poses). In the last two years, the cost inflation index rose by 10%
and 12.5% respectively.
RBI ON CASH RETRACTION FACILITY: The customer is not to
worry about cash withdrawal through ATM about the bank notes
getting sucked back by the machine if not collected immediately, as
the RBI has asked all banks to immobilize the cash retraction facil-
ity. At the same time, customers will have to be extra careful in
collecting the cash dispensed by the ATM, as they can not claim the
money from the bank, which was the case when this cash retrac-
tion facility was in place at ATMs.
GOVERNMENT APPROVED BAILOUT PACKAGE OF DISCOMS:
The Cabinet Committee of Economic Affairs (CCEA) approved the
package called Financial Restructuring of Discoms, of nearly Rs.2
Lakh Crore. The accumulated losses of State Power Distribution
Companies (DISCOMS) are estimated at Rs.1.9 Lakh Crore as on
March 31, 2012. Under the scheme, half of the outstanding short
term liabilities are to be taken over by the State Government. These
will be converted into bonds which will be issued to the participating
lenders. The bonds will have state government guarantee but not
get SLR status. The balance of 50% of short term loans will be
restructured.
NSE OPENS NEW MEMBERSHIP CATEGORY FOR ENTREPRE-
NEURS: The National Stock Exchange (NSE) launched a new cat-
egory of membership called ALPHA. This category of membership
is for firms that do not handle customer funds. It will be effective
from September 25, 2012. Targeted at the entrepreneurial class,
the NSE feels this category of membership can bring in innovative
trading ideas and strategies that could add to the liquidity of the
trading platform.
FINMIN FOR ZERO FEE FOR ETF: To promote cashless transac-
tions, the Finance Ministry has asked public sector banks to take
steps to reduce the fee to zero for electronic transfer of funds up to
Rs.1 Lakh. Currently, most banks charge a maximum fee of Rs.5 per
transfer of funds up to Rs.1 Lakh form one account to another
through NEFT system. Transfer of funds up to Rs.10,000 through
NEFT system attract a maximum charge of Rs.2.50 per transaction.
CBDT MOVES ON TAX RESIDENCY CERTIFICATES: The Finance
Ministry has prescribed the particulars that need to be provided in
Tax Residency Certificates (TRC) for a foreign company to avail
itself of tax treaty benefits. Submission of TRC by a foreign com-
pany to Indian Income Tax Authorities is now Mandatory but not
a sufficient condition for availing tax treaty benefits. The TRC re-
quirement is aimed at addressing the problem of treaty abuse.
REJIG BY RBI FOR URBAN COOPEARTIVE BANKS: RBI will con-
sider financial restructuring proposals of stressed Urban Coopera-
tive Banks (UCBs) involving conversion off deposits into equity or
debt instruments. This move comes as financial stronger banks are
unwilling to acquire weak UCBs where the deposit erosion is large.
In such situations, restructuring of liabilities (Deposits) of the weak
UCBs may be a variable proposition.
IPOs costly affairs for SMEs: Smaller companies have to pay
heavily to raise money from the capital markets due to stricter
regulatory requirements and heavy expenses for marketing the
issue. Some of the small and medium enterprises that have raised
capital by way of initial Public Offerings have shown Issue-related
expenses of as much as 13.5% of the total issue size, shows
information available in the final offer documents filed with the
Registrar of Companies.
GENERAL AWARENESS
A gigantic Persian carpet woven in the
Irani an Ci ty of Ni shapur has been
recognized by Guinness World Records
as the Worlds largest handmade Rug.
A planning Commission appointed commit-
tee has recommended creation of Rs.5, 000
Crore Sovereign Fund of Funds to
aid early stage venture funds. The com-
mittee also suggested creating new sources
of capital for domestic venture capital.
RBI will shortly issue Rs.1000 denomina-
tion bank notes incorporating rupee sym-
bol with inset letter L in both the number-
ing panels, in the Mahatma Gandhi Series -
2005 with improved security features.
According to the Ruling of the Delhi
High Court, Deposits are not the same
as loans but are, rather, in the nature of a
trust enjoined upon the company accept-
ing the funds to return them on time even
if the firm has gone sick.
Union Bank of India bagged 4 Awards
at IBA Banking Technology Awards Func-
tion in Mumbai, including Best Financial In-
clusion Initiative, Best Technology Bank of
the Year, Best Use of Mobile Technology in
Banking and Best Use of Business Intelli-
gence.
The Government is planning to come out
with a Business Development Index
based on economic parameters to reflect
the strength of the corporate sector. This
Index will be based on robust economic pa-
rameters that will reflect the true strength
of corporate sector.
The Indian Equity market is rapidly mov-
ing towards paperless trading. 98% shares
of companies in the NIFTY Basket and 96%
of CNX500 companies shares are now de-
materialized. But the proportion is lower,
at around 80% for the entire universe of
listed companies.
SEBI is planning to offer its investor
website in 13 Indian languages, besides
the existing one English, to spread aware-
ness among investors and to help resolve
their grievances.
The Union Government has approved nine
textile parks worth Rs.1500 Core in
Rajasthan and an additional grant of
Rs.400 Core to promote this industry in
the state.
The Finance Minister appointed Vijaya kelkar
Panel has submitted its report on fiscal con-
solidation. The committee is believed to
have suggested ways for increasing non-
tax revenue and cutting non-plan expen-
diture.
SIDBI has signed a 53 million loan
agreement with Germany KFW. Under
the agreement, SIDBI will channalise
the funds sourced fro KFW for provid-
ing innovation finance loans to Micro,
Small and medium enterprises.
Mario Draghi, President of the Eu-
ropean Central Bank (ECB) unveils
unlimited bond buying plan to ease the
Euro Zone crises.
The Worl d Bank has appoi nted
Kaushik Basu as its Chief Economist
and Senior Vice-President. Basu was
Chief Economic Advisor in Indias For-
eign Ministry.
Planning Commission was propos-
ing to lower annual average growth
target for the 12
th
Five Year Plan (2012-
2017) to 8.2% from its earlier projec-
tion of 9% in view of uncertain of glo-
bal environment and sluggish perfor-
mance of the manufacturing sector at
home.
According to the US Business Maga-
zine Forbes, Five Indian companies-
Larsen and Toubro, Hindustan Unilever,
Infosys, Tat Consultancy and Sun
Pharma have made it to the List of 100
Most Innovative Firms in the World.
India and Pakistan signed a liberalized
visa agreement, introducing for the
first time group tourist and pilgrim vi-
sas, separate visa for businessmen and
visa on arrival for those over 65 years
of age.
The planning commission is ex-
pected to peg the total plan outlay for
the 12
th
five year plan (2012-13 to
2016-17) at around Rs.3, 568, 626
Crore for both the centre and the
states at 2006-07 prices. At the out-
set, the funds would be almost
125%more than the actual money al-
located in the 11
th
plan.
Accordi ng to the ruling of the
Mumbai High Court, Even where
the assessee follows the mercantile
system of accounting , it is not obliged
to pay tax on the interest that has
accrued but has not fallen due before
the end of the relevant financial year.
UK Universities have taken the four
of the six top slots in a Global Universi-
ties League Table for 2011-12.With
USs Massachusetts Institute of Tech-
nology leading the list, UKs Cambridge
, which was Top last year ,stood now
Second.
OUR USEFUL BOOKS
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Rationals and Situation
Analysis (2012) N S Toor &
Arundeep Toor
Model Test Papers for Bank
Promotion (2012) N S Toor
Analysis of Balance Sheet
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How to Face Bank Inter-
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Model Papers in Hindi N S
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Banking Rationals and Prob-
lems (Hindi) N S Toor
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DIARY OF EVENTS
Compilation : SP Sharma & Sapandeep Toor Source : Financial Newspapers, Financial News-Magazines & Financial and Institutional Web-sites
India announced a $50 million contribu-

tion to Palestine and pledged its support
to Palestines bid for full and equal member-
ship of the United Nations.
HDFC Bank, the Second Largest private
sector lender in the country, said it opened
its 10000
th
Automated teller machine
(ATM) in the country. The lender is now the
third bank (After SBI and ICICI Bank) and
second private sector bank in the country to
have a network of 10000 ATMs.
A great Dane who towers 2.2m (7 feet
and 4 inches) on his hind legs is named the
Tallest dog ever recorded in the latest
Guinness Book of Records.The giant canine
from Michigan in the US eats an entire 14kg
bag of food every day and weighs in at
70.3kg.
The Cabinet Committee on economic Affairs
(CCEA) has approved offloading
Governments stake in four public
sector undertakings aimed at raising at
least rs.10, 000 Crore. The approved com-
panies include Hindustan Copper, National
Aluminum (NALCO), Oil India and MMTC.
National Housing Bank (NHB) in asso-
ciation with TERI launched an IT toolkit to
predict the energy performance of real es-
tate projects in the country. It is focused on
bringing energy efficiency in the untapped
huge residential sector.
According to a report released by the Swiss
Bank UBS, Tokyo is the Worlds Most
Expensive City for food. The two cheap-
est cities in the World are Mumbai and Delhi,
where the same baskets of foods cost $186
and $208 respectively. The average global
cost of the food basket is $424.
The international Monetary Fund
(IMF) has cut its 2012 growth estimate for
the Indian Economy by 0.7 percentage
points to 6.1%, the sharpest revision for
any of the countries included in the report.
This translates into 10.3% reduction in the
growth estimate.
Indian companies in the business of auto
components and engineering products will
have a First of its kind Special economic
Zone (SEZ) in Sri Lanka.
India announced a $40 million Line of
Credit to mineral-rich Burundi over the
existing $80 million and signed a slew of MOUs
in areas of rural development, education and
health and medicine with the Eastern Afri-
can Nation.
City Bank had opened its First Smart
Banking Branch in the country in the busy
commercial district Noida. The branch offers
a full range of banking services covering gen-
eral banking, wealth management, loans and
credit cards.
The Finance Ministry has initiated the
process of setting up a Central Pub-
lic Sector Enterprises exchange
Traded fund (CPSE-ETF) with an aim
to kick off disinvestment in a big way.
This Fund will help the investor to re-
duce investment risk.
The cabinet has approved the National
policy on Information Technology 2012.
The Policy aims to leverage informa-
tion and Communication Technology to
address the countrys economic and de-
velopmental challenges.
Microsoft Founder Bill gates has topped
among the Richest People in the US by
Forbes in a list of 400 billioners.
RBI said that it will soon issue Rs.100
denomination banknotes with inset
lstter G in the Mahatma Gandhi series
2005.
Corporations can now cut the cost of
foreign currency borrowings after the
Finance ministry notified a reduction
in the withholding tax on such bor-
rowings. The rate will be 5%, down
from 20% earlier.
K.R Kamath, CMD of Punjab National
Bank has been appointed as Chair-
man of the Indian Banks Asso-
ciation (IBA).
The Finance Ministry has decided to
freeze the long-pending proposal to
have a separate Debt Manage-
ment Office (DMO). As per mandate
of the RBI Act, RBI is to be the Debt
Manager of the Central Government
and it also manages the debt of the
state governments. RBI manages the
Governments borrowing programme
also.
Naveen Jindal topped the executive
pay charts for listed companies in the
country with a package of Rs.73.42
Core for the financial year 2012.
According to the CLSA Corporate
Governance Watch 2012 List, In-
dia has been ranked in the 7
th
place in
terms of Corporate Governance score
in the Asia Pacific Region.
IRDA has come out with a draft pro-
posal to expend the reach of in-
surance cover to Below Poverty
Line (BPL) Families in the next five
years. The Standard insurance prod-
uct would be in addition to the Govern-
ment Schemes.
Ministry of Statistics and programme
Implementation (MOSPI) would soon
come out with the Annual Survey of
Services (ASS) for 2013-14.Unlike the
Annual Survey of Industries (ASI), India
does not have a comprehensive data on
services, despite the tertiary sector con-
tributing more than 60% of its GDP.
Supreme Court has ruled that land be-
longing to the scheduled casts (SCs) or
tribes can not be bought by companies
and non-dalits and such transactions are
illegal.
According to a report by the Experts, Glo-
bal Environment Facility (GRF) in
partnership with the UN Environment
Programme, it has sounded warning bells
on Water Bankruptcy for many regions
after conducting a 20 year review of 200
major global projects.
International rating agency Standard &
Poors slashed its 2012-13 Euro Zone fore-
casts and now expects a slightly stron-
ger economic contraction this year. S&P
said that business activity would likely
decline by 0.8% across the 17 nations
block rather than by 0.7%, its previous
forecast issued in July. For 2013, the rat-
i ng agency expects the Euro zone
economy to record no growth, revising
the earlier outlook for a slight expansion
of 0.3%.
SEBI has cleared the Government pro-
posal to acquire a majority stake in IFCI
Ltd. SEBI also exempted the Govern-
ment from making an open offer to mi-
nority investors.
According to the Planning Commission,
Assuming agriculture growth of 4% , the
size of the credit requirement in the 12
th
plan period translates to about double
the flow during the 11th plan at Rs.8lakh
Core, as against the level of Rs.4.5Lakh
Core achieved during 2010-11.
Credit Rating Agency Moodys will retain
its Stable outlook on India, expect-
ing economic growth to improve on the
back of consumer demand, although the
country is still constrained by its fiscal
deficit.
Unique Identification Authority of India
(UIDAI) launched the Aadhar Official
Channel on YouTube as part off its ef-
forts to inform and educate people about
the features of the unique identity num-
bers issued.
India is ranked 66 in the Global Food
Security Index (GFSI) developed by the
Economic Intelligence Unit (EIU). The In-
dex is a dynamic scoring tool that has
measured the drivers of food security in
105 countries on factors such as avail-
ability, affordability, quality and safety.
Disclaimer : We have taken every care to provide information, we believe to be accurate
and reliable and do not assume responsibility of any kind nor shall be liable for losses &
consequence arising from use thereof. Since this information is based on the published
reports mostly, correctness or otherwise thereof may be verified by the user with the
original sources, in advance. .......................................................................Editor
We strongly believe that the subscribers
are the best consultants, we have. Based
on their feed back, we keep on redesigning
and restructring this publication. Kindly
send your suggestions and views.
MOCK-TEST
PAPER
Questions on Latest Policy
01 Cash reserve ratio has been changed
by RBI from ____ of NDTL to _____ of
NDTL w.e.f. Sep 22, 2012:
a 5% to 4.75%
b 4.75% to 4.5%
c 4.5% to 4.25%
d 4.25% to 4%
02 With change in CRR rate w.e.f. Sep
22, 2012:
a primary liquidity of Rs.10000 cr will be
injected in the banking system
b primary liquidity of Rs.17000 cr will be
injected in the banking system
c primary liquidity of Rs.10000 cr will be
withdrawn from the banking system
d primary liquidity of Rs.17000 cr will be
withdrawn from the banking system
03 The rating of which of the following
rating agency, can be used by banks
for the purpose of Capital Adequacy
calculation:
a CARE, CRISIL, SMERA
b Brickwick, CIBIL, ICRA
c FITCH, CRISIL, CIBIL
d any of the these
04 As per extant RBI guidelines, for import
of capital goods as classified by DGFT,
AD banks can approve trade credits up
to ______ per import transaction:
a USD 1 million
b USD 5 million
c USD 10 million
d USD 20 million
05 As per extant RBI guidelines, for import
of capital goods as classified by DGFT,
AD banks can approve trade credits up
to RBI prescribed amount per import
transaction with a maturity period of
_______ (from the date of shipment)
a less than one year
b less than 3 year
c more than 1 year and less than 3 years
d one year to up to 3 years
06 As per the extant RBI guidelines w.e.f
11.09.2012, the maximum permissible
ECB that can be availed of by an
individual company under the scheme,
is limited to _____ per cent of the
average annual export earnings
realised during the past three financial
years.
a 25%
b 50%
c 75%
d 100%
07 For the purpose of bank finance to
NBFC-Factoring company, it is
mandatory that the company derives
____% of its total income from
factoring activity:
a 100%
b 75%
c 50%
d 40%
08 For the purpose of bank finance to
NBFC-Factoring company, it is
mandatory that the receivables
purchased / financed, irrespective of
whether on with recourse or without
recourse basis, form at least ____
% of the assets of the Factoring
Company:
a 26%
b 49%
c 66%
d 75%
09 Overseas direct investment by
Indian Parties which was not
permitted earlier in a neighbouring
countries has been allowed under the
approval route, vide RBI notification
dated Sep 07, 2012. Specify the
name of the country:
a China
b Bangladesh
c Myanmar
d Pakistan
10 To ensure the time-bound migration
to CTS-2010 standard cheque
formats, the banks are required to
arrange to withdraw, the non-CTS-
2010 Standard cheques in circulation
before _____ by creating awareness
among customers:
a Sep 30, 2012
b Dec 31, 2012
c Mar 30, 2013
d Jun 30, 2013
11 As per RBI guidelines dated Aug 28,
2012, there would be an overall cap
of _____ for raising of capital by
issuance of Indian Depository
Receipts (IDRs) by eligible foreign
companies in Indian markets:
a USD 1 Billion
b USD 2 billion
c USD 5 billion
d USD 10 billion
12 FDI up to ____ per cent is permitted
in SingleBrand Product Retail Trading
by only one non-resident entity,
whether owner of the brand or
otherwise, under the Government
route
a 100%
b 74%
c 51%
d 49%
13 FDI up to _____ per cent is permitted
(from Sept 2012 onwards) in Multi-
Brand Retail Trading under the
Government route:
a 100%
b 74%
c 51%
d 49%
14 Foreign airlines are permitted FDI up
to _____ % (from Sept 2012
onwards) in the capital of Indian
companies in Civil Aviation Sector,
operating scheduled and non-
scheduled air transport, under the
automatic/Government route:
a 100%
b 74%
c 51%
d 49%
15 FDI up to ____ % is permitted (from
Sept 2012 onwards) in Power
Exchanges registered under the
Central El ectri ci ty Regul atory
Commi ssi on (Power Market)
Regul ati ons, 2010, under the
Government route:
a 100%
b 74%
c 51%
d 49%
Call and Notice Money
16 The market for short term financial
assets / instruments, that are close
substitutes of money, is called:
a money market
b capital market
c forex market
d financial market
17 Under _____ market, the funds are
transacted by banks on an overnight
Subscription Rates wef 1.1.2012- 1 yr: Rs.250, 2 yrs & Rs.480 Current Copy Rs.30 (Old Issues - Rs.30 per copy. For more than 2 copies add courier charges also). Rs.25 extra if deposited in our account.
basis:
a money market
b call money market
c notice money market
d term money market
18 Under notice money market, the funds
are transacted by banks for ____:
a one day
b overnight
c 2 to 14 days
d 15 days and above
19 Which of the following does not
participate in Call and Notice money
(1) scheduled commercial banks (2)
regional rural banks (3) cooperative
banks (4) land development banks (5)
primary dealers:
a 2 to 4
b 3 and 5
c 2 and 4
d 3 to 5
20 On a fortnightly average basis, the
prudent limit fixed by RBI in respect
of outstanding borrowing transactions
in call and notice money for the
participating banks is:
a 100% of capital of bank
b 100% of capital + reserves of the
bank
c 100% of capital fund of the bank
d 100% of net worth of the bank
21 As per the prudent limit fixed by RBI
in respect of outstanding borrowing
transactions in call and notice money
for the participating banks, the banks
can borrow a maximum of _______
on any day, during the fortnight:
a 110% of their capital fund
b 120% of their capital fund
c 150% of their capital fund
d 125% of their capital fund
22 On a fortnightly average basis, the
prudent limit fixed by RBI in respect
of outstanding lending transactions
in call and notice money for the
participating banks is:
a 10% of capital of bank
b 15% of capital + reserves of the bank
c 25% of capital fund of the bank
d 30% of net worth of the bank
2323As per the prudent limit fixed by RBI
in respect of outstanding lending
transactions in call and notice money
for the participating banks, the banks
can borrow a maximum of _______
on any day, during the fortnight:
a 20% of their capital fund
b 30% of their capital fund
c 50% of their capital fund
d 50% of their net worth
24 The interest rate on lending and
borrowing in call and notice money
can be decided by the market
participants but the calculation would
be based on the Hand book of Market
Practices prepared by:
a IBA b RBI
c FIMMDA d SEBI
Certificate of deposit and
Commercial Paper
25 Which of the following features of
certificate of deposit is correct (1) CD
is a negotiable market instrument (2)
CD is issued in demat form or as a
usance promissory note (3) CD is
issued at a discount to face value:
a 1 to 3 all
b 1 and 2 only
c 2 and 3 only
d 1 and 3 only
26 Which of the following can issue a
certificate of deposit:
a scheduled commercial banks only
b scheduled commercial banks and
financial institutions only
c scheduled commercial banks, financial
institutions and regional rural banks
d scheduled commercial banks and
regional rural banks only
27 Which of the following statement
regarding amount of certificate of
deposit is correct:
a minimum amount is Rs.1 lac and
maximum Rs.1 cr
b minimum amount is Rs.1 lac without
any maximum but multiple should be
of Rs.5 lac
c minimum amount is Rs.1 lac without
of Rs.2 lac
d minimum amount is Rs.1 lac without
of Rs.1 lac
28 Certificate of deposit cannot be
issued to which of the following (1)
individuals (2) companies (3) banks
(4) trust (5) non-resident Indian:
a 1 to 5 all
b 1 to 4 only
c 1 to 3 only
d 1 and 2 only
29 Certificate of deposit issued by banks
can have a maturity period of:
a 15 days to 12 months
b 15 days to 6 months
c 15 days to 3 months
d 7 days to 12 months
30 Which of the following statement
regarding certificate of deposit is
correct (1) banks can grant loan on
security of CD (2) banks can buy back
the CDs before maturity (3) CD can
be freely transferred any time after
issue (4) CRR and SLR is applicable
on CD
a 1 to 4 all
b 2 and 4 only
c 3 and 4 only
d 1 and 4 only
31 Commerci al Paper (CP) i s an
unsecured money market instrument
issued in the form of:
a a debenture certificate
b a share certificate
c a usance promissory note
d a bill of exchange.
32 Commercial Paper can be issued by
(1) reputed companies (2) financial
institutions (3) primary dealers (4)
banks
a 1 to 4 all
b 1 to 3 only
c 1 and 2 only
d 1 and 4 only
33 For a company to issue commercial
paper, whi ch of the fol l owi ng
conditions to be fulfilled are correctly
stated (1) the net worth should be at
least Rs.4 cr (2) the company should
have been sanctioned working capital
limits of Rs.10 cr (3) the loan accounts
the company should be classified as
Standard loan by its banks (4) it should
have a credit rating of at least A2 by
an approved credit rating agency.:
a 1 to 4 all
b 1,2 and 4
c 1, 3 and 4
d 1 to 3
34 The maturity period of Commercial
paper falls within the following range:
a 7 days to 3 months
b 7 days to 6 months
c 7 days to 9 months
d 7 days to 12 months
35 The minimum amount of and multiple
of commercial paper should be:
a min Rs.1 lac, multiple of Rs.1 lac
b min Rs.1 lac, multiple of Rs.5 lac
c min Rs.5 lac, multiple of Rs.5 lac
d min Rs.5 lac and no requirement of
multiple.
36 Which of the following statement is
correct regarding commercial paper
(1) it is issued at a discount to face
value (2) it can be issued as a usance
promissory note or in demat form (3)
total amount of CP is required to be
raised within one month from the date
on which the issue opens.
a 1 to 3
b 1 to 2
c 1 and 3
d 2 and 3
Credit Card Operations
37 Credit card business can be conducted
by banks only if their net worth is at
least Rs.___:
a Rs.100 cr b Rs.200 cr
c Rs.300 cr d Rs.500 cr
38 Which of the following statement on
credit card is correct (1) credit card
dues are to be treated as non-priority
sector personal loans (2) rate of
interest can be fixed by banks on credit
card dues (3) on credit card dues, the
rate of interest is to be quoted as
annualized percentage rates.
a 1 to 3 b 1 to 2
c 1 and 3 d 2 and 3
39 In case of credit card, the customers
can lodge a complaint with the banks
within a period of :
a 15 days b 30 days
c 45 days d 60 days
40 If a complaint of customer is not settled
by the bank within _____, the
customer can approach office of
Banking Ombudsman?
a 15 days b 30 days
c 45 days d 60 days
Interest on Deposit accounts
41 Which of the following match in respect
of Rate of interest on non-resident
deposit accounts:
a non-resident ordinary account banks
have discretion to fix interest rate
b non-resident external rupee account
- banks have discretion to fix interest
rate
c foreign currency non-resident account
banks can fix interest rate within
ceiling fixed by RBI
d all the above
42 In case of saving bank deposits, the
rate of interest is to be calculated on
_______ w.e.f.:
a month end balance w.e.f. 1.4.2012
b month end balance w.e.f. 1.4.2010
c daily product basis w.e.f. 1.4.2009
d daily product basis w.e.f. 1.4.2010
43 With effect from 25.10.2011, in case
of saving bank deposit account, the
rate of interest should be uniform for
balance up to ____:
a Rs.50000
b Rs.1 lac
c Rs.2 lac
d Rs.15 lac
44 With effect from 25.10.2011, in case
of saving bank deposit account, the
rate of interest for balance above
Rs.1 lac, the interest rate can be:
a different for different customer
b different for different amount
c different for different amount but
uniform for all customers
d uniform for all amount and for all
customers
45 Banks can offer differential rate of
interest in case of term deposits to
customers where the amount of
deposit is:
a Rs.1 lac and above
b Rs.5 lac and above
c Rs.10 lac and above
d Rs.15 lac and above
46 If banks offer floating rate on
deposits, these are required to be
linked to an anchor rate. This anchor
rate can be:
a an internal rate
b a derived rate
c a market based rupee bench mark rate
d any of the above
47 Renewal of a term deposit can be
considered by banks from date of
maturity in case the request is
received after maturity but the
overdue period should not exceed:
a 7 days
b 10 days
c 14 days
d 30 days
48 If a saving bank account is frozen by
enforcement authority of the Govt.,
what will be status of payment of
interest:
a interest will be credited to the account
on a regular basis
b interest will not be paid as long as the
account remains frozen
c interest will be calculated notionally
but it will be credited only after the
amount is permitted to be released
d interest will be paid by obtaining
permission from the authority that has
given freeze orders
49 If a fixed deposit matures and
proceeds are unpaid, the amount left
unclaimed with the bank will attract:
a no interest as the amount is in the
form of current account
b interest rate for corresponding
maturity
c saving bank interest rate
d interest rate corresponding to min
maturity of 7 days.
50 If cash credit account of a farmer has
credit balance, the banks can pay
interest in the following manner:
a at same rate as in case of saving bank
account
b at same rate and in the same manner
as in case of saving bank account
c at a rate to be decided by bank for
the min credit balance between 10
th
day to last day of the calendar month
d at saving bank rate for the min credit
balance between 10
th
day to last day
of the calendar month
51 Interest can be paid on current
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S
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account balances in respect of
fol l owi ng (1) current account
maintained by RRB with the sponsor
bank (2) current account in the name
of deceased customer from date of
his death (3) current account which
has credit balance representing loan
amount disbursed to the customer:
a 1 to 3 all
b 1 and 2 only
c 1 and 3 only
d 1 only
52 All transactions relating to payment
of interest on deposit or charging
interest on loans are to be rounded
off:
a to the nearest 10 paise
b to the nearest 50 paise
c to the nearest rupee
d not to be rounded off. Actual amount
to be paid or recovered.
53 If a term deposit matures on a Sunday
or holiday or non- business day what
is the provision regarding payment of
interest?
a interest would be paid on maturity
value for reinvestment deposit and on
original principal amount for ordinary
deposit.
b interest would be paid on original
amount for reinvestment deposit and
on maturity value for ordinary deposit.
c interest would be paid on maturity
value both for reinvestment deposit
and for ordinary deposit.
d interest would be paid on original
amount both for reinvestment deposit
and for ordinary deposit.
54 What is the max amount of customary
gift that a bank can give to its
customer:
a Rs.50
b Rs.100
c Rs.250
d Rs.500
Recalled Questions
55 Two cheques of Rs.10249 dated Jan
12 and Rs.12340 dated Jan 24, signed
by a Director of XYZ Limited, the
authorised signatory have been
presented for payment on Jan 27.
Meanwhile bank has been informed by
the company that concerned Director
has expired on Jan 20.
a Both the cheques will be returned
b Both the cheques will be paid
c Cheque dated Jan 12 will be paid and
cheque dated Jan 24 will be returned.
d Cheque dated Jan 12 will be returned
and cheque dated Jan 24 will be paid.
56 In the beginning of the financial year,
the capital of a firm was Rs.24000. The
firm earned a profit of Rs.4500 and paid
tax at 20%. The partners al so
withdrawn Rs.1500. What is the closing
balance in the capital account.
a Rs.24000 b Rs.26100
c Rs. 27000
d inadequate information
57 Business firms are sanctioned working
capital limits to provide finance for which
of the following:
a fixed assets, trade debtors, stocks,
cash holding
b fixed assets, trade debtors, stocks,
trade creditors
c pre-paid expenses, trade debtors,
stocks, cash holding
d trade debtors, stocks, cash holding,
trade creditors
58 What is correct regarding repayment
period the banks allow for loans under
Swarn Jyanti Gram Swairozgar Yojna?
a 3 to 7 years
b 5 to 9 years
c 3, 5 and 7 years
d 5, 7 and 9 years
59 X and Y have a joint locker in their name
and Z is the nominee. In case Y dies,
the access to the locker will be given by
the bank to which of the following:
a X alone
b X and legal heirs of Y
c X and Z
d X, Z and legal heirs
60 A and B have joint fixed deposit receipt
where Z is the nominee. A has expired
and the FDR is yet to mature. B
approaches for payment.
a payment can be allowed to B
b payment can be allowed to B jointly with
legal heirs of A
c payment can be allowed to B jointly with
Z
d payment can be allowed to B jointly with
Z and legal heirs
61 Bank has obtained guarantee from Z to
secure an overdraft allowed by the Bank
to X. This guarantee will be classified
as:
a performance guarantee
b continuing guarantee
c specific guarantee
d financial guarantee
62 The cash transaction report (CTR) is
submitted by banks on a monthly basis
to ____ and covers the following
transactions:
a RBI, single cash transactions above
Rs.10 lac or cash transactions with total
amount of above Rs.10 lac in a month
b FIU-India, single cash transactions
above Rs.10 lac or cash transactions
with total amount of above Rs.10 lac in
a month
c FIU-India, cash transactions of Rs.10
lac or above
d RBI, cash transactions of Rs.10 lac or
above
63 Your branch has sanctioned a loan of
Rs.15 lac under Agri Clinics and Agro-
Business Centres scheme. It will be
classified in priority sector as:
a direct agriculture advance
b indirect agriculture advance
c direct MSE advance
d indirect MSE advance
64 Which of the following loans is not to be
classified as priority sector loan by
domestic banks in India:
a loan to professional and self-employed
persons
b loans for small business
c export credit
d loans to small road and water transport
operators
65 The insurance sector and capital market
is regulated by which of the following:
a SEBI
Answers
01 b 02 b 03 a 04 d 05 c
06 c 07 b 08 d 09 d 10 b
11 c 12 a 13 c 14 d 15 d
16 a 17 b 18 c 19 c 20 c
21 d 22 c 23 c 24 c 25 a
26 b 27 d 28 a 29 d 30 c
31 c 32 b 33 c 34 d 35 c
36 b 37 a 38 a 39 d 40 b
41 d 42 d 43 b 44 c 45 d
46 c 47 c 48 a 49 c 50 c
51 b 52 c 53 a 54 c 55 c
56 b 57 c 58 d 59 c 60 b
61 b 62 b 63 b 64 c 65 c
66 a 67 d 68 b 69 d 70 b
71 b 72 c 73 c 74 b 75 b
76 b 77 d 78 d 79 b 80 c
81 b 82 c 83 c 84 a
b IRDA
c IRDA and SEBI respectively
d SEBI and IRDA respectively
66 The call money transactions are
undertaken by banks to borrow money
for:
a single day b 2 to 7 days
c up to 14 days
d 15 days or more
67 Olericulture relates to which of the
following:
a silk production
b mushroom cultivation
c honey bee keeping
d vegetable cultivation
68 X had fixed deposit of Rs.30000 with
your bank, in which Z was nominated.
The FDR which had fallen due for
renewal has been renewed recently.
But Z forgot to incorporate the details
about nomination:
a the existing nomination will lapse
b the existing nomination will continue to
be valid
c new nomination should be obtained as
a matter of precaution
d new nomination is mandatory to ensure
that the account has nomination facility
69 A grace period of 3 days is allowed
before payment, in respect of which
of the following instruments:
a demand bills and usance bills
b demand promissory notes and usance
promissory notes
c demand promissory notes and demand
bills
d usance promissory notes and usance
bills of exchange
70 In the balance sheet of a bank, the
letter of credit or bank guarantee is
classified as:
a demand liability
b contingent liability
c time liability
d Other liability
71 A demand loan has been sanctioned
and disbursed by the bank on the basis
of a demand promissory note. The
limitation period, in this case would be:
a 3 years from date of sanction
b 3 years from date of promissory note
c 3 years from date of recall of the loan
d 3 years from date of closing of financial
year in which the demand loan is given
72 The balance sheet prepared by a firm
represents which of the following:
a flow of funds during the period of one
year
b profitability position of the firm during
the year
c position of assets and liability as on a
particular date
d all the above
73 In which of the following securities /
assets, mortgage cannot be created:
a land and building
b machinery embedded to ground
c heavy vehicles
d ship
74 Which of the following are the owners
of a public limited company:
a directors
b shareholders
c debenture holder
d a and b together
75 Which of the following requires to be
witnessed in case of nomination in a
deposit account:
a where minor is appointed as nominee
b where nomination is made by way of
thumb impression
c where nomination is made by say of
signatures in vernacular
d a and b both
76 Bank has given crop loan to a farmer
who grows long duration crops. His
accounts becomes NPA if the loan
remains overdue for payment for a
period of:
a more than 90 days
b more than one crop season
c more than two crop seasons
d more than 180 days
77 What is the highest amount of
denomination of bank note which RBI
can print:
a Rs.100 b Rs.500
c Rs.1000 d Rs.10000
78 Cash reserve ratio is calculated by
banks on the basis of which of the
following:
a demand and time deposits
b demand and time liabilities
c demand loans and term loans
d none of the above
79 Bank has decided to grant loans under
PMEGP scheme. The project cost can
be:
a Rs.10 lac in case of manufacturing and
Rs.25 lac in business services
b Rs.25 lac in case of manufacturing and
c Rs.25 lac in case of manufacturing and
d Rs.10 lac in case of manufacturing and
80 A loan of Rs.40 lac has been sanctioned
by the bank in a North East State, by
obtaining guarantee from CGT-MSE.
What is the rate at which guarantee
fee would be paid.
a 1.5% of the sanctioned amount
b 1% of the sanctioned amount
c 0.75% of the sanctioned amount
d 0.5% of the outstanding amount
81 What is the maximum time limit during
which the loan application of Rs.2 lac is
to be disposed off by the bank:
a within 2 weeks
b within 4 weeks
c within 8-9 weeks
d at discretion of the bank
82 In case of an advances granted under
Agri Clinics and Agro Business Centre,
what is the amount of loan, where
collateral security is exempted:
a up to Rs.1 lac
b up to Rs.2 lac
c up to Rs.5 lac
d up to Rs.10 lac
83 What is the minimum amount up to
which the CRR balance should be
maintained by a bank on a daily basis:
a 5% of net demand and time liabilities
b 50% of the average fortnightly balance
c 70% of the average fortnightly balance
d 80% of the average fortnightly balance
84 Interest subvention is available on
short term crop loan up to Rs._____ at
_____ from Central Govt. provided rate
of interest charged from borrowing
farmer is ____:
a Rs.3 lac, 2%, 7%
b Rs.3 lac, 3%, 7%
c Rs.3 lac, 2%, 4%
d Rs.3 lac, 3%, 4%
Published by Gurmeet Toor (Mrs.) at 1008, Sector 45-B, Chandigarh- Printed by Gurmeet Toor (Mrs) at Golden Graphics 'n' Printers, Industrial Area, Ram Darbar, Chandigarh on
behalf of Ritu Singh - Editor- Ritu Singh (Mrs)
DATA COLUMN
Sh. N S Toor can be reached by readers at ns.toor@gmail.com DATE OF DESPATCH - Oct 7 / 10, 2012
Registration RNI No. 67802/98 Postal Regn No.CHD / (0001) 2012-14
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OUR PUBLICATIONS : REFER PAGE 9,11
Call and Notice Money
The money market is a market for short-term financial assets that are close
substitutes of money. An important feature of a money market instrument
is that it is liquid and can be turned into money quickly at low cost and
provides an avenue for equilibrating the short-term surplus funds of lenders
and the requirements of borrowers.
The call/notice money market forms an important segment of the Indian
Money Market. Under call money market, funds are transacted on an
overnight basis and under notice money market, funds are transacted for
a period between 2 days and 14 days.
Participants : Participants in call/notice money market currently include
scheduled commercial banks (excluding RRBs), co-operative banks (other
than Land Development Banks) and Primary Dealers (PDs), both as borrowers
and lenders. Non-bank institutions (other than PDs) are not permitted in
the call/notice money market.
Prudential Limits : The prudential limits in respect of both outstanding
borrowing and lending transactions in call/notice money market for
scheduled commercial banks, co-operative banks and PDs are as follows:-
Borrowing : On a fortnightly average basis, the borrowing outstanding should
not exceed 100% of capital funds of the bank as per latest audited balance
sheet. Banks can borrow up to 125% of their capital funds on any day
during the fortnight.
Lending : On a fortnightly average basis, the lending outstanding should
not exceed 25% of capital funds of the bank as per latest audited balance
sheet. Banks can lend up to 50% of their capital funds on any day during
the fortnight.
Interest Rate : Eligible participants are free to decide on interest rates in
call/notice money market.
The calculation of interest payable would be based on the Handbook of
Market Practices brought out by the Fixed Income Money Market and
Derivatives Association of India (FIMMDA).
Dealing Session : Deals in the call/notice money market can be done upto
5.00 pm on weekdays and 2.30 pm on Saturdays or as specified by RBI from
time to time.
Documentation : Eligible participants may adopt the documentation
suggested by FIMMDA from time to time.
Reporting Requirement : 1. All dealings in call/notice money on the
Negotiated Dealing System-Call, i.e. NDS-Call (a screen-based, negotiated,
quote-driven system), do not require separate reporting. It is mandatory
for all members of the NDS to report their call/notice money market deals,
other than those done on NDS-Call, on NDS. Deals should be reported
within 15 minutes on NDS, irrespective of the size of the deal or whether
the counterparty is a member of the NDS or not. In case there is repeated
non-reporting of deals by an NDS member, such non-reported deals may be
treated as invalid.
2. The reporting time on NDS is upto 5.00 pm on weekdays and 2.30 pm on
Saturdays or as decided by RBI from time to time.
3. With the stabilisation of call/notice/term money transactions reporting,
the practice of reporting call/notice/term money transactions by fax to
RBI has been discontinued with effect from December 11, 2004. However,
deals between non-NDS members will continue to be reported to the
Financial Markets Department (FMD) of the RBI, by fax, as hitherto.
In case the situation so warrants, the Reserve Bank may call for information
in respect of money market transactions of eligible participants by fax.
Business of Banks
(Rs.in cr) Mar31' 12 Sep07'12
Aggregate deposits 6329880 6321030
Cash in hand/RBI 3493230 356470
Investments 15000390 1979920
Bank Credit: 4959430 4749690
-Food 642830 94700
-Non-Food 38743760 4654990
Cash-Deposit Ratio 6.71 5.64
Investment-Deposit 28.82 31.32
Credit-Deposit 75.68 75.14
Money Stock
(Rs.in Cr) Mar31' 12 Sep07'12
M3 (Out of which) 7359200 7818320
(a) Currency with public 1026500 1066120
(b) Demand deposits-Banks 704910 667370
(c) Time Deposits - Banks 5624970 6082170
(d) Other deposits with RBI 2820 2660
Sources of Money Supply
(a) Net Bank credit to Govt 2369550 2621670
(b) Bank credit to Comrcl sector 4959430 5100070
(c) Net Forex assets of Banks 1543780 1581710
Important Banking Indicators
Bank rate 09.00% (17.04.2012)
Statutory Liquidity Ratio 23.00% (11.08.2012)
Cash Reserve Ratio 04.50% (22.09.2012)
Base Rate 10.5 - 11.0% (Leading banks)
Reverse Repo Rate 07.00% (17.04.2012)
Repo Rate 08.00% (17.04.2012)
MSF Rate 09.00% (17.04.2012)
Federal Reserve(US) rate: 1.00%
Bank of England Rate : 0.50%
European Comm. Bank 0.75%
Capital & Money Market Indicators
Parameter end-Sep 12 A year back
Call rates (percent) 3.70 5.10
Dollar-spot TT (Rs.) 55.65 45.35
BSE - Sensex (points) 16712 15849
NSE - Nifty(S&P CNX) 5108 4748
Foreign reserves(Million $) 294477 318220
INDIAN ECONOMY-IMPORTANT PARAMETERS
RBI's growth estimate for 2012-13 : 7.3%
GDP growth-2010-11 (revised estimate) : 8.4%
GDP at factor cost 2012-13 (cr) : 10159884
Share of service sector in GDP : 64.5%
Share of manufacturing sector in GDP : 18.2%
Share of agriculture sector in GDP : 17.3%
Current Inflation Rate (Wholesale) : 8.40%
Money Supply (M3) expansion : 14.3%
Exports during 2011-12 : 291.3 bn
Imports during (2011-12) : 347.4 Bn
Export target - 2012-13 (in $) 15% growth : 350 bn
India's share in world merchandise export : 1.45%
Food grain production (2007-08) -Estimate : 227.3
India's currency rating (S&P) : BB Postv
India's external debt (Mar 2012) US $ : 346 Bn
Fiscal Deficit Target (2012-13) 5.1% of GDP : 513590 cr
Revenue Deficit Target (2012-13) 3.4.% of GDP : 350424 cr
Tax-GDP ratio (2008-09) : 11.2%
Apr-Aug 2012:Export 119.95 bn Imports : 191.2 bn
Poverty line ratio (2004-05) : 27.5%
Per capita Income 2010-11 (Rs.) : 53331
Indian economy's ranking in world in PPP : 3rd
Indian economy's ranking in world in value: 10th

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BANKING POLICY : 4

Banking events updatE October 2012 4 BANKING FEATURES

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