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BANKING POCKETBOOK FY-17

1. Trending #Banking & Payments


Contents
22. PMJDY Pradhan Mantri Jan Dhan Yojana
1. Unified Payment Interface (& LoTZa )
23. Direct Benefit Transfer
2. National Payments Corporation of India
24 Business Correspondent (BC)
3. India Stack
25 MUDRA
4. 3D Printing
26 RuPay Card
5. Bitcoin
27 Micro ATM
6. GST
7. Insolvency and Bankruptcy Code 2016 28 White Label ATM
29 Card to Card (C2C)
8. Banks Board Bureau
30 Verified by Visa
9. Payment Banks update
31 Travel Cards / Cash Passport
10. Small Finance Banks update
32 NFS(National Financial Switch)
11. IMPS
33 2FA Authentication
12. Mobile Money Identifier (MMID)
34 Biometric Authentication
13. Aadhar Enabled Payment System
35 Crowd Sourcing/Funding
14. Mobile Wallets
36 Shell Bank & Shell company
15. QR Code based payments
37 D-SIBs
16. Trade Receivables Exchange
38 Gift City
17. P2P Lending
39 IFSC Banking Unit (IBU)
18. Phishing
40 Offshore Banking Unit (OBU)
19. Digital Locker
20. Sovereign Gold Bonds
21. National Pension Scheme (NPS)
Unified Payment Interface
UPI was launched by National Payments Corporation of India with Reserve Bank of
India's(RBI) vision of migrating towards a 'less-cash' and more digital society. NPCI has
built on the Immediate Payment Service(IMPS) platform through which one could
transfer money instantly. 21 banks including our Bank are participating in the first
phase. The UPI App of all participating banks is available in Google Play Store of
Android Phones. Using UPI one can send and receive money as well as make use of
its integrated payment system to make merchant payments, remittances, bill
payments subject to minimum and maximum limit fixed by NPCI from time to time.

LOTZA by Federal Bank is one of the few UPI PSP App approved by
National Payments Corp. of India Ltd (NPCI). Using Lotza one can
Send money to any Bank Account using only Virtual Payment
Address (VPA)
Send money using Account No/IFSC or Mobile Number/MMID Its more secured: No need to
Request money from any one of any Bank using the sender's pass on your account details for
funding your account. Virtual
Virtual Payment Address (VPA)/nickname
Payment Address (VPA) is a
Get account balance of registered account even of other unique ID similar to an email ID
Banks in UPI platform which will be issued by the Bank
Scan N Pay (QR based payment solution) to receive and send to the user. VPA will be mapped
money to user's Bank Account and
Get an OTP from the customer's bank (in the case of non helps the user to keep
Federal Bank customers) to complete IMPS transactions confidentiality of his Account
details. VPA will be a
Register for Mobile Banking Services
combination of username + "@"
Change MPIN of Mobile Banking + Bank Handle. (XYZ@ Federal)
National Payments Corporation of India
NPCI is the umbrella organisation for all Retail Payments system in India. It was
set up with the guidance and support of the Reserve Bank of India (RBI) and
Indian Banks Association (IBA). The core objective is to consolidate and
integrate the multiple systems with varying service levels into nation-wide
uniform and standard business process for all retail payment systems. The other
objective is to facilitate an affordable payment mechanism to benefit the
common man across the country and help financial inclusion. It has successfully
played pioneering role in the development of a domestic card payment network
called RuPay, reducing the dependency on international card schemes like Visa
and Mastercard. Currently Mr. A. P. Hota is the Managing Director & CEO, NPCI

NPCI has ten promoter banks-, State Bank of India, Punjab National
Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of
India, ICICI Bank, HDFC Bank, Citibank and HSBC. During the last five
years, the organization has grown from 2 million transactions a day
to 20 million transactions today. Their services consisting of
switching of inter-bank ATM transactions, Cheque Clearing,
Immediate Payments Service, Automated Clearing House, Electronic
Benefit Transfer and domestic card payment network RuPay

NPCI is a not-for-profit organisation founded in the year


2008. Their latest is the Unified Payments Interface, a
flagship product that will help India to move towards a
cashless economy.
IndiaStack
The rapid adoption of Aadhar, Jan Dhan Yojna, and smartphones (JAM) have created a
fundamental layer of customer identification and access, on which multiple other digital
transactions can be built. The combined initiative of UIDAI, CCA, DeitY, and NPCI has created a
unified, integrated layer of digital tools and services (or information system highway) that is
called as India Stack. A good analogy of the kind of innovation possible is Uber which uses the
building blocks of GPS, Google Maps, electronic payment and smartphone - none of which Uber
built nor owns - to create a customer friendly transportation solution.

IndiaStack is a complete set of API, made available under the


Open API Policy, which enables development of payment-
enabled Apps. It includes Aadhaar for Authentication (Aadhaar
already covers over 940 million people and will quickly cover
the population of the entire nation providing the worlds
largest authentication system), e-KYC documents (safe deposit
locker for issue, storage and use of documents), e-Sign (digital
signature acceptable under the laws), unified payment
interface (for financial transactions) and privacy-protected data
sharing within the stack of API.

Together, the India Stack enables Apps that could open up


many opportunities in financial services, healthcare and
education sectors of the Indian economy. IndiaStack has the
potential to revolutionize the way government services of the
future are delivered in a large country like India
3D Printing
3D printing or additive manufacturing is a process of making three
dimensional solid objects from a digital file. The creation of a 3D
printed object is achieved using additive processes. In an additive
process an object is created by laying down successive layers of
material until the entire object is created. Each of these layers can be
seen as a thinly sliced horizontal cross-section of the eventual object.

Recently, many IT companies like Microsoft and Google enabled their hardware to perform 3d
scanning, a great example is Microsofts Kinect. This is a clear sign that future hand-held devices
like smartphones will have integrated 3d scanners. Digitizing real objects into 3d models will
become as easy as taking a picture. This technique was invented in 1986 by Charles Hull, who
also at the time founded the company, 3D Systems.

The 250-square-metre space (2,700 square foot) is what Dubai's Museum of the Future project
is calling the world's first 3D-printed office building. China unveiled the world's first 3D printed
office building and mansion in early 2015.

3D printing is already having an effect on the way that products are manufactured the nature
of the technology permits new ways of thinking in terms of the social, economic, environmental
and security implications of the manufacturing process with universally favourable results. One
example of the positive effect is lowered manufacturing cost through recycled and other local
materials, but the loss of construction and manufacturing jobs could hit many developing
countries severely, which would take time to overcome.
Bitcoin
Bitcoin is a digital asset and a payment system invented by
Satoshi Nakamoto. The system is peer-to-peer and users can
transact directly without an intermediary. Transactions are
verified by network nodes and recorded in a public distributed
ledger called the block chain. The ledger uses bitcoin as its unit
of account. Bitcoin is called the first cryptocurrency.

Bitcoins are created as a reward for payment processing work. Users offer their computing
power to verify and record payments into a public ledger. This activity is called mining and
miners are rewarded with transaction fees and newly created bitcoins.
Bitcoins can be exchanged for other currencies, products, and services. Users can send and
receive bitcoins for an optional transaction fee.
Bitcoin is accepted as a payment for products and services. Merchants accept bitcoins because
fees is lower than that of credit card processors.
Financial regulators, legislative bodies, law enforcement, and media are concerned about the
use of bitcons by criminals.
Goods and Services Tax (GST)
The Government has set up GST Council under Article
The GST is a single indirect tax, which will 279-A of the Constitution of India for the purpose of
subsume most of the central and state taxes such implementing GST. GST council has agreed on rate
as VAT, Excise Duty, Service Tax and Central Sales structure as 0%, 5%, 12%, 18% and 28%. Having a
Tax. The new tax regime will do away with the slab rate structure in GST is a departure from popular
indirect taxes. It will usher in one tax for the international practice of having one rate of tax for all
entire country. Under GST regime, goods and services. Council has not announced
comprehensive and continuous chain of set-off schedule of goods and services under each slab rate.
benefits are available from the producers and FM has mentioned that highest tax slab rate will be
service providers point up to the retailers level. applicable to items currently taxed at 30% to 31%
Tax is levied only on value addition at each stage (excise duty plus VAT) where the effective rate under
and a supplier at each stage is permitted to set- the current regime is lesser than 28%. Some of the
goods taxed at 28% will be charged with an additional
off through a tax credit mechanism. The
cess for five years. For goods that are classified
consumer will thus bear only the GST charged by
under 5%, 12% and 18% slab rates, effective tax cost
the last dealer in the supply chain, with set of might be lesser as compared to current tax
benefits at the previous stages. The Government regime. In case of services It is likely that all services
is planning to roll out GST from 1st April 2017. will be taxed at standard rate of 18%. Most of the
Though GST is a tax reform, it is going to impact services are likely to be costlier due to increase in tax
every sphere of business activity, be it rate. However, impact may not be as high as 3%x
procurement, supply chain, IT, logistics, pricing, (from current service tax of 15%) if service providers
margins, working capital, etc. as a number of pass on savings due to higher tax credits.
business decisions taken based on the current tax
structure may no longer be relevant in the new
GST regime.
(For more details refer http://finmin.nic.in/reports/modelgstlaw_draft.pdf).
http://economictimes.indiatimes.com/wealth/tax/how-pocket-friendly-will-gst-be-for-you/articleshow/55239812.cms
Insolvency and Bankruptcy Code 2016
The Insolvency and Bankruptcy Code 2016 received the Implementing Insolvency and Bankruptcy
assent of the President on 28th May, 2016. The term Code 2016 is urgently needed in India as
the NPA of Indian banks are alarmingly
Insolvency is used for both individuals and organizations. For moving up and it is around 4 lakh crores
individuals it is known as Bankruptcy and for corporate it is at present. Corporate bad loans
constitute 56% of the total bad loans of
called Corporate Insolvency. It is a situation when an
state-run banks. At present, there are
individual or a company is unable to pay the debt in present about 70,000 liquidation cases pending
or near future and the value of assets held by them are less for resolution . It takes almost 4 years at
present to wind up an ailing company in
than liability. The new bankruptcy law will ensure time- India. The Code seeks to reduce this time
bound settlement of insolvency. The new Code will replace to less than a year. At present there are
about 12 laws, some of which are more
existing bankruptcy laws and cover individuals, companies,
than 100 years old, to tackle insolvency.
limited liability partnerships and partnership firms. It will Currently, there is no single law dealing
amend laws including the Companies Act to deal with with insolvency and bankruptcy in India.

corporate insolvency. It allows creation of formal Insolvency


Resolution Process (IRP) for businesses either by coming up
with a viable survival mechanism or by ensuring their speedy
liquidation. IRP can be initiated by a business or debtor who
has defaulted or lenders and creditors including employees.

(For more information refer : www.indiacode.nic.in/acts-in-pdf/2016/201631.pdf)


Banks Board Bureau
The Bank Board Bureau (BBB), is an autonomous body
of Union Government of India tasked to improve the
governance of Public Sector Banks, recommend selection of
chiefs of government owned banks and financial institutions
and to help banks in developing strategies and capital raising
plans. Sri.Vinod Rai is the Chairman of the Mumbai based
Bureau.
The bureau will replace the board for appointment of whole time
directors as well as nonexecutive chairman of public sector banks
(PSBs). It will also engage with boards of directors of all PSBs to
formulate appropriate strategies for their growth and development.
The central government has maintained that BBB is the first step
towards a holding company structure for state-run banks. ( Public
sector banks have been under great scrutiny over the last few months
due to mounting bad loans. )
Payment Banks - update
A PAYMENT BANK is a type of service Bank which can only receive deposits and provide
remittances. It cannot carry out lending activities. The objectives of setting up of payments
banks in India is to further financial inclusion by providing small savings accounts and
payments/remittance services to migrant labour workforce, low income households, small
businesses, other unorganised sector entities and other users.
RBI came out with operating guidelines for payments banks in
RBI granted in-principle approvals to 11 entities October 2016. As per the guidelines, PBs can accept deposit
for setting up payments banks (PBs) in August
only up to Rs 1 lakh. PBs will have to maintain a minimum
investment to the extent of not less than 75% of 'demand
2015 Of the 11 licence holders, only 8 remain in deposit balances' as on three working days prior to that day, in
the fray due to concerns about profitability and Government securities/Treasury Bills with maturity up to one
rising competition. Cholamandalam Distribution year that are recognised by RBI as eligible securities for
maintenance of Statutory Liquidity Ratio (SLR). (this is
Services Ltd; Dilip Sanghvi (IDFC & Telenor
expected to crimp their earnings). The capital adequacy
Financial Services consortium) and Tech framework - Minimum Capital Requirement (15 per cent) and
Mahindra Ltd have dropped out. Remaining are Common Equity Tier 1 (6 per cent). These banks can make
Aditya Birla Nuvo Ltd (Idea Cellular); Airtel M
arrangements with any other scheduled commercial
bank/small finance bank, whereby amounts in excess of the
Commerce Services Ltd; Department of Posts; prescribed limit of 1 lakh is swept into an account opened for
Fino PayTech Ltd; National Securities Depository the customer with the latter, with the prior written consent of
Ltd; Reliance Industries Ltd; Vijay Shekhar Sharma the customer. PBs need not issue passbooks for deposit
accounts. Annual plans for opening of physical access points
(Paytm), Vodafone m-pesa Ltd.
by the PBs for the initial five years would need prior approval
from RBI
Small Finance Banks -update
SMALL FINANCE BANKS are similar to regular As per operating guidelines issued in October 2016,
commercial banks except that their scale of services will by RBI, mobile phone users can to open bank
accounts with the payments banks promoted by
be much smaller. Minimum paid-up equity for small telecom companies seamlessly, provided all the KYC
finance banks is Rs 100 crore. These new type of banks (know your customer) formalities are already met.
i.e. open accounts without a wet signature, relying
should generate at least 75% of their business from the
completely on the digital signatures and electronic
priority sector (largely agriculture) and mainly from areas verification, which makes on-boarding of customers
where large banks are not present. Besides, 50% of their easy for geographically distant places where opening
a physical branch might not be viable. The minimum
loans should be of ticket sizes under Rs 25 lakh. The capital requirement will be 15% Small finance banks
objectives of setting up of small finance banks will be to will be allowed exemption from the existing
regulatory ceiling on inter-bank borrowings till the
further financial inclusion by (i) provision of savings
existing loans mature or up to three years, whichever
vehicles, and (ii) supply of credit to small business units; is earlier. Afterwards, it will be on par with scheduled
small and marginal farmers; micro and small industries; commercial banks.
While mandating that 25% of the small finance
and other unorganised sector entities, through high banks branches should be in the rural areas within
technology-low cost operations. the first year of operation, RBI has allowed their
business correspondents to function inter-operably
Ujjivan Financial Services Pvt. Ltd, Janalakshmi Financial Services Pvt. except for opening of savings and current
Ltd and Equitas Holdings Ltd; Au Financiers (India) Ltd, Capital Local accounts. RBI also said that SFBs will not be
Area Bank Ltd, Disha Microfin Pvt. Ltd, ESAF Microfinance and
permitted to undertake any para-banking activity
except that allowed as per the Licensing Guidelines
Investments Pvt. Ltd, RGVN (North East) Microfinance Ltd, Suryoday and the related FAQs issued. Further, SFBs will be
Micro Finance Pvt. Ltd, and Utkarsh Micro Finance Pvt. Ltd. are the 10 permitted to use Interest Rate Futures (IRF) for the
players which received licenses by RBI in September 2015. Capital Small purpose of proprietary hedging.
Finance Bank, first small finance bank started operations in April 2016
IMPS
IMMEDIATE PAYMENT SERVICE (IMPS) is an instant
interbank electronic fund transfer service through
mobile phones. It is also being extended through
other channels such as ATM, Internet Banking, etc.
Currently majority of interbank mobile fund transfer
transactions are channelised through NEFT This facility is provided by NPCI(National
mechanism. Under NEFT, the transactions are Payments Corporation of India) through its
processed and settled in batches, hence are not real existing NFS(National Financial Switch). Pre-
time. Also, the transactions can be done only during requisites for the facility are: Register for
the working hours of the RTGS system. IMPS offers mobile banking service of a bank. Get Mobile
an instant, 24X7, interbank electronic fund transfer Money Identifier (MMID) and MPIN from the
service through mobile phones by which one can bank.
transfer money instantly within banks across India
through mobile, internet and ATM. Our Bank provides fund transfer facility
through IMPS through our Fedmobile, SMS
Banking and Fednet channels.

For further reading:


http://www.npci.org.in/aboutimps.aspx
Mobile Money Identifier (MMID)

MMID is a seven digit random number issued by


the bank upon registration used mainly for IMPS
transactions (for fund transfer through Mobile
banking channels)
1. First four digits is unique for each bank.
2. For Federal Bank customers, MMID starts with
9049, followed by <last three digits of the
account number > Eg For Account Number
10015000301404, MMID will be 9049404
3. SBI -9002,ICICI - 9229
AEPS
Aadhar Enabled Payment System- Payment service offered by the National Payments Corporation of India to
banks, In order to further speed track Financial Inclusion in the country. AEPS is a bank led model which allows
online interoperable financial inclusion transactions at PoS (Micro ATM) through the Business correspondent of
any bank using the Aadhaar authentication). Customer should have an Aadhaar (Unique ID as issued by UIDAI)
number linked with any bank account (bank should be a part of AEPS network. For funds transfer, the
beneficiary also should also have an Aadhaar (UID) number linked to his bank account ( bank to be part of AEPS
network). AEPS facility is enabled in Federal Banks Business Correspondent Outlets.
The four Aadhaar enabled basic types of banking transactions are as follows:-
Balance Enquiry
Cash Withdrawal
Cash Deposit
Aadhaar to Aadhaar Funds Transfer
The inputs required for a customer to do a transaction under this scenario are:-
IIN (Identifying the Bank to which the customer is associated)
Aadhaar Number
Fingerprint captured during their enrolment

For further reading:


http://www.npci.org.in/aepsoverview.aspx
Mobile Wallets
It is a MOBILE-BASED VIRTUAL WALLET, where you preload a certain amount in your account created with the
mobile wallet service provider, and spend it at online and offline merchants listed with the mobile wallet
service provider. For example, if you go to a coffee shop A, which is listed with XYZ mobile wallet, you can pay
for your coffee through the phone. Depending on the service provider, you can also pay through app, text
message, social media account or website.
There are four types of mobile wallets in India - open, semi-open, semi-
closed and closed. Open wallets are the ones that allow you to buy good
and services, withdraw cash at ATMs or banks and transfer funds. These
services can only be jointly launched with a bank. M-Pesa by Vodafone and Semi-closed wallets like Paytm,
ICICI Pockets is one such example. Apart from the usual merchant do not permit cash withdrawal
payments, it also allows you to send money to any mobile number with or redemption, but allow you to
bank account. buy goods and services at listed
Airtel Money is a semi-open wallet, which allows you to transact with merchants and perform
merchants that have a contract with Airtel. You can't withdraw cash or get financial services at listed
it back. You'll have to spend what you load. locations.

Closed wallets are popular with e-commerce companies, where a certain


amount of money is locked with the merchant in case of a cancellation or For further reading: RBI Master Circular on
Prepaid Payment Instruments in India
return of the order, or gift cards. https://rbi.org.in/scripts/NotificationUser.aspx?Id
=8993&Mode=0
QR Code based payments
The QR code has become a focus of
advertising strategy, since it provides a way to
access a brand's website more quickly than
by manually entering a URL. A smart phone IS
typically used as a QR code scanner,
displaying the code and converting it to some
useful form (such as a standard URL for a
website, thereby obviating the need for a
QR CODE (abbreviated from Quick Response Code)
user to type it into a web browser).
is the trademark for a type of matrix barcode (or
two-dimensional barcode) first designed for the
automotive industry in Japan. A QR code consists of Our Lotza Scan N
black modules (square dots) arranged in a square Pay, Fed-book-
grid on a white background, which can be read by (Selfie) apps make
an imaging device (such as a camera, scanner, etc.) use of QR code
and processed until the image can be appropriately scanning to
interpreted. The required data are then extracted capture client
from patterns that are present in both horizontal details.
and vertical components of the image.
Trade Receivables Exchange
The use of Trade Receivables Discounting System (TReDS) is aimed at improving the flow
of funds to micro, small and medium enterprises (MSMEs) by reducing the receivables
realisation cycles. TReDS will allow SMEs to post their receivables on the system and get
them financed.

Trade receivables are bills for which the cash realisation comes at a future date. Even as
financing against these are possible by specialised institutions, called factoring firms, the
process is cumbersome and not all can approach factoring companies. As a result, small
companies almost always suffer from liquidity constraints given that they dont get cash
for their sales immediately. Under the electronic bill factoring exchanges facility, bills
against large companies can be electronically accepted and auctioned so that the vendors
can be paid promptly.

Three entities Axis Bank, Gurgaon-based Mynd Solutions and a joint bid by NSE
Strategic Investment Corporation and Small Industries Development Bank of India have
been granted in-principle approval for setting up the Trade Receivables Discounting
System (TReDS).
Peer to Peer Lending
Peer-to-peer lending, sometimes abbreviated P2P lending, is the practice
of lending money to individuals or businesses through online services that
In India, peer-to-peer lending is
match lenders directly with borrowers. Since the peer-to-peer lending currently unregulated. Reserve
companies offering these services operate entirely online, they can run Bank of India,, has placed a
consultation paper to regulate
with lower overhead and provide the service more cheaply than traditional P2P lending and the final
financial institutions. As a result, lenders often earn higher returns guidelines are expected soon.

compared to savings and investment products offered by banks, while There are over 30 peer-to-peer-
borrowers can borrow money at lower interest rates, even after the P2P lending platform operating in
India as of 2016. Even with first-
lending company has taken a fee for providing the match-making platform mover advantage many sites were
and credit checking the borrower. not able to capture market and
grow their user base. Peer-to-
peer lending platforms in India
Also known as crowd lending, many peer-to-peer loans are helping a huge section of
borrowers who were previously
are unsecured personal loans, though some of the largest amounts are lent rejected or unqualified for a loan
to businesses. Secured loans are sometimes offered by using luxury assets from banks.

such as jewellery, watches, vintage cars, fine art, buildings, aircraft and
other business assets as collateral. They are made to an individual,
company or charity. Other forms of peer-to-peer lending include student
loans, commercial and real estate loans, payday loans, as well as secured
business loans, leasing, and factoring.
Phishing
Phishing is the attempt to obtain sensitive information such as usernames,
passwords, and credit card details (and sometimes, indirectly, money),
often for malicious reasons, by masquerading as a trustworthy entity in an
electronic communication..

In October 2016 Banks in India will either replace or ask users to change the security codes of as
many as 3.2 million debit cards in what's emerging as one of the biggest ever breaches of financial
data in India. Several victims have reported unauthorised usage from locations in China.
Of the cards, 2.6 million are said to be on the Visa and Master-Card platform and 600,000 on the
RuPay platform. The worst-hit of the card-issuing banks are State Bank of India, HDFC Bank, ICICI
Bank, YES Bank and Axis Bank. The breach is said to have originated in malware introduced in
systems of Hitachi Payment Services, enabling fraudsters to steal information allowing them to
steal funds. Hitachi, which provides ATM, point of sale (PoS) and other services
Digital Locker
As part of Digital India initiative Union Government has launched the digital locker facility that will help
citizens digitally store their important documents, such as PAN card, passport, mark sheets and degree
certificates. DIGITAL LOCKER will provide secure access to government-issued documents. It uses
authenticity services provided by Aadhaar and is aimed at eliminating the use of physical documents and
enables sharing of verified electronic documents across government agencies. It is expected to reduce the
administrative overheads of government departments and agencies created due to paper work. It will also
make it easy for Indian citizens to receive services by saving time and effort as their documents will now be
available anytime, anywhere and can be shared electronically.

To sign up for your


Digital Locker, you
need your Aadhaar
number and a
mobile number
linked to that
Aadhaar number.

For further reading:


https://digitallocker.gov.in/
Sovereign Gold Bonds
SGBs are government securities denominated in
grams of gold. They are substitutes for holding
physical gold. Investors have to pay the issue price in
cash and the bonds will be redeemed in cash on
maturity. The Bond is issued by Reserve Bank on
behalf of Government of India. The quantity of gold
Minimum investment in the bond shall be 1
for which the investor pays is protected, since he grams.
receives the ongoing market price at the time of The bonds can be bought by Indian residents or
redemption/ premature redemption. The SGB offers a entities and is capped at 500 grams.
superior alternative to holding gold in physical form. Investors can apply for the bonds through
The risks and costs of storage are eliminated. scheduled commercial banks and designated
Investors are assured of the market value of gold at post offices. NBFCs, National Saving Certificate
the time of maturity and periodical interest. SGB is (NSC) agents and others, can act as agents.
The tenor of the bond is for a minimum of 8
free from issues like making charges and purity in the years with option to exit in 5th, 6th and 7th
case of gold in jewellery form. The bonds are held in years.
the books of the RBI or in demat form eliminating risk They will carry sovereign guarantee both on the
of loss of scrip etc. There may be a risk of capital loss capital invested and the interest.
if the market price of gold declines. However, the Bonds can be used as collateral for loans.
investor does not lose in terms of the units of gold Bonds would be allowed to be traded on
which he has paid for. Persons resident in India as exchanges to allow early exits for investors who
may so desire.
defined under Foreign Exchange Management Act, Further, bonds would be allowed to be traded
1999 are eligible to invest in SGB. Eligible investors on exchanges to allow early exits for investors
include individuals, HUFs, trusts, universities, who may so desire.
charitable institutions, etc. Capital gain tax arising on redemption of SGB to
an individual has been exempted.
National Pension Scheme (NPS)
NATIONAL PENSION SYSTEM (NPS) is a contributory pension system whereby contributions from a subscriber
are collected and accumulated in an individual pension account called Permanent Retirement Account Number
(PRAN), to provide old age monthly pension to citizens in the age group of 18-60. Regulated by PFRDA, with
transparent investment norms & regular monitoring and performance review of fund managers by NPS Trust.

Pension contributions are invested in the pension fund schemes and the employee will be able to know the
value of the investment on day to day basis.

Open to every Indian citizen. One can choose the amount to set aside and save every year(minimum annual
contribution is Rs 6000). Two types: Tier I and II Tier-I account is where you contribute your savings for
retirement into a non withdrawable account till you reach 60 years and draw pension for the rest of your
life. The Tier-II would enable the existing Permanent Retirement Account (PRA) holders to build savings
through investments over and above those in the Tier I pension account. An active Tier I account will be a
pre-requisite for opening of a Tier II account.

Each subscriber has a separate Permanent Retirement Account (PRAN) which is portable i.e., will remain the
same even if an employee gets transferred to any other office.

Bank designated branches i.e. Point of Presence-Service Provider (POP-SP) accept the application form and
get the subscribers registered with Central Record keeping Agency (CRA) for generation of PRAN.

Tax benefits - Contribution towards NPS is exempted under Section 80CCD up to 2Lakhs.
http://10.250.4.54:8030/vault/Fee%20Income_Important%20Circulars_NPS%20Final%20Circular%20July%2015%205132.pdf
PMJDY Pradhan Mantri Jan Dhan Yojana
PMJDY is National Mission on Financial Inclusion encompassing an
integrated approach to bring about comprehensive financial
inclusion of all the households in the country. The plan envisages
universal access to banking facilities with at least one basic banking
account for every household, financial literacy, access to credit,
insurance and pension facility.

The plan also envisages channelling all Government benefits


(from Centre / State / Local Body) to the beneficiaries accounts
and pushing the Direct Benefits Transfer (DBT) scheme of the
Union Government. The technological issues like poor
connectivity, on-line transactions are to be addressed. Mobile
transactions through telecom operators and their established
centres as Cash Out Points are also planned to be used for
Financial Inclusion under the Scheme. The beneficiaries would get
RuPay Debit card having inbuilt accident insurance cover of 1
lakh. (See RuPay cards)
For further reading:
http://pmjdy.gov.in/
Direct Benefit Transfer

The purpose of Direct Benefits Transfer is to ensure that


benefits (subsidies from central/state/local bodies) go to
individuals' bank accounts electronically, minimising
middlemen involved in the chain thereby reducing delay in
payment, ensuring accurate targeting of the beneficiary and
curbing pilferage, duplication and corruption.

For further reading:


http://www.dbtmis.planningcommission.nic.in/dbtentry/homepage.aspx
Business Correspondent (BC)
In unbanked or under-banked areas, Banks are permitted to provide
banking services to people at their doorstep through the use of third
party services. This model is referred to as Business
Correspondents/Banking correspondents Model (BCs). BC is a
representative authorized to offer services such as cash transactions
where the lender does not have a branch. BCs are subject to RBI
regulations and would have direct contact with one or more financial
institutions; and they charge a commission from the bank for enrolment
of clients, transactions, deposits etc. The BC arrangement essentially
means enrolling customers and enabling the transactions of the
customers at the Customer Service Points (CSPs) besides sourcing various
deposit and loan products for the Bank as a Business Facilitator.

Through Card Technology


,
Kiosk Banking Technologyand/or Mobile/SMS bankingTechnology, Business
correspondents act as bank representatives by.
helping villagers to open bank accounts.
helping villagers in banking transactions. (deposit money, take money out of savings account, loans etc.
The Wherever needed, authentication with thumb impression or electronic signature is done through a
mobile device carried by the BC For further reading: http://mfinindia.org/dec_business-
correspondent-model-a-layered-approach-to-banking/
MUDRA
MICRO UNITS DEVELOPMENT AND REFINANCE AGENCY, set up by GOI for
development and refinancing activities related to micro units- (is a refinance
agency and not a direct lending institution). Purpose is to provide funding to
the non corporate small business sector (non farm sector). To begin with it is
is set up as a subsidiary of SIDBI. MUDRA has already created its initial
products / schemes.
These products have been designed to cater to
customers operating at the lower end of the
enterprise spectrum. Generally, loans upto 10
The interventions have been named 'Shishu', 'Kishor' and
lakh issued by banks under Micro Small
'Tarun' to signify the stage of growth / development and
Enterprises is given without collaterals. The
funding needs of the beneficiary micro unit / entrepreneur
loans will be extended through MFIs, NBFCs,
and also provide a reference point for the next phase of
Banks etc. The Department of Financial Services
graduation / growth to look forward to :
(DFS) of the Ministry of Finance has allotted
a. Shishu: covering loans upto 50,000/-
targets to the banks under the Mudra Scheme
b. Kishor: covering loans above 50,000/- and upto 5 lakh
for FY 2015-16. Target allotted to our bank is Rs
c. Tarun: covering loans above 5 lakh to 10 lakh
1010 cr.
For further reading:
http://10.250.7.27/PLG/DOCS/CIRCULAR-5308.PDF http://www.mudra.org.in/faq.php
RuPay Card

RuPay is an Indian domestic card scheme


conceived and launched by the National
Payments Corporation of India (NPCI) (an
Indian version of credit/debit card) It was
created to fulfil the Reserve Bank of Indias
desire to have a domestic, open loop, and
multilateral system of payments in India.
RuPay facilitates electronic payment at all
Indian banks and financial institutions, and
competes with MasterCard and Visa in
India.

For further reading: http://www.npci.org.in/RuPayBenefits.aspx


http://www.business-standard.com/article/pf/five-things-you-wanted-to-
know-about-the-rupay-card-114080100278_1.html
Micro ATM

Micro ATMs are devices meant for drawing small amounts


of money. The money can be withdrawn by providing a
unique identification (UID) number linked to a person's
bank account. Micro ATMs are basically small portable
devices that can be carried along or can even be attached
to laptops as it supports SIM cards and broadband services
as well.
White Label ATM

Most automated teller machines (ATMs), or machines that


dispense cash, are owned by banks. But ones that are owned
and operated by non-banking companies are called while-label
ATMs (WLAs). They function just the same way as any other
bank-run ATM and are governed by RBI Guidelines on White
Label ATMS. The WLA Operators (WLAO) will provide banking
services to the customers of banks in India, based on the cards
(debit/credit/prepaid) issued by banks. The WLAO's role would
be confined to acquisition of transactions of all banks'
customers and hence they would need to establish technical
connectivity with the existing authorised shared ATM Network
Operators / Card Payment Network Operators. Non-bank
entities would be permitted to set up WLAs in India, after
obtaining authorisation from RBI under the Payment and
Settlement Systems (PSS) Act 2007
For further reading:
https://rbi.org.in/scripts/NotificationUser.aspx?Id=7286
Card to Card (C2C)

CARD TO CARD (C2C) is transfer of funds from a debit card to another debit card across the country
irrespective of bank &account number through ATM. Sender needs to know only the debit card number of the
beneficiary. This is introduced by NPCI (National Payment Corporation of India). It is simple, secure &
convenient. Can use any NFS member bank ATM who have enrolled for the service. Single transaction limit of
Rs.5000/- & monthly Rs.25,000/-.

To FB ATM card, service charge is FREE and to


other ATM card Rs.10/-+ ST after the free
transaction limit of 5- RBI limit.

For further reading:


RBD/DCP/DebitCards/C2C/5224/ 2015 17th August 2015
https://rbi.org.in/scripts/NotificationUser.aspx?Id=7286
Verified by Visa
Verified by Visa is a way to add safety for online
transactions.- also known as 3D Secure service. The service
provides a way to PIN-protect Card usage on the Internet.

A Visa card can be registered to be protected by Verified by


Visa as long as the card issuer offers this service. A 3D
secure PIN will be provided, which will be required
whenever one uses his/her Card to make Internet
purchases from participating merchants. The requirement
of 3D Secure PIN prevents unauthorized usage of Cards on
the Internet.

MasterCard Secure Code and Rupay PaySecure are similar


secured online payment service from MasterCard and NPCI
respectively
http://10.250.4.54:8030/vault/Fee%20Income_Important%20Circ
ulars_NPS%20Final%20Circular%20July%2015%205132.pdf
Travel Cards / Cash Passport
Used for travel purpose in foreign countries such as leisure tour , education or health . Issued in foreign
currency. Reloadable cards. Can be used in ATM / POS / On Line.
We are issuing Travel Cards in three currencies USD, GBP and EURO, in association with Access
Prepaid, an Australian Subsidiary of Master Card.
Key Features and Benefits:

Chip & Pin protected


Two cards are issued
Not linked to your bank account
Free second back up card
Supported around the world by 24/7 global emergency assistance
Replacement of lost or Stolen cards
Need not carry Money
Reloadable (Subject to RBI & FEMA regulation)
Withdraw local currency at 1.9 million ATMs World Wide
Accepted 29 million Retailers & Online traders; No bank account required

For further reading:


http://www.federalbank.co.in/travel-card-personal
NFS(National Financial Switch)

With a view to inter-connect the ATMs in the country and facilitate easy banking for the common man, the
Institute of Development and Research in Banking Technology (IDRBT), Hyderabad conceptualized, developed
and implemented the National Financial Switch. The National Financial Switch facilitates routing of ATM
transactions through inter-connectivity between the Banks Switches, thereby enabling the citizens of the
country to utilize any ATM of a connected bank.
2FA Authentication
TWO-FACTOR AUTHENTICATION (also known as 2FA) is a technology patented in 1984 that provides
identification of users by means of the combination of two different components. It is a type of multi-factor
authentication. These components may be something that the user knows and something that the user
possesses (what you know and what you have). A good example from everyday life is the withdrawing of
money from ATM. Only the correct combination of a bank card (something that the user possesses) and a PIN
(personal identification number, i.e. something that the user knows) allows the transaction to be carried out.
2FA is ineffective against modern threats, like ATM skimming, phishing, and malware etc. Federal Bank has
implemented Two Factor Authentication (2FA) in FedNet as per regulatory requirements.

We provide three methods of authentication :-


SMS OTP: While executing transactions, One Time Password (OTP)
will be transmitted to your registered Mobile and e-mail ID as 2FA,
with in a validity time of say 10 minutes.
Hardware Token: You will be provided
Mobile Based OTP Authentication: A Software has to be installed in with a small hardware device (the size
your smart phone/tablet for generating dynamic software tokens of a keychain) which can be used for
(numeric passwords) which is to be used for logging in to Fednet. generating dynamic tokens for
This method of authentication is recommended for users who use authenticating FedNet transactions.
J2ME, Android, Blackberry, Apple iPhone and Windows Phone.
For further reading: Federal Digest 21 & 22
Biometric Authentication

BIOMETRIC AUTHENTICATION is a type of system that relies


on the unique biological characteristics of individuals to verify
identity for secure access to electronic systems.

Our Bank is introducing biometric two factor authentication


system for CBS login wherein the users have to give the
password (something they know) as well as a second factor,
fingerprint (something they are).

Under this system the finger prints of all employees


will be recorded once for all, digitally stored and login
will be allowed only after matching the finger print
with the digitally stored one. Biometric login to CBS is
used in many of the nationalized banks to prevent
sharing/ leakage of password.

For further reading:


https://am.federalbank.co.in/WebApp9/BIO/w
here.aspx
Crowd funding/Crowd sourcing
CROWDFUNDING is the practice of funding a project or venture by
raising monetary contributions from a large number of people, typically
via the internet.
CROWDSOURCING Crowdsourcing is the practice of engaging a
crowd or group for a common goal often innovation, problem
solving, or efficiency.

Broadly there are four kinds of crowd sourcing models

Reward-based: Here, a funder gets a reward in return for contribution.


Donation-based: One can donate money for a social cause, and also get tax
benefit.
Equity-based: In this model, when you fund, say, a start-up, you get a stake in the
company.
Debt-based: This works like a loan; you earn an interest on the contribution,
depending on the agreement.
Shell Bank & Shell Company

Shell Bank is a bank which is incorporated in a country


where it has no physical presence and is not affiliated to
any regulated financial group. Banks as a matter of
precaution shall not enter into correspondent banking
arrangement with such banks.

A Shell Company is an entity that has no active business and usually exists only in name as a
vehicle (and often listed on a stock exchange) for another companys business operations. In
other words, Shell Companies are corporations that exist mainly on paper, have no physical
presence, employ no one and produce nothing. They are frequently used to shield identities
and/or to hide money. Also, these Companies exist merely as a front for a person or
organisation that wishes to hide its identity. Although, they are legal entities that do not have a
legitimate function in business operations, Shell Companies are also utilised by criminals to
facilitate fraudulent activities.
D-SIBs

DOMESTIC SYSTEMICALLY IMPORTANT BANKS -


The Reserve Bank of India (RBI) named the State
Bank of India and ICICI Bank as Domestic
Systemically Important Banks (D-SIBs). In
determining the D-SIBs, the central bank has used
factors like size, interconnectedness, lack of readily
available substitutes or financial institution
infrastructure and complexity.
RBI also brought out the additional common equity
tier-I (CET1) requirements that would be applicable
on the D-SIBs. The additional CET-1 requirement as
a percentage of risk-weighted assets (RWAs) for SBI
will be at 0.6% while for ICICI Bank it stands at 0.2%.
Gujarat International Finance Tec-city (GIFT City)
Government of India has announced setting up of an International Financial Services Centre in Gujarat
namely Gujarat International Finance Tec-City (GIFT) in Gandhinagar, Gujarat (first of it kind in India). It is
being developed with the main purpose to provide high quality physical infrastructure, so that finance and
tech firms can relocate their operations from areas where infrastructure is either inadequate or very
expensive
It will have a special economic zone (SEZ), international education zone, integrated townships, an
entertainment zone, hotels, a convention center, an international techno park, Software Technology Parks
of India (STPI) units, shopping malls, stock exchanges and service units. Etc

Our Bank is opening its first IFSC Banking Unit (IBU) in GIFT City on 09th November 2015. (Ref: IBUs in next
page) Types of business that IBU would be primarily focusing immediately will be;
1. Disbursing Buyers credit: At present, Buyers Credits are availed of by our customers from overseas Banks
based on the letter of comfort issued by us. Now, we will be able to extend Buyers Credit from our IBU at
GIFT City.
2. Extending External Commercial Borrowing:
3. Accepting deposits and providing credit facilities to Wholly Owned Subsidiaries (WOS))/Joint Ventures (JV)
of Indian companies registered abroad.
4. Inter Bank money market operations in foreign currency

Ref: Setting Up of IFSC Banking Units: https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=9636&Mode=0


IFSC Banking Unit (IBU)
Indian banks in the public sector and the private sector authorised to deal in foreign exchange are eligible to set
up banking units in an International Financial Services Centre (IFSC). The parent bank will be required to provide a
minimum capital of US$ 20 million or equivalent in any foreign currency to its IBU. The liabilities of the IBU are
exempt from both CRR and SLR requirements of Reserve Bank of India. IBUs would operate and maintain balance
sheet only in foreign currency and will not be allowed to deal in Indian Rupees except for having a Special Rupee
account out of convertible fund for administrative and statutory expenses. IBUs are not allowed to participate in
the domestic call, notice, term, forex, money and other onshore markets and domestic payment systems
Permissible activities of an IBU include
1. Transactions with non-resident entities other than individual / retail customers / HNIs. (All transactions of
IBUs shall be in currency other than INR.)
2. Deal with the Wholly Owned Subsidiaries / Joint Ventures of Indian companies registered abroad.
3. To have liabilities including borrowing in foreign currency only with original maturity period greater than one
year. They can however raise short term liabilities from banks subject to limits as may be prescribed by the
Reserve Bank.
4. Undertake factoring / forfaiting of export receivables.
5. Undertake transactions in all types of derivatives and structured products with the prior approval of their
Board of Directors.
6. NOT allowed to open any current or savings accounts. They cannot issue bearer instruments or cheques. All
payment transactions must be undertaken via bank transfers.
Setting up of IFSC Banking Units https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=9636&Mode=0
Offshore Banking Unit

Branch of a foreign bank located in an offshore financial center (OFC). It may


accept deposits from other foreign banks and OBUs and make Eurocurrency
loans, but may not accept deposits from (or make loans to) the residents of
the country in which it is located. OBUs are otherwise unrestricted in their
legitimate activities, and are free from the monetary controls of the country
of location. OBUs are found throughout Europe, as well as in the Middle East,
Asia and the Caribbean. U.S.