Banking Capsule PDF

BANKING
AWARENESS
CAPSULE: NOV-
JAN 2017
WWW.BANKEXAMSTODAY.COM
Summary of Banking events in India during the period of November 2016 to January 2017
1/18/2017
Banking Awareness Capsule: Nov-Jan 2017
TABLE OF CONTENTS
Airtel Payment Bank: Everything You Need To Know ................................................................................................................. 2

Currency Notes Printing: All You Need To Know ............................................................................................................................ 3
Unified Payment Interface -Future of Payments in India ......................................................................................................... 5
RBI measures on Non-Performing Assets (NPA) ............................................................................................................................. 8

Islamic Banking in India .................................................................................................................................................................................. 9
Retail Credit Operations in Banks: Explained with Important Points .............................................................................13
India Post Payments Bank (IPPB) as an effective vehicle of Financial Inclusion .....................................................16
DIPAM to address Divestment in PSUs ...............................................................................................................................................18

Different Perspectives of Currency Exchange ................................................................................................................................20
Fast Facts on NEFT, RGTS, AEPS and MTSS ....................................................................................................................................20
RBI guidelines for 100% FDI in E-Commerce ..................................................................................................................................23
National Investment and Infrastructure Fund (NIIF) .................................................................................................................25

Direct Tax Reforms Panel: Easwar Committee Recommendations .................................................................................27
Green Bond: Things You Must Know ....................................................................................................................................................28
International Bank for Reconstruction and Development (IBRD) - A World Bank Initiative ...........................30
FAQs on Gold Reforms in the Demonetization Drive ................................................................................................................32
*99# USSD – Towards a Cashless Economy ...................................................................................................................................33

4 Insurance Schemes Launched for People with Disabilities (PwD) ................................................................................35
Exchange Rates: Things You Need To Know ...................................................................................................................................35
International Development Association (IDA)- A World Bank Initiative........................................................................37
Special Drawing Rights (SDR): Key Points to Remember ........................................................................................................39
Aadhaar Enabled Payment System (AEPS): At a Glance ........................................................................................................40
MCLR: Marginal Cost of Funds Based Lending Rate- Explained .......................................................................................42
Line of Credit Guidelines by IDEAS: Explained ...............................................................................................................................44

Kisan Credit Cards: All You Need to Know .......................................................................................................................................46
Financial Inclusion Fund (FIF) by RBI- Key Points Explained .................................................................................................48

Sovereign Gold Bonds Scheme: All You Need To Know ...........................................................................................................50
Better Than Cash Alliance Network: Explained .............................................................................................................................52

Reverse Mortgage Loan: Explained with Key Points .................................................................................................................53
TransUnion CIBIL Limited: Everything You Must Know ............................................................................................................55

Primary Security vs Collateral Security ...............................................................................................................................................57
www.BankExamsToday.Com Page 1
Prepaid Payment Instruments - All you need to know .............................................................................................................60

Debt Consolidation: All You Need to Know .....................................................................................................................................62
Different Types of Banking: Key Points To Know .........................................................................................................................64

National Bank for Agriculture and Rural Development: Key Points ................................................................................66
GAAR-General Anti-Avoidance Rules: Explained With Examples.......................................................................................71

Skill Banks: All You Need To Know.........................................................................................................................................................74
Adhar Card Act 2016: All You Need To Know ................................................................................................................................75

Prevention of Money Laundering Act 2002: Explained ............................................................................................................77
Difference Between Regional Rural Banks and Corporative Banks ................................................................................80
Base Rate and Differential Rate of Interest: Explained ...........................................................................................................82

Clean Note Policy of RBI: All You Need To Know .........................................................................................................................85
INX: India's First International Stock Exchange: Key Points .................................................................................................86

Blockchain System: All You Must Know..............................................................................................................................................88
Sustainable Structuring of Stressed Assets (S4A Scheme) ....................................................................................................90
AIRTEL PAYMENT BANK: EVERYTHING YOU NEED

TO KNOW
INTRODUCTION SIGNIFICANCE OF THE LOGO

Airtel Payments Bank is the first company in The Company also unveiled a new logo to
India to receive a payments bank license reflect its new identity. The new logo is a
from the RBI; plans to launch operations in modified form of Bharti Airtel telecom
the second quarter of the current FY 2016- services. It can be observed that Indian rupee
17. Airtel M-Commerce Services Limited, a symbol has been inscribed in it.
subsidiary of Bharti Airtel Limited, has been The ‘=’ sign denotes ‘Equality’. A bank that
renamed as Airtel Payments Bank Limited gives equal access to everyone.(as declared
after receiving necessary approvals from RBI. officially by the Payment bank).
MD and CEO : Shashi Aurora
Key stakeholder : Kotak Mahendra bank SIGNIFICANCE OF AIRTEL
(19.9%).
PAYMENT BANK
Kotak Mahendra bank contribution : INR
98.38 crore  Airtel Payments Bank Limited is the first
payment bank in India to receive a
payments bank license from the Reserve banking industry, while other banks
Bank of India (RBI), on April 11, 2016. offer 4-5% on demand deposits.
 It is a joint venture between Airtel M  It will allow money transfer to any bank
Commerce and Kotak Mahindra bank. account in India and free money
The bank strongly focuses on the transfer from Airtel to Airtel numbers
payments bank segment and to the within Airtel Bank.
Government’s vision of financial  The bank also offers personal accidental
inclusion and banking services for every insurance of Rs 1 lakh with every savings
citizen. account
 With Airtel’s wide distribution network in  At present the bank is operating on a
the country, it claims that Airtel pilot test basis in Rajasthan, it plans to
Payments Bank would deliver quality expand this network to 100,000 retailers
banking services to customers by in Rajasthan by the end of this year.
leveraging the power of mobile the  Merchants who are part of the network
network which is well established. would accept digital payments, helping
 The bank accounts will be opened with customers go cashless.
Aadhar numbers without the need for  The network of merchants
any other documentation and the (sellers/shops) across Rajasthan will
customer’s mobile number will be the accept digital payments from Airtel
bank account number. Bank from day one, offering customers
 The rate of interest offered is 7.25 % on the convenience of cashless purchase of
demand deposits as the best in the goods and services via their mobile
phones in a quick and secure manner.
CURRENCY NOTES PRINTING: ALL YOU NEED TO KNOW
After the ban of 500 and 1000 Rs. currency Where printing of New currency notes (2000
notes there are a lot of curiosity regarding Rs.) takes place?
currency note printing.According to exam
Ans. - Printing of New currency notes (2000
point of view, this is a very important topic
Rs.) takes place at Salboni (West
for General awareness and personal
Midnapur,West Bengal.
interview, hence here we are providing some
basic information about currency note
printing for our reader. Ques
Ques Where printing of New currency notes (500

Rs.) takes place?
Ans.- Printing of New currency notes (500 paper by cutting one tree.Hence for currency
Rs.) takes place at Security press of Nashik note printing we have to cut 5,27,895 trees
per year.
(Maharashtra), and Devas (Madhya Pradesh)
.
Ques Ques
Who printed the currency notes? How much money we have to invest on
currency printing?
Ans. - Currency notes are printed by Security
printing and minting corporation of India. Ans. - As per data released by RBI in June
2016 for last year,Investment of Government
Security Printing and Minting Corporation of
on the printing of 21.2 billion notes was
India Limited (SPMCIL) was incorporated on
3,421 crores Rs.
13
January 2006 under the Companies Act, 1956

Ques
with its headquarters in New Delhi. It is a
Miniratna Company and is wholly owned by Who printed 1st note of India ?
the Government of India.
Ans. - British company ‘Thomas de la ru’
The work of SPMCIL includes manufacturing printed 1st note of India at 1862.Today this
of security paper, minting of coins, printing of company printed currency notes for more
currency and banknotes, non-judicial stamp than 150 countries.
papers, postage stamps, travel documents,
etc.
PAPER MILL
The vision of SPMCIL is “To be leader in
manufacturing of currency, coins and The Security Paper Mill (SPM), Hoshangabad
security products through process excellence was established in 1968 which is responsible
and innovation”. for the manufacturing of different types of
Security Papers. It provides the numerous
Ques security features in paper via Fluorescence
Fibres, Multi-tonal three Dimensional
How many Metric tonnes of paper required
Watermark, Electrotype Watermark, various
per year for printing notes for India?
types of Security Threads, Tangents, etc.
Ans. - India required 22 Thousand metric
tonnes of paper per year for currency
notes.i.e. 88 lakh of Rim. We get 16.67 Rim PRINTING PRESSES:
Following are 4 printing presses in the  Hyderabad Mint: The Hyderabad Mint
country - has five pointed STAR Under the date of
coin ashyd mint.
 Currency Note Press, Nashik Road
 Noida Mint: The Noida Mint has a small
 Bank Note Press, Dewas
or thick dot under the date of the Coin.
 India Security Press, Nashik
 Security Printing Press, Hyderabad
UNIFIED PAYMENT INTERFACE -
FUTURE OF PAYMENTS IN INDIA
MINTS:
The Mints are situated at Mumbai, INTRODUCTION:
Hyderabad, Kolkata and Noida.
Coins are minted at the four India We are seeing the tide which is rapidly
Government Mints at moving towards a cashless economy or say

digital money. It is really a boost to the
 Noida, Uttar Pradesh – set up in 1986 economy where mobile wallets are increasing
and started minting ferritic stainless and e- commerce transactions are becoming
steel coins from 1988. easier. The benefit from this digital systems
 Alipore (Kolkata), West Bengal, can be used to reduce the cash flow.
established in 1929. The transparency will be channelized and it
 Mumbai, Maharashtra – established in will help to build the financial history of each
1929. and every one, which will result in the form of
 Saifabad and Cherlapally (Hyderabad), financial inclusion. By keeping all these
Telangana – established in 1903 by the aspects in mind the central bank of India
Government of the erstwhile Nizam of (RBI) has taken a big step in terms of making
Hyderabad and was taken over by the India a cashless economy as it has launched
Government of India in 1950 & started Unified Payment Interface (UPI) initiated by
minting since 1953. National Payment Corporation of India
Each mint has its mark on the coin minted by (NPCI).
it as shown below:
BACKGROUND:
 Mumbai Mint: The Bombay Mint has a
small dot or diamond mint mark under The Reserve Bank of India (RBI) had released
Date of the Coin as Mumbai mint. a payment system vision during the period of
 Kolkata Mint: The Calcutta Mint has No 2012-2015. The main agenda for releasing
Mint Mark beneath the date of coin as the vision is to encourage the
Kolkata mint. implementation of a cashless society in our
country. The real mission was that the remittances, merchant payments etc. In this
payment and settlement systems need to be digital era, every one of us is having
secure, efficient and it needs to meet smartphones. Each and every user with
international standards. Against this android phones can download the UPI from
backdrop, the NPCI was set up to integrate Google Play store. After the installation
all the multiple systems into a uniform process, you need to set up the app login and
process for all retail payment systems. In the then create a virtual address, add the bank
mid-week of April 2016 RBI Governor account and then finally set a mobile pin (M-
launched the UPI developed by NPCI. It is a Pin) and then start using UPI. The transaction
nice initiative to introduce UPI to make it limit is 1 lakh.
easier and to provide a single interface
across all systems. As of now 21 banks are VIRTUAL ADDRESS:
implementing this UPI app. It is a type of
It is the most innovative idea or we can say
payment system which allows easy and quick
it is the heart of the UPI we generally make
transfer of money between two parties.
payments by using card details such as card
number, CVV etc. Typing these numbers in a
UNIFIED PAYMENT INTERFACE:
mobile is not a hassle free and to solve this
This interface will integrate the entire problem, UPI has come up with an idea of the
payment systems in India. It uses a single virtual address. It will be in the form of
application programme interface with a ‘bankexamstoday@idbi’. There is no need of
series of Application Programme interface furnishing any other details.
(API’S). The mobile devices are the primary
object for all the payments. FEATURES OF UPI:
Payment systems should be simpler.
WORKING: 
Transfer of money should be done with
It is a payment system which allows the just an identifier without having any
transfer of money between two bank complex details to hand. It should be
accounts by using a smartphone. A customer done at a simple click.
will be paying directly from a bank account  Innovation is a major aspect. Both the
to different dealers both online as well as payer and payee shouldn’t face any
offline. There is no need of typing any card difficulties.
details, IFSC code or any passwords. It is a  The solution needs to have strong and
type of payment system which is like the efficient data protection.
existing NEFT, RTGS etc. UPI includes
transactions such as bill payments,
 The adoption of this app needs to be each transaction happens between two
scalable to a billion users and even large persons.
scale adoption also.  UPI will create a new ecosystem so that
 In the coming 5 years, the number is it will offer simpler and instant solutions
expected to rise 500 million users of to the customers.
smartphones. So the solution should be  There will be no entry barriers for start-
channelized in a proper mechanism to ups and for small businesses as it will
take full advantage of that. solve the problem of collecting money
For Example, if a user wants to make for products and services.
payment to the commercial store, he can  It is a very significant move, as the
simply tell his virtual identity to the cashier service can be provided to the merchant
the cashier will generate an invoice in UPI with the help of the smartphone at the
and the user approves it using his place of business.
smartphone. In this process, the payment will  It is a big platform for a growing
be made. economy like India. There will be no
paper money and consumers will not be
USAGE OF UPI: facing any barriers.
 UPI works only on the mobile interface. CONCLUSION:

 Some banks have integrated UPI with the The innovation is becoming a key factor as
existing apps and some have included a new new players are emerging and entering into
one. the payment landscape, so as to improve the
customer experience. NPCI is playing a key
 Users can send money using their virtual ID role in ensuring the participants to innovate
only. By using the virtual ID only we can do more with the existing systems. The increase
payments. An alert message will be sent so in smartphones, universal access to banking
as to authorise the transactions. in phones provides us with a unique
opportunity to maintain an edge over the e-
ADVANTAGES: payments and to provide customers with
 The UPI will have a significant control stringent security and unparalleled ease of
over current systems and can take use.
mobile payments to next level.
 The UPI is supported by the aadhar
system. It is based on the unique
identification code and it is ensured that
RBI MEASURES ON NON-PERFORMING ASSETS (NPA)
RBI has revealed that 5 out of 8 PSU

INTRODUCTION 
banks have recorded huge losses due to
Non Performing Assets are increasing rapidly NPA
and shaking the entire banking sector
including both public and private sector The highly stressed public sector banks
banks in India. include
1. Punjab National Bank

WHAT IS NPA?
2. Indian Overseas bank
 A credit amount for which both the 3. Syndicate bank
principal amount and the interest due 4. Bank of Baroda
on the amount is not paid for a specific 5. Dena Bank
period of time (generally 90 days) is 6. Allahabad bank
termed as NPA 7. Central bank of India
NPA are also termed as bad loans or

ILL EFFECTS OF NPA
defaults
 NPA arise as a result of bad lending  Borrowers find it difficult to borrow from
practices, banking crisis, frauds in banks as bankers show aversion to
banking operations etc borrowers
 Public sector banks are highly stressed  The attitude of bankers towards the
due to NPA borrowers becomes arrogant
 NPA causes severe liquidity problems in  Borrower gets demoralized with such
banks and to the shareholders of the behavior of the employees and loses
banks faith in the banking system.
Bank loyal customers move away from
NPA FACTS FOR CURRENT 
their banks
FISCAL  The reputation of the bankers is at stake
in such high NPA situation
 RBI has reported gross NPA has
 The relation between bankers and
increased to 11.1 percent from 9.2
borrowers is not conducive
percent in the previous year
 Banks start to adjust daily operations
 RBI reports a staggering gross NPA
and accounts as a result of NPA
figure of 3 lac crore
 Shareholders lose confidence in the
 Stressed assets of banks stood at more
banks and withdraw their invested
than 6 lac crore
money from the banks as a result of  RBI has asked banks to accelerate
NPA provisioning of stressed assets
 Customer service of Banks becomes  This provisioning measure has reflected
negative and employees start shouting heavily on the profitability of the banks
at customers over the phone with banks recording huge losses or low
 Banks start moving towards bankruptcy profits
 RBI has eased the NPA redressal norms
Gross NPA figures of banks  RBI revised guidelines on Strategic debt
restructuring (SDR)
 Punjab National Bank reported the  Banks can make provisions to the tune
maximum gross NPA and ranks top of 15% of the loan value
among public sector banks  RBI relaxed Joint Lender’s Forum (JLF) by
 Punjab National Bank reported gross bringing down the divestment limit to
NPA of 34338 crore, an increase of 26% from 51%
10000 crore from previous year  RBI has released corrective action plan
 Central Bank of India has reported gross (CAP) on defaulters
NPA of 17564 crore  RBI has initiated criminal action
 Dena Bank has reported gross NPA of on willful defaulters
7916.47 crore  RBI has recognized Common Equity Tier
 Allahabad Bank has reported gross NPA I (CETI) capital for deferred tax assets
of 3494 crore  RBI has unlocked 40000 crore to banks
 ICICI banks is facing huge problems due to handle the NPA problem temporarily
to NPA and faces the heat in the private  Public sector banks will get an infusion
sector of 35000 crore from RBI
 ICICI bank has reported gross NPA of  Private sector banks will get an infusion
21149 crore, a steep rise of 70 percent of 5000 crore from RBI
compared to previous years  SARFAESI Act amended to handle NPA
related cases in State High court and
RBI MEASURES
Supreme court
 Asset restructuring  The recent demonetization drive could
 Divestment through sell off of stressed help banks in recovering some of the
assets NPA arrears
 Reformed Bankruptcy norms
ISLAMIC BANKING IN INDIA

Islamic economics.
INTRODUCTION:
Islamic Banking is known by several names:
Reserve Bank of India (RBI) has proposed the
 Interest free banking (Iran)
opening of an "Islamic window" in
 PLS Banking (Pakistan)
conventional banks for a gradual
 Islamic Banking (Gulf countries)
introduction of Sharia-compliant or interest-
 Special Finance Houses (Turkey)
free banking in India.Interest-free banking,
All expressions are used interchangeably.
also known as Islamic banking, has shown
significant increase, especially after the
ELEMENTS OF INTEREST-FREE
financial crisis across the globe. According, to
Christine Lagarde, Managing director, IMF BANKING :
(2015), total Islamic
 Riba: The most important aspect of
finance assets are estimated at around USD
interest-free banking is the prohibition
2 trillion, practically a ten-fold increase from
of interest;
a decade ago, and outperforming the growth
 Haram/halal: The code of ‘ethical
of conventional finance in many places.
investments’ which governs operations
Even though many interest-free banking
based on interest-free financial
products are similar to conventional banks;
activities. Priority is given to the
the central concept of interest-free banking
production of essential goods that
and finance is equality, which is achieved
satisfy the needs of the population, such
through the sharing of risk. All the
as food, clothing, shelter, health and
stakeholders are to share profits and losses,
education;
and charging interest is strictly prohibited.
 Ghrarar/maysir: Gambling in all forms is
prohibited. It also condemns economic
WHAT IS INTEREST-FREE
transactions involving elements of
BANKING? speculation;
 Zakat: This is an important instrument
The term “Interest-free/Islamic banking”
for the redistribution of wealth in the
refers to the system of banking that is based
form of a mandatory levy.
on Islamic law (Shariah) and is guided by
BASIC FINANCIAL CONTRACTS UNDER INTEREST-

FREE/ ISLAMIC BANKING
1. TRUST-BASED FINANCE 4. EQUITY PARTICIPATION

(MUDARABAH) (MUSHARAKAH)
It is the type of investment which represents Musharakah is a partnership agreement
the ownership of units of equal value in the between the bank and the customer where
equity. In Mudarabah, one partner provides equity is contributed by both the parties,
the capital, while the other partner offers either in cash or in the form of goods or
labour and expertise. Profits earned are assets.The profits earned and losses incurred
shared in a predetermined ratio, whereas are shared on agreed ratios.
losses are borne entirely by the capital’s
owner. 5. DEFERRED PAYMENT,
DEFERRED DELIVERY (ISTISNA)
2. COST-PLUS FINANCING
Istisna is a type of contract in which the
(MURABAHAH)
manufacturer /contractor agrees to produce
In Murabahah, the buyer(customer) /build and to deliver a certain
approaches the bank to acquire goods. In goods/premises at a given price on a given
turn, the bank (seller) purchases them from a future date. The price might be paid in
third party (a supplier) and then re-sells them instalments or by part-paid in advance with
to the borrower/customer (buyer) on the remaining balance will be paid later,
basis of an agreed mark-up for immediate or depending on the preferences of the parties
deferred payment. The total cost is paid in involved.
instalments and the product's ownership is
with the buyer until the last instalment is 6. PARTICIPATION SECURITIES
paid.
(SUKUK)
Sukuk represent Shariah-compliant securities
which are backed by tangible assets. It has a
3. LEASING (IJARAH) face value linked to the value of the
In Ijarah, the bank acts as a lessor, buys and underlying asset which can be traded in the
leases out an asset or equipment required by secondary market. As with conventional
its clients( who acts as a lessee) for a lease bonds, Sukuks have maturity and the issuer
rental fee. The responsibility for has. Buyback option on the maturity date.
maintenance/insurance lies with the lessor. Risk involved is that the initial investment is
not guaranteed and the returns or principal
repayment completely depends on the charge borrowers a service fee to cover the
performance of the underlying assets. administrative expenses of handling the loan
as they are given mainly for welfare
7. AGENCY (WAKALA) purposes.
Wakala is a money market concept used in

LIST OF INSTITUTIONS WHICH
deposit products by Islamic finance houses.
The depositors fund the bank to invest in PROVIDE ISLAMIC FINANCING
suitable Shariah projects. The bank acts as IN INDIA
agent to invest the funds into various assets
and projects. The bank which acts as an 1 Atharvved Finance Corporation
agent is entitled to receive a fee for its 2 TAMEEM IMPEX
expertise and services while the returns will 3 Associated Industrial Credit Society Al-
be given to the depositors or investors. Siraat Investment & Banking
4 The Bank of Tokyo-Mitsubishi UFJ, Ltd
8. DEMAND DEPOSITS (AL- 5 Baitun Nasr Urban Cooperative Society
WADIAH) INTEREST-FREE BANKING AND

Al-Wadiah refers to a concluded contract FINANCE IN INDIA- WAY AHEAD:
between the owner/depositor of the
goods/money and the bank which acts as  In 2000, the southern Indian state of
the custodian for safekeeping. In this Kerala experimented with Islamic
contract the depositor(s) grants the bank finance with a financial company called
their consent to utilise the money for Alternative Investments and Credits
whatever purpose permitted by Shariah laws. Limited based in Kochi which promoted
Depending upon the financial results, the interest-free financing vehicles following
bank may decide to pay a premium at its Islamic banking principles.
discretion, to the depositors/customers.  In 2013, Cheraman Financial Services
was launched, a NBFC (Non-banking
9. BENEVOLENT LOAN (QARD finance company) promoted by the
Kerala State Industrial Development
HASSAN) Corp and focusing on Shariah-compliant
Under Qard Hassan(benevolent/virtuous financing projects such as land and
loan), a loan is sanctioned on a goodwill housing development scheme based on
basis, with the debtor (bank), where the waqf, Islamic endowments and
customer is only required to repay the donations.
amount borrowed. Banks are allowed to
 Later, Taurus Mutual Fund and Tata Islamic Corp. for the Development of the
Mutual Fund offer Shariah-compliant Private Sector, a unit of Saudi Arabia-
investment schemes in India, not based Islamic Development Bank (IDB),
specifically marketed as “Islamic,” but to extend a $100mn financing line to
as “ethical funds” in order to appeal to support the export of Indian goods to
non-Islamic investors as well. Muslim countries. The IDB, would soon
 EXIM Bank( in April,2016 ) has establish its first Branch in Ahmedabad.
announced a collaboration with the
RETAIL CREDIT OPERATIONS IN BANKS:

EXPLAINED WITH IMPORTANT POINTS
Retail Credit Operations means the
INTRODUCTION
sequential process which involves screening,
Banks being the financial houses which evaluation of risk(s), and ensuring that the
primarily are established to accept deposits bank lends to a worthy( credit worthy) client
and to lead loans to the public. Profitability from the asset products applications
of the bank depends mainly on the Net sourced.
Interest Income(NII) generated.(I.e) If a bank
accepts deposits from customers for which THE PROCESS OF RETAIL
an interest of 6 % is paid every quarter, but
CREDIT OPERATIONS IN BANKS
lends a loan for an interest of (say) 13%
which might fixed or a floating rate( it  Initially, the asset product( Personal
depends and varies for different asset loan/Mortgage/Business loan/Credit
products). The Net difference which is Card) applications are sourced by the
excluding the cost, earned is the Spread Sourcing team.
which is also called Net Interest Income. Sourcing team consists of :
The quality of loans lent depends on the a. Retail Branch Team
efficiency of the banks in sourcing, screening, b. Direct Sales Team.
processing and sanctioning of credit. c. Tele-Sales Team.
Computerization of data and pre-

WHAT DOES RETAIL CREDIT 
screening of application is done by the
OPERATIONS REALLY MEAN? pre-screening team, if any rejections like
missing documents or signature  If the Credit evaluation team while

mismatch/unsigned forms are rejected processing the application finds any
to sourcing team to attach the recommendations attached by
additional documents required. GM/VP/Country head-sales for policy
 Then the application moves to the Credit deviations or all the policy criteria are
evaluation team, which evaluates the met but any system deviations(errors in
application as per the Credit and calculation of eligibility by the computer
product policy. after policy revision) is observed then
 A CPV( Contact Point Verification) is the application is
done to ensure correct phone number, escalated/recommended to Credit Risk
address, employment details, existence Evaluators to process it from their end.
of business, etc.A positive CPV check is  When the policy criteria are not met( say
essential to credit evaluation. customer has a poor credit score,
 Any suspicions in documents is cheque bounces in the recent past, or
observed, it is referred to the Fraud may not be eligible for the particular
Management Unit and after FMU product) then the application is
clearance it is processed further. declined.
 Rejections observed during credit  Application is processed and moved to
evaluation are clarified with Sourcing the disbursement team for disbursal, if
team and necessary documents are all policy criteria are met.
attached for further evaluation.
MUTUAL FUNDS: IMPORTANT FACTS REVEALED

debentures upon the scheme’s stated
IMPORTANT FACTS ABOUT
objective.
MUTUAL FUNDS  Mutual fund is one of the most cost
efficient financial products.
 A mutual fund is the trust that pools the
 By investing in mutual fund, one can
savings of a number of investors who
gain the service of professional fund
share a common financial goal.
managers, who would otherwise be
 The money that are collected from
costly for an individual investor.
investors then invested by the fund
manager in different types of securities.
These could range from shares to
 Without investing a large amount of maturity period. So the money available

money one can enjoy the service of to you at any point of time.
trading through mutual fund.  Close ended scheme: unlike an open
 Since many investors are investing in ended scheme, there is a stipulated time
one scheme so the market risk (if any) period. Hence the money available to
get divided among the investors. Hence you only at the maturity date.
ultimately the risk is comparatively  Interval fund : This type of scheme is the
lower than other investment plans. combination of open ended scheme and
 The trading of units in mutual fund done closed ended scheme. Here the investors
through the stock market. And the price are allowed to trade at a pre -defined
of commodity is not stable all the time. date.
So the market value of the commodity is
ADVANTAGES OF MUTUAL
fluctuated and thus the risk mostly
called the market risk also fluctuated FUND
with respect to the price of the traded
 Professional management
commodity.
 Diversification
TYPES OF MUTUAL FUND  Convenient administration
 Low cost
mutual funds are mainly of three types.
 Liquidity
These are listed below with the help of a
 Transparency
diagram.
 Flexibility
 Choice of scheme
 Well regulated
 Tax benefit
HOW IS MONEY MADE

THROUGH A MUTUAL FUND?
 Capital Appreciation: as the value of
securities in the fund increase, the fund’s
unit price will also increase. There would
be a capital appreciation when you sell
 Open ended
your available units at a price higher
scheme: under this scheme investors are
than the price at which you bought.
free to buy or sell units at any point of
time. This means that there is no
 Coupon / dividend income : fund will  Step6-> income and dividend gets
earn interest/coupon from the bonds it generated.
holds on.  Step7-> income is distributed among
the shareholders.
TAX BENEFIT FROM MUTUAL

HOW TO INVEST IN MUTUAL
FUND
FUND?
 Under sec 80c up to a limit of 100000 in
 Step1 -> identify your investment
a financial year is eligible for deduction
needs.
in a savings scheme.
 Step2-> choose the right mutual fund.
 Dividend from mutual fund scheme is
 Step3-> select the ideal mix of scheme.
tax free in the hands of investor.
 Step4-> investors pool their money.
 Indexation benefit under long term
 Step5-> fund manager invest the pooled
capital gain in debt scheme.
money in securities.
INDIA POST PAYMENTS BANK (IPPB) AS AN

EFFECTIVE VEHICLE OF FINANCIAL INCLUSION
up the financial inclusion in India especially in
INTRODUCTION
the rural areas with its extensive network of
India Post Payments Bank (IPPB) was branches.
incorporated on 17th August 2016 under the
companies Act, 2013. IPPB is expected to speed
WHAT ARE PAYMENT BANKS?

 Payment banks are specialized banks to  RBI is the authority to license payment
receive deposits up to 1 lac banks
 They can issue Debit or ATM cards  RBI approved 11 companies in the initial
 They cannot issue Credit cards phase
 They cannot lend money  IPPB is one of the payment banks
approved by RBI
 IPPB works under the Department of Posts
REGULATORY BODY
Department of Posts is expected to roll

PURPOSE OF IPPB 
out the IPPB all over the country by
 Aims to become the top most vehicle of September 2017
financial inclusion in India
 IPPB is expected to bring nearly 40
percent of the Indian population that is IPPB SERVICES
outside the ambit of the formal banking
 IPPB provides demand deposits up to 1 lac
sector
through savings and current accounts
 Propagate financial literacy across the
 Remittances and payments are enabled in
country
a digital manner
 Encourage people to move to a less cash
 IPPB provide access to Mutual funds,
economy
insurance, forex, credit products and other
 The main goal of IPPB is to become the
third party financial services by
world’s most accessible bank equipped
establishing partnerships
with modern banking technology
 People can pay educational institutions
fee, utilities bill etc. through IPPB
IPPB will offer internet services, mobile
FACTS ABOUT IPPB 
banking services, debit cards, mobile
 IPPB was proposed to be launched in wallets, ATMs and POS devices etc.
Budget session of 2015
 IPPB becomes the first Public Sector
Undertaking (PSU) under the Department IPPB FEATURES
of Posts with 100 percent Union
 Develop a savings habit among people by
government equity
increasing financial literacy
 IPPB becomes the fastest rollout for a
 Beneficiaries will receive MGNREGA
bank anywhere in the world
wages, social security pensions and other
 IPPB will become the world’s largest bank
government welfare measures directly to
in terms of time and accessibility
their bank accounts following the already
 Initially, service will be available through
successful DBT model through IPPB
650 payment bank branches linked with
 IPPB extends financial inclusion rapidly
the post offices
 Post men are empowered to widen the
 Gradually services will be extended to 1.55
accessibility of IPPB across the country
lac post offices across the country having
 The postal delivery system is the most
physical presence
reliable network in India
 IPPB will use alternate channels of modern
 IPPB will enjoy the trust of India post
technology including ATMs, Mobiles, POS
developed over the years
devices etc
 Transparency in governance will improve

 Corruption will be reduced
BENEFITS  The intermediaries will be cut
 Low cost
 Easy access for customers
 Availability of quality financial services
 Customers can get the leverage of
across the country
postal network
Data Security is a major area of concern.
 Wider reach especially in the rural and
IPPB is launched with huge expectations to
remote areas
develop India as a whole and hope it lives up
 Direct transfer of subsidies to the actual
to the expectations. This is yet another big
beneficiaries in their bank account
step of the Government of India towards
through IPPB services of financial
financial inclusion with the aid of RBI and
inclusion
Department of Posts.
DIPAM TO ADDRESS DIVESTMENT IN PSUS

NITI Aayog has identified 74 loss making
INTRODUCTION 
PSUs
Union Government of India renamed the  Among these 8 PSUs are identified to be
Department of Divestment to DIPAM closed this fiscal according to Union
(Department of Investment and Public Asset budget 2016 - 2017
Management) on April 20, 2016.
PURPOSE OF DIPAM
This was formally announced in the Union
budget 2016 - 2017 by Finance Minister Mr.  Proper management of Government
Arun Jaitley investments in equity
 Divestment in Central Public Sector
NEED FOR DIPAM Undertakings (CPSUs)
 To advise government on financial
 Highly stressed PSUs
restructuring matters of CPSUs
 Inefficient management structure in loss
 To attract investment through capital
making PSUs
markets
 Increase in loss making PSUs
 To address issues of capital
 Rapidly rising non performing assets of
restructuring, bonus shares, dividend etc
Banks
in CPSUs
BACKGROUND DIPAM PROGRESS

 NDA government (1999 – 2004) was  “Invest India” was the official agency for
aggressive in divestment and privatizing promotion of investment in India
loss making PSUs  Main aim is to provide facilities for
 NDA earlier privatized more than a investment in India
dozen companies  This is to be merged with DIPAM
 UPA government buried this divestment  DIPAM works closely with “Make In
regime in their rule India” and predicted to be first and
 Now, BJP is aiming to revive divestment foremost place for investors
again through DIPAM  The experts and DIPAM team will
provide the potential investors with the
EARLIER DIVESTED PSUS
various opportunities existing in various
 Some of the divested PSUs during the sectors
Atal Bihari Vajpayee led NDA  It will guide the investors from
government include incubation to establishment and after
 Videsh Sanchar Nigam Limited (VSNL) care services
 Bharat Aluminium Company (BALCO)  DIPAM expedites regulatory provisions
 CMC Ltd and approvals
 HZL (Hindusthan Zinc Ltd)  DIPAM will carry out privatization of
 Hotels PSUs in due course by transforming the
poor or loss making PSUs as
DIPAM FUNCTIONING
infrastructure to new potential investors
 DIPAM will function under the finance through “Make In India’
ministry of India
 Head Quarters located in Delhi
 DIPAM will deal with the sale or CURRENT IMPLICATIONS
divestment of equity in CPSUs
 NITI Aayog sell off 8 loss making PSUs
 DIPAM will manage government
for 56500 crore through Divestment
investments in equity
 Among this, 20500 crore to be divested
 DIPAM uses Open For Sale (OFS), private
through strategic sale
placement, stake sale, strategic sale etc
 Rest 30000 crore to be divested through
to divest CPSUs
stake sale
 All divestments to be handled by DIPAM
 DIPAM to garner more than 16000 crore
or on the advice of DIPAM by the
by November end through share buy
concerned ministry
backs and offer for sale (OFS) route of  NTPC and IOC carry out Divestment
Divestment through employee subscriptions
 PSUs involved in Share buy back include  SBI merger with its associate banks and
NALCO, NMDC, Coal India, MOIL and Bharatiya Mahila Bank on share swap
Bharat Electronics accounting to 13500 ratio basis approval on August 18, 2016
crore
 NHPC Stake sale amounting to 3350
crore
FAST FACTS ON NEFT, RGTS, AEPS AND MTSS

Core Banking Services (CBS): It is a process branch server. Due to its high advantages,
under which information related to customer Central bank of India i.e. RBI made it
accounts and database information was compulsory to all Banks to implement Core
done over electronic media. It stored in Banking Services (CBS) as soon as possible.
It stored in the central server instead of
1. NEFT - “NATIONAL ELECTRONIC FUND

TRANSFER”
It is a nation-wide payment system .

FAST FACTS ON NEFT
 One can transfer funds to others though
self-account.  There is no minimum or maximum limit
 Applicable to both Account holders and while transferring through NEFT
Non-Account holders. platform.
 Funds can be transferred through  If you have Bank account in any NEFT
electronic media enabled branches , then you can
 Funds can be transferred in 12 slots on transfer fund through internet or bank
weekdays and 6 slots on Saturday branches directly.
 Applicable for those customers,  If you don’t have an account, then there
Corporates, Firms,whose bank is entitled are few norms you need to follow, RBI
with NEFT payment system. sets an upper limit ceiling i.e. one can
transfer up to Rs.50,000 per transaction.
 NEFT mode can also be used while  While transferring NEFT fund you to
transferring fund to Nepal under Indo- anyone you must have His/Her Bank
Nepal Remittance Facility scheme. Here Accounts Details like Account Number ,
also RBI sets an upper limit ceiling i.e. Account Holders Name , IFSC code.
one can transfer up to Rs.50,000 per
transaction.
 For these schemes, Banks charges as
service charge or processing fee for
each ENFT transactions.
2. RTGS- “REAL TIME GROSS SETTLEMENT”

 Processing of instructions starts at the  Only Account Holders can enjoy the
same time service. There is no provision to transfer
 Settlement of fund transfer occurs funds for Non-Account holders.
according to individuals basis or it can  The customer can transfer funds in
be transferred instantly. There is no such Between 9AM to 4:30PM on Monday to
time slot. Friday. & 9AM to 1:30PM on Saturday.
 Funds can be transferred in Real Time  But Bank transaction time is in between
Basis. 9AM to 4:30PM on Monday to Friday. &
 RBI sets a limit, One can transfer a 9AM to 3PM on Saturday.
minimum of Rs.2 Lakh  As per RBI guidelines, Banks charges
 The scheme is only applicable for those Rs.25 + Application time charge (Rs.5) A
customers, Corporates, Firms, whose total of Rs.30 for each transaction in-
bank is entitled with RTGS Payment between Rs.2 lakh to Rs.5 lakh.
platform system.  However, Above Rs.5 lakh Bank charges
Rs.50 + Application time charge
FAST FACTS ON RTGS:
3. IMPS: IMMEDIATE PAYMENT SERVICES

IMPS is an instant interbank electronic fund the immediate payment services with
transfer service through mobile phones. your bank.
 After successful registration, the bank
will provide you “Mobile Money
Identifier(MMID) and Mobile Personal
FAST FACTS ON IMPS:
Identification number(MPIN).
 This service is available 24x7 for a  For transferring of funds the Minimum &
transaction between interbank. Maximum amount is to be Rs.1 and
 It doesn’t require any “batches”. Though Rs.2,00,000.
IMPS offers Instant Transfer.
 To be able to transfer fund through
IMPS route you must first register for
4. AEPS: AADHAR ENABLED PAYMENT SYSTEM

 It is a payment system which uses  Through AEPS, the customer can
Aadhar card number and individuals withdraw or deposit cash, make the
online UIDAI authentication, which are balance enquiry, and transfer funds.
linked to a customer's Bank account.  The maximum amount of transaction
 A customer will have to register his/her per account per day is Rs.50,000.
Aadhar number to their existing bank  These transactions are normally
account, provided their bank is AEPS conducted by Business Correspondents
enabled. (BCs) service centres.
5. MTSS: MONEY TRANSFER SERVICE SCHEME

 It is a system of money transfer for  A maximum of Rs.50,000 can be
transferring personal remittances from remitted inwards as per the money
abroad to beneficiaries in India. value. And a maximum of 30
 Through this only inward remittances transactions per the calendar year.
into India are permissible. No outward
remittance allowed.
6. NEPAL REMITTANCE SCHEME

 It is a cross-border one-way remittance  Maximum amount remittance is INR
facility scheme for remittance from India 50,000 and beneficiaries will receive in
to Nepal. Nepalese Rupees.
RBI GUIDELINES FOR 100% FDI IN E-COMMERCE
INTRODUCTION BACKGROUND OF E-
The tremendous growth of e-commerce COMMERCE IN INDIA
market required streamlining in currency flow
 E-commerce is fast growing industry in
and regulation of e-commerce companies. In
India and is expected to touch $69
this purview, RBI along with DIPP have
billion by 2020
released guidelines for e-commerce
 Already 100 % FDI is allowed in e-
companies
commerce
In the last 2 years, there is a tremendous
NODAL AGENCIES

increase in e-commerce market place
 Department of Industrial Policy and competition with the emergence of
Promotion (DIPP) is the nodal agency to players like Amazon, Snapdeal, Flipkart,
provide licenses to e-commerce Myntra, e-bay etc
companies  The e-commerce companies give huge
 DIPP works under ministry of commerce offers and discounts that drastically
and industry affected the sales of traditional brick
 RBI regulates the money transactions in and mortar companies
e –commerce  Most of the traditional companies have
 Most of the transactions in e-commerce gone out of business due to the heavy
take place online and RBI has a huge competition in e-commerce market
role to provide safe and secure online place
transactions to the customers  In this context, certain guidelines and
measures needed to be taken to check
the online companies from give such  The guideline will provide a level playing
high discounts and offers to customers field for both online and traditional brick
and mortar companies
ISSUES AND GUIDELINES
 The new guidelines will put an end to
 The recently released guidelines address the existing predatory pricing
two major issues of prominent display  The guidelines constitute a direct or
and online monopoly indirect influence on the online market
 First, a large vendor with big discounts which is fast growing and needs
will get prominent display in online streamlining
portals like Amazon, Snapdeal etc  The guidelines have been released as a
 This forces other retailers in the online first measure to regulate the online
portal to reduce their prices and also market
get lower display
CONCLUSION
 Fixing of a floor price for the products in
e-commerce is the recommended  The guidelines will make the e-
guideline to curb the above practice commerce players operate as
 Second, monopoly creation in online technology providers and not as
market place retailers
 WS retail in Flipkart alone accounts for  Market places will serve as only
more than 35% of sales technology providing platforms to sellers
 CloudTail India sales in Amazon exceeds and not get in to inventory based
40 % models resulting in predatory pricing
 A single e-commerce entity is restricted  The guidelines have put restrictions on
to only 25 percent of the sales is the the existing players and the new
recommended guideline to prevent the entrants in to the online market place
above monopoly in e-commerce sales  Critics argue this to be a bureaucratic
discretion
IMPLICATIONS OF THE
 The new guidelines clearly separate
GUIDELINES inventory based models from market
based e-commerce
 Customers cannot enjoy the current
 In inventory based models, there is no
huge online discounts once the
FDI allowed
guidelines come into force as the online
 100 % FDI is allowed only in market
retailers will be forced to reduce the
based e-commerce
discounts
 The guidelines must be transformed in  Overall, customers will not enjoy the
to policies and implemented strongly by huge discounts that they are enjoying
the nodal agencies – DIPP and RBI now from the online shopping portals
 Competition commission of India must after the guidelines are implemented
establish a committee to look into the
existing predatory pricing regime in
online market place
NATIONAL INVESTMENT AND INFRASTRUCTURE

FUND (NIIF)
AIFs are established to raise capital to
INTRODUCTION 
reach a size of as much as 2 % of
NIIF is established by the Union government the GDP
as a category II Alternate investment Fund  NIIF is established as a Category II AIF
(AIF)
NIIF – ESTABLISHMENT
BACKGROUND OF NIIF  NIIF will be established under SEBI
regulations
 SEBI constituted the 21 member
 NIIF will be financed by GOI with 49%
committee under the leadership of N R
equity
Narayan Murthy, Infosys Co-founder
 The rest of the funds will be done
 The committee was named Alternative
through foreign and domestic partners
Investment Policy Advisory Committee
 Initial corpus amount of NIIF is 40000
(AIPAC)
crore rupees
 On the recommendations of the
 The amount of NIIF will be changed from
committee, Alternate Investment Funds
time to time
(AIF) were established as start up eco
system in India OBJECTIVES OF NIIF
 AIFs are private equity and hedge funds
 To maximize economic impact through
defined in SEBI Regulations
infrastructure development
 Any form of privately pooled investment
 Investments made in brown field
both from foreign or India origin in the
projects, green field projects, stalled
form of a company, trust, body,
projects and commercially viable
corporate or LLP are classified as AIF
projects
 NIIF would allow equity participation more transparent manner compared to

from anchor partners the old FIPB route suffering from Red
 NIIF would also undertake nationally Tapism
important projects  NIIF is a measure towards good
governance of India
 Ease of doing business is enhanced
TAX BENEFITS OF NIIF through NIIF
 Adoption of global best practices to
 Investments made through NIIF enjoy
increase transparency
certain tax benefits
 Cooperation among the various
 Exempted income of NIIF is not taxed
regulators
withholding 10 percent
 Innovation of new business and
 Overseas investors investing in NIIF are
investment practices
not subject to indirect tax provisions of
IT act RECENT MOU’S MADE
 FDI process made transparent through THROUGH NIIF
investment in NIIF
 Tax residence measures to be  India and UAE signed a MoU in March
introduced in NIIF after making 2016 to mobilize long term investment
amendments to IT act, 1961 into NIIF
 NIIF will make tax procedures simplified  This will allow transparent mechanism
for overseas investors to make their between investment institutions of UAE
investments and establish their in Indian Infrastructure through NIIF
companies in India  NIIF signed MoU with Russian
 Tax policies are made consistent, clear investment firm RUSANO OJSC
and certain  The Russian MoU will help set up a high
 NIIF funds will have parity with public end technology private equity fund
market funds considering the tax  The will enable joint implementation of
policies investments into diverse projects in
India
OTHER BENEFITS
 This will establish a joint working group
 NIIF is established to promote the to develop cooperation between India
“Make In India” flagship initiative of GOI and Russia
to attract more FDI in a direct manner  NIIF will work on the development of the
 NIIF will help in infrastructure agreements signed in the MoU
development of India as a whole in a
DIRECT TAX REFORMS PANEL: EASWAR

COMMITTEE RECOMMENDATIONS
7. DIPP Secretary
INTRODUCTION
8. Revenue department secretary
GOI has established the tax reforms panel to
9. Secretary of commerce department
streamline the indirect and direct tax policy
for transparent administration.
TAX POLICY RESEARCH UNIT
DIRECT TAX RECOMMENDING  Multi disciplinary body
COMMITTEE’S  Analyze and examine any tax policy or
fiscal referred by CBDT and CBEC
 Parthasarthy Shome committee  Disseminate and prepare background
recommended the establishment of two papers and policy documents pertaining
tax panels to various taxation issues
 Tax Policy Research Unit (TPRU) and  Comprises officers from CBDT, CBEC,
 Tax Policy Council (TPC) economists, researchers, statisticians
 Easwar committee recommendations on and legal experts
Tax Deducted at Source (TDS)
EASWAR COMMITTEE
TAX POLICY COUNCIL
RECOMMENDATIONS
 Headed by Finance Minister
 Retired High court Judge Easwar
 Advisory in nature
committee was formed by GOI to
 Identify key tax policy decisions
change the direct tax laws
 Suggest broad taxation policy measures
 The committee recommends for
 Nine member body including
simplification in TDS
1. NITI Aayog Vice Chairman
 Tax refunds to be made faster
2. Minister of state, Finance
 Deduction from taxable income slab
3. Finance Secretary
revision
4. Commerce Minister
 Stock market gains up to 5 lac will be
5. Chief Economic Advisor
treated as capital gains
6. DEA Secretary
 These stock market gains are exempt  Project Saksham of digitalizing the
from business income encouraging more Income Tax department is a direct
retail investments in the stock market implication of these tax reforms
 Tax payer friendly reforms introduced to  Project Insight launched to monitor
align with Ease of Doing Business income tax transactions
 TDS rates reduced from 10% to 5% for  Project e-sahyog launched to reduce the
individuals hassles of the small tax payers
 Income tax department transactions to  This makes it easy for tax payers to pay
be made in an electronic manner and tax online and eliminates their visit to
human interface to be minimized to the the income tax department offices to
core pay taxes and lodge their grievances
 Presumptive scheme for business  Tax payers grievances are recorded
increased from 1 crore to 2 crore online and addressed accordingly
 This step will make business people life  The tax reforms aim to bring more
easier and relaxing transparency in the direct tax sector
IMPLICATIONS OF THESE
REFORMS
GREEN BOND: THINGS YOU MUST KNOW

Green bonds are focused to
INTRODUCTION 
Environment, Social and Governance
A green bond is a debt instrument issued by (ESG) projects
an entity like any other bond (with subtle  There is the double scope of
differences) to raise funds from investors environment benefit and development in
green bonds
ABOUT GREEN BONDS  Green bond concept is open to
corporate from 2016 in India
 Initially, green bonds were issued by
 It is a new concept with regulations and
World Bank, multilateral organizations
guidelines still in the initial stages
and few nations from 2007
 Green bonds are pioneered by
development banks in few nations NODAL AGENCY
 Green bonds is a niche product till 2012
 Securities and Exchange Board of India
(SEBI) is the nodal agency
 SEBI released the green bond concept  New set of investors will come in to the
paper on December 2015 fray with the introduction of green
 SEBI frames the guidelines regarding bonds
issuance of green bonds  Issuer can get access to a diversified set
of investors other than business oriented
DIFFERENCE BETWEEN
clients or investors
REGULAR BOND AND GREEN  Issuer will get a pricing advantage in
BOND case of green bonds
 The current scenario of global warming
 Green bond is issued to finance only and climate change will attract global
green projects investors to invest in green bonds in
 Green bond issuer explicitly states that large numbers
the fund raised will be used for  The cost of funding for the green
environmental benefit activities like projects will be lowered with the
renewable energy, solar projects etc expected increasing number of investors
 Green bonds are being used based on in the green bonds
market practices
 Issuer can price Green bonds at a far
better rate than the regular bonds due
CONCLUSION
to the environmental benefit feature  Green bonds is relatively a new concept
to Indian market
BENEFITS OF GREEN BONDS  SEBI must frame guidelines for issuing
green bonds to prevent the misuse of
 Green bonds help to increase the funds raised through green bonds
reputation of the issuer  SEBI must establish a monitoring
 Issuer will get positive publicity mechanism to check the usage of the
 Green bonds develop a commitment green bonds
among the corporate about  World nations are responding in a
sustainability and development of the positive manner to the climate change
environment scenario with the signing of the
 Green bonds will give an international Conference of Parties (COP) in Rio by
experience majority of the nations
 Positive public relations will be  GOI has placed special emphasis on
enhanced renewable energy projects especially on
solar power generation making it
conducive for green projects
 The reception of green bonds in India is corporate for the overall development of
on the positive side the nation and the world as a whole
 Overall, Green projects and green bonds
offer huge opportunities in future for
INTERNATIONAL BANK FOR RECONSTRUCTION

AND DEVELOPMENT (IBRD) - A WORLD BANK
INITIATIVE
assistance to middle income countries
INTRODUCTION:
primarily.
The mission of the World Bank is defined by  IBRD belongs to World Bank group. It
two goals works closely with the rest of the World
Bank Group in order help developing
1. To end extreme poverty by reducing the
countries reduce poverty, promote
percentage of people living on less than
economic growth, and ultimately to
$1.90 per day to no more than 3%
build prosperity.
globally by 2030; and
 The institution constitutes of/ owned by
2. To promote shared prosperity in a
the governments of its 189 member
sustainable manner by fostering income
countries, which are represented by a
growth for the bottom 40% of the
25-member board (5 appointed and 20
population of every developing country
elected Executive Directors).
To adhere its mission World Bank established
 It provides financial resources,
subsidiaries which function as its arm to
knowledge and technical services, and
concentrate on particular areas as a focus.
strategic advice to developing countries,
One such institution is IBRD ( International
including middle income and lower
Bank for Reconstruction and Development)
income countries which are credit-
worthy.
WHAT IS IBRD?
THE FIVE LARGEST OF IBRD’S
 The International Bank for
Reconstruction and Development was SHAREHOLDERS ARE
established in the year 1944 to help
 The United States of America(with
Europe rebuild after World War II.
16.63% of the total voting power),
Today, IBRD provides loans and other
 Japan (7.19%),
 China (4.64%),
 Germany (4.21%), and national and subnational levels to

 France and the United Kingdom (with members (countries).
3.94% each)  IBRD finances projects across all sectors
and provides technical support and
FUNCTIONS OF IBRD
expertise at various stages of ongoing
 It supports long-term human and social projects.
development which private creditors do  IBRD’s helps countries to build resilience
not finance. to shocks by facilitating access to
 Provides support in times of crises which products that mitigate the negative
preserves borrowers' financial strength, impact of currency, interest rate, and
when poor people are most adversely commodity price volatility, natural
affected. disasters and extreme weather by
 IBRD promotes key policy and innovative financial products and
institutional reforms (such as safety or services.
anti-corruption reforms)  Unlike commercial lending, it's (IBRD’s)
 Facilitates in Creation of a favorable financing not only supplies borrowing
investment climate to catalyze the countries with needed
provision of private capital funding/financing, but also serves as a
 It also facilitates access to financial vehicle for knowledge transfer and
markets often at more favourable terms technical assistance globally.
than member countries can achieve on  Advisory services in the areas of public
their own debt and asset management help
governments, and development
SERVICES OFFERED BY IBRD
organizations build institutional capacity
 The World Bank works with middle to protect and expand financial
income countries simultaneously as resources of nations.
clients, shareholders, and global actors.  It supports government efforts to
As this association evolves, IBRD strengthen not only public finance, but
provides innovative financial solutions, to also cater enhanced investment
including financial products (loans, climate, other policy and institutional
guarantees, and risk management actions and address service delivery
products and services) and knowledge bottlenecks.
and also advisory services (on a
reimbursable basis also) at both the
FAQS ON GOLD REFORMS IN THE

DEMONETIZATION DRIVE
invested in gold buying a whopping 70
INTRODUCTION
metric tonnes of gold overnight
The recent demonetization drive saw large  Black money is hoarded in the form of
investments in Gold and accordingly reforms gold to the tune of 20000 metric tonnes
were made on holding gold by individuals.  Gold forms the primary source of black
Some of the FAQ on gold reforms are as money followed by real estate and liquid
follows. cash
 The main aim of the gold reforms
WHAT ARE THE RESTRICTIONS announced now is to recover the black
MADE ON MAINTAINING GOLD? money

 The effectiveness of the reforms has to
 A married woman can keep 500 be seen after the results are produced
grams of gold
WHY GOLD IS SO SENSITIVE?
 A male can keep 100 grams of gold
 An unmarried female can keep 250  Hoarders maintain gold in biscuit or
grams of gold other smuggled means
 All must pass litmus test or heirloom test  In India, Gold is a customary aspect in
conducted by Income Tax department marriages with parents doing
stri dhanto their daughters
 Gold reforms become very sensitive as it
WHAT IS LITMUS OR HEIRLOOM directly impacts women on a mass scale
TEST?  Gold has been a part of the Indian
society from the historical ages
 It is a measure to prove that the  Gold is always a status symbol among
jewellery was handed over from the past Indians
generation  People continue to buy gold on festive
WHY THE GOLD REFORMS ARE occasions and during marriages
boosting the demand of gold
ANNOUNCED NOW?  India ranks top among the gold
 As soon as the demonetization was importers in the world
announced, hoarders of black money
Earlier the gold schemes of both 1999

HOW CAN GOLD BOND 
and 2005 were a total failure
SCHEMES HELP IN THE  Pitfall is the low-interest rate given on
CURRENT SITUATION? gold bonds
 Women will be hesitant to give away
 GOI introduced the gold bond schemes their idle jewellery for cash in the gold
to bring in the 20000 metric tonnes of bonds
idle yellow metal present in the Indian  Black money is hoarded mainly as gold
households biscuits and other forms
 These are government securities and is  The gold reforms target on
the perfect substitute for keeping jewellery keeping the gold biscuits and
physical gold in bond format to be other gold forms out of the bracket
redeemed for cash on maturity  This is the main reason for the failure of
 RBI issues the gold bonds on the market the gold reforms
value of gold  The current reforms may see a push in
 Individual can invest from 2 grams to the gold bond investments
500 grams annually in gold bonds
 Tax exemption is available
WHY GOLD REFORMS AND

SCHEMES HAVE BEEN A
FAILURE TILL NOW?
*99# USSD – TOWARDS A CASHLESS ECONOMY
AGENCIES CONCERNED
INTRODUCTION National Payments Corporation of India
(NPCI) is the nodal agency of USSD
Unstructured Supplementary Service Data
(USSD) (*99#) is a mobile banking service USSD establishes a network between Banks
that allows customers to access the financial and Telecom Service Providers (TSP)
and non-financial services of the banks.
ABOUT USSD
USSD technology is a GSM standard for USSD offers three main types of services to
transmitting information providing session- customers including
based communication in the banking services
Financial
Customer has to register their mobile
Non-Financial and
number with their bank
Value added services
Customer access financial services by dialling
*99# from their mobiles registered with their
FINANCIAL SERVICES
bank accounts
Financial services include fund transfers in
USSD works exclusively on all GSM handsets
the means of
USSD links the benefits of the
P2P – Person to Person
telecommunication network to make
financial and banking transactions easier. P2A – Person to Account
USSD FEATURES P2U – Person to UID
No internet is required for its operations NON-FINANCIAL SERVICES

Uses voice based connectivity Mini Statement
Very simple to use Balance Enquiry
Available to all GSM mobile users through a Know MMID

common code ‘*99#’ across all TSPs
Generate OTP
No roaming charges charged in addition to
MPIN
the ordinary service
Works round the clock on all days including WHAT IS MMID?

holidays
MMID is the 7 digit code given by the bank to
USSD will act as a key financial inclusion the user while registering for mobile banking
measure of GOI
Value-added Services
Customer need not install any new apps to
Aadhar based money transaction (*99*99#)
avail this service
USSD SERVICES HOW TO USE USSD?
Customer has to dial *99# from their mobile This charge will form a major hindrance for
common man to switch to USSD
Welcome screen appears
RBI has initially set a restriction of
Customer has to enter their bank IFSC first 4
transacting only 5000 rupees per transaction
letters or short name of Bank in 3 letters
NPCI must make this USSD totally free of
Various options pop up for the user
cost to achieve the cashless economy as
The user has to select the appropriate option promised by Prime Minister Mr Modi
and complete their transaction
For fund transactions or transfers using

MMID and mobile number, both the sender CONCLUSION
and the receiver must have registered their
USSD is a major initiative of NPCI to move
mobile numbers in their banks
towards a cashless economy like the USA
However, the receiver need not have to
USSD enhances financial inclusion to a great
register their mobile numbers in their banks
extent
for receiving money using Aadhar number or
account number from the sender It helps India to move to digital revolution
helping in ‘Digital India’ mission
LIMITATIONS
Moving to a cashless economy will help curb
USSD is charged by TSPs from the customers black money, corruption etc
A maximum rate of Rs. 1.50 per transaction USSD is a positive step forward towards
is set by TRAI making India, a developed nation
EXCHANGE RATES: THINGS YOU NEED TO KNOW
INTRODUCTION HOW TO CALCULATE

The exchange rate is the price of a country’s EXCHANGE RATE?
currency in terms of another country’s
 It is calculated by relating the value of
currency.
one currency to other country currency
 In mathematical terms, Exchange rate =  Also called as pegged exchange rate

(price of domestic currency)/(price of  Central bank of a nation fixes and
foreign currency) maintains the exchange rate
 Example: $1 = 65 rupees implies that  The domestic price of the currency will
one has to give 65 rupees to get $1 generally be set against US dollar or
other world currency like Euro, Yen or
IMF basket of currencies
WHO DETERMINES EXCHANGE
 Central bank will sell and buy its own
RATE? currency from the foreign exchange
market against the pegged currency
 After World War II, World Bank and IMF
 RBI has been following the fixed
were formed to reconstruct the war-torn
exchange rate till 1991
world nations
 Now complete fixed exchange rate
 IMF determined the exchange rate
regime has come to an end and only a
initially with the quota of the developed
combination of fixed and floating rate
nations
are employed in the foreign exchange
 Later, UK withdraw from the fixed rate
market
regime and fixed its own currency rate
depending on market conditions
 Gradually, countries also started moving FLOATING EXCHANGE RATE
to the floating currency regime
 Floating exchange rate is determined by
 Currently, the central bank of nations
demand and supply prevailing in the
have the power to determine the
market
exchange rate by buying and selling
 Rate determined solely by the market
currencies in the foreign exchange
 Exchange rate constantly changes
market
periodically (even on daily basis)
HOW TO DETERMINE  Also termed as the self-correcting
EXCHANGE RATE? exchange rate
 When the demand for a currency in
 To determine the exchange rate, there foreign exchange market becomes low,
are three generally used methods then its imports become expensive and
 Fixed exchange rate ultimately its value will decrease
 Floating exchange rate  This will cause heavy demand for goods
 Crawling peg exchange rate and services domestically
FIXED EXCHANGE RATE  This, in turn, results in the creation of
more jobs domestically
 Thus an automatic correction is made  Appreciation of exchange rate or rupee

balancing the demand and supply in the appreciation implies rise in exchange
floating currency regime rate of rupee
 The exchange rate changes in global  Depreciation of exchange rate or rupee
scenario will affect the domestic depreciation implies fall in exchange
currency in the floating rate regime rate of rupee
 Currently, this is the widely accepted  Both appreciation and depreciation of
and adopted currency regime by the currency occurs as a result of change in
world nations supply and demand of the currency in
the foreign exchange market
CRAWLING PEG EXCHANGE
 Depreciation of currency favours exports
RATE and makes imports costlier
 Appreciation of currency favours
 Also known as Dirty Floating rate
imports and makes exports costlier
 This is a combination of fixed and
 Devaluation of currency is similar to
floating exchange rate
depreciation of currency
 Government allows the currency to
 India devalued its currency during the
fluctuate freely in a given band
1991 Balance of Payment crisis
determined by the central bank
 Recently China devalued its currency
 Once the currency exceeds the band
Yuan
fixed by central bank, Government
 RBI has the power to devalue the rupee
intervenes in the foreign exchange
by selling more rupees and buying
market to stabilise the domestic
dollars from the foreign exchange
economy
market
 Similarly, RBI can revalue the rupee by
IMPLICATIONS OF EXCHANGE selling dollars and buying rupees
RATE  The activities of devaluation and
revaluation of currency are associated
with the fixed exchange rate regime
INTERNATIONAL DEVELOPMENT ASSOCIATION

(IDA)- A WORLD BANK INITIATIVE
Once in three years, global donors meet

INTRODUCTION 
to replenish IDA resources and review
 The International Development IDA's policy's framework.
Association (IDA) is an arm of the World  The recent replenishment (IDA17) was
Bank, that supports the world’s poorest finalised in December 2013, which
countries. It was established in 1960, resulted in a $52.1 billion replenishment
IDA aims to reduce poverty by providing to finance projects over the 3-year
loans (credits) and grants for programs period ending June 30, 2017.
that enrich economic growth, reduce  The next replenishment- IDA 18 is from
inequalities, and improve people’s living July 1, 2017, to June 30, 2022.
standards  The replenishment process typically
 IDA complements the World Bank’s consists of four formal meetings held
original lending arm—the International over the course of one year.
Bank for Reconstruction and  In addition to officials from more than
Development (IBRD). 50 donor governments (IDA Deputies),
 IDA has done 889 projects worth representatives of borrowing member
$84.53Billion operating in 10,935 countries are invited to participate to
locations across 75 countries(as on ensure that IDA’s policy and financing
10.11.2016 frameworks are responsive to country's
requirements.
SOME MILESTONES OF IDA:
FOUR IDA18 REPLENISHMENT
 120,000 Kilometres of roads were
constructed, rehabilitated or upgraded MEETINGS WERE SCHEDULED
(FY2011-2016) FOR 2016:
 64 MILLION People received access to
better water services (FY2011-2016)  14 & 15th March 2016, in Paris, France
 7MILLION Teachers were recruited  21 to 24th June 2016, in Nay Pyi Taw,
and/or trained (FY2011-2016) Myanmar
 Half a BILLION People received essential  10 & 11th October 2016, in Washington,
health services (FY2011-2016) D.C.
 14 & 15th December 2016 – Yogyakarta,
Indonesia
IDA DONORS MEET:
SPECIAL DRAWING RIGHTS (SDR): KEY POINTS TO

REMEMBER
IMF helped world nations to get out of
INTRODUCTION 
the financial crisis through SDR
Special Drawing Rights (SDR) was created in allocation
1969 by IMF as a fixed exchange rate system  Now, SDR has become a dominant force
to support the Bretton Woods agreement. in international economic scenario
SDR CALCULATION
VALUE OF SDR
SDR is calculated based on the basket of five
 SDR is an international reserve asset
international currencies
 SDR is not a currency
The five currencies include
 It is also not a claim on the IMF
 US Dollar  SDR exchanged for freely usable
 Euro currencies
 Yen  Allocated to members of IMF from time
 Pound and to time
 Yuan  SDR is a potential claim on the IMF
member countries
ROLE OF SDR
 204 billion SDRs is equivalent to $285
 SDR had a dominant role in the world billion in value
economy and trade during the fixed rate  Valuation and weight of the IMF
regime currencies basket done once in 5 years
 SDR role diminished after the collapse of  Next valuation to be done on September
fixed rate regime 30, 2021
The floating rate regime saw huge

SDR WEIGHTAGE
accumulations of international currency
reserves Following is the weight assigned to the
 In 2009, SDR regained popularity by basket of five currencies
allocating 182.6 billion SDR to global
economy amidst the global economic US Dollar – 41.73 %
crisis
 Euro – 30.93 %
 Yuan – 10.92 %
 Yen – 8.33 %  Interest rate determined on short-term

 Pound Sterling – 8.09 % debt instrument basis prevailing in the
money market of SDR currency basket
CRITERIA TO GET ADDED TO CONCLUSION

SDR  SDR of IMF is going to play a crucial role
in the global economy
 SDR basket of currencies determined by
 SDR allocations to member countries of
the IMF Executive board
IMF is focused on recovering from an
 Export criteria – The exports of the
economic turmoil
country must have the largest value in
 SDR basket of currencies are considered
five years
as a global standard of currency
 Freely usable criteria – Widely
exchange
transacted in the international exchange
 The currencies included in the IMF SDR
markets
currency basket will play a dominant
 Earlier in 1999, Euro was included in the
role in the world economy
SDR basket replacing Franc
 The five nations in SDR are considered
 In 2016, Chinese Yuan was included in
to be politically important and dominant
the SDR basket
in the international affairs
SDR INTEREST RATE  The recent inclusion of Chinese Yuan is
considered a political victory for China
 Interest rate is determined weekly by
over the USA
IMF
 World trade is to be dominated by the
 Interest rate charged on IMF loans and
SDR basket of currencies with a great
SDR allocations
boost in international relations
 Interest rate is given to members of IMF
based on their SDR holdings
AADHAAR ENABLED PAYMENT SYSTEM (AEPS):

AT A GLANCE
Aadhaar Enabled Payment System is a major
INTRODUCTION:
initiative taken by Government of India to
initiate a simple, secure user friendly mode of
payment solution by Micro-ATM. It also  Finger Print – A customers need his/her

empower Cashless Economy in the country in finger print which was captured during
future. The basic meaning of AEPS is a their enrolment.
customer can pay through Aadhaar Card, i.e.
MAJOR ROLE PLAYED BY NPCI
Empowering Cashless transactions in the
country. Through Aadhaar Card a customer IN AEPS:
can access his/her bank account. However,
 NPCI (National Payment Corporation of
these days Government of India is also trying
India): It was founded in 2008,
to empower bank customers to use Aadhaar
Headquarters at Mumbai, It is the
as his/her main identity to access his/her
umbrella organisation for all retail
respective Aadhaar enbled bank account and
payment systems in India, which aims to
perform various transactions like balance
allow all Indian citizens to have
enquiry, cash deposit, cash withdrawal, Pay
unrestricted access to e-payment
through Aadhaar, etc.
services.
 NPCI conducts all government
BASIC BANKING TRANSACTIONS benefits/subsidies to beneficiary
THROUGH AADHAAR CARD: account in a secured and transparent
manner.
 Aadhaar to Aadhaar fund transfer
 It also provides a unique platform to use
 Cash withdrawal
safe and secure payment interface to
 Cash Deposit
avail those benefits by using their finger
 Balance Enquiry
prints.
DURING ANY BASIC  NPCI is directly in touch with Unique
Identification Authority of India to
TRANSACTIONS A CUSTOMER’S
provide Aadhaar Enabled Payment
NEEDS: Service to reduce the forgery in Indian
 IIN (Issuer Identification Number) – It is Financial System.
the Identification number to recognise BASIC LAYOUT/ HOW IT

the Bank to which the customer’s banks
WORKS:
account is associated.
 Aadhaar Card Number – It is a 12 digit Let us understand by using flow chart. I Hope
unique identification number provided it will clear everything. But here I will describe
by the Gov. of India at the time of the following steps.
enrolment.
 Step 1 – Customer swaps his/her cards
at Mini ATM.
 Step 2 – Mini ATM fetch data from  Step 10 – Now customers get
Customers Bank confirmations bill from Mini ATM.
Step 3 – Customers bank get

BENEFITS OF AEPS:
confirmation from NPCI.
 Step 4 – NPCI get confirmations from  Aadhaar enabled Payment platform is a
UIDAI. very important tools to rule out all the
 Step 5 – UIDAI approve confirmed fake data in the system concerning
details about customer Account to NPCI. National Social Assistance Programme
 Step 6 – Again after getting (NSAP).
confirmation from UIDAI , NPCI again  The basic theme of Direct Benefit
asks Creditors details to his/her banks. Transfer is to ensure that the beneficiary
 Step 7- Creditors Bank Approve details gets their benefit through Aadhaar
of creditors to NPCI Enabled Payment System (AEPS) which
 Step 8- NPCI now confirms to SBI is an accountable, cost-effective and
 Step 9 – SBI deduct the amount which transparent.
customers want to pay/credit.
MCLR: MARGINAL COST OF FUNDS BASED

LENDING RATE- EXPLAINED
 Most commercial banks do not change
their lending rates to customers
INTRODUCTION  Ultimately, bank customers does not
receive the benefits aimed by RBI
RBI recently made its move from the historic
 Till now, RBI was verbally instructing the
Benchmark Prime Lending Rate (BPLR) to
commercial banks to change their
Marginal Cost of Funds Based Lending Rate
lending rates with every Repo rate
(MCLR) in April 2016 as the current rate
change
setting method for lending money by
 The real benefit of repo rate change will
commercial banks
be realised only when the customer gets
benefited
NEED FOR MCLR
 With the New MCLR, there will be quick
 RBI changes the repo rates and other change in the lending rate and the
rates periodically but the banks are slow commercial banks will have to oblige
in changing their interest rates with RBI at a fast pace as repo rate is
according to RBI rates included in MCLR calculation
banks charge interest to customers for

HOW MCLR IS CALCULATED?
this idle money in RBI
 RBI has instructed all the commercial  Tenor premium of charging higher
banks to calculate their marginal cost interest rates on long-term loans
 Novel feature of MCLR is the inclusion of  Exclusion of factor minimum rate of
repo rate along with marginal cost return under MCLR
 Commercial banks now must include the  Overall, MCLR is mainly determined by
marginal cost components along with the marginal cost and the deposit rate
the repo rate to arrive at the MCLR
BENEFITS OF MCLR
lending rate
MCLR revised on monthly basis
WHAT ARE THE MARGINAL 
benefiting bank customers especially
COST COMPONENTS? borrowers
 Banks to compete with commercial
 Marginal cost weightage in MCLR – 92
paper market
%, return on net worth – 8%
 Reduces borrowing cost for companies
 RBI has included the following main
 Indian banking industry moves towards
components in marginal cost
international standards
 Return on net worth (capital adequacy
norms) PITFALLS
 Repo rate (short term borrowing rate)
 MCLR rule exempted for loans given to
and long term borrowing rate
retired employees, existing employees,
 Interest rate given by banks to various
government schemes etc
deposits including
 Banks will be reluctant to change to
 Savings deposit
MCLR rule due to cut in interest rates as
 Term deposit
currently, it is up to the customer to
 Current deposit
exercise their loans under MCLR as an
 Foreign currency deposit
option
WHAT ARE OTHER
CONCLUSION
COMPONENTS OF MCLR?
 Bank customers will quickly get the
 CRR negative carry charged on benefit of the repo rate changes from
customers their respective banks
 RBI does not pay any interest to banks  Banks also get benefited to compete
for CRR maintained by them and hence with commercial paper market
 Companies and borrowers will get  Lending rates will see quick change in
benefited with the low-interest rates for MCLR
short term loans and reflection on repo  The entire economy of India will get a
on lending rates boost with increase in rate transparency
 MCLR has to be implemented by RBI as a result of MCLR - A change in repo
with a strong monitoring system to by RBI reflects on the loans borrowed by
check whether banks change their individuals from banks
lending rates according to the repo rate  Overall, this MCLR regime is one of the
cuts innovative measures of RBI to improve
 The ultimate success of MCLR lies in the Indian banking system to global
end user getting benefited standards
LINE OF CREDIT GUIDELINES BY IDEAS:

EXPLAINED
This deed serves as the guarantee
INTRODUCTION 
against any default against principal or
Indian Development and Economic interest by the borrowing nations
Assistance Scheme (IDEAS) was given  Now new guidelines have made Line of
approval by the cabinet committee on Credit to be processed through IDEAS
Economic affairs chaired by Prime Minister
AGENCIES INVOLVED IN IDEAS
Modi.
 Department of Economic Affairs is the
ABOUT IDEAS implementation agency
 Ministry of Finance is the nodal agency
 IDEAS is used by GOI to extend Line of
 EXIM bank is the lending agency
Credit (LoC) to African nations,
 Any PSU Bank or lending agency
neighbours and other developing
authorised by Ministry of Finance can
nations
extend Line of Credit
 Earlier Department of Economic Affairs
was held responsible for LoC till 2010 COUNTRIES COVERED UNDER
 GOI used to sign deed of guarantee with LOC
the recipient nations of LoC
 Low-income countries classified
according to IMF
 Lower Middle-Income countries with no  Low interest rate to the tune of 1.5 %
minimum binding concession and a maximum of only 1.75 %
requirement  100 % finance from GOI
 Other developing nations  Exemption from duties and taxes
 Detailed classification of low and low-  Administrative charges at the lowest
middle income nations available under including commitment and management
EXIM bank annexure fee of 0.5 % per annum
Friendly relations with India
TERMS OF CREDIT 
BENEFITS TO INDIA
 The terms of credit vary across three
categories of low income, low middle  India will earn good will among world
income and other developing nations nations helping low-income nations
 The maturity period of the loan especially the African nations
extended by LoC through IDEAS is 25  IMF has lauded the real and sincere
years maximum efforts of India in development of
 The maximum interest rate charged by African nations
EXIM Bank is 1.75%  Establish trade relations with world
 A maximum grant of 37.48 % is given to nations
the borrowing nation by GOI  The recently inaugurated Friendship
 A moratorium of 5 years Dam in Saudi Arabia is one such
 Elements of credit are calculated by example
EXIM bank according to IMF formula  India will get the support of the
 GOI is the ultimate authority in India to borrowing nations in the international
revise the terms from time to time for scenario while voting on strategically
LoC extended through IDEAS important decisions in UN and other
 Countries are selected through international organizations
competitive bidding based on their  Mongolia, African Nations like South
proposals Africa, Ghana, Zimbabwe, Nigeria,
 Tenor of Infrastructure projects worth Congo, Namibia and other developing
$200 million or more and strategic nations are covered under IDEAS
important projects worth $100 million or scheme of GOI
more are extended by 5 year  Indian officials in the high level including
Prime minister, President and Vice
BENEFITS OF IDEAS TO
President have visited these countries to
BORROWING NATION extend LoC through IDEAS
 India can establish diplomatic ties with  The massive tours made by Prime
these borrowing nations and strengthen Minister Modi to different nations are in
herself line with the IDEAS scheme and
 Bilateral ties and many other promoting India as a manufacturing hub
agreements are signed with the in the international scenario
borrowing nations  Overall, IDEAS is a positive step of India
growing globally establishing friendship
CONCLUSION
with world nations through positive
 IDEAS scheme of GOI and EXIM Bank means
promote the friendship of India with the
world nations
KISAN CREDIT CARDS: ALL YOU NEED TO KNOW

Reserve Bank of India (RBI), with
WHAT IS A KISAN CREDIT 
National Bank for Agriculture and Rural
CARD? Development (NABARD), shouldered the
 Kisan Credit Card is offered to farmers responsibility and initiated the Kisan
in India in order to enable them to Credit Cards in India.
access affordable credit. Reserve Bank WHY KISAN CREDIT CARDS?
of India (RBI), along with National Bank
for Agriculture and Rural Development  To provide timely credit facility to
(NABARD) initiated the conception of support agriculture and allied activities.
Kisan Credit Cards (KCC) in 1998-99, in  To eliminate unregulated credit by
order to assist agriculturists to have money lenders.
easily accessible cash credit facilities.  To boost nation's Agribusiness
 Kisan Credit Card facility was proposed environment and productivity to
by the Finance Minister Shri Yashwant international standards.
Sinha in the FY1998-99 Budget, with the

objective of providing accessible short-
term credit to farmers to meet their HOW DO KISAN CREDIT CARDS
immediate credit requirements during WORK?
the crop seasons.
 Based on the land holdings and the  Other charges and fees involved in
income earned from the cultivation in it, taking credit under KCC scheme are
banks issue farmers Kisan Credit Cards. insurance premium, processing fees,
 The card holder/ farmer should have a charges on land mortgage deed, etc.
good credit history to be eligible for the
BENEFITS OF KISAN CREDIT
KCC.
 The Card holders get facilities like CARDS:
passbook, particulars of land holding,
 Time and cost-efficient scheme.
address, validity period, credit limit, etc.,
 Comparatively lower interest rates.
which acts as the customer’s unique
 Single term loan for all agricultural
identification and as a system for
requirements.
tracking transactions.
 Flexible repayment options.
 Kisan credit cards can be used at
 Assists in the purchase of fertilisers,
outlets, as well as to withdraw cash to
seeds, availing cash discounts from
make the necessary purchases for
merchants/ dealers, etc.
agriculture.
 Funds withdrawal from any of the
INTEREST AND OTHER Bank’s branches, as per the sole
discretion of the bank is possible.
CHARGES ON KISAN CREDIT
 Income from agriculture and allied
CARDS: sources determines the maximum credit
limit.
 Kisan Credit Card interest rates, as well
 Repayment of the credit can be made
as credit limits, varies from bank to
once the harvest season in over.
bank. Generally, the applicable interest
 An elaborate documentation process is
rate per annum for Kisan Credit Cards is
not required or continuous appraisals
9%, for a maximum Rs. 3 Lakh as a
under the Kisan Credit Card Scheme.
credit limit.
 Cash withdrawal using the Kisan credit
 The Central government subsidies on
card requires very little paperwork, it is
interest rate applicable to the financing
simple and hassle-free for both ( the
institutions, provided that the
card holder and bank).
cardholder’s credit history is good.
 Some other advantages include no
 The additional interest subsidy of 2% is
transaction costs, lesser risks in loan
provided and if the customer has a
recovery, etc.
soundtrack record for 3 years, She/he is
eligible for an increased credit limit.
TOP BANKS PROVIDING KISAN CREDIT CARD IN

INDIA:
NABARD: NATIONAL PAYMENTS

NABARD offers term loans and easily CORPORATION OF INDIA (NPCI)
accessible credit to farmers to meet their AND KCC
basic agricultural expenses.
RuPay Kisan credit cards are to be offered by
STATE BANK OF INDIA: National Payments Corporation of India
(NPCI), as a part of its domestic card scheme
Short-term credit is offered to farmers, for for multilateral payments in RuPay platform.
the purpose of meeting the credit Under PMJDY( Jan Dhan Yojana), debit cards
requirements for production, expenses are offered in RUPAY platform.
related to agriculture allied activities, as well
as contingency reserves and expenses. INSURANCE UNDER KISAN
BANK OF INDIA: CREDIT CARD SCHEME:
A personal accident insurance cover for
The Bank provides financial support to
farmers who have a Kisan Credit Card, as
farmers in order to meet the expenses
soon as the customer avails the scheme is
involved in cultivation and other Agri-allied
provided. The individual gets a personal
activities, at a comparatively lower cost.
accident cover of Rs. 50,000 in the event of
IDBI deceased(death), and Rs. 25,000 in the case

of disability.
IDBI offers Kisan Credit Cards to farmers In order to avail this insurance cover, the
along with additional features like crop customer should not be above the age of 70
loans, investment credit and working capital years at the time of availing the Kisan Credit
for meeting agricultural expenses. Card
FINANCIAL INCLUSION FUND (FIF) BY RBI- KEY

POINTS EXPLAINED
NABARD support to establish skill

INTRODUCTION 
development centres (SETI)
Financial Inclusion Fund (FIF) was formed by  SETI aimed at imparting skills necessary
merging FIF and Financial Inclusion for generating income
Technology Fund (FITF) and established by  To provide linkages in a forward manner
RBI and establish marketing activities
 To improve network connectivity by
BACKGROUND sharing government projects pertaining
infrastructure and telecommunication
 FIF and FITF were established in the year
development
2007 – 2008 over a period of five years
 Initial corpus was 500 crore OBJECTIVES OF FIF
 Contribution of GOI, RBI and NABARD
 To enhance financial inclusion on a large
was in the ration 40:40:20
scale
 RBI framed guidelines for both these
 To support promotional and
funds
development activities
 RBI merged both funds into a single
 Increased technological absorption
entity named FIF and came into effect in
capacity
2016
 To provide ICT solutions
NODAL AGENCIES  To increase stakeholder capacity
building
 RBI established FIF with a corpus of
 FIF funding is done through ICT – BC
2000 crore
model (Information and Communication
 NABARD maintains the funds of FIF
Technology – Business Correspondent
 GOI administers the FIF
Model)
NEED FOR FIF  To support banks investment in purview
of business expansion in future
 To create awareness among people
 To address the various issues pertaining
about financial inclusion
to financial inclusion including training,
 To set up financial literary centres at
skill development, creating awareness
every block level
and lack of infrastructure and ICT etc
 To cater to the services of Jan Dhan
Yojana account holders
 To set up standard kiosks to create ELIGIBLE INSTITUTIONS TO GET
financial literacy in gram panchayats FIF
 The Kiosks will be highly interactive to
educate the masses  Self Help Groups (SHG)
 NGO  FIF not to be used for normal banking

 Cooperatives transactions
 Farmer clubs  FIF not to be used for normal business
 Panchayats transactions
 Village knowledge centres
Agricultural societies

CONCLUSION
 IT enabled rural entities
 Rural multipurpose Kiosks etc  FIF seems to a positive step forward to
enhance financial inclusion
This is yet another measure of GOI to
OTHER GUIDELINES 
move towards a digital lifestyle and a
 Contribution to FIF in excess of 0.5 cashless economy
percent from STCRC and RIDF deposits  Financial inclusion and its benefits will
 NABARD to maintain all the fund be known to the common people
sources and FIF through training programs conducted
 FITF funds transferred to FIF through FIF
 RBI decides operation of FIF for a fixed  This will help majority of the Indians to
period of years come into the formal banking sector
 Union government in consultation with  Subsidies will reach the beneficiaries
other stakeholders decides important directly in the bank accounts
amendments on FIF  FIF is a positive step of RBI, GOI and
 FIF will be included as a part of National NABARD to educate the rural masses
E-Governance plan and bring them under financial inclusion
EXCEPTIONS
SOVEREIGN GOLD BONDS SCHEME: ALL YOU

NEED TO KNOW
INTRODUCTION BACKGROUND
Sovereign Gold Bonds scheme was launched  India is one of the largest importers of
in the budget session 2016 and approved by Gold in the world
the cabinet to reduce the demand for  The demand for Gold in India is rising
physical gold rapidly
 Imports of India see a hike with Gold as  The interest rates are fixed at 1 to 2
the major contributor percent
 This affects the balance of trade figures  The tenure of the bond is from 5 to 7
for India years
 GOI needed to restrict the Gold imports  Value of the bond is determined by the
to have a positive balance of trade gold price movements in the market
 This created the need for Gold bonds  Gold Bonds have an attractive feature
scheme  The investor will get the value of bond
 Gold Bonds are seen as an alternative to according to the prevailing gold prices in
purchase gold metal the market at the time of redemption
In this manner, the investor will get the
ABOUT GOLD BONDS 
same benefit of purchasing the metal
 Gold Bonds are issued by RBI with a gold without actually purchasing it
fixed interest rate  In this manner, GOI can restrict Gold
 Ministry of Finance is the concerned imports to a certain extent
ministry  Returns on gold bonds can be positive
 RBI in consultation with Finance ministry or negative
determines the issuing amount  All risks of the gold bond are covered
 Risk of gold price changes borne by the under the Gold Reserve Fund
Gold Reserve Fund created by RBI
FEATURES OF GOLD BOND
 GOI aims to shift 300 tonnes of Gold
purchased annually as bars and coins  Bonds issued by RBI with a sovereign
into the Gold Bond Scheme guarantee
 This Gold Bond scheme is expected to  Bonds can be easily traded and sold on
help GOI sustain the current account exchanges
deficit  Gold Reserve Fund will be created by
GOI through RBI
HOW DOES GOLD BONDS
 On gold bond maturity, redemption will
WORK? be made in Rupee only
 Price of gold bond will vary with the
 Gold Bonds are sold in banks
market prices of gold
 Investor can walk in buy the gold bonds
 Investor needs to be aware of this price
from the banks preferably where they
volatility
have their Saving Bank accounts
 Gold bond deposits will not be hedged
 Gold Bonds are treated in a similar
manner as a Bank Fixed Deposit
RBI has fixed tenor of the bond from 5


CONCLUSION
to 7 years to protect the investors from
medium term volatility  The effectiveness of the scheme will
depend on the investor attitude towards
LIMITATIONS
the gold bond scheme
 NRI cannot buy gold bonds issued by  GOI must take steps to change the
RBI mindset of Indians from viewing gold as
 Common Indian buys gold for marriage a jewellery or a status symbol to an
and other occasions as a Jewellery and investment avenue
not for investment purpose  This transition in behaviour of Indians
 The attitude of a common Indian will take time
towards gold is not of investor nature  Overall, Gold bond scheme is a welcome
 This attitude will see a Luke warm measure to cut imports on gold
response to the Gold bonds scheme purchase
 Also, the interest rate offered is very low
in the tune of 1% to 2%
BETTER THAN CASH ALLIANCE NETWORK:

EXPLAINED
It is a partnership of international
INTRODUCTION 
agencies, companies and countries
The move towards cashless economy in India  Alliance is funded by Bill and Melinda
has its roots from Jan Dhan Yojana triggered Gates foundation, Master card, Citi
through UN’s Better Than Cash Alliance foundation, Visa, Omidyar network and
Network Ford foundation
BACKGROUND
AIMS AND BENEFITS
 Better than Cash Alliance Network is an
 Aim is to help countries to make a
initiative of United Nations Capital
transition to electronic or digital
Development Fund (UNCDF)
payments
 UNCDF is the secretariat of the alliance
 Alliance promotes inclusive growth
based at United Nations
 It reduces poverty by helping nations to  India is a great case study and success
benefit poor directly story of Better than cash alliance
The alliance promotes financial inclusion

CONCLUSION
 It enhances digital finance
 Reduce costs for countries  India has benefited a lot from the
 Women empowerment alliance in the recent demonetization
 Increases transparency levels scenario
GOI has partnered with the alliance to
IMPLICATIONS FOR INDIA 
make a change to cashless economy
 Better than Cash Alliance fueled the  It has improved transparency levels to a
world’s largest financial inclusion system great extent by bringing most of the
of Jan Dhan Yojana in India financial transactions under formal
 Helped open about 180 million accounts banking sector
in a year accumulating to $3 billion in  Alliance has given India the required
deposits in India infrastructure and technical expertise to
 Brought nearly 300 million Indian change to a cashless economy
citizens under formal banking sector in 3  The alliance has helped India develop a
years digital economy
 The financial inclusion along with  Creating awareness and changing the
Aadhar identification will help in attitude of the Indians from traditional
identification of beneficiaries to provide to modern methods is a big challenge
subsidies  India is progressing to a cashless
 The LPG subsidy is a major success in economy despite facing a lot of hurdles
India through DBT saving $2billion to and challenges
GOI annually  UN Better than cash alliance is an aid to
 India can enhance its research and India’s “Digital India” Mission
technology by joining in the alliance  Overall, India is changing with the
 India gained a policy partner through partnership of the UN Better than cash
the alliance alliance
REVERSE MORTGAGE LOAN: EXPLAINED WITH

KEY POINTS
INTRODUCTION
A reverse mortgage is a special kind of home his home into one lump sum or into
loan for senior citizens who are above the payments which will be done periodically
age of 60. This type of loan does not need as agreed upon by the borrower and the
any payments on a monthly basis but still the banker.
people who opt for such a loan have to take  No repayment is needed as long as the
care of property taxes and homeowner's borrower lives and he or she should take
insurance. Reverse mortgage loans help responsibility to settle payments of all
senior citizens to defer or postpone payment taxes relating to the house and maintain
of the home loan till their death or when they the property as his primary residence.
sell or  The loan amount to be provided
move out just because they have accessed depends on several factors:
the home equity that has been built up in (i) Borrower’s age
their houses. The interest which builds up is (ii) Value of the property
added to the loan balance at the end of each (iii) Current interest rates
month since there are no mortgage (iv) The specific plan chosen
payments needed on such types of loans. The
loan balance rises gradually and can even RBI GUIDELINES
grow to exceed the value of the home mainly
 Maximum loan amount would be up to
at the time when the value of the house is
60% of the value of the residential
declining or if the person involved keeps on
property.
living in the home for more than the
 Maximum tenure of the mortgage is 15
expected time period. However, the borrower
years and the minimum is 10 years.
is generally not required to repay any
 Monthly, quarterly, annual or lump sum
additional loan balance in excess of the value
loan payment options
of the home. The reverse mortgage is also
 Property revaluation to be undertaken
known as a Home Equity Conversion
by the lender once every 5 years.
Mortgage (HECM).
 If at such time, the valuation has
increased, borrowers have the option of
FEATURES OF REVERSE
increasing the quantum of the loan. In
MORTGAGE LOANS such a case, they are given the
incremental amount in lump-sum.
 The scheme of reverse mortgage has
 Amount received through reverse
been brought about in order to provide
mortgage is a loan and not income.
help of senior citizens who own a house
Hence it will not attract any tax.
but have inadequate income to meet
 Reverse mortgage interest rates could
their needs
be either fixed or floating. The rate
 A homeowner who is above 60 years of
would be determined by the prevailing
age is eligible for the reverse mortgage
market interest rates.
loan. It allows him to turn the equity in
borrower has not been living in the

ELIGIBILITY CRITERIA 
house
 House owners above the age of 60  borrower has failed to pay property
years. If spouse is a co-applicant, then taxes and to ensure the home
she should be above 58 years.  borrower is bankrupt
 Owners of a self-acquired, self-occupied  mortgaged property is donated or
residential house or flat, located in India. abandoned by the borrower.
The titles should be clear, indicating the  If the borrower makes changes in the
prospective borrower's ownership of the residential property, that could affect
property. the security of the loan for the lender.
 Property should be free from any This could be renting out part or entire
encumbrances. house, addition of a new owner to the
 The life of the property should be of house's title or creating further
minimum 20 years. encumbrance on the property.
 Property should be the permanent  If the government under statutory
primary residence of the individuals. provisions, seeks to acquire or condemn
the residential property for health or
HIGHLIGHTS
safety reasons.
Borrowers could prepay the loan at any

DRAWBACKS
time during loan tenor at no penalty or
charges.  Lengthy documentation procedures
 The borrower can live in the house even  Fixed monthly amounts
if he outlives the tenure, but the lender
CONCLUSION
may cease the monthly payment.
 Settlement of the loan is done only According to the scheme formulated by
after the borrower's death. National Housing Bank (NHB), 15 years is the
 If one of the spouses dies, the other can maximum period of the loan wherein the
still continue living in the house. property’s residual life should be 20 years or
 After the death of both, the settlement more. In case the borrower lives for a period
of the loan takes place. longer than 15 years, no periodic payments
 The loan could be foreclosed by the will be made by lender. However the one who
lender if has opted for the loan can continue to
occupy the house as long as he or she wants.
TRANSUNION CIBIL LIMITED: EVERYTHING YOU

MUST KNOW
Due to this, Banks and financial

INTRODUCTION 
institutions faced many losses because
 "CIBIL" stands for 'Credit Information Borrowers were unable to pay their loan.
Bureau India Limited'.  In 2000, GOI decided to form an
 "CIBIL" now known as 'TransUnion CIBIL institution which keep records of every
Limited'. individual's credit score and maintains it
and Provide it to its members.
It is India's first Credit Information  In 2004, Credit bureau services are
Company(CIC). launched in India (Consumer Bureau).
 In 2006, Commercial bureau operations
It was founded in August 2000.
commenced.
Basically, CIBIL collects and maintains
 In 2007, CIBIL Score, India’s first generic
records of an individual's payments
risk scoring model for banks and
pertaining to loans and credit cards.
financial institutions, was introduced.
CIBIL was formed to play a crucial role in
 In 2010, Two firsts for the credit industry
India's financial system, helping loan
in India with the launch of:
providers manage their business.
(a) CIBIL Detect: India's first repository
for information on high-risk activity.
FUNCTIONING OF CIBIL
(b) CIBIL Mortgage Check: The
 First, On a monthly basis records are first centralised database on mortgages in
submitted to CIBIL by member banks India.
and credit institutions.
 In 2011, CIBIL TransUnion Score is made
 Then, these informations are used to
available to individual consumers.
create Credit Information Reports(CIR)
 In 2016, TransUnion acquires a
and Credit scores.
82% stake in CIBIL to become
 Last, Records are provided to credit
TransUnion CIBIL, India’s leading credit
institutions in order to help evaluate and
information company.
approve loan applications.
DIVISIONS OF CIBIL
HISTORY
CIBIL houses credit on over 220 million
 Previously, when a person wanted loan
trades across individuals and businesses,
from any bank or financial institution,
organised into two divisions:
Then Banks had no information
regarding
1. Consumer Bureau - The Consumer Bureau
 his/her loan re-payment capability.
was launched in 2004 with 4 million records,
and now maintains more than 260 million Bank(5%), The Hong Kong & Shanghai
records. Banking Corp. Ltd.(5%),
2. Commercial Bureau and MFI Bureau - The  Union Bank of India(5%), BOI(5%),
Commercial Bureau was launched in 2006 BOB(5%), India Alternatives Private
with 0.7 million records, Equity Fund(2.9%), India Infoline Finance
and now maintains more than 12 million Limited(1%).
records.
QUICK FACTS
SHAREHOLDERS
 TransUnion International Inc.(55%),
SBI(6.1%), ICICI(6%), Indian Overseas
Name of organisation TransUnion CIBIL
Founded August, 2000
HeadQuarter Mumbai, India
MD and CEO Mr. Satish Pillai
Chairman Mr. M.V Nair
Total members 900 members
Website www.cibil.com
PRIMARY SECURITY VS COLLATERAL SECURITY

of loan default as the lender could acquire
WHAT IS SECURITY?
the security if the repayment is not done by
One of the major functions of a bank is to the borrower.
provide credit to the customers for various
purposes such as home, vehicle etc and a WHAT ARE SECURED AND
bank’s strength and solvency depends on the UNSECURED LOANS?
quality of its loans and advances. Security
resembles an insurance against emergency. An arrangement in which a lender gives
It provides a protection to the lender in case money or property to a borrower and the
borrower agrees to return the property or

UNSECURED LOAN
repay the money, usually along with interest,
at some future point in time is called a loan. Unsecured loans include things like credit
A loan can be broadly classified as a secured card purchases, education loan where
and unsecured loan. borrower don’t have to provide any physical
item or valuable assets as security for the
SECURED LOANS loan. If a person is not able to repay this type
of loan it leads to a bad credit history which
Secured Loans are those which are protected
creates problems in future when he tries to
by some sort of asset or collateral, for
get a loan from other lenders or the lender
example – mortgage, auto loan, construction
may appoint a collection agency which will
loan etc. If the lender is unable to repay the
use all its possible tools to recover the
loan, the borrower has the right to sell off the
amount.
asset to recover the loan.
Basis for comparison Secured loan Unsecured loan
Asset Compulsory Not compulsory
Basis Collateral Creditworthiness
Risk of loss Very less High
Tenure Long period Short period
Borrowing limit High Less
Rate of interest Low High
if he doesn’t want to lose his pledged

WHAT IS THE IMPORTANCE OF
security.
ASSET/COLLATERAL? For borrower: Secured loan has a low rate of
For lender: It reduces the risk associated with interest and give more time to repay the loan
the loan default as in the case of insolvency so a borrower with low income can easily
of the borrower the lender could sell off his afford it. Secondly, if a borrower has bad
asset to compensate the loss occurred. credit or limited income, most of the financial
Moreover, the borrower will make payments institutions are reluctant in providing a loan
but if he pledges collateral, the lender may be more willing to approve his application.
TYPES OF SECURITY
There are two types of security collateral security in case of all priority sector
advances up to Rs. 25000. In other cases, it is
PRIMARY SECURITY left to the mutual agreement of the borrower
with the bank.
When an asset acquired by the borrower
under a loan is offered to the lender as
WHEN COLLATERAL SECURITY
security for the financed amount then that
asset is called Primary Security. In simple IS REQUIRED?
terms, it is the thing that is being financed.
Collateral security is not required in housing
Example: A person takes a housing loan of Rs
loan, car loan, personal loan etc. It is
50 lakh from the bank and purchases a
required by lenders in corporate loans like
residential loan. That flat will be mortgaged
cash credit because in cash credit primary
to the bank as primary security.
security such as stock and book debts can be
sold any time by the borrower so an
COLLATERAL SECURITY
additional security in shape of immovable
If the bank or financial institution feels that property or some other assets are taken to
the primary security is not enough to cover secure loan.
the risk associated with the loan it asks for
an additional security along with primary WHAT ARE COLLATERAL FREE
security which is called Collateral Security. It LOANS?
guarantees a borrower’s performance on a
debt obligation. It can also be issued by a Loans that are disbursed without collateral
third party or an intermediary. or security, which limit the lender’s exposure
Example: A person takes a loan of Rs 2 crore to risk, are called collateral free loans. This
for the types of machinery. So to secure itself facility is provided under Credit Guarantee
in the case of default by the borrower it asks Fund Trust for Micro and Small Enterprises
for mortgaging residential flat or (CGTMSE), where micro and small enterprises
hypothecating jewellery, which will be termed can be extended loan upto Rs. 1 crore
as collateral security. without security. This scheme was launched
RBI has advised the banks not to obtain any to solve the problem of lack of funding that
these enterprises face as well as to boost  Quick and hassle free processing of
their development. applications.
 Letter of credit/bill discounting up to
ADVANTAGES 180 days.
 No collateral or third party guarantee is

Similarly, MUDRA (Micro Units Development
required
and Refinance Agency) bank provide
 The subsidised rate of interest.
collateral-free financial aid up to Rs. 10 lakhs
 Flexible repayment tenures up to 5
to sole proprietors or entrepreneurs carrying
years.
on Small and Medium enterprises.
 No track record required.
PREPAID PAYMENT INSTRUMENTS - ALL YOU

NEED TO KNOW
WHAT ARE PREPAID PAYMENT

1. Closed System Payment Instruments
INSTRUMENTS? They are usually issued by
businesses/organizations for buying their
Prepaid payment instruments are those
own products or services only. These
which facilitate purchase of goods and
instruments do not permit cash withdrawal.
services against the value stored on such
instruments. Value stored on them is paid by  E.g. - Delhi Metro Prepaid card - these
the holder using a medium (cash, debit card, can be used for their respective
credit card etc). establishments only.
These are generally issued in the form of 2. Semi-Closed System Payment Instruments
smart cards, mobile wallets, paper vouchers,
internet accounts/wallets.  These are redeemable at a group
of clearly identified establishments or
CLASSIFICATION OF PPIS stores who enter into a contract with
the issuer to accept that as a payment
PPIs are usually classified into 5 categories instrument.
as follows:  Do not permit cash withdrawal.
E.g. - Sodexo cards are redeemable at


WHERE THE MONEY
designated stores only.
3. Semi-Open System Payment Instruments COLLECTED CAN BE USED?
 These payment instruments can be used  For PPIs issued by SCBs and NBFCs,
at any card accepting point of sale outstanding balances are a part of net
terminals for purchase of goods and time and demand liabilities for purpose
services. of maintenance of reserve
 Do not permit cash withdrawals. requirements.
 E.g. - Gift cards  For PPIs issued by other entities,
4. Open System Payment Instruments outstanding balances are to be
maintained in an escrow account (non-
 They can be used for purchasing goods interest bearing) account with any SCB.
and services and provide the option of  Entities who have been into business
cash withdrawal as well from ATMs. for >1 year & whose accounts have
 E.g. Debit cards, Credit cards. been duly audited for a full accounting
5. Mobile Prepaid Instruments year can keep their these funds in an
interest bearing account. But no loan
can be given against such interest
 The value of talk time issued by mobile
bearing deposit.
service provider can also be used to
avail other 'value added services' from VALIDITY
them. E.g. You can use 'Airtel Money'
All PPIs issued in the country shall have
balance to avail caller tune benefits or
a minimum validity period of 6 months from
other packs from Airtel.
date of issuance or activation.
WHO CAN ISSUE THEM?
Only those entities who are incorporated in
RBI'S MOVE AFTER
India, have a minimum paid up capital of Rs. DEMONETIZATION
5 crore and minimum positive net worth
RBI in Nov, 2016 doubled the limit of prepaid
of Rs 1 crore at all times are permitted to
payment instruments limit to Rs 20,000 from
issue such instruments.They should also be in
earlier limit of Rs 10,000 to facilitate digital
compliance with capital adequacy
transactions. Balance in such PPIs can not
requirements of RBI from time to time.
exceed Rs 20,000 at one point of time.
DEBT CONSOLIDATION: ALL YOU NEED TO KNOW
INTRODUCTION
The term "Consolidate" means in general terms that 'To bring together (separate parts) into a
single or unified whole.
Debt Consolidation means Combining several unsecured debts — credit cards, medical bills,
personal loans etc. — into one debt bill and paying all of them with a single loan.
Debt consolidation is nothing more than a "con" because you think you have done something
about the debt problem but debt is still there.
Let us take an example to understand debt consolidation. Let's say you have Rs60,000 in
unsecured debt, including a two-year loan for Rs40,000 at 14%, and a four-year loan for Rs20,000
at 13%. Your monthly payment on the Rs40,000 loan is Rs1517 and Rs1583 on the Rs20,000 loan,
for a total payment of Rs3,100 per month. The debt consolidation company tells you they have
been able to lower your payment to Rs2640 per month and your interest rate to 10% by
negotiating with your creditors and rolling the loans together into one. Sounds great, doesn't it?
Who wouldn't want to pay Rs460 less per month in payments?
ADVANTAGE OF DEBT CONSOLIDATION

1. The main advantage is that instead of writing 5–20 checks to creditors every month, you
combine bills into one payment,
and write one check. This helps in eliminating mistakes that result in penalties like incorrect
amount or late payments.
2. This process can result into a lower overall interest rate to the entire debt load and provide the
convenience of servicing only one loan.
TYPES OF DEBT CONSOLIDATION

1. Debt Management Plans - Most financial experts agree that a Debt Management Plan is the
preferred method of debt consolidation. DMPs are mostly managed by the non-profit
organisations. Firstly, they started with a counselling session with us and try to know that how
much can we pay monthly to the creditors. After that, they try to negotitate with the creditors for
a lower interest rate. Now, You send one payment to the agency running the DMP and they split
the payment into your creditors.Utilizing a DMP could affect your credit score. However, at the
end of the 4-to-5 years process, you should be debt free, which definitely improves your credit
score.
2. Debt Cosolidation Loans - A Debt Consolidation Loan (DCL) allows you to make one payment
to one creditor in place of multiple payments to multiple creditors. A debt consolidation loan
should have a fixed and lower interest rate than what you were paying previously, which reduce
your monthly payments and make it easier to repay your debts.
3. Debt Settlement - Where an individual's debt is negotiated to a lesser interest rate or principal
with the creditors to lessen the overall burden. Debt settlement companies promise to negotiate
your monthly payment with each one of your creditors for less than what you actually pay.
While this sounds fair but there are drawbacks. Many creditors refuse to bestow with debt
settlement companies and debt settlements may impact a negative score on your overall credit
score.
REASONS TO CONSIDER DEBT CONSOLIDATION

1. Lower interest rates
2. Convenience
3. Pay off your debt fastely
4. Scheduling.
TYPES OF LOANS WHICH CAN BE CONSIDERED UNDER DEBT

CONSOLIDATION ARE
1. House Loans
2. Educatiom loans
3. Personal loans
4. Vehicle loans
5. Credit cards
6. Small Business loans and many more.
ELIGIBILITY FOR DEBT CONSOLIDATION LOANS

Anyone with a good credit score could qualify for a debt consolidation loan. If you do not have a
good credit score, then it will be difficult for you to get the loan or whether you have to pay
additional interest rate to get debt consolidation loan.
DIFFERENT TYPES OF BANKING: KEY POINTS TO

KNOW
Sometimes people require more than
PARA BANKING: 
their local banks can offer. In such cases
 Para banking activities are defined as they opt for Offshore banking.
those banking activities which a bank  It provides financial and legal benefits
performs apart from its daily activities like privacy and minimal taxation.
like withdrawal or deposit of money.
GREEN BANKING
 Under para banking activities banks can
undertake activities either  Green banking promotes deployment of
departmentally or by setting up clean energy technologies.
subsidiaries.  It stresses on environmental friendly
NARROW BANKING: practices and aims at reducing carbon

footprint from banking activities.
 This is a type of banking in which banks  These activities seek to reduce costs of
invest money mostly in government energy for ratepayers, private sector
bonds and securities. investments and other economic
 This is done to avoid risk in the market. activities.
Banks dedicated to such type of banking
RETAIL BANKING

are also known as Narrow Banks.
OFFSHORE BANKING  Retail banking is a type of banking in

which direct dealing with the retail
 When a bank accepts currencies of customers is done. This type of banking
countries abroad, such an activity is is also popularly known as consumer
known as Offshore banking banking or personal banking
 Retail banking is the visible face of
banking to the general public.
A better and more apt term for Islamic

WHOLESALE BANKING 
banking is Sharia Compliant Finance.
Wholesale banking can be refered to as

UNIT BANKING
the services provided by banks to
organisations like Mortgage Brokers,  USA is where such type of banking was
corporate clients, medium scale first introduced.
companies, real estate developers and  In such a type of banking all the
investors, international trade finance operations are performed from a single
businesses, institutional customers (such branch.
as pension funds & government  A customer having an account in a
agencies) and services offered to other specified branch has to undergo all
banks or financial institutions. banking activities through that branch.
Examples are Regional Rural Banks and
UNIVERSAL BANKING 
Local Area Banks.
The recommendation of the concept of

MIXED BANKING
Universal Banking was done by the R H
Khan committee.  Mixed banking is a type of banking in
 This is a type of banking in which banks which deposits and investment activities
are allowed to undertake all types of take place simultaneously.
financial activities regarding banking or  It can also be described as the dual
development in accordance with the functioning of investment banking and
statutory and other requirements of RBI, commercial banking.
Government and related legal Acts.
CHAIN BANKING:
 Universal Banking includes activities like
accepting deposits, issuing credit cards,  Chain banking is a type of banking
investing in securities, merchant which is a group of minimum 3 banks
banking, foreign exchange operations, held together by a group of people to
etc. carry out effective banking activities.
Instead of having a holding company
ISLAMIC BANKING 
the bank functions independently.
 Islamic banking is a kind of banking  The revenue is maximised since there is
activity which strictly follows the no overlap of activities.
principles of the Islamic law (Sharia) and
its application practically through the
RELATIONSHIP BANKING
development in Islamic economics
 In such a type of banking the the major the most profitable way of doing
needs of the customers are understood business.
by the bank and accordingly banking  In such a type of banking, the bank does
services are provided to the individual. not have a physical presence or any
 Banks get to know if the customer is limitations in the permission of
credit worthy since they have to gather operations.
information about its customers.  It acts as a banking agent for a home
bank.
CORRESPONDENT BANKING
 In more than 200 countries, this type of
banking is prevalent and is considered
NATIONAL BANK FOR AGRICULTURE AND RURAL

DEVELOPMENT
INTRODUCTION HISTORY OF NABARD

 "NABARD" means 'National Bank for  On 30th march 1979, GOI and RBI
Agriculture and Rural Development'. constituted a committee under the
 NABARD is an apex level bank set up by Chairmanship of Shri B.Sivaraman to
GOI(Government of India) with an review the arrangements for
instruction of providing credit flow for institutional credit for agriculture and
the promotion and development of rural development (CRAFICARD).
agriculture, cottage, village and other  The Sivaraman committee submitted a
small scale industries in the country. report on 28th november 1979 stated
 It is not a wholly own subsidiary of RBI that there is a need for a new institution
now because RBI sold 99% of its stake which will cater the supply of credit flow
to GOI. for the development of rural area.
 Its headquarter is in Mumbai, India.  Through Act,61 of 1981, The Parliament
 It has 336 district offices across the approved the setting up of NABARD and
country. NABARD came into the existence on
 Chairman of NABARD is Dr. Harsh 12th July 1982.
Kumar Bhanwala.
NABARD was initially started with an


ROLE
amount of Rs100 crore.
 The main role of NABARD is to provide
and manage credit flow for the
MISSION development of the rural area.
 Promote sustainable and equitable

agriculture and rural prosperity through
effective credit support, related services,
institution development and other
innovative initiatives
TYPES OF LOANS PROVIDED BY NABARD
SHORT TERM LOANS MEDIUM TERM LOANS

These types of loans are provided for  These types of loans are generally the
production purposes at reduced rate of extended period of short term loans.
interest to the RRBs(Regional Rural Banks) When crops are damaged, the banks
and SCBs(State Cooperative Banks). Then give them extra period of time for re-
RRBs and SCBs provide the credit as loans to payment of loans.
the needy ones for different purposes such
LONG TERM LOANS
as:
 These types of loans are generally for
 Seasonal agricultural operations the period of 3-15 years. These loans are
 Marketing of crops generally taken by small scale industries,
 Fisheries Sectors non farm sector, handicrafts,
 Industrial Cooperative Societies (other handlooms, powerlooms etc.
than weavers)
 Purchases, Stocking and Distribution of
Chemical Fertilisers and other
Agricultural Inputs.
ELIGIBLE INSTITUTIONS FOR REFINANCING THE

LONG TERM LOANS ARE:
 RRBs  Scheduled Primary Urban Co-operative
 SCBs Banks (PUCBs)
 Commercial Banks (CBs)  North East Development Finance
 State Co-operative Agriculture & Rural Corporation (NEDFC).
Development Banks (SCARDBs)
 Non-Banking Financial Companies
(NBFCs) QUICK FACTS
 State Agricultural Development Finance
Companies (ADFCs)
Name of organisation NABARD(National Bank for

Agriculture and Rural Development
Function Manage and provide credit flow
for the development of rural areas.
Founded on 12th July 1982
No of district offices 336
Website www.nabard.org
Chairman Dr. Harsh Kumar Bhanwala
BUSINESS OF BANKING COMPANIES IN BANKING

REGULATION ACT, 1949
powers by controlling the banks by any
INTRODUCTION
means necessary and to the interest of
Indian economy in general. There are many
provisions of banking regulation act 1949
The banking and regulations act was
and we are going to the topic about business
enacted to safeguard the interest of the
of banking companies.
depositors and to control the abuse of
Provider compulsory amalgamation of

OBJECTIVES OF BANKING 
weaker banks with senior banks, and
REGULATION ACT 1949 thereby strengthens the banking system
in India.
 The provision of the Indian Companies
 Introduce few provisions to restrict
Act 1913 was found inadequate and
foreign banks in investing funds of
unsatisfactory to regulate banking
Indian depositors outside India.
companies in India. Therefore a need
 Provide quick and easy liquidation of
was felt to have a specific legislation
banks when they are unable to continue
having comprehensive coverage on
further or amalgamate with other
banking business in India.
banks.
 Due to inadequacy of capital many
banks failed and hence prescribing a THIS ACT APPLIES TO THE
minimum capital requirement was felt
FOLLOWING CATEGORIES OF
necessary. The banking regulation act
brought in certain minimum capital BANKS
requirements for banks.
 Nationalized banks
 One of the key objectives of this act was
 Non-nationalized banks
to avoid cut throat competition among
 Co-operative banks in the manner and
banking companies. The act was
to the extent specified in the act
regulated the opening of branches and
changing location of existing branches. BUSINESS OF BANKING
 To prevent indiscriminate opening of COMPANIES
new branches and ensure balanced
development of banking companies by  In banking regulation act 1949, section
system of licensing. 6 it provides a list of activities which a
 Assign power to RBI to appoint, banking company may engage in the
reappoint and removal of chairman, business of banking. The Main functions
director and officers of the banks. This are as follows
could ensure the smooth and efficient  Acting as agents for any Government or
functioning of banks in India. local authority or any other person
 To protect the interest of depositors and carrying the agency’s business of any
public at large by incorporating certain description but excluding of the
provisions, viz. prescribing cash reserve managing agent or secretary and
and liquidity reserve ratios. This enable treasurer of a company.
bank to meet demand depositors.  Managing the public loan and private
loan and solving issues respectively.
 The insuring, guaranteeing, account or otherwise dealing with the

underwriting, participating in managing property and rights of the company.
and carrying out of any issue public or  Acquiring and undertaking the whole or
private of the State municipal or other part of the business of any person or a
loans or of shares, stock, debentures, company, when such business is of a
stock of any company, corporation or nature enumerated or described in the
association and the lending of money act.
for any purpose  Doing all these things as are incidental
 May carrying on every kind of guarantee or conducive to the advancement of the
business. business of the company.
 Managing, selling and realizing any  Any other form of business which the
property which may come into the Central Government fixed in the Official
possession of the company in Gazette, and specified as a form of
satisfaction in any of its claims. business in which it is lawful for a
 Can acquire, hold and deal with any banking company to engage.
property or any right, title or interest in The above list of activities is exhaustive but
any such property which may form the not comprehensive. There are several kinds
security for any loan or advance which of services listed above both under main
may be connected to any of that business as well as ancillary business, some
security. are agency services and general utility
 Undertaking and executing trusts. services
 Undertaking the administration of
estates as executor, trustee. AGENCY SERVICES
 Establishing and supporting of
 Carrying and transacting guarantee
associations, institutions, funds, trusts
business on behalf of its clients,
and conveniences calculated to benefit
collection of bills, securities etc.
employees or ex-employees of the
purchasing and selling of shares, bonds,
company.
debenture, etc. on behalf of constituents
 The acquisition, construction,
negotiating of loans and advances, mail
maintenance and alteration of any
transfer etc. and many more agency
building or works necessary for the
services are grouped as follows
purposes of the company.
 Non-fund Business
 Selling, improving, managing,
 Collection of instruments and securities
developing, exchanging, leasing,
on behalf of customers
mortgaging, disposing of or turning into
 Portfolio Management or Merchant
Banking
 Facility of remittance of funds banking, DEMAT services for securities

 Money Exchange business as Authorized trading, ATM services, etc.
dealer under foreign exchange business
 Other agency business on behalf of
Government or local body
 Factoring Services CONSULTANCY SERVICES
 Special Purpose Vehicle(SPV) services for
 ECS services for payment of different
securitization of assets under
dues of the people
securitization and reconstruction of
 Payment of pension
Financial assets and Enforcement of
 Payment of salaries of the employees
security interest act
 Collection of taxes on behalf of the
people
CONCLUSION
 Collection of different dues of the
people like telephone, electricity, Some of the activities mentioned both under
municipal taxes agency services and general utility services
are of new generation activities particularly
after reforms in the financial sector and
GENERAL UTILITY SERVICES growing adoption of technology-based
banking. These are the important facts that
 Providing Safe-custody facility to its
are given in the 6th section of banking and
customers for keeping their valuables
regulations act 1949 regarding Business of
 Providing the facility of Safe deposit
banking companies.
vault under lease agreement to its
customers for keeping their valuables
 Technology based utility services like
Tele-banking, Mobile banking, Online
GAAR-GENERAL ANTI-AVOIDANCE RULES:

EXPLAINED WITH EXAMPLES
introduced by then Finance Minister, Pranab
INTRODUCTION
Mukherjee, on 16 March 2012 during the
General Anti-Avoidance Rule (GAAR) is an Budget session.
anti-tax avoidance regulation of India. It was
government will curb on tax avoidance

TAX AVOIDANCE
effective from the fiscal year 2012-13.
Avoidance means nothing but an attempt to  On7th–May-2012: Finance Minister,
reduce the tax liability through the legal Pranab Mukherjee forced to change his
means. opinion and agreed to defer GAAR by a
The difference between Tax Avoidance and year as his announcements spooked
Tax Evasion oversea investors.
Evasion & Avoidance are two different  On 28th-Jun- 2012: Finance Ministry
entities. In Avoidance, tax reduction is done releases the first draft on GAAR, there
legally but in evasion, it is done illegally. was the wide criticism of the provisions.
 On 14th-Jul-2012: PM, Manmohan Singh,
formed a review committee under
GAAR IN SIMPLE TERMS Parthasarathi Shome, for preparing a
second draft by 31st August and final
Tax Avoidance is one of the major concerns
guidelines by 30th September 2012.
across the world. Different countries framed
 On 1st-sept- 2012: Shome Committee
different rules to minimise such tax
recommends to defer GAAR by three
avoidance. Such rules in simple terms are
years.
known as General Anti-Avoidance Rule
 On 14th-Jan-2013: Govt. of India
(GAAR).Thus GAAR is nothing but the set of
partially accepts the recommendations
rules ratified so as to check the avoidance of
of Shome Committee and has decided
tax.
to defer the same for 2 years and will
now be effective from the year 2016-17.
HISTORY OF GAAR IN INDIA
 On 27th-sept-2013, as per the
 In India, the actual discussions started notification issued by Govt. of India,
on 12th-Aug-2009, when the draft of GAAR would be valid for foreign
Direct Taxes code Bill (DTC) released. institutional investors that have not
taken the benefit of an agreement
SOME OF THE RECENT
under Section 90 or Section 90A of the I-
DEVELOPMENTS ABOUT GAAR T Act or Double Taxation Avoidance
ARE Agreement (DTAA).
Thus
 On 16th-Mar-2012: Finance Minister,
Pranab Mukherjee takes a tough  GAAR will not be applicable for the
decision & announces that the investments made by foreign investors
prior to Aug-2010
 GAAR provisions that will come into circular that was issued in the year 2000
effect from April 2016 and on acceptance of TRC (Tax Residence
 apply only to business arrangements Certificate) issued by Mauritius
with a tax benefit exceeding Rs3 crores. government.
The Approving panel is Five-member
SOME RECOMMENDATIONS OF 
committee, two members must be non-
PARTHASARATHI SHOME PANEL government persons & of renown from
the fields of Accountancy, Business or
 Defer implementation of GAAR by 3
Economics.
years.
 The other two members must be chief
 The threshold of tax benefit is Rs.3
commissioners of IT dept., chaired by a
crores & additional with changes in
retired High court judge.
1962 Income Tax Rules.
 Mauritius Issue- GAAR should not appeal
to inspect the realness of the residency
FII from Mauritius. The government
should hold the provisions of the CBDT
TWO EXAMPLES TO UNDERSTAND GAAR

PROVISIONS:
out an asset and through various sub-leases,
EXAMPLE -1
takes it back on lease, thus creating a tax
Facts: benefit without any change in economic
A choice made by a company between substance, Revenue would examine the
leasing an asset and purchasing the same matter for invoking GAAR provisions.
asset. The company would claim a deduction
for leasing rentals rather than depreciation if EXAMPLE -2
it had their own asset. Would the lease rent
Facts:
payment be disallowed as an expense under
À` company borrowed money from a
GAAR?
company `B` and used that to buy shares in
Interpretation:
three 100% subsidiary companies of À`.
GAAR provisions, would not, prima facie,
Though the fair market value of the shares
apply to a decision of leasing (as against
was Rs. Y, À` paid Rs. 6Y for each share. The
purchase of an asset). However, if it is a case
amount received by the said subsidiary
of circular leasing, i.e. the taxpayer leases
companies was transferred back to another
company connected to `B`. The said shares obtained a tax benefit and created rights or
were sold by „A‟ for Rs. Y/5 each and a obligations which are not ordinarily created
short-term capital loss was claimed and this between persons dealing at arm’s length.
was set-off against other long-term capital Revenue would invoke GAAR with regard to
gains. this arrangement.
Interpretation:
By the above arrangement, the taxpayer has
SKILL BANKS: ALL YOU NEED TO KNOW
INTRODUCTION MAIN FOCUS COUNTRIES OF

 Skill banks are training centres to SKILL BANKS
provide training to potential immigrant
 South East Asia
workers
 Norway
 Skill Banks are established first in the
 Germany
states of U.P and Bihar
 Canada
 U.P and Bihar account for the maximum
 Sweden
emigrants annually in India
 Japan
 These two states have the maximum
 The above countries will have huge
number of employees working abroad
dearth of nurses and care givers in the
 Also these states have the maximum
next decade
population
 Skill banks focus on these countries for
 The training program is of international
job opportunities and train people
standards
according to the requirement
 Skill banks cover about 110 job roles
 50 global skill banks are set up by GOI in KEY SECTORS COVERED BY
2016 SKILL BANKS
OBJECTIVES OF SKILL BANKS
 Health care
 The primary objective of skill banks is to  Medicine
train workers for global markets  IT
 To project India as the capital of Human  Hospitality
resources in the world  Retail trade
 Automobile  Skill banks ensure that the employee

Other sectors are likely to be included in the gets good working conditions abroad
skill development training program of skill  The trainees get a better salary abroad
banks where job opportunities may emerge after attending the training program
in future and sent abroad
CONCLUSION
SPECIAL FEATURES OF SKILL
Skill banks help people go abroad and
BANKS 
work in a safe manner
 Youth trained in skill banks get  Workers sent abroad through skill banks
acquainted with the local culture of the will have the support of GOI
country in which they go to work  All migration-related issues and frauds
 Before emigration, trainees are made by consultancies will not occur once
familiar with language and work ethics workers are trained and sent abroad
of the foreign nation through skill banks
 Training at the skill banks is demand  Rural poor and unaware people can
driven completely trust the skill banks for their
 If the requirement in a gulf nation is for overseas job opportunities
1000 mason workers, then skill banks  Skill banks help in identifying the
will train 1000 masons and send them to requirements arising abroad in various
the respective nation nations and match the requirements
 This ensures that majority of the persons with the employees in India through skill
trained in skill banks will be sent abroad training programs
as it is demand-based
 Skill banks train the workers and certify
them
ADHAR CARD ACT 2016

It enables as identity proof of the
INTRODUCTION 
individual
 Aadhar card is given to every citizen of  It came into effect from 2016
India
AADHAR CARD DETAILS
 Aadhar number means an identification  The central government established an

number issued to an individual Authority to be known as the Unique
 Aadhar number holder means an Identification Authority of India to be
individual who has been issued an responsible for the processes of
Aadhar number under this act enrolment and authentication and
 Authentication means the process by perform such other functions assigned
which the Aadhar number along with to it under this act.
demographic information or biometric  The head office of the authority is in
information of an individual is submitted New Delhi
to the Central Identities Data  The Authority may with prior approval of
Repository the central government, establish its
 Authority is given to the Unique offices at other places in India.
Identification Authority of India
GRANTS, ACCOUNTS AND
 The biometric information submitted are
photograph, finger print, Iris scan AUDIT AND ANNUAL REPORT
 The enrolment process is given to
 The Central Government after due law
enrolling agency to collect demographic
passed in the parliament grant a sum of
and biometric information of individuals
money to be utilised for the purpose of
ENROLLMENT this act
 The fees or revenue collected by the
 Every Indian shall be entitled to obtain
authority shall be credited to the
an Aadhar number submitting his
Consolidated fund of India
demographic information and biometric
information by undergoing the process PROTECTION OF INFORMATION
of enrolment
 The authority shall ensure the security of
 An Aadhar number ,issued to an
identity information and authentication
individual shall not be re-assigned to
records of individuals
any other individual
 The authority shall take all necessary
 An Aadhar number should be a random
measures to ensure that the information
number and should not bear no relation
in the procession or control of the
to the attributes or identity of the
authority, including information stored
Aadhar number holder
in the central Identities Data Repository,
UNIQUE IDENTIFICATION is secured and protected against access,
use or disclosure not permitted under
AUTHORITY OF INDIA
this act or regulations made under.
If an offence is committed for which no

OFFENSES AND PENALTIES 
penalty is specified , the person
 Whoever impersonates or tries to concerned shall be punished with
impersonate other persons, whether imprisonment up to 1 year or fine up to
dead or alive, real or imaginary by Rs 25000 or Rs 1 lakh or both
providing any false demographic  The Aadhar act is the key to the
information or biometric information ambitious financial inclusion programme
shall be punishable for imprisonment for of the government. The act empowers
a term which shall be extended to three Aadhar with legal backing for the
years purpose of transferring subsidies and
 Whoever with intention of causing harm other welfare services to beneficiaries
or mischief to an Aadhar number holder through designated bank accounts.
shall also be punishable for Banks can also use Aadhar number as
imprisonment for a term which shall be identity proof, which will help them weed out
extended to three years fake Jan Dan accounts.
PREVENTION OF MONEY LAUNDERING ACT 2002:

EXPLAINED
INTRODUCTION
The purpose of a large number of criminal make their activities authorised. Because the
minds is to make profit or money for Money which is generated by the illegal way
themselves or for any criminal organisation. is dangerous and can not be used directly so
Money laundering is the simplest way for to make it happen Money Laundering is the
these criminal to hide their illegal process of conversation of such illegal
origin.Selling illegal arms, smuggling, drug activities to make it appear like authorised or
trafficking, and other illegal activities can legal.
generate large amounts of money. Stealing Simply it is the process of engaging in
Money through Fraud Way, accepting a bribe specific Financial transactions to hide the
and doing computer fraud for some benefits identity, Process source and destination of
can also produce huge profits and so this all money.
fraud individual use Money Laundering to
MONEY LAUNDERING
The process of Money Laundering contains The above stages always not work line by
following stages. line sometimes illegal money gets mixed with
authorized money like in the business of
PLACEMENT gambling nobody knows the source of money
but after the gambling it becomes authorized
The person who has the Money which is
for that individual.
generated by illegal or fraud activities
introduces such unauthorised funds into the
ANTI MONEY LAUNDERING ACT
Financial System by depositing smaller
number of amounts in the Bank by using In India, the Anti Money Laundering
cheques or another instrument. In this stage measures are controlled by using the
the main work of the money launderer is the Prevention of Money Laundering Act, 2002
entry of his fund. which was introduced got working from 1st
July 2005. RBI, SEBI and IRDA have
LAYERING introduced it under the PML Act, and hence it
will be now applicable to all financial
Now the second stage of Money Laundering
institutions, banks, mutual funds, insurance
is the layering. In this stage, the Money
companies, and other financial agencies.The
Launderer finds the unique way for
agency which is responsible for monitoring
transaction by creation of complex network
the Anti Money Laundering activities in India
In which he uses lots of different account so
is called Financial Intelligence Unit (FIU IND)
as to hide his true origin.He uses another
.It works under Department of Revenue,
person's account to place his money safe.
Ministry of Finance which analyses all the
information related to person who is suspect.
INTEGRATION
After successful placing of his criminal money INDIAN GOVERNMENT'S STEPS
through first two stages then money TO FIGHT AGAINST MONEY
launderer uses such funds in the business,
real estate, and in some other assets.Also
LAUNDERING
then authorized money transferred or  Government of India is doing best to
returned to the source where it has been fight against the threat of Money
originated. Laundering and so for that India has
signed the rules with the following UN  The main objectives of FATF are to
Conventions, which deal with Anti regulate the effective implementation
Money Laundering and Countering the for fighting against money laundering,
Financing of Terrorism : terrorist Financial activities and other
 International Convention for the problems related to the international
Suppression of the Financing of financial system.
Terrorism (1999).  Freezing terrorist assets , establishing
 UN Convention against Transnational Financial intelligence unit for collection ,
Organized Crime (2000). evaluation and find suspicious
 UN Convention against Corruption transactions reports from Financial
(2003). institution are the functions of FATF.
 Under the special session held by United  Indian is one of the active member of
Nations General Assembly (UNGASS) this FATF group.
during 8th to 10th June 1998 all the
members of this group have to adopt
the Anti Money Laundering Legislation &
Programme and for that they have OFFENCE OF MONEY
made act called 'Prevention Of Money
LAUNDERING
Laundering Act 2002'.
 This Act has been again amended for  Offence of money laundering has been
enlarging its scope of money laundering, defined in the section 3 of the
in 2009 by the law of Prevention of Prevention Of Money laundering Act.
Money Laundering (Amendment) Act  Any person who is directly or indirectly
2009. This Act was again further attempts to become the part of the such
amended by Prevention of Money- illigal activity shall be guilty according to
Laundering (Amendment) Act 2012. the offence of money laundering.
INTERNATIONAL RESPONSE TO ACTIONS TAKEN AGAINST

FIGHT AGAINST MONEY PERSONS INVOLVED IN MONEY
LAUNDERING LAUNDERING
 Financial Action Task Force (FATF) is a  Under the section 17 and section 18 of
government body which is established Money laundering Act freezing of all
and introduced in 1989 by the initiative unauthorised property and records
of G7 group. takes place.
 Persons who committed this crime and also that person have to pay fine.
found responsible according to offence
of money are punishable to put in the
CONCLUSION
prison for three years which may be
extended upto seven years and also that After all this prevention and lots of rules and
person have to pay fine under the regulations by Government there are some
section 4 of money laundering act. people who are not stopping and that's why
 If the offence committed is under the India is listed among the six countries which
Narcotics and Psychotropic Substance are actively monitored by the INTERPOL and
Act 1985 then in that case the guilty other International banking agencies.
person gets three years of prison which
can be extended upto ten years and
DIFFERENCE BETWEEN REGIONAL RURAL BANKS

AND CORPORATIVE BANKS
Rural Banks comes under scheduled
INTRODUCTION
commercial banks.
The banks which are present in India are
divided into 3 major groups namely, Central REGIONAL RURAL BANKS
Bank (RBI), Scheduled Banks & Non-
RRBs were established in 1975 under the
Scheduled Banks. This means other than RBI,
provisions of the ordinance promulgated on
every bank will be either a scheduled bank or
26th-sept-1975.
a non-scheduled bank. Based on the
Every RRB is owned by 3 entities with their
functions, there are five categories of Banks
respective shares as follows:
in India viz. Central Bank (RBI), Commercial
Central Government -50%
Banks, Development Banks, and Cooperative
State government-15%
Banks & Specialized Banks.
Sponsor bank -35%
Further Scheduled banks are classified into

DIFFERENCE BETWEEN RRB
scheduled commercial banks & scheduled
cooperative banks. The basic difference b/w AND CORPORATIVE BANKS
them are in their holding pattern. Regional
 Ownership – They are maintained by 3 themselves & were expected from the
different bodies as mentioned above. statutory pre-emptions. There were 196 RRBs
 Regulation- They are regulated by in India in1990.This has reduced to 56 (as of
NABARD, which is a subsidiary of mar-2014) after mergers & amalgamations.
RBI.Other banks in India are directly
regulated by RBI. CURRENT GOVERNMENT’S
Statutory Background –These banks

POLICY:-
have a distinct law behind them viz.
Regional Rural Banks Act, 1976. The Modi govt. has put the hold on further
 Statutory pre-emptions – RRBs need not mergers of the RRBs. The government is
maintain CRR (Cash Reserve Ratio) & focusing on improving the performance of
SLR (Statutory liquidity ratio) like any RRBs & to explore new opportunities in the
other banks. same. At present, there is a bill pending to
make some amendments in the RRB act
which is aiming to increase the pool of
REASONS FOR ESTABLISHING
investors to tap capital for RRBs.
THE RRBS:-
COOPERATIVE BANKING
Even after nationalisation, there were
cultural concerns which made it difficult for A cooperative bank is jointly owned
commercial banks even under the ownership enterprise in which same people are its
of government, to lend to farmers. So customers who are also its owners.
Regional Rural Banks were started to work in Therefore, the basic difference b/w scheduled
rural perspectives & they can lend to more & commercial banks & a scheduled cooperative
more farmers, who are in real need of bank is in their holding pattern. These are
money. To provide them constitutional registered under Cooperative societies Act.
background, a separate act was passed. The cooperative banks work agreeing to the
principles of mutual assistance.
VARIOUS PROBLEMS OF RRB:- These cooperative structures are one of the
largest networks in the world comprising of
RRBs were considered as a low-cost
more than 200million members.
organisation having a rural philosophy, local
touch & pro-poor focus. Each bank was to be
funded by a ‘Public Sector Bank’ (PSU),
HISTORY
though; they were planned as the self-
sustaining credit institutions which were able Hermann Schulze & Friedrich Wilhelm
to refinance their core resources in Raiffeisen gave the idea of cooperative
banking for the first time. In India, the history

SIGNIFICANT FEATURES OF
of cooperatives begins from 1904 when the
cooperative credit societies act, 1904 led to COOPERATIVE BANKING IN
the formation of societies in both rural & INDIA:-
urban zones. The act was recommended by
Sir Friedrich Nicholson (1899) & Sir Edward These are small financial institutions
Law (1901).The cooperative societies act of governed by Banking Regulations Act,1949 &
1912, further gave recognition to the Banking Laws cooperative Societies Act,
formation of non-credit societies & the 1965
central cooperative organisations. Owned by its members
Involved in community development
EXTENT OF COOPERATIVE Bringing banking to the doorstep of the
lowest section of the society
BANKING IN INDIA Profits obtained will be combined to form
Further, it is divided into 2 broad categories some reserves while some amount is
namely, Urban Cooperative Banks & Rural distributed to members.
Cooperative Banks. Some sections of banking regulation act are
Urban cooperatives have been further not applicable to cooperative banks
divided into scheduled & non-scheduled. Both
categories are again divided into multi-state PROBLEMS FACED BY
& single-state. The majority of these comes COOPERATIVE BANKS IN INDIA:-
under no- scheduled & single-state category.
All the activities of urban cooperatives are The state partnership has resulted in
monitored by RBI.whereas; it is regulated by excessive state control & interference.
RBI & NABARD for rural cooperative banks. Inactive membership has made them
declining as there is the lack of dynamic &
professional attitude. Credit retrieval is weak,
especially in rural areas.
BASE RATE AND DIFFERENTIAL RATE OF

INTEREST
Base rate is the minimum rate set by Reserve
INTRODUCTION
Bank of India below which banks are not
allowed to lend to its customers.
Banks should have policy delineating the

DESCRIPTION
components of spread which include a)
 RBI prescribed the minimum rate of Business strategy b) Credit risk premium.
interest on loans with effect from Oct 1, The spread charged to an existing borrower
1960 should be increased except on account of
 On recommendations of Working Group deterioration in the credit risk profile of the
( Chairman : Deepak Mohanty) RBI customer.
decided that banks should switch over
to Base Rate system from July 1, 2010 INTEREST RATES ON LOANS
for enhancing transparency in lending
Actual lending rates will be determined by
rates and enables better assessment of
adding components of spread to MCLR.
transmission of monetary policy.
There will be no lending below the MCLR of a
 RBI replaced the bases system with
particular maturity.
Marginal Cost Based Lending Rate
(MCLR) with effect from April 1, 2016
EXEMPTIONS FROM MCLR
MARGINAL COST BASED  Loans under schemes of the government

of India wherein banks have to change
LENDING RATE interest rates as per the scheme
RBI introduced MCLR to determine Base Rate  Working Capital Term Loan, funded
by banks to improve the efficiency of interest term loan etc. as part of
monetary policy transmission. rectification/ restructuring package.
 Loans under various refinance schemes
INTERNAL BENCHMARK of government of India or any
government
All rupee loans sanctioned and credit limits  Undertakings wherein banks charge
to be priced with MCLR. It will be internal interest at the rates prescribed under
benchmark the schemes
The MCLR comprises of
Marginal cost of funds
REVIEW OF MCLR
Banks shall review and publish their MCLR of
Negative carry on account of CRR
different maturities every month
Operating Cost
Tenor premium RESET OF INTEREST RATES

Banks can offer loans with reset dates linked
SPREAD
either to the date of sanction of the
loan/credit limits or to the date of review of The periodicity of reset shall be one year or
MCLR lower
DIFFERENTIAL RATE OF INTEREST
ELIGIBILITY AMOUNT
 Individuals whose family income does Maximum Rs. 15000, for physically
not exceed Rs. 18000 per annum in handicapped additional loan Rs. 5000 for
Rural areas and Rs. 24000 per annum in artificial limbs / Braille typewriter. Loan up to
Urban and Semi Urban Areas Rs. 20000 for housing to SC/ST and under
 Individual whose land holding does not INDIRA AWAS YOJANA
exceed 1 acre of irrigated and 2.5 acres
of un-irrigated land TARGET
 No ceiling for SC/ST engaged in allied
 Minimum 40% to SC/ST beneficiaries
activities
 2/3rd to be routed through rural and
 People engaged in Cottage and Rural
semi-urban branches
industries
CLASSIFICATION - Weaker Section advances
 Physically handicapped pursuing gainful
occupation SUBSIDY / MARGIN - No subsidy. No Margin
 Orphanages and women’s home
 State owned corporations /cooperative SECURITY
societies including State corporations
for supreme Court / ST’s /co-operative  Hypothecation of assets created out of
societies, large sized Adivasi bank loan
Multipurpose Co-operative Societies for  No collateral security
Tribal areas REPAYMENT
PURPOSE OF LOAN Depending upon income generated
For productive Activities, pursuing higher, maximum of 5 years including grace period
education by indigent students, purchase of up to 2 years depending upon the type of
artificial limbs, hearing aids, wheel chair by activity and income generation
physically handicapped.
CLEAN NOTE POLICY OF RBI

not circulate spoiled notes in the
INTRODUCTION
counters of bank which they have
Lots of people in our country have a bad received from people.
habit of writing anything on the currency  Banks are instructed to provide clean
note, folding currency note, also somebody currency in exchange of spoiled notes.
staple it which spoils the Note and reduces  RBI also provided the guideline for
notes durability. citizens of a country which says that
So to avoid such occurrences RBI introduced avoid spoiling notes by oil, water etc .
the Clean Note Policy in 2001 in an order to Do not write anything on the currency
increase the life of currency notes. notes.
 According to RBI, the clear objective of
OBJECTIVES providing good clean quality notes to
public by the banks is provided under
 The main objective of this Clean Note
the section 35A of banking regulations
Policy is to provide good quality
act 1949 and if the bank does not follow
currency notes and coins to the citizens
this then that bank may be punishable
of our country.
and the license of such bank can be
 Also, the objective of this policy is to
cancelled.
avoid the circulation of spoiled notes in
the economy. INITIATIVE BY RBI
GUIDELINES  To stop such spoiled currency RBI
developed Currency Verification and
 According to this policy packets of notes
Processing System (CVPS) to speed up
are not stapled with a pin while the
this process.This system is installed in
banding of such packets should be done
the various offices of RBI. In this System
by paper or polyethene bands so as to
have a watermark feature in which if
increase the life of the currency
something is written on watermark then
notes.The note packets can also be
this machine automatically rejects such
binded by rubber bands in order to
note.
minimise the damage of currency notes.
 This CVPS machine is capable of
 Banks should sort the notes in two parts
processing about 50,000 to 60,000
like re-issuable and non-issuable.
pieces of spoiled notes per hour.
 RBI instructed all the banks to circulate
 This machine sorts the notes which are
good quality notes to the public and do
in good or bad condition.The bad
condition notes are shredded online and RBI but still the objective of this policy
the notes which are in good condition are not realised but there are some
are banded into packets for reissue. improvements in the banks which are
 RBI installed 42 such machines in the not stapling notes, providing quality
Currency issue offices. notes, exchanging spoiled notes.
 Clean Note Policy has been
implemented almost with all aspects
CONCLUSION
only some people due to lack of
 Now it has been almost 16 years since awareness are ruining this policy.
this Clean Note Policy was issued by the
INX: INDIA'S FIRST INTERNATIONAL STOCK

EXCHANGE: KEY POINTS
market and it was a proud moment for all
INTRODUCTION
the Indian. In this article we will discuss the
January 9, 2017, brought a great day for key points of INX because in the upcoming
Indian Market as Prime Minister Narendra bank exams this will be the hot topic for
Modi gifted India its first International Stock discussion and one or two objective type
Exchange Market. This initiative of GOI has questions will be surely based on INX.
taken India a step ahead in the global stock
FEATURES OF INX
To match the pace of global economy and
1. SPEED
stock market, INX will remain open for 22
It is world's fastest stock exchange in terms hours a day. The stock exchange will open at
of response. The highly advanced technology 4 am and will close at 2 am. This time span is
based stock exchange will work on four matched with Japan and US's stock
microsecond response time. exchange time. Japan Stock exchange open
at 4 am according to Indian time and US
2. WORKING HOURS Stock exchange closes at 2 am according to
Indian time.
first six months, it will offer only derivative

3. INVESTMENT TARGETS
products.
Bombay Stock Exchange has kept the target
of investing 500 crores in the market within 6. SECURITY
three years.
To prevent money laundering and to manage
risks and money manipulation, INX has a
robust security system.
4. EMPLOYEES
To function perfectly, the staff of BSE has
relocated to Gujrat. 100 BSE employees have TAX BENEFITS
shifted to INX. There is a team of local and
 The people who will invest via INX will
foreign personnel too.
get following tax benefits
No income tax for fixed time span
5. TRADING 
 Low commodity transaction tax
INX will trade in securities and products  Beneficial for dividend distribution tax
along with Indian Rupee. It will indulge in the  Renunciation in long-term capital tax
trading of equity shares of companies  Beneficial in Security Transaction tax
incorporated outside India, depository
receipts, debt securities, currency and
interest rate derivatives, index-based
derivatives, commodity derivatives. For the
FAST FACTS FOR QUICK REVISION
Launched on January 9, 2017
Launched by Narendra Modi
Situated in Gandhinagar, Gujrat
Situated at Gujarat International Finance-Tec

(GIFT) City
Working hours 4 am- 2 am (22 hours)
Response Time 4 microsecond (fastest in the

world)
Investment 500 crores in 3 years
Products Derivative Products: equity,

currency 7 commodity
Tax Benefits for transaction tax, distribution tax
capital tax
Income Tax No income tax for three years
BLOCKCHAIN SYSTEM
So, by this, it is very clear that the
INTRODUCTION
transactions will be done in a more
 These days the transactions in the secured manner. A bank’s ledger is
banking sector is becoming a very connected to a centralised network.
tedious task and so as to ensure that
WORKING:
this tedious task to be removed, our
banking sector is trying to emerge  Blockchain is a distributed database
towards block chain technology. To which takes in a number of inputs and
simplify the transactions without the they try to place them in a block. There
help of any third party in a secure will be blocks lined and each block is
manner is really a great challenge, but said to be chained to another block
to overcome this challenge an using a cryptographic signature. This
anonymous online ledger (collection of ensures that block chains used as a
financial accounts) which uses the data ledger are accessed by anyone provided
structure to simplify it is called block if he has the permission to seek the
chain technology. details.
We can still see what comes in and gets
HOW IS IT UNIQUE?

out, and to whom. But now all these
information’s are present in the form  For any transaction to be done we need
of a digital format at one particular to have a reconciliation so as to ensure
place. In banks we see physical financial that the transaction is done in a genuine
collections, now we can get rid of it, and way. Every time having a reconciliation
we can keep the records directly in block is a tougher task to ensure that the
chain as it is framed even for record transactions are done in a smoother
keeping. manner.
 As mentioned about the block chain  To eradicate this problem block chain
system that it is an anonymous part built applications will play a key role by
which protects the identities of the user. not allowing reconciliation of any
transactions as all the information will application will just replicate this paper-
be readily available and verification will intensive work into an electronic
be done to see that if anyone is a part decentralised ledger which enables all
of particular block chain ecosystem. participators the ability to access a
single source of information. We can
EXAMPLE
track any documents easily and we can
 A person X wants to send his money to a validate ownership of assets digitally, by
person Y. So, here we have lender and not allowing any changes in the real
beneficiary. Once the deal is sealed, in time.
the block chain world this transaction  Block chain mechanism is to create a
gets recorded with all important details core banking platform. This technology
such as date, transaction value and the is being developed by the Indian IT
names also will be recorded. Next time service providers like TCS and INFOSYS.
when they want to repeat the process
ADVANTAGES:
they wouldn’t face any problems as their
data is already stored in it. It is a  Block chain technology validates each
decentralised ledger, and all the system and every transaction which makes it
numbers can store the information. more secure and reliable.
Verifications by any intermediaries are  The technology is decentralised and if
not required at all. any third party tries to enter he wouldn’t
get any chance as it will discard off in
WHY ARE BANKS INTERESTED?
peer-to-peer transactions.
 As we are in the digital era and even our  Block chain technology is a cost-saving
country is advancing towards digital factor for banks as manual intervention
India and cashless society so we need to is not required for reconciliation
adopt good technologies so as to be in purposes. It is basically done by
the forefront in terms of competition intermediaries but now with the help of
with the entire world. block chain, there is no need of any
 The first Indian bank to complete the manual interventions.
block chain transaction successfully was  This technology is cryptographically
ICICI bank. Even all major banks are also encrypted with our digital signatures
trying to implement this block chain and it is difficult to hack into. If in case
system as it will be really beneficial for there is any fraudulent transactions
all sort of money transfers and for every node of it can detect it and it will
storing the records. deny the proceedings.
 In banks, we see a lot of hectic work is  A lot amount of aggressiveness is
done by just making more paper- amounted in banks by looking at block
intensive works, but now this block chain chain technology. The banks can keep a
track of debit and credit data. Even, in also become easy by this technology
the forex market, the back office of the and in the same way, tracking also will
respective banks they need to speak become easy. It will play a crucial role
with the back office of another bank particularly with bonds and stocks as
which is said to be a tedious process. In banks spend a lot of money and time on
this case block chain technology will tracking it.
play a pivotal role as it doesn't support
CONCLUSION
any back office, so automatically back
offices will be eliminated in the banking Block chain technology will be a huge
sector. benefitting factor to the banking sector and
even this technology is not limited to only
HUGE POTENTIAL
this sector but rather, it can be used even in
 Banks tend to invest a lot of time in many other areas also. There will be no
moving money, thus creating a problem, human intervention at all if we adopt block
whereas the blockchain technology can chain technology as it will verify all the
free up the movement of money, instead transactions solely. The block chain
of leaving it clogged in slow banking. It’s architecture can significantly bring down the
very secure and till now no blockchain costs and even it can reduce the
technology has never been hacked inefficiencies in the financial sector.
successfully. Transaction process will
SUSTAINABLE STRUCTURING OF STRESSED

ASSETS (S4A SCHEME)
which they didn’t have the expertise to run
INTRODUCTION
nor could find buyers to sell. The S4A Scheme
Reserve Bank of India has issued a new helps in determination of sustainable debt
Scheme for Sustainable Structuring of level for stressed borrower and bifurcation of
Stressed Assets (S4A Scheme) for large the outstanding debt into sustainable debt
stressed accounts in addition to existing and conversion of remaining debt in
Strategic Debt Restructuring Scheme issued equity/quasi-equity instruments which are
last year. In strategic debt restructuring expected to provide upside to the lenders
(SDR) the loans were converted into equity when the borrower turns around. Under the
and the management control was taken over S4A the loan account will be divided into two
and the banks ended up with companies parts
 sustainable portion (Part A) serviced over the same duration as that of

 unsustainable portion (Part B) the existing facilities even if the future cash
Part A includes debt which can be serviced flows remain at their current level.
from the existing operation while remaining Techno-economic viability (TEV): An
will be classified as Part B. There will be no independent agency will have to conduct a
extension for the repayment of Part A and TEV report to assess the amount of the
Part B will be converted into sustainable debt and a resolution plan
equity/redeemable cumulative optionally should be agreed upon minimum 75 percent
convertible preference shares. In case the of lenders by value and 50 percent of lenders
resolution plan does not involve change in by number in the consortium. Once the
promoter banks may convert a portion of resolution plan is decided it will go to the
Part B into optionally convertible overseeing committee.
debentures.
OVERSEEING COMMITTEE
ELIGIBLE ACCOUNTS
 An Overseeing Committee (OC)
 To be eligible for the S4A Scheme a comprises of eminent persons and will
borrower must meet the following be constituted by IBA in consultation
conditions with RBI. The members of OC cannot be
 The project has commenced commercial changed without the approval of RBI.
operations.  The resolution plan shall be submitted
 The aggregate exposure (including by the JLF/consortium/bank to OC.
accrued interest) of all institutional  The OC will review the process involved
lenders in the account is more than in preparation of resolution plan.
Rs.500 cr.  The OC will be an advisory body.
The debt meets the test of sustainability

THE RESOLUTION PLAN
conditions
The Resolution Plan shall have the following
features
DEBT SUSTAINABILITY
 There will be no fresh moratorium
A debt level will be sustainable if the Joint granted on interest or principal
Lenders Forum (JLF)/Consortium of repayment for servicing of Part A.
lenders/bank conclude through independent  There will be no extension for the
TEV report that the debt of principal value repayment schedule or reduction in the
among the currently funded/non-funded interest rate for servicing of Part A, as
liabilities owed to institutional lenders can be
compared to repayment schedule and quotations are not available or where

interest rate prior to this resolution. the shares are not listed on the stock
 Part B shall be converted into equity or exchange should be valued at the lowest
redeemable cumulative optionally value arrived using the following
convertible preference shares. If the valuation methodologies
resolution plan does not involve change  Break-up value is applied from the
in promoter, banks may at their company's latest audited balance sheet.
discretion convert a portion of Part B If latest audited balance sheet is not
into optionally convertible debentures. available then the shares are to be
valued at Re.1 per company. The
VALUATION
independent TEV will assist in
For the purpose of this scheme fair value for ascertaining the break-up value.
Part B instruments will be arrived as per the Discounted cash flow method in which the
following methods discount factor is the actual interest rate
charged to the borrower 3%, subject to floor
 Equity - The equity shares in the bank's
of 14%. Further cash flows occurring within
portfolio should be marked to market on
85% of the useful economic life of the project
a daily basis or at least on a weekly
only shall be reckoned.
basis. Equity shares for which current
Redeemable cumulative optionally
ASSET CLASSIFICATION AND
convertible preference shares/optionally
convertible debentures -The valuation should PROVISIONING
be on discounted cash flow (DCF) basis by
Change of Promoters: In case a change of
the weighted average actual interest rate
promoter takes place under the resolution
charged to the borrower by the lenders.
plan then asset classification and
provisioning requirement will be as per the

CONCLUSION
SDR scheme or outside SDR scheme.
No change of Promoters: When there is no The new S4A scheme is a success for both
change of promoters the lenders will have to the banks and as well as for promoters. It
make higher provisioning at 40% of the Part would be positive for the stressed sectors
B Debt or 20% of the total outstanding debt and also for the PSU banks. This scheme
whichever is higher. The lenders may provides the banks a greater flexibility to
upgrade the account to the standard structure the stressed assets. These are the
category after one year of satisfactory important facts about the Sustainable
performance of service of Part A Debt. Structuring of Stressed Assets.

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BANKING

Airtel Payment Bank: Everything You Need To Know ................................................................................................................. 2

Unified Payment Interface -Future of Payments in India ......................................................................................................... 5

RBI measures on Non-Performing Assets (NPA) ............................................................................................................................. 8

DIPAM to address Divestment in PSUs ...............................................................................................................................................18

National Investment and Infrastructure Fund (NIIF) .................................................................................................................25

*99# USSD – Towards a Cashless Economy ...................................................................................................................................33

Line of Credit Guidelines by IDEAS: Explained ...............................................................................................................................44

Financial Inclusion Fund (FIF) by RBI- Key Points Explained .................................................................................................48

Better Than Cash Alliance Network: Explained .............................................................................................................................52

TransUnion CIBIL Limited: Everything You Must Know ............................................................................................................55

Prepaid Payment Instruments - All you need to know .............................................................................................................60

Different Types of Banking: Key Points To Know .........................................................................................................................64

GAAR-General Anti-Avoidance Rules: Explained With Examples.......................................................................................71

Adhar Card Act 2016: All You Need To Know ................................................................................................................................75

Base Rate and Differential Rate of Interest: Explained ...........................................................................................................82

INX: India's First International Stock Exchange: Key Points .................................................................................................86

AIRTEL PAYMENT BANK: EVERYTHING YOU NEED

INTRODUCTION SIGNIFICANCE OF THE LOGO

Ques Where printing of New currency notes (500

January 2006 under the Companies Act, 1956

Government Mints at moving towards a cashless economy or say

 UPI works only on the mobile interface. CONCLUSION:

RBI MEASURES ON NON-PERFORMING ASSETS (NPA)

RBI has revealed that 5 out of 8 PSU

1. Punjab National Bank

ISLAMIC BANKING IN INDIA

BASIC FINANCIAL CONTRACTS UNDER INTEREST-

1. TRUST-BASED FINANCE 4. EQUITY PARTICIPATION

Wakala is a money market concept used in

WADIAH) INTEREST-FREE BANKING AND

RETAIL CREDIT OPERATIONS IN BANKS:

Computerization of data and pre-

missing documents or signature  If the Credit evaluation team while

MUTUAL FUNDS: IMPORTANT FACTS REVEALED

 Without investing a large amount of maturity period. So the money available

HOW IS MONEY MADE

TAX BENEFIT FROM MUTUAL

INDIA POST PAYMENTS BANK (IPPB) AS AN

WHAT ARE PAYMENT BANKS?

Department of Posts is expected to roll

 Transparency in governance will improve

DIPAM TO ADDRESS DIVESTMENT IN PSUS

BACKGROUND DIPAM PROGRESS

FAST FACTS ON NEFT, RGTS, AEPS AND MTSS

1. NEFT - “NATIONAL ELECTRONIC FUND

2. RTGS- “REAL TIME GROSS SETTLEMENT”

FAST FACTS ON RTGS:

3. IMPS: IMMEDIATE PAYMENT SERVICES

4. AEPS: AADHAR ENABLED PAYMENT SYSTEM

5. MTSS: MONEY TRANSFER SERVICE SCHEME

6. NEPAL REMITTANCE SCHEME

RBI GUIDELINES FOR 100% FDI IN E-COMMERCE

NATIONAL INVESTMENT AND INFRASTRUCTURE

 NIIF would allow equity participation more transparent manner compared to

DIRECT TAX REFORMS PANEL: EASWAR

GREEN BOND: THINGS YOU MUST KNOW

INTERNATIONAL BANK FOR RECONSTRUCTION

 Germany (4.21%), and national and subnational levels to

FAQS ON GOLD REFORMS IN THE

MADE ON MAINTAINING GOLD? money

Earlier the gold schemes of both 1999

WHY GOLD REFORMS AND