CONTENTS

CONTENTS

PAGE
Foreword I-3
Syllabus for the Certificate Examination for Business Corres- I-5
pondents (BCs) of Payments Banks
Chapter-heads I-9
MODULE A : APPLICABLE TO BCs OF PAYMENTS
BANKS

CHAPTER 1
STRUCTURE OF INDIAN BANKING AND TYPES
OF BANKS

1.1 Objectives 5
1.2 Introduction 5
1.3 Need of Banking Services 5
1.4 Meaning of a bank 6
1.5 Structure of Indian banking system 7
1.5-1 Scheduled banks 7
1.5-2 Public Sector banks 8
1.5-3 Regional Rural Banks (RRBs) 9
1.5-4 Private Sector Banks 9
1.5-5 Co-operative Banks 10
1.6 Functions of Banks 11
1.6-1 Traditional Functions 11
1.6-2 Other Functions 13

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1.7 Regulation and Supervision of Banking in India 14
1.8 Recent Trends in Banking 15
1.9 Let us sum up 18
1.10 Key words 18
1.11 Check your progress 18
1.12 Answers to check your progress 19

CHAPTER 2
VARIOUS DEPOSIT SCHEMES AND OTHER
SERVICES

2.1 Objectives 23
2.2 Introduction 23
2.3 Types of deposits 23
2.4 Demand deposits 24
2.5 Insurance of bank deposits by Deposit Insurance 28
and Credit Guarantee Corporation (DICGC)
2.6 Remittances 28
2.7 Let us sum up 35
2.8 Check your progress 35
2.9 Answers to check your progress 36

CHAPTER 3
ACCOUNT OPENING, ON-BOARDING PROCESS,
KYC MECHANISM AND OPERATIONS

3.1 Objectives 39
3.2 Introduction 39
3.3 Procedure for opening an account 40
3.3-1 Submitting Account Opening form and 40
other prescribed documents

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3.3-2 ‘Know Your Customer’ (KYC) guidelines 40
of RBI
3.3-3 Electronically Know Your Customer 48
(e-KYC)
3.3-4 Periodic Updation of KYC 48
3.4 Photographs of depositors 49
3.5 Specimen signature 50
3.6 Power of attorney 50
3.7 Nomination 51
3.8 Prevention of money laundering 52
3.8-1 Money Laundering - Stages and Types 52
3.8-2 Role of Banks 53
3.9 RBI guidelines in regard to operations in accounts 53
3.10 Closing an account 60
3.11 Let us sum up 61
3.12 Key words 61
3.13 Check your progress 61
3.14 Answers to check your progress 62

CHAPTER 4
ACCOUNTING, FINANCE & OPERATIONS

4.1 Objectives 65
4.2 Introduction 65
4.3 Finance and operations 65
4.4 What is interest? 65
4.4-1 Simple interest 66
4.4-2 Compound interest 66
4.5 Key words 67
4.6 Check your progress 68
4.7 Answer to check your progress 68

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CHAPTER 5
GRIEVANCE REDRESSAL MECHANISM IN BANKS
AND BANKING OMBUDSMAN SCHEME

5.1 Objectives 71
5.2 Introduction 71
5.3 Meaning of grievance 71
5.4 Common grievances of the small customers 72
5.5 Model policy on grievance redressal and its principles 72
5.6 Customer complaint 73
5.7 Present grievance redressal mechanism in banks 73
5.7-1 Resolution of Grievances at Branch 74
5.7-2 Resolution of Grievances at Regional 75
Office
5.7-3 Resolution of Grievances at Head Office 75
5.7-4 Grievance escalation system 76
5.7-5 Nodal officer, other designated officials 76
to handle complaints and grievances and
mandatory display requirements
5.7-6 Resolution of Grievances 77
5.8 Banking ombudsman scheme 78
5.8-1 Rationale behind this exclusive grievance 79
redressal machinery for bank complaints
5.8-2 Role and functions of an Ombudsman 79
5.8-3 Grounds of complaints 79
5.8-4 Procedure for Redressal of Grievance 82
5.9 Let us sum up 83
5.10 Key words 83
5.11 Check your progress 83
5.12 Answers to check your progress 84

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CHAPTER 6
OVERVIEW OF THE FINANCIAL MARKET

6.1 Banking sector 87

6.1-1 Role and Functions of Reserve Bank of 87
India
6.2 Let us sum up 89
6.3 Check your progress 89
6.4 Answers to check your progress 89

CHAPTER 7
FINANCIAL INCLUSION AND BANKING FOR THE
UNBANKED

7.1 Objectives 93
7.2 Introduction 93
7.3 What is financial inclusion ? 94
7.4 Need for financial inclusion 94
7.5 Present banking scenario 95
7.6 Initiatives of Reserve Bank of India 96
7.7 Business Correspondent and Business Facilitator 96
model
7.8 Role of Technology in Financial Inclusion 97
7.9 Let us sum up 98
7.10 Key words 99
7.11 Check your progress 99
7.12 Answers to check your progress 101

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CHAPTER 8
BUSINESS CORRESPONDENT AND BUSINESS
FACILITATOR (BC/BF) MODEL : A VEHICLE FOR
FINANCIAL INCLUSION

8.1 Objectives 105

8.2 Introduction 105
8.3 Need for the BC/BF model 106
8.4 Role and responsibilities of Business Correspondents/ 106
Business Facilitators
8.5 Who can be the Business Facilitators ? 109
8.6 Who can be Business Correspondents ? 110
8.7 Business Facilitators : Scope of activities 110
8.8 Business Correspondents : Scope of activities 111
8.9 Business Correspondent v. Business Facilitator 112
8.10 Eligibility criteria for engaging Business Correspon- 112
dents/Business Facilitators
8.11 Let us sum up 113
8.12 Key words 114
8.13 Check your progress 114
8.14 Answers to check your progress 114

CHAPTER 9
RISK AND FRAUD MANAGEMENT

9.1 Objectives 117

9.2 Introduction 117
9.3 Risk and fraud from the perspective of BCAs 117
9.4 Risk and fraud management 119
9.5 Do’s and don’ts for business correspondents and 120
business facilitators

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9.6 Let us sum up 120
9.7 Check your progress 121
9.8 Answers to check your progress 121

CHAPTER 10
PMJDY, PMJJBY, PMSBY AND APY

10.1 Objectives 125

10.2 Introduction 125
10.3 Pradhan Mantri Jan Dhan Yojana (PMJDY) 126
10.3-1 Opening A/c with Bank under PMJDY 127
10.3-2 Life Insurance Cover under PMJDY 129
10.3-3 Rupay Debit Card 130
10.3-4 Overdraft in PMJDY Account 131
10.3-5 Role of Business Correspondent Agents 131
(Bank Mitra) in PMJDY
10.3-6 Role of Technology 132
10.3-7 Direct benefit transfer scheme 135
10.4 Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) 137
10.4-1 Benefits 137
10.4-2 Premium 137
10.4-3 Eligibility 138
10.4-4 Termination of the assurance on the life 138
of the member
10.4-5 Administration of the scheme 139
10.4-6 Role of the insurance company and the 139
Bank
10.5 Pradhan Mantri Suraksha Bima Yojana (PMSBY) 139
10.5-1 Benefits 140
10.5-2 Premium 140
10.5-3 Eligibility 141

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10.5-4 Termination of the accident cover assurance 141
10.5-5 Administration of the scheme 142
10.5-6 Role of the insurance company and the 142
Bank
10.6 Atal Pension Yojana (APY) 142
10.6-1 Co-contribution of the Government 143
10.6-2 Benefit in joining APY scheme 143
10.6-3 Procedure for opening APY Account 144
10.6-4 Nomination 145
10.6-5 Fate of existing subscribers in NPS-Lite/ 146
Swavalamban Yojana
10.6-6 Fate of APY account in case of continuous 147
default
10.6-7 Withdrawal procedure from APY 147
10.7 Let us sum up 148
10.8 Key words 148
10.9 Check your progress 148
10.10 Answers to check your progress 150

CHAPTER 11
BASIC TECHNICAL SKILLS

11.1 Objectives 153

11.2 Introduction 153
11.3 It enabled financial inclusion using BC model 153
11.4 Technology for low cost financial inclusion 154
11.5 Let us sum up 158
11.6 Key words 159
11.7 Check your progress 159
11.8 Answer to check your progress 159

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Annexure 1 : Case 1 - Business Correspondent Model of 160
a Public Sector Bank
Annexure 2 : Case 2 - It enabled financial inclusion 163
Annexure 3 : Case 3 - Private Sector Bank and Business 175
Correspondent
Annexure 4 : Case 4 - The case of a technology enabled 182
company offering its service to banks for
financial inclusion

CHAPTER 12
DIGITAL BANKING PRODUCTS

12.1 Objectives 191

12.2 Introduction 191
12.3 Need for Digital Banking 192
12.4 Various types of Cards 192
12.5 Mobile banking 194
12.6 Internet banking 199
12.7 Automated Teller Machines (ATMs) 201
12.8 POS (Point-of-Sale) Terminals and Micro ATM 203
12.9 Aadhaar Seeding and e-KYC 203
12.10 APBs and AEPs 205
12.11 Rupay Cards 207
12.12 UPI, BHIM and Bharat QR 209
12.13 Let us sum up 211
12.14 Key words 213
12.15 Check your progress 213
12.16 Answers to check your progress 215

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CHAPTER 13
COMMUNICATION AND FINANCIAL COUNSELLING
(INCLUDING FINANCIAL LITERACY AND FINAN-
CIAL EDUCATION)

13.1 Importance of financial education for banks 219

13.2 Role of RBI in Financial Literacy 220
13.3 Let us sum up 222
13.4 Key words 223

CHAPTER 14
HOW TO DEAL WITH DIFFERENT TYPES OF
CUSTOMERS

14.1 Objectives 227

14.2 Introduction 227
14.3 Soft skills and hard skills 228
14.4 Soft Skills to build relationships 228
14.5 Dealing with different types of customers 229
14.5-1 How to deal with the Annoyed Customers? 230
14.5-2 How to deal with the impatient customers? 230
14.5-3 How to deal with the suspicious one? 230
14.5-4 How to deal with the Indecisive? 230
14.5-5 How to deal with other types of customers? 231
14.5-6 How to explain (should be simple and 232
comprehensible)?
14.6 How to maintain trust in the client relationship? 232
14.7 How to deal with a complaint? 232
14.8 Do’s and Don’ts for handling Customer Complaints 233
14.9 Duties of a bank 233

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14.9-1 Bank’s duty to maintain secrecy of cus- 234
tomer’s accounts
14.9-2 Precautions to be adopted while disclosing 235
information
14.10 Let us sum up 236
14.11 Key words 236
14.12 Check your progress 236
14.13 Answer to check your progress 236
MODULE B : APPLICABLE TO BCs OF PAYMENTS
BANKS WHO HAVE CLEARED MODULE
A AND SUBSEQUENTLY APPOINTED BY
SCBs AS BCs

CHAPTER 1
VARIOUS DEPOSIT SCHEMES AND OTHER
SERVICES

1.1 Term deposits 241

1.1-1 Fixed deposits 241
1.1-2 Recurring deposits 242
1.2 Check your progress 243
1.3 Answers to check your progress 243

CHAPTER 2
ACCOUNTING, FINANCE & OPERATIONS

2.1 Fixed and floating interest rates 247

2.2 Equated Monthly Instalment (EMI) 247
2.3 Check your progress 248
2.4 Answers to check your progress 248

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CHAPTER 3
LOANS AND ADVANCES : RETAIL LENDING

3.1 Objectives 253

3.2 Introduction 253
3.3 Loans and types of loans 254
3.4 Retail lending 254
3.5 Education loans 255
3.6 Housing loans 256
3.7 Overdrafts 258
3.8 Micro and small enterprises 258
3.9 Let us sum up 259
3.10 Check your progress 259
3.11 Answers to check your progress 260

CHAPTER 4
PRINCIPLES OF SOUND LENDING

4.1 Objectives 263

4.2 Introduction 263
4.3 Principles of lending 264
4.3-1 Cardinal Principles of Lending 264
4.4 Let us sum up 266
4.5 Key words 266
4.6 Check your progress 266
4.7 Answers to check your progress 268

CHAPTER 5
KISAN CREDIT CARD SCHEME

5.1 Objective 271

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5.2 Introduction 271
5.3 Scheme details 271
5.4 Let us sum up 280
5.5 Key words 281
5.6 Check your progress 281
5.7 Answers to check your progress 281

CHAPTER 6
ASSET CLASSIFICATION AND METHODS OF
RECOVERY

6.1 Objectives 285

6.2 Introduction 285
6.3 Definition of NPA 286
6.4 Asset classification 287
6.4-1 Standard assets 287
6.4-2 Sub-standard assets 287
6.4-3 Doubtful assets 288
6.4-4 Loss assets 288
6.5 Important aspects of recovery 289
6.6 Let us sum up 291
6.7 Key words 292
6.8 Check your progress 292
6.9 Answers to check your progress 293

CHAPTER 7
OVERVIEW OF THE FINANCIAL MARKET

7.1 Objective 297

7.2 Introduction 297
7.3 Insurance market 297
7.4 Pension market 298

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7.5 Let us sum up 299
7.6 Key words 299
7.7 Check your progress 299
7.8 Answers to check your progress 300

CHAPTER 8
MICROFINANCE AND SELF-HELP GROUPS (SHGs)

8.1 What is microfinance ? 303

8.2 SHG - Definition 305
8.2-1 Need for SHGs 305
8.2-2 Organising the Group 306
8.2-3 Functions of SHGs 307
8.2-4 Other conditions of indirect finance to 308
SHGs through NGOs
8.3 Let us sum up 309
8.4 Key words 309
8.5 Check your progress 309
8.6 Answers to check your progress 310

CHAPTER 9
SOFT SKILLS AND STRATEGIES FOR RECOVERY
OF BANK LOANS

9.1 Objective 313

9.2 Introduction 313
9.3 Negotiation skills 313
9.4 Dealing with difficult borrowers 314
9.5 Strategy for Recovery 314
9.6 Farmers clubs and SHGs 316
9.7 Let us sum up 316

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9.8 Key words 316
9.9 Check your progress 317
9.10 Answer to check your progress 317
ABBREVIATIONS 319

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