INTERVIEW 2019

TIPS FOR INTERVIEW

He She
Be comfortable (wear formals)
Light shirt (Sky blue or White) with dark trouser Normal traditional dresses like saree, salwar
kameez, etc. Avoid bright /dazzling colours
Wear formal shoe (preferably black with lace) Good quality footwear / shoe.
with matching socks.

Belt should match with shoe colour. Avoid big Any formal footwear. Wear matching socks if
buckles. possible.
Wear a tie. Keep ornaments/ jewellery at minimal
Carry one additional dress if you are traveling a long distance.

General Guidelines :
Work on non-verbal communication ( take care of your posture and gesture )

Reach venue well in advance ( at least 1 Hour before scheduled time)

Reach the venue city one day before Interview date
Enhance your communication ability
Write down expected questions and your possible replies. Rehearse yourself.
Build your confidence level high, Avoid over confidence
Your communication with panel should reflect Leadership and Managerial quality.

In Interview Hall :
Before you enter in to hall, seek permission and greet every panel members. (e.g. Good
morning madam & Good morning sirs,. Maintain eye contact with every panel member). Sit only
after panel member asked to do so. Say thank you.

Avoid bluffing or guessing, do not get emotional or nervous even if a question is asked to
provoke you, try to maintain your cool. If you don’t remember answer say “Sorry Sir/Madam, I
am unable to recollect right now.” OR if you don’t know the answer, say “ Sorry Sir/Madam
followed by I don’t know the answer” .
Do not carry Purse / Papers / Mobile with you.
Listen carefully.
Give your answers precise and to the point.
Always maintain perfect eye contact.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 WORK SHEET

1 : ABOUT SELF
Strength

Weakness

2 : Previous Assignments
Tenure Branch Major Achievements

3 : Branch Performance
March 2017 March 2018 March 2019
Deposits
Advances
NPA level
Net Result
CASA ratio
Audit rating Last Audit: Present Audit:
Per
Employee
Business
Per
Employee
Profit

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 4 : Bank Performance
March 2017 March 2018 March 2019 /
Q-3of 2018
Deposits
Advances
NPA level
Net Result
CASA ratio

5. Prepare answers for the following

 ABOUT YOURSELF

 ABOUT YOURFAMILY

 ABOUT YOUR NATIVE PLACE

 THE MEANING OF YOURNAME

 YOUR HOBBIES

 ABOUT YOUREDUCATION

 YOUR CONTRIBUTION TO YOUR BRANCH

 YOUR CONTRIBUTION AFTER YOUR PREVIOUS PROMOTION

 SPECIAL ACHIEVEMENTS, IF ANY

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 EASE Reforms Index

The BCG-IBA report EASE Reforms for Public Sector Banks measures the performance of each PSB on
140 objective metrics across 6 themes. The 6 themes are:

1]Customer Responsiveness: EASE for customer comfort

2]Responsible Banking: Financial stability, governance for ensuring outcomes, and EASE for clean &
commercially prudent business

3]Credit Off-take: EASE for the borrower and proactive delivery of credit

4]PSBs as UdyamiMitra:EASE of financing and bill discounting for MSMEs

5]Deepening Financial Inclusion & Digitalisation: EASE through near-home banking,
Micro-insurance and digitization

6]Ensuring outcomes – HR: Developing personnel for Brand PSB.

Findings of the Report

Punjab National Bank has been ranked first among public sector banks in the implementation of
‘reforms agenda’, followed by Bank of Baroda and State Bank of India.

Punjab National Bank with a score of 78.4 out of 100 has been ranked first under the theme of EASE
(Enhanced Access & Service Excellence). PNB is followed by BoB (77.8), SBI (74.6), Oriental Bank of
Commerce (69), Canara Bank (67.5) and Syndicate Bank (67.1).
The six Public sector banks which are under PCA framework of the RBI have also been ranked under
the Index. The performance of PSBs is as shown Indian Overseas Bank (66.7), UCO Bank (64.1),
United Bank of India (60.8), IDBI Bank (60.2), Central Bank of India (55.7) and Dena Bank (53.8). The
government had announced in January 2018 that the government would come out with EASE -Index for
ranking of banks aimed at increasing the public accountability of PSBs as independent agencies
evaluate and rank PSBs annually on reforms. The report has been commissioned through Indian Banks’
Association and authored by Boston consulting group(BCG) with Forrester Inc., Kantar IMRB and
TransUnion CIBIL as knowledge partners.

Banks Board Bureau (BBB)

 Banks Board Bureau is an autonomous body of the GOI.
 Recommended by P J Nayak committee in May 2014.
 Approved by GOI in Feb 2016.
 Started functioning in April 2016.
 Banks Board Bureau is located in RBI’s Central Office in Mumbai.
 Shri Vinod Rai was the first Chairman of BBB.
 Shri Bhanu Pratap Sharma is the new Chairman from 12 April 2018.
 Other members are Shri Rajiv Kumar, Mrs. Seema Bahuguna,Shri N.S. Vishwanathan,Ms Vidika
Bhandarkar,Shri P. Pradeep Kumar, shri Pradip P. Shah.
 Main objectives of BBB :
 Improve the governance of Public Sector Banks.
 Recommend selection of chiefs of government owned banks & FIs
 To Help banks in developing strategies and capital raising plans.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 PROMPT CORRECTIVE ACTION (PCA):
Trigger points:-

Indicator Risk threshold 1 Risk threshold 2 Risk threshold 3

CRAR 7.75 to 10.25% 6.25 to 7.75% <6.625

(9% min capital +
1.25% CCB)=10.25%
And or
CET 1 + CCB <6.75 to > 5.125% <5.125% o 3.625% <3.625
(5.50%+1.25)=6.75%
Net NPA % >6.00 upto 9 % >9.00% upto 12.00 >12.00%

ROA -ve for 2 -ve for 3 consecutive -ve for 4

consecutive years years consecutive years
Leverage Leverage is over 25 28.60 times of the tier
times of tier 1 capital 1 capital
ECONOMY & OUTLOOK FOR2019-20:
 GDP of India is expected to grow by over 7.00%.
 India’s rank in DOING BUSINESS REPORT (DBR) has improved to 77 th from 100th
released by World Bank. This would facilitate flow of FDI.
 CPI (COST PRICE IDEX) inflation to be below 4%.
 Fiscal deficit is expected to be around 3.40%
 Current Account Deficit ( CAD ) to be 2.50% for the FY 2019-20
 Growth in Deposits at 9.63% and advances 14.53% signals that during the FY 19-20 the
growth in advances will be in double digits.
 RBI’s guidelines for delivery of bank credit for exposure above Rs. 150 crores will be effective
from 01.04.2019.

BANKING BRIEF
ANGEL INVESTMENT IN INDIA
 An angel investor is a person who invests in a business venture, providing capital for startup or
expansion.
 Angel investors are typically individuals who have spare cash available and are looking for a
higher rate of return.
 Angel investor is an individual investor who has net tangible assets of at least Rs.2 crores
excluding value of his principal residence, a body corporate with a net worth of at least Rs.10
crores or an Angle Investment Fund registered under these regulations.
 An angel investment is a form of equity financing as the investor supplies funding in exchange
for taking an equity position in the company.
 In India there is no specified monetary limit for securing and agreeing a deal between angels
Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal
 and entrepreneurs.
 Financing business via angel investments is much less risky than debt financing.
 The primary disadvantage of raising funds through angels leads to loss of complete control
over the operations of the company.
 Angel funds shall accept an investment of not less than Rs.25 lakhs from an angel investor for
a maximum period of 3 years.

ARTIFICIAL INTELLIGENCE
 The term Artificial Intelligence (AI) was coined in 1956 by John Mc Carthy, an American
computer and cognitive scientist.
 AI in simplest terms refers to the intelligence demonstrated by machines and the term is also
used when a machine displays cognitive functions normally associated with human minds such
as learning and problem solving.
 AI has evolved to provide many specific benefits in every industry especially in health care,
manufacturing, sports and retail.
 Natural language processing (NLP) is the ability of computers to analyze, understand and
generate human language, including speech.
 The next stage of NLP is natural language interaction, which allows humans to communicate
with computers using normal, everyday language to perform tasks.
 Artificial intelligence makes it possible for machines to learn from experience, adjust to new
inputs and perform human-like tasks.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 CHALLENGES TO THE INDIAN BANKING SECTOR
 Piling up of bad loans in India is to the tune of Rs10 lakh crores, is bigger than the gross
domestic products of at least 137 countries.
 Asset quality pressures have remained elevated during the last few years due to moderate
growth in the economy and low capex demand.
 It is crucial for the banks to meet the Basel-III regulatory norms by March 2019. The
Government of India has been infusing capital on a regular basis into the public sector banks,
to enable them to meet regulatory capital requirements and maintain the government stake in
the PSBs at a benchmark level.
The increasing popularity of FinTech companies is disrupting the way of traditional banking and
creates a big challenge for traditional banks to adjust themselves quickly to the changes not just in
technology, but also in operations, culture, and other facets of the industry.
With increasing access to the internet, Indians are taking to digital channels for their
banking needs which leads to Cybercrimes like phishing, vishing and social
engineering and attacks by organized gangs.
The biggest challenge is to build capacity at a rate which matches the loss of existing
talent and skills due to retirement.
Technological innovation is considered to be one of the most influential developments
affecting the financial sector in the near future.

BAD BANK
 As defined by London School of Economics, a Bad Bank segregates the NPA in financial
institutions from the healthier assets into a separate entity.
 The ultimate objective of the Bad Bank is to maximize the value of the core operations of the
bank and minimize the amount of nonperforming assets, contributing to the stability of the
financial system.
 The Bad Bank concept was first brought to the practice by the Baring Brothers, a London
investment bank during the Baring crisis of 1890.
 To insulate the banking system from impaired assets that threatened individual bank solvency,
the concept of Bad Bank came into being.
 The whole idea of creating a Bad Bank is to open some space for the primary lender(s) to
establish a separate entity to deal with its troubled assets.
 Being free of troubled assets, the resulting good bank would work to restore investor and
market confidence, raises capital more easily at competitive rate and resumes normal lending
operation.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

CONSOLIDATION OF PUBLIC SECTOR BANKS
The consolidation proposal of the Indian banking was furnished way back in 1990s by
the suggestion of Narasimham Committee Report in 1991 (NC-I).
The Narasimham Committee Report in 1998 (NC-II) also reiterated the
recommendations on NC-I.
Key reasons for the merger of banks are: i)economies of scale and scope, ii) efficiency
gains, iii) cost savings, iv) diversification of customers and assets v) the large banks
get international recognition.
Merits:

With increasing NPAs, small banks cannot give more loans, but with merger, big banks
can better deal with NPAs and may not have to stop giving more loans.
Consolidation would strengthen the banks bargaining power, save costs and improve
supervision and corporate governance across the banking system.
Consolidation will help in leveraging the synergies among banks that have diverse
portfolios, focus areas and coverage areas.
From a regulatory perspective, monitoring and control of less number of banks will be
easier after mergers.
Better management of capital, infrastructure and technology of the merged entity will
benefit the customer with wider access of new products, technology, better pricing and
improved customer service.
Demerits:

Mergers or consolidation can lead to challenges like job cuts, branch closures,
reducing the quality and quantity of services offered to customers.
Systems integration plays an important role as various banks are currently operating
on different technology platforms.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

CRYPTO CURRENCY - FUTURE OF MONEY
Though yet to be popular in India, globally, organizations and countries are slowly
adopting.
Crypto currencies are an acceptable means of commerce, as it is being touted as
NEXTGEN currency after plastic money like Credit and Debit cards.
Crypto currencies cannot be printed or minted, they can only be generated by miners
through cryptographic processes and the complexity of mining process limits the
amount of currency that could be created e.g. there could be only 21 million Bit coins
that can be created.
Cryptocurrency funds are locked in a public key cryptography system, almost
impossible to break into even with sophisticated hardware and software.
Every single transaction that ever happened in the network is stored in a huge version
of a general ledger, called the block chain.
There are more than 1500 cryptocurrencies in circulation, however the more popular
ones are Bit coin, Ethereum, Litecoin, Ripple, Dash, Monero, Neo, etc.
RBI, has cautioned users, holders and traders of cryptocurrencies by stating that the
creation, trading or usage of virtual currencies, as a medium for payment is not
authorized by any central bank or monetary authority.
Government of India has also cautioned the public at large against
cryptocurrencies, mentioning that virtual currencies are not backed by assets and
posed risks such as money laundering.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

CYBER CRIMES
Cyber Crime can be defined as an economic offence committed using computers and
Internet. It includes distributing viruses, illegally downloading files, phishing and
pharming and stealing personal information like bank account details.
Cyber Criminals use different techniques for committing crimes and some of the
prominent techniques use by them are:
i) Wire Tapping: Access to telecommunication network either physically by
wiretapping or by picking up data as it flows through wires.

ii) Denial of Services: This attack is an attempt to make a computer or network

resource unavailable to its intended users and it prevents an internet site from
functioning temporarily or permanently.

iii) Phishing: A hybrid technique involving technology and social engineering and the
victims are sent links via email and are persuaded to share their personal details.

iv)Spoofing: The perpetrator impersonates someone else and makes the victim to do
something which in normal course would not be done by victim like sharing sensitive
information.

V) Malware: Malignant software may serve the purpose of gaining unauthorized

access to systems and data and even disrupting computer operations. Malware
includes viruses, worms, Trojan horses and spywares.

Vi) Trojan horse is a program which allows the hacker to take control of system and is
used to steal the data from computers.

Vii) Virus is a self-replicating program which can infect other programs and systems
thus slowing them down.

The Information Technology Act, 2000 made India the 12th nation in world to adopt
cyber laws.

DESIGN THINKING
Design Thinking is a creative process of problem solving that integrates a designer’s
perspective with a project’s technological possibility and economic viability.
The five step Process of Design thinking is Empathise, Define, Ideate, Prototype
and Test.
Design Thinking is complementary to other forms of thinking and other forms of
product development.
Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal
 Analytical thinking provides us the logic to make a decision whereas design thinking
gives us the curiosity to look out into the world and find new solutions to traditional
problems.
Design Thinking is appropriate if a deep understanding of the actual people or users
involved is essential.
Linear analytics methods may be better if there are few human beings involved.

DIGITAL MARKETING
Digital marketing is the promotion of products or brands through one or more forms of
electronic media.
Various formats of digital marketing are Search Engine Optimization, Conversion
Rate Optimization, Pay Per Click, Content Marketing, Email Marketing, Mobile
Marketing, Social Media Marketing, Facebook Marketing, PINTEREST Marketing,
Twitter Marketing, Linkedin Marketing, YouTube Marketing, Google AdWords,
Google Analytics and User Experience (UX) Design.
Today’s consumers are multi-device and multi-channel, doing the majority of their own
research online before they enter into a store or speak to a sales person.
Google Think Insights found that 48% of consumers start their inquiries on search
engines, while 33% look to brand websites and 26% search within mobile applications.
For a successful digital marketing, translating insights into action requires certain
amount of playfulness with the data to discover deeper insights.

EASE OF DOING BUSINESS

The ease of doing business index ranks countries against each other based on how
the regulatory and environments are conducive to business operations.
The World Bank’s Doing Business Report 2018 ranked India 100th out of the 190
countries surveyed. This is attributed to the success of the government’s to resolve the
difficult decisions that have translated into remarkable progress.
India is one of the top five reformers, improving its score in six out of ten criteria
used by the World Bank for measuring the ease of doing business.
The Doing Business Report 2018 appreciated the government for taking several
measures to boost its ranking.
i) Recapitalizing the public sector banks with an infusion of $32 billion.
ii) Introduced 37 reforms in areas such as insolvency resolution, protecting the interest of
minority shareholders, and simplifying the process of taxes.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 iii) Introduction of the Bankruptcy and Insolvency code (Amendment) Bill 2017. The act makes
it easier to exit or attempt a revival of a business, thereby improving the non- performing
assets (NPAs) for the financial sector.
FINANCIAL RESOLUTION AND DEPOSIT INSURANCE (FRDI) BILL, 2016
The FRDI Bill shall pave the way for a smooth and acceptable resolution of financial
institutions in case of their insolvency.
The Bill proposes to outline how the insolvency of financial institutions, banks, non-
banking companies and even insurance firms can be tackled.
The bill envisages setting up of a resolution corporation which will replace the existing
Deposit Insurance and Credit Guarantee Corporation or DICGC.
DICGC is a Reserve Bank of India (RBI) arm that offers an insurance cover of up to
Rs.1 lakh to the depositors.
A bail-in means rescuing a financial institution on the brink of failure by making its
creditors and depositors take a loss on their holdings.
The proposed Resolution Corporation will classify financial firms based on their risk
factors as low, moderate, material, imminent and critical.
This will provide depositors a clear picture of the financial health of banks and other
institutions where they put their money.
In case of the risk being high, the corporation will be empowered to take over and
resolve issues within the span of one year.

FINANCIAL SECTOR: REGULATIONS AND DEVELOPMENTS

On the domestic front, regulations on resolution have ultimately evolved into the
bankruptcy framework and stakeholders have to maintain a fine balance among
various options available to them for the most optimum resolution.
The new insolvency and bankruptcy regime, which came into existence in May
2016 has enabled the introduction of a market-determined and time-bound
mechanism to handle insolvencies.
Corporate governance in banks is key to ensuring the success of the
recapitalisation of banks.
Reducing the systemic risk from over-the-counter (OTC) derivatives market was one of
the important aspects of the post-crisis reforms initiated by the Basel Committee on
Banking Supervision (BCBS) and the International Organisation of Securities
Commissions (IOSCO).

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 CAPACITY BUILDING
The Reserve Bank had constituted a ‘Committee on Capacity Building’ (July 2014)
under the Chairmanship of former Executive Director, Shri G Gopalakrishna, with the
objective of implementing non-legislative recommendations of the Financial Sector
Legislative Reforms Commission (FSLRC), relating to capacity building in banks and
non-banks, streamlining training intervention and suggesting changes thereto in view of
ever increasing challenges in banking and non-banking sector.

One of the recommendation of the committee is pertaining to certification of staff.

Banks should identify specialised areas for certification of the staff manning key
responsibilities. To begin with, the banks should make acquiring of a certificate course
mandatory for the following areas:
 Treasury operations
 Risk management
 Accounting
 Credit management

IMPORTANT TOPICS:
TOPIC IMPORTANT POINTS

MCLR (Marginal cost All rupee loans sanctioned and credit limits renewed w.e.f. April 1, 2016 will be
of lending rate) priced w.r.t. Marginal Cost of Funds based Lending Rates (MCLR).
MCLR comprises of following components
a. Marginal cost of funds;
b. Negative carry on account of CRR;
c. Operating costs;
d. Tenor premium.
Marginal Cost of Funds:
The marginal cost of funds will comprise of Marginal cost of borrowings and
return on net worth.
Marginal cost of funds = 92% x Marginal cost of borrowings + 8% x Return on net
worth

CRYPTO CURRENCY A crypto currency (or crypto currency) is a digital asset

designed to work as a medium of exchange that uses strong
cryptography to secure financial transactions, control the
creation of additional units, and verify the transfer of assets.
Crypto currencies use decentralized control as opposed to
centralized digital currency and central banking systems.
Eg: Bitcon.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

BLOCK CHAIN Block chain is a distributed, decentralized, public ledger. “Blocks” on
TECHNOLOGY the block chain are made up of digital pieces of information.
Specifically, they have three parts:
1. Blocks store information about transactions, say the date, time,
and currency.
2. Blocks store information about who is participating in
transactions.
3. Blocks store information that distinguishes them from other
blocks.

SIM SWAP FRAUD The fraud centres around exploiting a mobile phone operator’s ability to
seamlessly port a telephone number to a new SIM. This feature is
normally used where a customer has lost or had their phone stolen.
The scam begins with a fraudster gathering details about the victim, either
by use of phishing emails, by buying them from organised criminals, or by
directly socially engineering the victim. Once the fraudster has obtained
these details they will then contact the victim's mobile telephone provider.
The fraudster will use social engineering techniques to convince the
telephone company to port the victim's phone number to the fraudster's
SIM.

INFLATION Inflation is a quantitative measure of the rate at which the average price
level of a basket of selected goods and services in an economy increases
over a period of time. Often expressed as a percentage, inflation indicates
a decrease in the purchasing power of a nation’s currency.
DEFLATION Deflation is a decrease in the general price level of goods and services.
Deflation occurs when the inflation rate falls below 0% (a negative
inflation rate). Inflation reduces the value of currency over time, but
deflation increases it. This allows one to buy more goods and services
than before with the same amount of currency.
WHOLESALE A wholesale price index (WPI) is an index that measures and tracks the
PRICE INDEX changes in the price of goods in the stages before the retail level – that is,
(WPI) goods that are sold in bulk and traded between entities or businesses
instead of consumers. Usually expressed as a ratio or percentage, the WPI
shows the included goods' average price change and is often seen as one
indicator of a country's level of inflation.
STRONG CURRENCY A currency when it is worth more relative to other currencies. Bec ause
most currencies are floating, their valuesvary according to marketrends.
When one unit of a currency trades for more units o f another currency, it is
knownas a strong currency. When a curre ncy is strong, travelers are able
to go abroad while spending less of their money,but it makes exports more
expensive in other coun tries. A strong currency can be disinflationary for
currencies pegged to it.
ARBITRAGE Buying an asset in one market and simultaneously selling an identical
asset in another market at a higher price. Sometimes these will be
identical assets in different markets, for instance, shares in a company
listed on both the London Stock Exchange and New York Stock
Exchange. Often the assets being arbitraged will be identical in a more
complicated way, for example, they will be different sorts of financial
securities that are each exposed to identical risks.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

BALANCE OF The total of all the money coming into a country from abroad less all of the
PAYMENT money going out of the country during the same period. This is usually
broken down into the current account and the capital account.
BALANCED BUDGET When total public-sector spending equals total government income during
the same period from taxes and charges for public services.
BANKRUPTCY When a court judges that a debtor is unable to make the payments owed to
a creditor.
BUYERS MARKET A market in which supply seems plentiful and prices seem low; the opposite
of a seller's market.
DEVALUATION A sudden fall in the value of a currency against other currencies. Strictly,
devaluation refers only to sharp falls in a currency within a fixed
EXCHANGE RATE system.
FLOTATION When shares in a company are sold to the public for the first time through
an initial public offering. The number of shares sold by the original private
investors is called the "float".
FOREIGN DIRECT Investing directly in production in another country, either by buying a
INVESTMENTS company there or establishing new operations of an existing business.
GROSS Gross domestic product, a measure of economic activity in a country. It is
DOMESTIC calculated by adding the total value of a country's annual output of goods
PRODUCT and services. GDP = private consumption
+ investment + public spending + the change in inventories + (exports -
imports). It is usually valued at market prices; by subtracting indirect tax and
adding any government subsidy.
GOLD STANDARDS A monetary system in which a country backs its currency with a reserve of
gold, and allows currency holders to exchange their notes and coins for
gold.
HAWALA An ancient system of moving money based on trust. In hawala, no money
moves physically between locations; nowadays it is transferred by means of
a telephone call or fax between dealers in different countries. No legal
contracts are involved, and recipients are given only a code number or
simple token, such as a low-value banknote torn in half, to prove that money
is due. Over time, transactions in opposite directions cancel each other out,
so physical movement is minimised. Trust is the only capital that the dealers
have.

HEDGE Reducing your risks. Hedging involves deliberately taking on a new RISK
that offsets an existing one, such as your exposure to an adverse change in
an EXCHANGE RATE, INTEREST RATE or COMMODITY PRICE.
HOT MONEY Money that is held in one currency but is liable to switch to another currency
at a moment’s notice in search of the highest available RETURNS, thereby
causing the first currency’s EXCHANGE RATE to plummet. It is often used
to describe the money invested in currency markets by speculators.
INSIDER TRADING Insider trading involves using INFORMATION that is not in the public
domain but that will move the PRICE of a share, BOND or currency when it
is made public. An insider trade takes place when someone with privileged,
confidential access to that information trades to take advantage of the fact
that prices will move when the news gets out.
MARKET The market value of a company’s SHARES: the quoted share PRICE
CAPITALIZATIO multiplied by the total number of shares that the company has issued.
N

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

NAFTA Short for North American Free-Trade Agreement. In 1993, the United
States, Mexico and Canada agreed to lower the barriers to trade among the
three economies. The formation of this regional TRADE AREA was opposed
by many politicians in all three countries.
OECD The Organisation for Economic Co-operation and Development, a Paris-
based club for industrialised countries and the best of the rest. It was formed
in 1961, building on the Organisation for European Economic Co-operation
(OEEC), which had been established under the MARSHALL PLAN. By
2003, its membership had risen to 30 countries, from an original
20.Together, OECD countries produce two-thirds of the world's goods and
SERVICES. The OECD provides a policy talking shop for governments. It
produces forests-worth of documents discussing public policy ideas, as well
as detailed empirical analysis. It also publishes reports on the economic
performance of individual countries, which usually contain lots of valuable
information even if they are rarely very critical of the policies implemented
by a member GOVERNMENT.
Predatory Pricing Charging low PRICES now so you can charge much higher prices later. The
predator charges so little that it may sustain losses over a period of time, in
the hope that its rivals will be driven out of business. Clearly, this strategy
makes sense only if the predatory firm is able eventually to establish a
MONOPOLY. Some advocates of anti-DUMPING policies say that cheap
IMPORTS are examples of predatory pricing.

OPEC The Organisation of Petroleum Exporting Countries,a CARTEL set up in

1960 that wrought havoc in industrialised countries during the 1970s and
early 1980s by forcing up oil prices (which quadrupled in a few weeks during
1973-74 alone), resulting in high INFLATION and slow GROWTH. A lot of
productive CAPITAL equipment that had been viable at lower oil prices
proved to be unprofitable to run at the higher prices and was shut down.
Some economists reckon that MARKET FORCES would have driven up oil
prices anyway and that OPEC merely capitalised on the opportunity. Since
the early 1980s, OPEC's influence has waned. Many firms have switched to
production methods that need less oil, or less energy altogether.
Recession Broadly speaking, a period of slow or negative economic GROWTH, usually
accompanied by rising UNEMPLOYMENT. Economists have two more
precise definitions of a recession. The first, which can be hard to prove, is
when an economy is growing at less than its long-term trend rate of growth
and has spare CAPACITY. The second is two consecutive quarters of falling
GDP.
Soft Loan A loan provided at below the market INTEREST RATE. Soft loans are used
by international agencies to encourage economic activity in DEVELOPING
COUNTRIES and to support non- commercial activities.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 FOREIGN EXCHANGE RESERVES OF INDIA
 IMF has defined Foreign Exchange Reserves as external assets that are readily
available to and controlled by monetary authorities for direct financing of external
payments imbalances.

 The Foreign Exchange Reserves of India consists of four categories, i.e.,Foreign

Currency Assets, Gold, Special Drawing Rights (SDRs) and Reserve Tranche
Position (IMF).

 In India, 94% of the reserves are invested in foreign currency assets, 5% in gold
and the balance forms the SDRs and IMF reserve position.

 Forex reserves in India as on 30th March 2018 reached USD 424.4 billion (Foreign
Currency Assets: USD 399.2 billion, Gold: USD 21.6 billion, SDRs: USD 1.54 billion
and Reserve Position in the IMF is USD 2.1 billion)

 FCA (Foreign Currency Assets) are maintained as a multi-currency portfolio

comprising major currencies, such as, US dollar, Euro, Pound sterling, Japanese
yen, etc. and are valued in terms of US dollars.

 Objectives of holding foreign exchange reserves are:

i) To support and maintain confidence in the policies for monetary and exchange rate
management including the capacity to intervene in support of the national or union
currency

ii) Limit external vulnerability by maintaining foreign currency liquidity to absorb shocks
during times of crisis or when access to borrowing is curtailed

iii) Provide a level of confidence to markets that a country can meet its external
obligations

iv) Demonstrate the backing of domestic currency by external assets assist the
government in meeting its foreign exchange needs and external debt obligations

v) Maintain a reserve for national disasters or emergencies.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

.

GENETICALLY MODIFIED CROPS

The term genetically modified (GM) refers to the transfer of genes between
organisms using a series of laboratory techniques for cloning genes and inserting
genes into cells.
In crops, genetic modification helps to introduce traits for pest/herbicide resistance,
drought tolerance, delayed ripening, nutrient fortification, etc.
Genetically Modified Crops (GM crops) were first introduced for commercial production
in the mid-1990s.
In India 90% of cotton cultivated is genetically modified, popularly called as Bt Cotton
which is the only GM crop allowed for cultivation in India.
In developed nations like USA even food crops which are genetically modified viz.
corn, alfalfa, sugar beet, soybeans and canola are being grown.
The usage of genetic modification of crops helps in the larger interest of achieving
food security particularly in developing nations.

GOVERNMENT SECURITIES (G-SECS) MARKETS IN INDIA

A Govt security is a tradable instrument issued by the Central Govt or the State
Govt which acknowledges the debt obligation of the respective Govt.
Such securities are short term (usually called treasury bills, with original
maturities of less than one year) or long term (usually called Govt bonds or dated
securities with original maturity of one year or more).
Treasury bills are money market instruments which are short term debt
instruments issued by the Govt of India and are presently issued in three tenors;
91 day, 182 day and 364 day.
Cash Management Bills (CMBs) is a short-term instrument to meet the
temporary mismatches in the cash flow of the Govt. The CMBs have the generic
character of T-bills but are issued for maturities less than 91 days.
Major players in the G-Sec market include commercial banks and primary
dealers besides institutional investors like insurance companies

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 INSOLVENCY AND BANKRUPTCY CODE, 2016
The Insolvency and Bankruptcy Code, 2016 (Code) is being viewed as one
of the most significant latest legislative and policy reform towards Ease of
Doing Business in India.
The Code has been formulated with the broad objective to consolidate all
existing laws relating to insolvency and bankruptcy for companies and
individuals under one umbrella.
The Code intends to bring a paradigm shift from debtors in possession to
creditors in control which creates a time bound process for insolvency
resolution of companies and individuals.
It moves from the concept of Erosion of Net-Worth to Payment Default.
Core objectives of the Code is to enhance credit availability, promote
entrepreneurship, balance the interest of all stakeholders in an entity and
reduce the time of resolution for maximizing the value of assets.
It also provides confidence building environment to lenders in particular and
investors in general in the debt market in the country.
The Code allows creditors to access viability of debtors as business decision with
a plan for its revival or a speedy liquidation.

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 INSTRUMENTS FOR TRADE FINANCE
Trade Finance Instruments are developed for mitigating the risk in international
trade.

Traditionally Trade Finance instruments – e.g. Letters of credit (L/Cs),

Documentary collections, Pre-export finance, Receivables discounting &
Forfeiting etc.
Lehman Bankruptcy in 2008 and global recession lead to changes in Banks
policies and regulation.

onsequently, a few new products have been evolved for supporting International
trade Finance such as Supply chain finance (SCF), Buyers Credit & Suppliers
Credit, Letter of Comfort (LoC), Letter of Undertaking (LoU) etc. In the wake of
Punjab National Bank (PNB) fraud, the RBI has decided to discontinue the
practice of issuing letters of undertaking (LOUs)/letters of comfort.

Due to ban on LoUs/LoCs, cost of imports will increase hence, the importers as
well exporters will get a hit as increase in their cost will impact their
competitiveness.

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS): THE NEW

ACCOUNTING SYSTEM
Financial statements prepared using a common set of accounting standards help
investors to understand investment opportunities in a better way.

Ind AS is a set of accounting norms developed by Indian authorities, which

converge with the International Financial Reporting Standards (IFRS).

Convergence to IFRS will not only help the economy, but also further the
acceptance of IFRS as global accounting language which provides single set of
high quality information globally.

Government of India has notified the roadmap for implementation of IFRS (IFRS
9) converged Indian Accounting Standards for banks, replacing IAS 39 and
superseding all previous versions.

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 INVESTMENT PORTFOLIO OF BANKS
The investment portfolio of the banks are classified under three categories:
(a) Held to Maturity
(b) Available for Sale and
(c) Held for Trading

The securities acquired by the banks with the intention to hold them up to
maturity are classified under HTM category.

The securities acquired by the banks with the intention to trade (to be sold within
90 days) by taking advantage of the short-term price/interest rate movements are
classified under Held for Trading category

Available for Sale (AFS) portfolios have debt securities that are bought into the
portfolio with the intention to sell before reaching the maturity.

With a view to addressing the systemic impact of sharp increase in the yields on
Government Securities, RBI has granted the option to spread provisioning for
MTM losses on investments held in AFS and HFT category for the quarters
ended December 31, 2017 and March 31, 2018.

The provisioning for each of these quarters may be spread equally over up to
four quarters, commencing with the quarter in which the loss is incurred.
MARKETING OF BANKING PRODUCTS THROUGH SOCIAL MEDIA
Social media marketing (SMM) is a form of Internet marketing that utilizes social
networking websites as a marketing tool.

Both private and public sector banks in India have established a social media fan
following that matches that of their global peers.

Social media marketing helps Banks in achieving their strategic goals and
priorities.

Social Media Marketing has become an inevitable tool today given its ability to
cater to the larger audience in a cost effective and quick way.

MONETARY POLICY FRAMEWORK & INFLATION TARGETING

Primary objective is to maintain price stability while keeping in mind the objective
of growth.

The Monetary Policy Committee (MPC) is required to meet at least four times in
a year. Chairperson is RBI Governor.

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 Each member of the MPC has one vote, and in the event of an equality of votes,
the Governor has a second or casting vote.

The MPC will be accountable for failure to establish and achieve the nominal
anchor.

Failure is defined as the inability to achieve the inflation target of 4 %( +/- 2 %) for
three successive quarters from August 5, 2016 to March 31, 2021.
MONEY MARKET IN INDIA
Money Market is a market for borrowing and lending of short-term funds.

It deals in funds and financial instruments having a maturity period of one day to
one year.

Due to short maturity term, the instruments of money market are liquid and
convertible at any time

The major function of the Money Markets is to cater to the short term financial
needs of the economy.

Money Markets help in effective implementation of the RBI’s monetary policy,

maintain demand and supply equilibrium with regard to short term funds, cater to
the short-term fund requirement of the Govt and help in maintaining liquidity in
the system.

The Central Govt has proposed to amend the RBI Act to take away money
market regulatory powers from the RBI and bring it under the purview of the
SEBI.

QUANTUM COMPUTING
It is an area of study focused on developing computer technology based on the
principles of quantum theory, which explains the nature and behavior of energy
and matter on the quantum (atomic and subatomic) level.

Quantum computers are incredibly powerful machines that take a new approach
to processing information.

They exploit complex and fascinating laws of nature that are always there, but
usually remain hidden from view.

By harnessing such natural behavior, quantum computing can run new types of
algorithms to process information more holistically. We expect them to open
doors that we once thought would remain locked indefinitely.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 - RERA
The Real Estate (Regulation and Development) Act, 2016 (came into effect from
May 1, 2016)

28 States and UTs have been notified under RERA up to October 2018. North
Eastern States are yet to be notified.

RERA is aimed to promote real estate sector and protect the interest of
consumers in the sector.

The Act provides that a promoter cannot advertise, market, book, sell or offer for
sale, without registering the real estate project with the RERA Authority.

The act reads that 70 per cent of the amounts realised from the allottees, from
time to time, shall be deposited in a separate account that is to be
maintained in a scheduled bank to cover the cost of construction and the land
cost that will be used only for that project.

It also says that the promoter will remain responsible for any structural defect,
even after the execution of conveyance deed.
RECAPITALISATION OF PSBS
Re-capitalisation is a strategy for enhancing the financial base of a bank to
overcome a rough financial situation or to enhance the bank’s financial strength.

Three main reasons for the current recapitalization of PSBs in India are: -
1. Rising volume of bad assets of the banks which have led to the erosion of
their existing capital.
2. Basel III norms require higher capital.
3. Expanding credit needs in the economy require higher based capital on
risk weighted assets.

A package of Rs 2.11 lakh crore was announced by the government on October

24th 2017, as recapitalization for PSBs, through Budget, Market Borrowings &
Issue of Recapitalisation Bonds so that the banks can meet the stressed assets
problem.
ROBOTICS AND AUTOMATION
Robotics is a field of engineering that deals with designing and application of
robots and the use of computer for their manipulation and processing

Automation and Robotics Engineering is the use of control systems and

information technologies to reduce the need for human work in the production of
goods and services

Data analytics forms the backbone of robotics and automation

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 SHARING ECONOMY MODELS
Sharing economy also known as collaborative economy is often based on
(Peer to Peer) P2P activity of providing or sharing access to goods and services
facilitated by on-line platform.

Popular sharing economy models are Airbnb, Uber, Ola, Blablacar, etc.

Sharing Economy has ushered in a new era that alleviates the burden of owning
an asset, the burden of cost of maintenance and other such variables.

The sharing economy can grow in India provided the sharing platforms address
key issues like fostering trust and building a platform that provides a transparent
pricing, verified listings and assured delivery of goods and services.

SUSTAINABLE BANKING
Sustainability is the ability to continue a defined behaviour indefinitely.

Three pillars of sustainability are Environmental, Economic and Social.

Sustainable Banking is the pursuit of environmental and social responsibility in a

Bank’s operations.

Sustainability is achieved by integrating environmental and social considerations

into a Bank’s core businesses.

Sustainable Banking performs by decreasing exposure to environmental liability

and improve risk management.

Key drivers for sustainable banking are Lender’s liability, Borrower’s liability,
growing environmental concerns, Business opportunities and Changing
paradigm.

THE FINTECH REVOLUTION: IMPETUS, OPPORTUNITIES AND RISKS

The term FinTech is a contraction of the word finance and technology.

It refers to the technological startups that are emerging to challenge traditional

banking and financial players and covers an array of services, from crowd
funding platforms and mobile payment solutions to online portfolio management
tools and international money transfers

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 Some of the major FinTech products and services currently used in the market
place are Peer to Peer (P2P) lending platforms, Crowd Funding, Block Chain
Technology, Distributed Ledgers Technology, Big Data, Smart Contracts, Robo
advisors, E-aggregators, etc.

The Indian FinTech software market is forecasted to touch USD 2.4 billion by
2020from a current USD 1.2 billion, as per NASSCOM.

TRADE BASED MONEY LAUNDERING: ISSUES AND CHALLENGES

Trade Based Money Laundering is one of the main methods used by criminal
organisations and terrorist financiers to move money for disguising the actual
sources

As much as 80 percent of illicit financial flows from developing countries are now
channelled through TBML methods.

TBML was recognized by the Financial Action Task Force (FATF) in its landmark
2006 study as one of the three main methods used by criminal organizations and
terrorist financiers.

FATF’s study notes that the basic techniques of trade-based money laundering
include:
_ Over Invoicing
_ Under invoicing
_ Multiple invoicing by issuing more than one invoice for the same goods
_ Short shipping - seller ships less than the invoiced quantity or quality of goods
_ Over shipping - seller ships more than the invoiced quantity or quality of goods
_ Deliberate obfuscation of the type of goods by simply omitting information from
relevant documentation or deliberately disguising or falsifying it.

_ Phantom Shipping: no goods are shipped and all documentation is completely

falsified.

FATF, based on studies and information gathered from various jurisdictions has
made available red flags to competent authorities and financial institutions for
guidance, so as to foster the capacity to combat TBML.
TRADE PROTECTIONISM
Trade protectionism is defined as a nation, or sometimes a group of nations,
creating trade barriers with the specific goal of protecting its economy from the
possible perils of international trading

The objective of trade protectionism is to protect a nation’s vital economic

interests such as its key industries, commodities, and employment of workers.

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 Some of the commonly employed methods of trade protectionism include tariffs,
quotas, subsidies, local content requirements, anti-dumping laws, exchange rate
controls, etc

The world’s top 60 economies have adopted more than 7,000 protectionist trade
measures on a net basis since the financial crisis of 2008. The United States and
European Union are each responsible for more than 1,000 of the restrictions.

RBI Proposes Loan Restructuring Of MSMES

In order to provide relief to the demonetization hit small business, the Reserve Bank
of India proposed a one-time loan restructuring scheme for micro, small and
medium enterprises (MSMEs).
Scheme for restructuring of stressed assets will be application to credit facilities not
exceeding Rs 25 crore as on January 1, 2019
The restructuring has to be implemented by March 31, 2020.
A provision of 5 per cent of the total outstanding loan, in addition to the money
already set aside to cover potential losses, will have to be made for such borrowers.
Each bank or NBFC must formulate a policy including a framework for viability
assessment of the stressed accounts and regular monitoring of the restructured
accounts.
The scheme is applicable for the borrowers who are GST-registered on the date of
implementation of restructuring.
The restructuring would aid provide a stimulus to the economy since the MSME
sector contributes significantly to job creation and employs around 12 crore people,
the second largest after the agriculture sector.

Ombudsman Scheme For Digital Transactions

 The Reserve Bank of India (RBI will implement an 'Ombudsman Scheme for Digital Transactions
covering services provided by entities falling under Reserve Banks regulatory jurisdiction.
 The scheme will be notified by the end of January 2019.
RBI has also issued instructions on limiting customer liability in respect of unauthorised
electronic transactions involving banks and credit card issuing non- banking financial companies
(NBFCs).
Public Credit Registry (PCR)
 To capture details of all borrowers, including wilful defaulters and also the pending legal suits in
order to check financial misconduct.
 It also include data from entities like market regulator Sebi, the corporate affairs ministry, Goods
and Service Tax Network (GSTN)
 The Insolvency and Bankruptcy Board of India (IBBI).
 For this purpose, RBI has invited expression of interest (EOI) for developing PSC with Rs 100
crore turnover in the last three years.
 The Reserve Bank of India has shortlisted six major IT companies to set up a wide- based digital
Public Credit Registry (PCR) for capturing details of all borrowers and wilful defaulters.
 These companies are: TCS, Wipro, IBM India, Capgemini Technology Services India, Dun
&Bradstreet Information Services India, and Mindtree
 The move is based on the recommendations of a committee, headed by Shri Y.M. Deosthalee.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 PCR will address issues such as information asymmetry, improve access to credit and strengthen
the credit culture among consumers.
 It can also address the bad loan problem staring at banks, as corporate debtors will not be able
to borrow across banks without disclosing existing debt.
 A PCR may also help raise India’s rank in the global ease of doing business index.
 Setting up the PCR will help improve India’s rankings in the World Bank’s ease of doing business
index.
Bitcoin
Bitcoin is a cryptocurrency, a form of electronic cash. It is a decentralized digital
currency without a central bank or single administrator that can be sent from user to
user on the peer-to-peer bitcoin network without the need for intermediaries.
Transactions are verified by network nodes through cryptography and recorded in a
public distributed ledger called a blockchain.
Bitcoin was invented by an unknown person or group of people using the name
Satoshi Nakamoto and released as open-source software in 2009.
Bitcoins are created as a reward for a process known as mining. They can be
exchanged for other currencies, products, and services. Research produced by the
University of Cambridge estimates that in 2017, there were 2.9 to 5.8 million unique
users using a cryptocurrency wallet, most of them using bitcoin.
Bitcoin has been criticized for its use in illegal transactions, its high electricity
consumption, price volatility, thefts from exchanges, and the possibility that bitcoin is
an economic bubble.
Bitcoin has also been used as an investment, although several regulatory agencies
have issued investor alerts about bitcoin.
Internal Ombudsman Scheme, 2018
RBI implemented the internal ombudsman scheme, 2018.
Scheduled commercial banks (except Regional rural banks) with more than 10
branches to appoint an internal ombudsman (IO), directed by Reserve Bank of
India.
Ombudsman is a person officially charged with investigating and addressing public
complaints or violation of rights.
Banks in India had an internal ombudsman but they were mostly appointed from
within bank staff and did not have statutory powers.
Under section 35 A of the Banking Regulation Act, 1949, RBI gives ombudsman
statutory powers.
The internal ombudsman scheme is for strengthening the internal grievance of
banks and ensuring that the complaints of the customers are redressed.
This scheme will be monitored by the bank’s internal audit mechanism apart from
regulatory oversight by RBI.
Tenure of the IO cannot be more than five years and it is not open to reappointment.
Brexit

What is Brexit ?
Brexit is short for "British exit" - and is the word people use to talk about the United
Kingdom's decision to leave the EU (European Union).

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 What is the EU?
The EU is a political and economic union of 28 countries which trade with each other
and allow citizens to move easily between the countries to live and work The UK joined
the EU, then known as the EEC (European Economic Community), in 1973.

Why is the UK leaving?

A public vote - called a referendum - was held on Thursday 23 June 2016 when voters
were asked just one question - whether the UK should leave or remain in the European
Union. The Leave side won by nearly 52% to 48% - 17.4m votes to 16.1m - but the exit
didn't happen straight away. It's due to take place on 29 March 2019.

What has happened so far?

The 2016 vote was just the start. Since then, negotiations have been taking place
between the UK and the other EU countries. The discussions have been mainly over
the "divorce" deal, which sets out exactly how the UK leaves - not what will happen
afterwards. This deal is known as the withdrawal agreement.
The main point of having a deal between the UK and the EU is to ensure as smooth as
possible an exit from the EU for businesses and individuals - and to allow time for the
two sides to hammer out a permanent trading relationship. If no deal is finalized, it will
be called no-deal Brexit.

GDP- Concepts and Statistics

Gross domestic product (GDP) is a monetary measure of the market value of all the
final goods and services produced in a period of time
GDP can be determined in three ways, all of which should, in principle, give the same
result. They are the production (or output or value added) approach, the income
approach, or the speculated expenditure approach.
When GDP declines for two consecutive quarters or more the economy is in a
recession. Meanwhile, when GDP grows too quickly and fears of inflation arise.
After the 1991 economic liberalisation, India achieved 6-7% average GDP growth
annually. Since 2014 with the exception of 2017, India's economy has been the world's
fastest growing major economy, surpassing China. The Indian economy advanced 7.1
percent year-on-year in the third quarter of 2018, well below 8.2 percent in the previous
period and market expectations of 7.4 percent.

JET AIRWAYS:

The airline ran out of cash (and luck!) and temporarily halted its operations first
international, then domestic - after failing to secure additional funding from its lenders.
Currently Jet owes Rs 8,500 crore to its bankers, about Rs 3,000 crore to vendors, airport
operators and fuel companies in addition to the pending salaries of its strong workforce of
16,000. In the absence of sufficient funds, the airline and its lenders is pinning hopes on
the bidding process that will conclude on May 10.
Abu Dhabi-based airline Etihad, which currently owns 24% in the airline, was keen on
bailing out Jet Airways in January on some conditions: (1) Naresh Goyal should be
removed from the board, (2) His (Goyal’s) stake should be lowered from 51% to 22% and

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 exemption from the SEBI's regulations on open offer and preference pricing.
The main reasons for worst condition of Jet Airways are as follow:
(1) Increasing price of crude oil.
(2) Increasing in Operational Expenses in comparison to its peers like Indigo and SpiceJet.
Jet airways has failed to pay money to pilots, lessors, banks and vendors. To safeguard its
23000 jobs, Jet Airways plans to convert some debt to equity to help the carrier remain
afloat. State Bank of India, who will now infuse Rs 1,500 crore of emergency funds, but the
resignation of Naresh Goyal was a pre-condition for infusion of funds. As per BSE, the
shareholding of Jet at the end of December was thus: Naresh Goyal 51%, Etihad Airways
24% while the rest was public shareholding. Now, banks plus other government institutions
would hold a little over 50% stake, Etihad is expected to sell its share and exit while Goyal’s
would be diluted to a minority.
New e-commerce guidelines
The Government announced new e-commerce rules restricting players from selling the
products of companies in which they have a stake, and capping the percentage of
inventory that a vendor can sell through a marketplace entity (IT platform of an e-
commerce entity) or its group companies. To curb the practice of deep discounts, the
Government said they cannot directly or indirectly influence the price of goods and
services, and brought in a new set of rules that bar the sale of products exclusively in
one marketplace.
From February 1, 2019, e-commerce companies running marketplace platforms such as
Amazon and Flipkart, cannot sell products through companies, and of companies, in
which they hold equity stake. While foreign direct investment is not permitted in the
inventory-based model of e-commerce, the clarification put a cap of 25% on the
inventory that a marketplace entity or its group companies can buy from a vendor.

FDI – Forex Reserve – Balance of Payments in the context of PSB

Foreign direct investment (FDI) in India is a major monetary source for economic
development in India. Foreign companies invest directly in fast growing private Indian
businesses to take benefits of cheaper wages and changing business environment of
India. Presently the cap on FDI in Public Sectors banks is 29% and in Private sector
banks is 74%. Proposal is on to increase the cap to 74% and 100% respectively.
Higher FDI limits could be of greater significance once the need for capital increases, as
banks move to Basel-III capital adequacy norms, and with transition to IndAS (Indian
Accounting Standards) accounting norms. However, given the sensitivity of the sector,
Reserve Bank of India’s comfort will be a major factor in opening the sector.

Economic Capital Framework Committee

Reserve Bank of India (RBI) in Dec 2018 has set up a committee of experts headed by
former RBI governor Bimal Jalan to decide what was the adequate level of reserve the
central bank needs to maintain of the current Rs 9.59 lakh crore (June 2018) and
whether some surplus could be transferred to the Government. The expert committee
under Jalan will have five more members -- former RBI deputy governor Rakesh Mohan
(vice-chairman), Economic Affairs Secretary Subhash Chandra Garg, RBI central board

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal

 members Bharat Doshi and Sudhir Mankad, and RBI deputy governor NS
Vishwanathan.

CONSOLIDATION & MERGER OF PSBs

Furnished way back in 1990s by the suggestion of Narasimham Committee Report in
1991 (NC-I), and it was reiterated in Narasimham Committee Report in 1998 (NC-II).

May address
 Stressed assets resolutions
 Balance sheet management
 Risk management
 Technological advancements
 Human resource issues

Challenges are
 Integration of technology
 Determining the value of the target banks
 Opposition of employees
 Human Resources Challenges
 Cultural compatibility

With a view to fast-track the process of mergers, the Union Cabinet on August 23,
2017 approved the setting up of an alternative mechanism, or a panel of Ministers, to
decide on consolidation proposals for State-run banks. Approval for merging Bank of
Baroda, Dena Bank and Vijaya Bank accorded and modalities being worked out.

DISCLAIMER:

The Interview study material – is a voluntarily effort and the contents are
compiled / prepared from various sources. However, users are requested to
refer the other sources, circulars, manuals for latest guidelines/ updations.

Compiled by : Pradeep Patil, CM/faculty & Incharge, CBOTC, Bhopal