The Banking Tutor

JAIIB Notes – PPB – 01

Paper I – Principle and Practices of Banking

Module A - Indian Financial System - Part 1

001. Basel norms or Basel accords are the international banking

regulations issued by the Basel Committee on Banking Supervision.
002. The Basel norms is an effort to coordinate banking regulations across
the globe, with the goal of strengthening the international banking
system.

003. “Basel norms” is the set of the agreement by the Basel committee of
Banking Supervision to focuses on the risks to banks and the financial
system.
004. Basel committee on Banking Supervision (BCBS) is the primary
global standard setter for the prudential regulation of banks and provides
a forum for regular cooperation on banking supervisory matters for the
central banks of different countries.

005. BCBS was established by the Central Bank governors of the Group of
Ten countries in 1974. The BCBS now has 45 members from 28
Jurisdictions, consisting of Central Banks and authorities with
responsibility of banking regulation.
006. BCBS’s objective is to enhance understanding of key supervisory
issues and improve the quality of banking supervision worldwide.
007. BCBS’s norms - Banks lend to different types of borrowers and each
carries its own risk. They lend the deposits of the public as well as money
raised from the market i.e. equity and debt. This exposes the bank to a
variety of risks of default and as a result they fall at times. Therefore, Banks
have to keep aside a certain percentage of capital as security against the
risk of non – recovery. The Basel committee has produced norms called
Basel Norms for Banking to tackle this risk.

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008. Basel is a city in Switzerland. It is the headquarters of the Bureau of
International Settlement (BIS), which fosters cooperation among central
banks with a common goal of financial stability and common standards of
banking regulations. It was founded in 1930. BCBS is housed in the BIS
offices in Basel, Switzerland.

009. The Basel Committee has issued three sets of regulations which are
known as Basel-I, II, and III.

010. Basel-I - It was introduced in 1988. It focused almost entirely on

credit risk.

011 . Credit risk is the possibility of a loss resulting from a borrower's

failure to repay a loan or meet contractual obligations. Traditionally, it
refers to the risk that a lender may not receive the owed principal and
interest.

012. Basel I defined capital and structure of risk weights for banks.
013 . Basel I has fixed The minimum capital requirement at 8% of risk
weighted assets (RWA).

014. RWA means assets with different risk profiles.

015. India adopted Basel-I guidelines in 1999.

016. In 2004, Basel II guidelines were published by BCBS.

017.Basel II is the refined and reformed version of Basel I accord.
018. Basel II guidelines were based on three parameters, which the
committee calls it as pillars.

019. Capital Adequacy Requirements - As per Basel II , Banks should

maintain a minimum capital adequacy requirement of 8% of risk assets

020. As per Basel II banks were needed to develop and use better risk
management techniques in monitoring and managing all the three types
of risks that a bank faces, viz. credit, market and operational risks.

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021. Market Discipline: This needs increased disclosure requirements.
Banks need to mandatorily disclose their CAR, risk exposure, etc to the
central bank.

022. In 2010, Basel III guidelines were released. These guidelines were
introduced in response to the financial crisis of 2008.
023. Basel III guidelines aim to promote a more resilient banking system
by focusing on four vital banking parameters viz. capital, leverage, funding
and liquidity.
024. Basel III - Capital: The capital adequacy ratio is to be maintained at
12.9%. The minimum Tier 1 capital ratio and the minimum Tier 2 capital
ratio have to be maintained at 10.5% and 2% of risk-weighted assets
respectively. In addition, banks have to maintain a capital conservation
buffer of 2.5%. Counter-cyclical buffer is also to be maintained at 0-2.5%.

025. Basel III - Leverage: The leverage rate has to be at least 3 %. The
leverage rate is the ratio of a bank’s tier-1 capital to average total
consolidated assets.
026. Basel III created two liquidity ratios: LCR and NSFR.

027. The liquidity coverage ratio (LCR) will require banks to hold a
buffer of high-quality liquid assets sufficient to deal with the cash outflows
encountered in an acute short term stress scenario as specified by
supervisors. This is to prevent situations like “Bank Run”. The goal is to
ensure that banks have enough liquidity for a 30-days stress scenario if it
were to happen.
028. The Net Stable Funds Rate (NSFR) requires banks to maintain a
stable funding profile in relation to their off-balance-sheet assets and
activities. NSFR requires banks to fund their activities with stable sources
of finance (reliable over the one-year horizon). The minimum NSFR
requirement is 100%. Therefore, LCR measures short-term (30 days)
resilience, and NSFR measures medium-term (1 year) resilience.

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029. Bank run - It occurs when a large number of customers of a bank or
other financial institution withdraw their deposits simultaneously over
concerns of the bank's solvency. As more people withdraw their funds, the
probability of default increases, prompting more people to withdraw their
deposits.

030. Countercyclical capital buffer (CCCB)

Following Basel-III norms, central banks specify certain capital adequacy
norms for banks in a country. The CCCB is a part of such norms and is
calculated as a fixed percentage of a bank’s risk-weighted loan book.

The key respect in which the CCCB differs from other forms of capital
adequacy is that it works to help a bank counteract the effect of a
downturn or distressed economic conditions.
With the CCCB, banks are required to set aside a higher portion of their
capital during good times when loans are growing rapidly, so that the
capital can be released and used during bad times, when there’s distress
in the economy.
031. Tier 1 Capital vs. Tier 2 Capital

Banks have two main silos of capital that are qualitatively different from
one another.

Tier 1: It refers to a bank's core capital, equity, and the disclosed reserves
that appear on the bank's financial statements.

In the event that a bank experiences significant losses, Tier 1 capital

provides a cushion that allows it to weather stress and maintain a
continuity of operations.
Tier 2: It refers to a bank's supplementary capital, such as undisclosed
reserves and unsecured subordinated debt instruments that must have an
original maturity of at least five years.

Tier 2 capital is considered less reliable than Tier 1 capital because it is

more difficult to accurately calculate and more difficult to liquidate.

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032. A subordinate debt with remaining maturity of 30 months will be
taken as part of Tier II capital at a discount of: 60%

033. An exposure is called Retail Exposure as per implementation of

Basel II, if it is not more than Rs 5 crore.

034. As per Basel II, banks are required to bring capital for Operational
risk risk in addition to capital for credit risk and market risk.
035. Payment of cheques/drafts/pay orders/banker’s cheques, if they are
presented beyond the period of three months from the date of such
instruments, shall not be made.

036. As per BASEL III, what is the risk weight on exposure to Govt securities
issued by Central Government? (Answer : 0%)
037. As per Basel-II, RBI has recommended adoption of basic indicator
approach for operational risk .
038. BASEL Accords are related to: Capital Adequacy.

039. For being part of Tier II capital, Rupee Denominated subordinated

debts should have minimum maturity period of 5 years and no maximum
maturity period (perpetual)

040. In Basel II, Pillar I covers Credit Risk, Market Risk, Operational Risk.
041.Subordinate Debts are part of: Tier-II capital

042. Supervisory Review according to which Central Bank of the country

is to ensure that proper capital has been provided for risk exposure and
maintain proper system for the same is provided under Pillar II of Basel IL

043. The minimum capital adequacy ratio implemented in India, by RBI is

8% and as per Basel II recommendations it is 9% .

044. The objective of the Pillar III as per BASEL-II is Market discipline
through public disclosures.

045. Under BASEL-II, the Risk Weightage on the Loans and advances given
to Staff of the bank secured by Mortgage /superannuation benefits is 20%
046. Revaluation Reserve is part of Tier II Capital.

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047. Documents not stamped properly attract Legal Risk

048. For calculation of capital adequacy ratio, the risk weight for
Commercial Real Estate for commercial building is : 100%

049. For capital adequacy purposes, risk weight for personal loans is :
125%

050. Fraud is Operational risk

051. General Insurance works on principle of Spreading the Risk.

052. If an Outsourcing agency does not serve properly bank may face
Reputation Risk and Operational Risk.

053. Investment in perpetual bonds is risky as the interest is not payable

if the CRAR falls below the stipulated target.
054. Legal risk is part of Operational risk.

055. Loss due to inadequacy or failure of system, process, people or due

to external events is called: Operational risk

056. Risk weight for exposure to Scheduled Commercial Bank that

maintains CRAR as per RBI requirement: 20%

057. The capital adequacy ratio is computed by the following formula:

Capital/Risk Weighted Assets.

058. Tier 2 - general provisioning & loss reserves only up to 1.25% of total
risk weighted assets.
059. Transaction risk or default risk and portfolio risk are the components
of credit risk.
060. Liquidity risk arises when maturing liabilities are more than maturing
assets.

061. Repo is a money market instrument, which enables collateralized

short term borrowing through Govt. securities.

062. A Security which can be called at any predetermined date is known

as Callable Security.

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063. A bank cannot grant loan against security of own shares.

064. A cheque will be valid for 3 months from date of issue.

065. Demand Draft issued by Bank required to be crossed with account

payee crossing if the amount of DD is Rs 20000 and above
066. A Financial that derives its value from another financial product is
called: Derivative.
067. On the death of Principal (Account holder), cheque signed by P A
holder should not be honoured.

068. A minor will attain majority at the age of: 18 years

069. A private limited company must have minimum 2 Directors.

070. Appeal against decision of Banking Ombudsman can be made to:
Deputy Governor RBI.

071. Application for information under RTI Act 2005 should be disposed
off within: 30 days

072. As per RTI Act, information related to life and liberty should be
submitted within 48 hrs.

073. As per section 107 and 108 of Indian Evidence Act, a person can be
presumed to have died if he is missing for : 7 years

074. As per Supreme Court judgement HUF cannot be a partner.

075. When winding up proceedings of the company started funds in the
account will be at disposal of Official Liquidator.

076.Bank Customer relation in safe custody - Bailee- Bailor.

077. Banker customer relationship in standing instruction - Agent and

Principal

078. Banks should disclose the details of fees/remuneration received in

respect of the Bancassurance business undertaken by them, in the ‘Notes
to Accounts’.
079. GDP is the Best indicator of country's growth.

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080. Break even point: Level of sales at which there is no profit no loss

081. Broad money is represented by: M3.

082. Business correspondent appointed by bank work as Agent of the

Bank.
083. Business correspondent in bank are for banking business: Bank is the
Principal and correspondent is the Agent.
084. Call money is available for one day

085. Call option stands for - Right to Buy but without obligation to buy.

086. Capital account convertibility means the freedom to convert to

financial assets in to foreign financial assets and vice versa.
087. Carbon credits relates to: environment
088. Certificate of incorporation issued by Registrar of Companies

089. Clayton’s Rule is related to Right of Appropriation

090. Clean Audit Report means : An audit report without any qualifications
091. Contract of Insurance is a contract of Indemnity.

092. Contract to perform the promise or discharge the liability of a third

person in case of his default can be termed as Guarantee.

093. Cost push inflation is due to High cost of production

094. Counter Cyclic Buffer required as per Basel III will be made at: normal
times
095. Cross selling: Offering banks products to existing customers

096. CRR (Cash Reserve Ratio) decided by RBI under Section 42(1) of RBI
Act.

097. CRR is calculated on net demand & time liability.

098. Cheque signed by Finance Director of a Company (authorised

signatory) presented after his death should be paid, if otherwise in order.
099. Customer day is observed by banks on 15th day of every month).

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100. Delayed collection beyond abnormal period penalty at SB Rate +
2%.

101. Distribution of Insurance products as Corporate Agents is called -

Bancassurance.

102. DRP: Disaster Recovery Plan

103. DSB Returns relate to RBI’s Off Site Surveillance.

104. IFRS -International Financial Reporting System

105. GAAS - Generally Accepted Auditing Standards

106. FIR is required to be filed in case where Five and more Notes
counterfeit notes found and acknowledgement is to be obtained from the
concerned police authorities:
107. For creation of Equitable mortgage, the town for deposit of title
deeds to be notified by State Government.
108. For seeking information under RTI , reason not to be disclosed.

109. Forged currency note not to be returned & should be impounded

110. FSDC - Financial Stability and Development Council

111. FDI: Foreign Direct Investment
112. IRDAI is: Insurance Regulatory & Development Authority of India.

113. MUDRA: Micro Units Development and Refinance Agency Ltd.

114. NIM: Net Interest Margin

115. NREGA- National Rural Employment Guarantee

116. PRAN?: Permanent Retirement Account No

117. General insurance works on which principle: Principle of utmost faith.

118. Gift City (Gujarat International Finance Tec-City - Gandhi Nagar,

Gujarat.
119. Govt securities (G-Sec) are known as Gilt edged securities

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120. Green revolution is related to production of Wheat and Rice.

121. Growth of people in a country is reflected in: real per capita income.

122. Guidelines on having Investor Protection Funds by Stock exchanges

issued by SEBI.
123. Hyperinflation is a term to describe rapid, excessive, and out-of-
control general price increases in an economy. While inflation is a measure
of the pace of rising prices for goods and services, hyperinflation is rapidly
rising inflation, typically measuring more than 50% per month.

124. IBPP – Internet Bill Presentation & Payment.

125. ICAAP - Internal Capital Adequacy Assessment Process.

126. If a Garnishee Order is received by the bank in which amount to be

attached is not mentioned full amount to be attached
127. If there is delay in reporting to RBI by currency chest or there is
double/excess reimbursement, RBI charges interest at Bank Rate + 2%
128. in 1969, the 14 Bank Nationalised. At that time Smt. Indira Gandhi
was the Prime Minister of India.

129. In a partnership formed under Indian Partnership Act 1932, the

liability of a partner is liable jointly and severally i.e. as partner as well as
in his personal capacity. Therefore, liability is unlimited.

130. In case of Pledge possession is with creditor and ownership is with

debtor.

131. Inflation in India is measured on the basis of - Wholesale Price Index

132. Insurance sector in India is regulated by: IRDA

133. Investment Fluctuation Reserve is maintained on securities classified
as: "Held for Trading" and "Available for Sale '
134. Investment Fluctuation Reserve is part of Tier I Capital.

135. Islamic banking has the features of : Conservative banking

136. CMD of a public sector bank is appointed by: Central Govt.

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137. RBI Review Credit and Monetary policies Bi- Monthly.

138. Kite flying means accommodation receipts and payments and not
genuine trade transactions.

139. LFAR (Long Form Audit Report) relate to: Statutory audit.
140. Loan should not be granted to a director of the bank against shares
of own bank.
141. Maximum period for filing case with Ombudsman: 12 months from
receiving reply from bank

142. MGNREGA: Mahatma Gandhi National Rural Employment Guarantee

Act

143. Money market mutual funds are regulated by: RBI

144. Mutual fund Market regulated by: SEBI

145. Name of device used by Business Correspondents: Biometric device.

146. New name of Planning Commission: “National Institution for
Transforming India” or “NITI”.

147. Nobel Price for Microcredit: Muhammad Yunus

148. Number of directors in a public limited company can be: between 3
to 15. For more than 15, special resolution passed by shareholders is
required.
149. Perpetual Non redeemable preference share is a part of: Tier -1
capital.

150. Purchaser of DD cannot Stop the Payment of DD.

151. In CAMELS criteria, “C” stands for Capital Adequacy.

152. RBI can issue bank note up-to: Rs 10000

153. RBI has issued star series notes for replacement of wrongly printed
currency notes. Currently, these notes have been issued in the
denomination of : Rs 10, Rs 20, Rs 50, Rs 100.
154. Regulator of Capital market: SEBI
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155. Safe custody of Articles comes under which act: Indian Contract Act

156. Safe deposit locker – maximum deposit that can be asked is 3 year
advance rent plus locker breaking charges.

157. SAFTA ( The South Asian Free Trade Area) is the free trade
arrangement of the South Asian Association for Regional Cooperation
(SAARC).
158. Sensex of 30 scrips is related to Bombay Stock Exchange (BSE).
Sensex (also known as the S&P BSE SENSEX) is the index which broadly
represents BSE and the market sentiment. The base year is 1978-1979 with
a base value of 100. There have been many modification to sensex index
since inception. This Index is based on 30 selected companies data.
Sensex also known as Sensex 30 or BSE 30 or simply the SENSEX.
159. Shares transferred in electronic form - D Mat Dematerialization.
160. Spread in the context of bank profit loss account means: Interest
earned - interest expended.
161. Statutory Audit of banks is done as per provisions of: Banking
Regulation Act

162. Subordinate Debt should not be more than 50 % of tier-I capital.

163. Subordinated debt instruments together with all other instruments

of Tier - II capital are to be limited to ___ of Tier I: 100%.
164. Subprime crisis means : Problem created by lending to borrowers not
meeting the credit rating criteria.
165. The Branch Level Customer Service Committee meet at least once a
month.

166. The charge levied by banks for under utilization or non utilization of
sanctioned CC/OD limits is called: Commitment charge.

167. The main source of infrastructure finance are: FDI investment,

Pension funds, Insurance funds.

168. The present Bank Rate is: 7.75%

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169. Tier I capital also known as: core capital.

170. Mortgage is transfer of interest in specific immovable property to

create security for a debt.

171. Unclaimed deposits with banks which have not been claimed for
last 10 years will be transferred to: Depositor Education and Awareness
Fund (DEAF) .
172. Uniformity in Intersol Charges: Banks should follow a uniform, fair
and transparent pricing policy and not discriminate between their
customers at home branch and non-home branches. The word “sol‟
means branch. Thus intersol charges mean inter-branch charges. These
are charges levied by banks for using service of branches other than the
home branch where a customer originally opened his account.
173. Simplified KYC norms for Foreign Portfolio Investors (FPIs) -
Accounts of FPIs which are eligible/ registered as per SEBI guidelines, for
the purpose of investment under Portfolio Investment Scheme (PIS),
shall be opened by accepting KYC documents specified, subject to Income
Tax (FATCA/CRS) Rules. Provided that banks shall obtain undertaking from
FPIs or the Global Custodian acting on behalf of the FPI that as and when
required, the exempted documents specified will be submitted.

174. Voting rights to an individual shareholder in Private banks not to

exceed 15 %.

175. Total number of digits in Aadhar Card: 12

176. LAF - Liquidity Adjustment Facility.

177. A special purpose vehicle is a legal entity (usually a limited company

of some type or, trust or a limited partnership) created to fulfil narrow,
specific or temporary objectives. Its operations are limited to the
acquisition and financing of specific assets.

178. Accrual concept: Every income or expense is taken in to account

when becomes due irrespective of the fact whether it is received or paid
or not.

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179. Certificate of Incorporation issued by Registrar of Companies to a
limited company is a conclusive evidence of existence of company as a
separate body corporate.

180. Debt securitization: Converting illiquid financial assets in to liquid

marketable securities.
181 Factoring - Purchasing of Book debt.
182. Forfaiting is discounting of export bills without recourse

183. FDI - Foreign Direct Investment

184. GDP - Gross Domestic Product

185. GST - Goods and Service Tax

186. ULIP - Unit Linked Insurance Plan
187. Sensitivity analysis (SA) is the study of how the variation
(uncertainty) in the output of a statistical model can be attributed to
different variations in the inputs of the model. It is a technique for
systematically changing variables in a model to determine the effects of
such changes.

188. Selling securities by a dealer which he does not possess at the time
of sale is known as short selling. It is generally a transaction in which an
investor sells borrowed securities in anticipation of a price decline; the
seller is then required to return an equal number of shares at some point
in the future.

189. Issue of Bonus Shares does not effect Debt Equity Ratio as neither
there is a change in term liability nor in net worth of the company.

190. QIP - Qualified Institutional Placement.

191. Increase in Inflation rate results in decrease of purchasing power.

192. Bank is liable to drawer for having made payment of forged cheque
without authority.
193. Financial Closure occurs when there is legally binding commitment
of private sponsors to mobilize funding or provide services.

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194. The objective of selling mutual fund product by a bank is to earn
non interest income

195. The Purpose of nomination is to settle claims easily and quickly in

case of death of depositor.

196. The relation between debenture holder and company - Creditor and
debtor.
197. The relation between purchase of a DD and Bank?: Creditor and
Debtor.

198. The relationship between bank and customer in case of Garnishee

order - Debtor and Creditor.
199. The transaction code no for DD in the MICR cheques - 16

200. Variable cost is one which changes with production like Raw material,
wages, power etc.

201. The minimum holding of Government in public sector banks should

be 51%
202. When a bank in addition to accepting deposits and making advances,
provides various other types of financial services, it is called - Universal
Banking
203. When banks borrow fund for overnight, it is it called call money.

204. When a person dies intestate letter of administration issued.

205. Income Tax is Direct Tax.

206. The central bank of India - Reserve Bank of India.

207. CIBIL is the first Credit information company of India. CIBIL - The
Credit Information Bureau Limited or CIBIL was founded in the year 2000.
It is also the first Credit Information Company of India.
208. The largest source of liquidity in equity market is FII

209. NABARD does not have share in RRB..

210. Gift Tax is a Direct Tax.

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211. Nifty is index of National Stock Exchange .

212. Mumbai is the financial capital of India.

213. Purchasing power of Money will be reduced with increase in inflation.

214. CRISIL is a subsidiary of Standard & Poor.

215. Services has highest share in GDP of India.

216. Nobody can stop payment of a Demand Draft.
217. Nachiket Mor headed the committee appointed by RBI for financial
inclusion. (The Committee on Comprehensive Financial Services for Small
Businesses and Low Income Households).
218. In case of DD, Drawee is Paying branch of issuing bank.

219. Forward Market Commission is regulator of commodity market in

India.

220. Garnishee Order is issued by Court of Law.

221. Wholesale Price Index is calculated on Weekly basis for food inflation
and monthly for aggregate inflation.

222. International Financial Reporting System (IFRS) is implemented for

comparison of financials of companies operating in two different
international jurisdictions.
223. Within 30 days appeal against Ombudsman can be filed.

224. Within 30 days from receiving the acceptance from customer, appeal
can be made by a bank against the Award of Banking Ombudsman to the
Appellate Authority i.e. Deputy Governor RBI.

225. TDS is not applicable in savings bank interest.

226. Complaints under Consumer forum should be dealt with within

(Where no testing of commodities is required) 90 days.
227. Maximum deposit for allotting a locker: 3 year advance rent plus
locker breaking charges.
228. RBI can issue bank note with highest denomination upto Rs. 10,000
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229. Govt. of India can issue currency note in denomination of : Rs. 1

230. In FDR if the principal and interest is Rs. 20,000 or above it is not to
be paid in cash as per: Section 269T of Income Tax Act.

231. SB /CD to be treated as inoperative if there are no transaction for

over a period of 2 years.

232. Letter of Administration is issued by court when a person dies

without leaving a Will ( Intestate).

233. Implied authority of a partner does not allow to settle a dispute

relating to the business of the firm thru arbitration singly.

234. MCA 21 is the single portal initiated by Ministry of Corporate Affairs

for one stop solution for all Companies.

235. The RBI is using Consumer Price Index for policy making:
236. In Small Accounts , Foreign remittance shall not be allowed to be
credited into the account unless the identity of the customer is fully
established through the production of an OVD and Aadhaar Number or
the enrolment number which is not more than six months old, where the
person is eligible to enrol for Aadhaar number has not been assigned an
Aadhaar number.

237. General Insurance works on principle of Spreading Risk.

238. Contract of Insurance is a contract of: Indemnity.
239. Under RBI KYC directives, CFT stands for - Combating Financing of
Terrorism.

240. Full KYC is required at least once in 2 years in case of high risk
customer.

241. Rupee 1 Note issued by Govt. of India.

242. Time limit for preservation of record under KYC: 5 years from close
of account in respect of records relating to opening of account and 5 years
from date of transaction in respect of transactions reported to FIU.

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243. The focus of Asset Liability Management is to protect Net Interest
Margin.

244. A customer deposited huge amount in cash several times. When

Branch manager enquired about the same, the customer did not give the
details. In such cases, report to FIU as part of Suspicious Transaction Repot.
245. The Small Account shall be monitored and when there is suspicion of
money laundering or financing of terrorism activities or other high risk
scenarios, the identity of the customer shall be established through the
production of an OVD and Aadhaar Number or where an Aadhaar number
has not been assigned to the customer through the production of proof
of application towards enrolment for Aadhaar which is not more than six
months old, along with an OVD.

246. Payment bank cannot do: Lending

247. SCORES is SEBI's online platform that provides a centralised

database of all complaints.
248. Maximum foreign investment in Public sector bank: 20%

249. Committee on Bankruptcy Law headed by Shri T.K.Vishwanathan

250. Money market mutual fund regulated by (Earlier by RBI) now by SEBI

251. Indian Currency Rupee is in circulation in two more countries. One is

Nepal, the other is Bhutan.
252. After issuing a Garnishee Order by court, Bank is referred is
Garnishee.
253. Regressive Taxation is as the tax base increases or income increases,
the taxation rate decreases.

254. Rs 10 and Rs 125 coins have been released as part of the 125th birth
anniversary year celebrations of Dr. B.R. Ambedkar.

255. Federal Reserve System is the Central bank of U.S.

256. NABARD undertakes supervision of RRBs.

257. Hindi day is celebrated on: 14th Sept.

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258. Statutory Audit is the Annual Inspection of large loans by RBI
inspectors. .

259. Aggregate Capital Market exposure of a bank should not be more

than: 40% of net worth of bank

260. Minimum capital required for Small Finance Bank and Payment Banks
is Rs.100 cr.
261. What should be the Promoter contribution in Small Bank: 40%

262. Short Account Number (SAN) SAN is a 6 digit unique number

allotted at the time of requesting for issue of cheque book. SAN was
implemented to address the issue of overlapping of cheque series and
consequent fetching of wrong account numbers during Inward Clearing
process at CTS Grids. SAN helps in fetching the correct account number
thereby avoiding debits to wrong account Number. SAN is a part of the
MICR band printed between the 9 digit MICR code & the transaction code.
263. Section 31 of RBI Act prohibits issue of Banker's Draft/pay order
payable to bearer on demand.

264. Pay Orders are not covered by N I Act.

265. RE stands for Regulated Entity.

266. The objective of KYC guidelines are

(a) to prevent Bank from being used, intentionally or unintentionally, by
criminal elements for money laundering activities.

(b) to enable the bank to understand the customers and their financial
dealings better so that the risks can be managed prudently.

267. The 4 main pillars on which the KYC norms of the Bank rests are:

1) Customer Acceptance Policy

2) Customer Identification Procedure

3) Monitoring of Transactions
4) Risk Management

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268. OVD stands for Officially Valid Documents

269. Objectives of the Customer Acceptance Policy

(i) No account is opened in anonymous or fictitious/benami name.

(ii) Parameters of risk perception are clearly defined

(iii) Documentation requirements and other information to be collected

in respect of different categories of customers.
(iv) Not to open an account or close an existing account where the bank
Is unable to apply appropriate customer due diligence measures.

270. Banks should prepare a profile for each new customer based on risk
categorisation.

271. FIU IND stands for Financial Intelligence Unit - India (FIU-IND) is the
central, national agency responsible for receiving, processing, analyzing
and disseminating information relating to suspect financial transactions
to enforcement agencies and foreign FIU.

272. Cash Transaction Report ( CTR) All cash transactions of the value of
more than Rs 10 Lacs or it’s equivalent in FC or series of cash transactions
aggregating Rs 10 Lacs or more in one month. Report to be submitted to
FIU IND by 15th of succeeding month.

273. Suspicious Transaction Report ( STR) A transaction may be of

suspicious nature irrespective of the amount involved. There is no
restrictions on operations in the accounts where an STR has been made.T
here is no periodicity of reporting suspicious transactions.

274. Non Profit Organisation ( NPOs) Transaction Report ( NTR) : NPO

means any organization that is registered as a Trust or society under
Societies Registration Act 1860 or any similar State Legislation or a
company registered under Section 25 of the Companies Act 1956.

275. Receipt transaction of more than Rs 10 Lacs or equivalent in foreign

currency in NPO accounts is reported to FIU-IND .

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276. “Customer risk" in the present context refers to the money
laundering and terrorist funding risk associated with a particular customer
from a Bank's perspective.

277. For risk categorization of customers, the IBA has provided a hybrid
model containing seven parameters .
(1) Customer Type ; (2) Customer Profession ; (3) Type of Business ;
(4) Product code ; (5) Account Status ; (6) Account vintage ;

(7) Deposit Balance (SB+CA+TD-).

278. Customer Type means - Individual Salaried // Proprietorship

concern / NGOs / Trust / Pvt. Ltd. Co. / Corporate / Associations / NRIs.

279. Customer Profession - Service/ Pensioner/ Accountant / Architect

/Contractor / Real Estate services /Agriculturist / Lawyer / HNI.
280. Type of Business : Central Govt. / State Manufacturing / Hotel /
Import / Export / Govt. / PSU Health services / NBFC.
281. Product code : SB Gen / FD Gen / SB CGA / SB NRO, NRE/FD / Staff
/ NRO, NRE/ FCNR.

282. Account Status : Active / Regular / Inoperative / dormant / Blocked

/ Unclaimed.
283. Account vintage : One year and above // 6 months to less than one
year / Less than 6 months

284. This risk is based on risk perceptions associated with customer profile
and level of risk associated with the product & channels used by
Customer.

285. For the purpose of KYC Norms, a 'Customer' is defined as a person

who is engaged in a financial transaction or activity with a reporting entity
and includes a person on whose behalf the person who is engaged in the
transaction or activity, is acting.

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286. As per Sec 3 of Prevention of Money Laundering Act, ”Money
Laundering” is an offence committed by anyone who acquires, owns,
possess or transfers any proceeds of crime

Or
knowingly enters into a transaction which is related to proceeds of crime,
either directly or indirectly
Or
Conceals or aids in the concealment of the proceeds or gains of crime
within India or outside India commits the offence of money.

287. Designated Director means a person designated by the reporting

entity (Bank, financial institution, etc.) to ensure overall compliance with
the obligations imposed under chapter IV of the PML Act and the Rules.
288. In terms of PML Act a 'person' includes: an individual ; a Hindu
undivided family ; a company ; a firm ; an association of persons or a body
of individuals.

289. Transaction means a purchase, sale, loan, pledge, gift , transfer,

delivery or the arrangement thereof and includes- opening and operating
of an account.

290. All customer profiles/accounts of NRIs, HNIs, PEPs, NGOs, Trusts,

Cooperative Societies, HUF, Exporters, Importers and Accounts having
Beneficial Owners are to be invariably categorised as High Risk.
(irrespective of the lower risk category (low/medium) allotted under other
parameters in the Matrix.

291. Blocked Accounts and Unclaimed deposits are to be categorised as

High Risk.

292. Accounts of dealers in jewellery, gold/silver/bullions, diamonds and

other precious metals/stones are to be categorised under High Risk.

293. Under vintage parameter, newly opened CASA accounts which have
not completed 6 months are to be categorised as High Risk.

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294. Accounts in respect of which complaints received from Legal
Enforcement Authority or fraud is reported should be categorised under
“ High Risk” category.

295. Suggested Risk Categorization under Customer Type are as follows

Individual, salaried- Low

Proprietorship concern/Pvt Ltd. Co./Corporates - Medium

NGOs/Trusts/Associations/NRIs- High

296. Suggested Risk Categorization under Customer Profession are as

follows :

Service/Pensioner/Agriculturist – Low
Accountant/Architect/Lawyer – Medium
Contractor/Real Estate services/HNI- High

297. Suggested Risk Categorization under Type of Business are as follows

Central Govt./State Govt./PSU – Low

Manufacturing/Hotel/Health services – Medium

Imports/Exports/NBFC – High

298. Suggested Risk Categorization under Product Code are as follows

SB Gen/FD Gen/Staff – Low

SB CGA – Medium

SB NRO, NRE/FD NRO, NRE/FCNR – High

299. Suggested Risk Categorization under Account Status are as follows

Active/Regular – low

Inoperative/dormant – Medium

Blocked/Unclaimed – High

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300. Suggested Risk Categorization under Account Vintage are as follows

Less than six months old – High

Six months to less than one year – Medium

One year and above – Low

(Account Vintage refers to age of the account).

301. Total risk will be assigned based on the highest risk carried by any of
the 7 parameters.

302. Low Risk Customers also known as Level 1 customers.

303. Medium Risk Customers also known as Level 2 customers.

304. High Risk Customers also known as Level 3 customers.

305. Review of Customer Risk Categorization - to be carried out not

less than once in 6 months i.e.as on 15th of May and November every
year.

306. Objective of PMLA ( Prevention of Money Laundering Act, 2002) -

to prevent money-laundering and to provide for confiscation of property
derived from money-laundering. The Act and Rules notified there under
impose obligation on banking companies, financial institutions and
intermediaries to verify identity of clients, maintain records and furnish
information in prescribed form to Financial Intelligence Unit – India (FIU-
IND).
307. Non-Profit Organisations (NPOs)/ Non-Government Organisations
(NGOs) promoted by the United Nations or its agencies, and such
international/ multilateral organizations of repute, may be classified as
low risk customers

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308. The following customers are classified as Medium Risk Customers:

Gas Dealers // Car/boat/plane dealers // Electronics (wholesale) // Travel

agency // Telemarketers // Telecommunication service providers //
Pawnshops // Auctioneers // Restaurants, Retail shops, Movie Theatres,
etc.// Sole practitioners // Notaries // Accountants // Blind // Pardanashin.
309. Trusts, chari es, NGOs and organizations receiving donations to be
classified as High Risk Customer.

310. Companies having close family shareholding or beneficial ownership

to be classified as High Risk Customer.

311. Firms with sleeping partners to be classified as High Risk Customer.

312. Accounts under Foreign Contribution Regulation Act to be classified
as High Risk Customer.

313. Politically Exposed Persons (PEPs) to be classified as High Risk

Customer.

314. Customers who are close relatives of PEPs and accounts of which a
PEP is the ultimate beneficial owner to be classified as High Risk
Customer.

315. Those with dubious reputation as per public information available to

be classified as High Risk Customer.
316. Accounts of non-face-to-face customers to be classified as High Risk
Customer.

317. High Net worth Individuals to be classified as High Risk Customer.

318. Non-Resident customers to be classified as High Risk Customer.

319. Accounts of Cash intensive businesses such as accounts of bullion

dealers (including sub-dealers) & jewellers to be classified as High Risk
Customer.

320. Overall Risk grade for the customer will be the Highest Risk grade
among the chosen parameters.

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321. A low risk category may be classified otherwise based on following
illustrative list of parameters considered as "High Risk" such as:

a) Unusual transaction/behavior(Detailed in the KYC/AML/CFT policy)

b) Suspicious Transaction Reports (STR) for customer

c) Cash Transaction Report (CTR) for customer

d) Frequent Cheque returns etc.

322. KYC exercise should be done at least every two (2) years for High
Risk customers.

323. KYC exercise should be done at least every eight (8) years for
Medium Risk customers.
324. KYC exercise should be done at least every ten (10) years for Low Risk
customers.

325. Customer Identification Procedure means undertaking client Due

Diligence (CDD) measures based on the Risk profile, while commencing
an account based relationship (whether regular or occasional).
326. Customer identification procedure to be carried out - When bank
sells third party products as agent.
327. Customer identification procedure to be carried out – While selling
bank's own product for more than Rs 50000/-.

328. Customer identification procedure to be carried out - During periodic

review of KYC.

329. Accept only the Officially Valid Documents (OVD) while opening of
accounts/ periodical KYC up-dation.
330. A document is deemed to be an “Officially Valid Document” even if
there is a change in the name subsequent to its issuance, provided it is
supported by a marriage certificate issued by State Government or a
Gazette notification.
331. Passport is a OVD in case of Individual Customer.

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332. Driving License is a OVD in case of Individual Customer.

333. Aadhaar card or Proof of possession of Aadhaar number is a OVD in

case of Individual Customer.

334. Voter Identity Card issued by Election Commission of India is a OVD

in case of Individual Customer.

335. Job Card issued by NREGA duly signed by an officer of the State
Government is a OVD in case of Individual Customer.

336. Letter issued by the National Population Register containing details

of name and address is a OVD in case of Individual Customer.

337. Certificate of incorporation is a OVD in case of Company.

338. Memorandum and Articles of Association is a OVD in case of

Company.
339. Do not insist on a Company's Common Seal, unless there is a
provision to that effect in their Memorandum and Articles of Association.
340. Government of India has authorised the Central Registry of
Securitisation Asset Reconstruction and Security Interest of India (CERSAI),
to act as, and to perform the functions of the CKYCR.

341. Registration certificate is a OVD in case of Partnership Firms.

342. Partnership deed is a OVD in case of Partnership Firms.

343. PAN Card of the Firm is a OVD in case of Partnership Firms.

344. Registration certificate is a OVD in case of Trusts and Foundations.

345. Trust deed is a OVD in case of Trusts and Foundations.

346. PAN number of the Trust is a OVD in case of Trusts and Foundations.

347. For proprietary concerns, in addition to the OVD applicable to the

individual (proprietor), any two documents in the name of the proprietary
concern are required to be submitted as Activity Proof.

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348. Though the default rule is that any two documents should be
provided as activity proof by a proprietary concern, in cases where the
banks are satisfied that it is not possible to furnish two such documents,
they would have the discretion to accept only one document as activity
proof.

349. Introduction is not mandatory for all the accounts, including those of
legal entities.

350. Aadhaar is not mandatory for opening SB account for Individual.

351. We may accept e- KYC service as a valid process for KYC verification.

352. Fresh photographs will be required to be obtained from minor

customer on becoming major.
353. In case proof of address furnished by the customer is not the local
address or the address where the customer is currently residing , the
branch may take a declaration of the local address .

354. In case a customer categorised as low risk is unable to submit the

KYC documents due to genuine reasons, she/he may submit the
documents to the Bank within a period of six months from the date of
opening account.
355. Foreign students have been allowed a time of one month for
furnishing the proof of local address.

356. To open account for close relatives of low risk customers e.g. wife,
son, daughter and parents etc. who live with their husband, father /
mother and son, the utility bills which are in the name of close relatives
can be accepted.
357. The Small Account shall remain operational initially for a period of
twelve months which can be extended for a further period of twelve
months, provided the account holder applies and furnishes evidence of
having applied for any of the OVDs during the first twelve months of the
opening of the said account.

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358. Customers' name should be screened with UN list of terrorist
individuals/ entities before creation of new customer ID. If any
resemblance is observed, transactions are to be verified in such accounts
and report those accounts to RBI/FIU-IND.

359. Additional document pertaining to the nature of occupation/activity

and financial status (income) of the customer while opening of accounts,
along with OVDs and photographs should be obtained. If it is not possible
to provide a document related to occupations, such as, unemployed,
housewife, labour, street vendor, etc., the same need not be insisted.

360. For opening of accounts of juridical persons, such as Government or

its departments, Societies, Universities and Local Bodies like Village
Panchayats, a certified copy of the following documents shall be obtained:

i. Document showing name of the person authorised to act on behalf of

the entity;

ii. Officially Valid Documents for proof of identity and address in respect
of the person holding a power of attorney to transact on its behalf and
iii. Such documents as may be required by the Bank to establish the legal
existence of such an entity/ juridical person.
361. Foreign students have been allowed a time of one month for
furnishing the proof of local address.
362. Foreign remittance exceeding USD 1000 is not allowed into the
accounts of foreign students, within the period of first thirty days, when
local address is not verified.

363. If the address of the customer mentioned as per proof of address

undergoes a change, fresh proof of address may be submitted to the
branch within a period of six months.

364. PAN or Form 60 are mandatory for opening of accounts other than
“small accounts”.

365. For Low Risk category, KYC requirement of proper identification and
verification on of proof of address would suffice.

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366. For medium risk category, higher due diligence is required, which
includes customer's background, nature and location of activity ,country
of origin, source of funds and their client's profile etc., besides
identification.

367. High Risk category accounts require higher due diligence as per
medium risk category and such accounts require enhanced monitoring on
an ongoing basis.

368. Threshold limits are to be fixed as per limits mentioned by customer

at the time of opening the account and review the threshold limits once
in 6 months.

369. Fresh proofs of identity and address need not be obtained at the
time of periodic up-dation from those customers who are categorised as
'low risk', in case of no change in status with respect to their identities
and addresses. A self-certification by the customer to that effect should
suffice in such cases.

370. In case of change of address of low risk customers, they could merely
forward a certified copy of the document (proof of address) by mail/post,
etc. Branches need not insist on physical presence of such low risk
customer at the time of periodic up-dation.

371. If an existing KYC compliant customer of the bank desires to open

another account in the bank, there should be no need for submission of
fresh proof of identity and/or proof of address for the purpose.
372. Branches should impose partial freezing on KYC non-compliant
accounts in a phased manner by giving due notice. Due diligence to be
observed wherever notices are returned undelivered.

373. In case of Small Accounts, ensure that the stipulated monthly and
annual limits on aggregate of transactions and balance requirements in
such accounts are not breached, before a transaction is allowed to take
place.

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374. The option of partial freezing is to be exercised after giving due
notice of 3 months initially to the customers to comply with KYC
requirements and followed by a reminder for further period of 3 months.
Thereafter, partial freezing should be imposed by allowing all credits and
is allowing all debits with the freedom to close the accounts.

375. If the accounts are still KYC non-compliant after six months of
imposing initial partial freezing, branches should disallow all debits and
credits from/to the accounts, rendering them inoperative. Further, it
would always be open to the branches to close the account of such
customers.

376. Non-account based customer, that is a walk-in customer, where the

amount of transaction is equal to or exceeds rupees fifty thousand,
whether conducted as a single transaction or several transactions that
appear to be connected, the customer's identity and address shall be
verified.
377. A juridical person has been defined as an Entity, as a firm, that is not
a single natural person, as a human being, authorized by law with duties
and rights, recognized as a legal authority having a distinct identity, a legal
personality .

378. A juridical person also known as artificial person, juridical entity,

jurisdiction person, or legal person.

379. Walk-in customer is also known as Non-account Based Customer.

380. AML stands for Anti Money Laundering.
381. "Beneficial Owner” is the natural person who ultimately owns or
controls a client.
and/or

the person on whose behalf the transaction is being conducted, and

includes a person who exercises ultimate effective control over a juridical
person.

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382. In case of Companies,(Beneficial Owner”) “Controlling ownership
interest” means ownership of / entitlement to more than 25 % of the
shares or capital or profits of the company.

383. In case of Partnership firm, (Beneficial Owner”)“Controlling ownership

interest” means ownership of / entitlement to more than 15 % of the
shares or capital or profits of the Partnership Firm.
384. In case of an Unincorporated Association or Body of Individuals,
(Beneficial Owner”)“Controlling ownership interest” means ownership of
entitlement to more than 15% of the property or capital or profits of
Such Association or Body of Individuals. In other cases, (Beneficial
Owner”)“Controlling ownership interest” is relevant natural person who
holds the position of senior managing official.

385. Politically exposed persons (PEPs) are individuals who are or have
been entrusted with prominent Public functions in a Foreign Country, e.g.,
Heads of States or of Governments, Senior Politicians, Senior Government
/ Judicial /Military Officers, Senior Executives of State-owned
Corporations, important Political Party Officials, etc.
386. Persons of Foreign/Diplomatic Missions, located in India, also qualify
as PEPs. Persons holding prominent positions in multilateral agencies such
as the United Nations, World Bank etc., can also be construed as PEPs.

387. Small Accounts are opened only at Core Banking Solution (CBS)
linked branches or in a branch where it is possible to manually monitor
and ensure that foreign remittances are not credited to the account.

388. In the event of an existing customer or relatives of an existing

customer subsequently becoming a PEP, the decision to continue the
business relationship has to be taken by Executive.

389. Penalty of not less than rupees ten thousand extended upto one lakh
rupees may be levied by RBI on any of the employees for non-compliance
of KYC/ AML / CFT guidelines.

390. CFT stands for Combating Financial Terrorism.

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391. Account of non face to face customers : This is opening of account
without the customer coming to the branch.

392. In case of Non Face to Face Customer Account First credit should be
by way of account credit.

393. In case of Non Face to Face Customer Account, Documents should

be certified /or/attested.
394. In case of Non Face to Face Cross Border Customer Account and ,
the introducer should be a regulated body.

395. Transactions using forged or counterfeit Indian Currency notes to be

reported under Counterfeit Currency Report (CCR).
396. Attempted transactions by customers ( where counterfeit or forged
currency are used) are to be reported under STR even if the transactions
are not completed by customers irrespective of the amount.
397. Records of transactions to be maintained for at least ten years from
the date of transaction.

398. Records pertaining to identification of the customer and his address

to be preserved for at least ten years after the business relationship is
ended.

393. Accounts of Trusts/Charities/Organisations, receiving foreign

funding should be opened after permission of Ministry of Home Affairs.
394. Accounts of Trusts/Charities/Organisations, receiving foreign funding
are treated as High Risk.
395. Branches may transfer existing accounts at the transferor branch to
the transferee branch without insisting on fresh proof of address and on
the basis of a self-declaration from the account holder about his/her
current address, subject to submitting proof of address within a period of
6 months.
396. KYC once done by one branch of a Bank should be valid for transfer
of the account within the Bank as long as full KYC has been complied for
the concerned account.

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397. “In-Person verification” means customer to sign in the presence of
Bank official and Bank Official has to affix signature, SP No and Staff No.

398.“High Net worth Individuals” are Customers with any of the

following:

1) Average balance of Rs 100 lakh and above in all deposit accounts

(SB+CA+TD).
2) Enjoying Fund based limits/term loans exceeding Rs 100 lakh.

399. eKYC : Under eKYC, the customer need not bring any document for
opening of an account. He/she has to inform his/her Aadhaar number
only. He/she has to fill up the Account opening Form and give a consent
letter to undergo e-KYC process and provide his/her fingerprint on the
biometric reader.
400. Ensure e-KYC authentication of Aadhaar through only either
Biometric authentication or OTP based authentication facility only.
401. All cross border wire transfer of the value of more than Rs 5 lakhs are
to be reported to Financial Intelligent Unit (FIU-IND) on monthly basis.

402. Records of ALM to be preserved for 10 years.

403. Suspicious Transaction Report ( STR) - A transaction may be of

suspicious nature irrespective of the amount involved.

404. There are no restrictions on operations in the accounts where an STR

has been made.

405. There is no periodicity of reporting suspicious transactions.

406. FATF stands for Financial Action Task Force.

407. Correspondent Banking is the provision of banking services by one

bank (the “correspondent bank”) to another bank (the “respondent bank”).

408. Banks should not enter into a correspondent relationship with a

“shell bank”.

409. Shell Bank is bank which is incorporated in a country where it has

no physical presence and is not affiliated to any regulated financial group.

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410. UAPA stands for Unlawful Activities (Prevention) Act, 1967.

411. The United Nations periodically circulates the following two lists of
individuals and entities suspected of having terrorist links, and as
approved by its Security Council (UNSC).

(a) The “ISIL (Da’esh) &Al-Qaida Sanctions List” - associated with the Al-
Qaida.
(b) The “1988 Sanctions List” - associated with the Taliban.

412. UNSCRs stand for The United Nations Security Council Resolutions.

413. In case of Accounts of Married Women - a document shall be

deemed to an - officially valid document even if there is a change in the
name subsequent to its issuance, provided it is supported by a marriage
certificate issued by the State Government or a Gazette notification,
indicating such a change of name. Accordingly, accept a copy of marriage
certificate issued by the State Government or Gazette notification
indicating change in name, together with a certified copy of the “Officially
Valid Document” in the existing name of the person while establishing an
account based relationship or while undergoing periodic up-dation
exercise.
414. Small Accounts: If a person who wants to open an account and is not
able to produce any of the OVDs or the documents applicable in respect
of simplified procedure, bank shall open a Small Account.

415. While opening Small Accounts, the designated officer of the bank
certifies under his signature that the person opening the account has
affixed his signature or thumb impression in his presence.

416. “Demographic information”, (defined in the Aadhaar Act).

Demographic information includes information relating to the name, date
of birth, address and other relevant information of an individual, but shall
not include race, religion, caste, tribe, ethnicity, language, records of
entitlement, income or medical history.

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417. “FATCA” means Foreign Account Tax Compliance Act of the United
States of America (USA) which, inter alia, requires foreign financial
institutions to report about financial accounts held by U.S. taxpayers or
foreign entities in which U.S. taxpayers hold a substantial ownership
interest.

418. “IGA” means Inter Governmental Agreement between the

Governments of India and the USA to improve international tax
compliance and to implement FATCA of the USA.

419. The bank shall obtain a self-attested photograph from the customer
while opening Small Account.

420. “KYC Templates” means templates prepared to facilitate collating

and reporting the KYC data to the CKYCR, for individuals and legal entities.
421. “Regulated Entities” (REs) means – ( a) All Banks; (b) All India
Financial Institutions (AIFIs); (c) All Non-Banking Finance Companies
(NBFC)s, Miscellaneous Non-Banking Companies (MNBCs) and Residuary
Non-Banking Companies (RNBCs); (d) All Payment System Providers
(PSPs)/System Participants (SPs) and Prepaid Payment Instrument Issuers
(PPI Issuers) ; (e) All authorised persons (APs) including those who are
agents of Money Transfer Service Scheme (MTSS), regulated by the
Regulator.

422. CIDR stands for Central Identities Data Repository is defined in the
Aadhaar Act, means a centralised database containing all Aadhaar
numbers issued along with the corresponding demographic information
and biometric information of such individuals and other information
related thereto.

423. “Central KYC Records Registry” (CKYCR) means an entity

established to receive, store, safeguard and retrieve the KYC records in
digital form of a customer.

424. “Biometric information”, as defined in the Aadhaar Act, means

photograph, finger print, Iris scan, or such other biological attributes of an
individual as may be specified by Aadhaar (authentication) regulations.

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425. ”Enrolment number” or “Enrolment ID” is a 28 digit Enrolment
Identification Number allocated to residents at the time of enrolment of
Aadhaar.

426. “E-KYC authentication facility”, means a type of authentication

facility in which the biometric information and/or OTP and Aadhaar
number securely submitted with the consent of the Aadhaar number
holder through a requesting entity, is matched against the data available
in the CIDR, and the Authority returns a digitally signed response
containing e-KYC data along with other technical details related to the
authentication transaction.

427. “Identity information”, in respect of an individual, includes

individual’s Aadhaar number, biometric information and demographic
information.
428. “Yes/No authentication facility”, as defined in Aadhaar Act, means
a type of authentication facility in which the identity information and
Aadhaar number securely submitted with the consent of the Aadhaar
number holder through a requesting entity, is then matched against the
data available in the CIDR, and the Authority responds with a digitally
signed response containing “Yes” or “No”, along with other technical
details related to the authentication transaction, but no identity
information.

429. “Common Reporting Standards” (CRS) means reporting standards

set for implementation of multilateral agreement signed to automatically
exchange information.

430. “Walk-in Customer” means a person who does not have an account
based relationship with the RE, but undertakes transactions with the RE.

431. “Customer Due Diligence (CDD)” means identifying and verifying

the customer and the beneficial owner.

432. “Customer identification” means undertaking the process of CDD.

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433. “Non-face-to-face customers” means customers who open
accounts without visiting the branch/offices of the REs or meeting the
officials.

434. “On-going Due Diligence” means regular monitoring of

transactions in accounts to ensure that they are consistent with the
customers’ profile and source of funds.
435. “Periodic Up-dation” means steps taken to ensure that documents,
data or information collected under the CDD process is kept up-to-date
and relevant by undertaking reviews of existing records at periodicity
prescribed by the RBI.

436. “Wire Transfer” means a transaction carried out, directly or through

a chain of transfers, on behalf of an originator person (both natural and
legal) through a bank by electronic means with a view to making an
amount of money available to a beneficiary person at a bank.

437. When the originator bank and the beneficiary bank is the same
person or different person located in the same country, such a wire-
transfer is a Domestic Wire Transfer.

438. If the ‘originator bank’ or ‘beneficiary bank’ is located in different

countries such a wire-transfer is Cross-border Wire Transfer.
439. Aadhar number shall not be sought from individuals who are not
‘residents’.

440. In case an individual customer who does not have

Aadhaar/enrolment number and PAN and desires to open a bank account,
banks shall open a ‘Small Account’.

(Compiled by Sekhar Pariti)

Hyderabad

02-12-2021

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