PROMOTION MATERIAL – INDEX

All about our Bank 2

Latest in Banking 3

NI Act 7

B R Act 14

KYC 18

Public Grievance Redressal mechanism 21

Definitions 24

BCSBI 25

Deposits & Settelement of claims 28

SLP 35

MSME 73

Balance sheet ratio analysis 87

Corporate Credit 92

Priority Sector 108

Prudential norms 139

Various recovery tools & measures 143

Documentation and legal aspects 148

Indian Stamp Act 151

Foreign Exchange 159

Ancillieary services and 3rd party products 168

Latest in IT Products 189

Human Resources 204

Risk Management 216

Important Banking & Economic Terms 222

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All about our Bank

Government Holding:
Total number of 1.54 Crore Equity shares of face value of Rs. 10/- each was allotted to
Government of India at an issue price of Rs. 181.31 per share as preferential allotment on
23.03.2015. With this, the Government of India holding in the bank has increased to 39.43 crore
equity shares representing 82.10 of the paid up equity capital.
Branch Network
1. Bank’s Customer touch points as of September 30, 2017 was 8593 which included 2695
Domestic branches, 3 Overseas branches, 3202 ATM/BNAs and 2693 active Business
Correspondents. 1442 Domestic branches (54%) are in semi-urban and rural areas.
2. Bank has 3 foreign branches at Singapore, Colombo & Jaffna in Sri Lanka.
3. Number of employees of the Bank were 20,328 as of September 30, 2017.
AWARDS AND ACCOLADES:
 Indian Bank bagged 4 NPCI (National Payments Corporation of India) Awards from among
920 participants:
 NACH – Winner Award (APB/NREGA payments)
 NFS – Joint Winner Award (ATM Operations)
 CTS – Joint Winner Award (Cheque Truncation)
 Special award bestowed on the Bank for making cash available through Micro – ATMs and
Aadhar identification to flood stranded people in Chennai.
 The Bank was awarded SKOCH Technology Innovation Award for “IB Smart Remote”
Mobile Application.
 Indian Bank Won 3 prestigious Social Banking Excellence Awards from ASSOCHAM under
the following categories:
 Winner under Medium Bank Class for Agriculture Banking
 Winner under Medium Bank Class for Urban Banking
 Runner-up under Medium Bank Class for Rural Banking
 Banking Frontier’s Finnoviti Award for the Best Technology Innovation was conferred on
Indian Bank for the Technology product ‘E-Purse’.
 India’s Best Bank Award by Financial Express for Strength & Soundness by the Finance
Minister Shri. Arun Jaitely
 ACI International award for Innovation in Retail Category using Base24 ATM switch
 BANK WAS AWARDED SIX SKOCH TECHNOLOGY INNOVATION AWARDS FOR THE
FOLLOWING TECHNO PRODUCTS:
o `Scan and Pay’ in Mobile app.
o `Geo-tagging’ Mapping geographical co-ordinates of property and tagging it with the
Bank’s Core Banking Solution.
o `Digital challan’ – Feature available in app to minimize turnaround time by
dispensing with physical challan.
o `Green Pin’ for Credit/Debit cards and Net/mobile banking customers.
o `Online credit card transaction view’ in app for customers
o `Online branch/ATM room cleanliness feedback’ with photo from user through app
 Awards for 'IT initiative for Transparency in the organization' and 'Vigilance
Awareness Initiative'.
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  First Prize among Public Sector Commercial Banks for Excellence in performance under
Self Help Groups (SHG) Bank Linkage Programme in Tamil Nadu during the year 2016-17.
 Assocham Services Excellence Award in Banking Services.
 “First Rank – National Award for Excellence in lending to Micro Enterprises during
2015-16”.
 ‘SHG award’ for contribution to SHG movement, being one among the two PSBs which has
credit linked the largest number of SHGs.

Latest in Banking
RBI's 4th Bi-Monthly Monetary Policy of RBI: 2017-18
On October 4, 2017, Reserve Bank of India (RBI) announced Fourth Bi-Monthly Monetary Policy
Statement in which the Policy Repo Rate has been kept unchanged for financial year 2017-18. RBI
but cut the statutory liquidity ratio (SLR) by 50 basis points to 19.5 per cent but kept the repo
rate unchanged at 6 per cent.
 The Monetary Policy Committee (MPC) decided to Keep the rates unchanged the policy repo
rate under the liquidity adjustment facility (LAF) at 6.0 per cent, the Reverse Repo Rate at
5.75 per cent, the Bank Rate at 6.25 per cent and marginal standing facility (MSF) rate
remains the same except Statutory Liquidity Ratio (SLR).
 Statutory Liquidity Ratio (SLR) has been cut by 50 basis points to 19.50 per cent, which
will effect from October 14, 2017.
 Economic growth forecast has been revised down to 6.7 per cent from the August 2017
projection of 7.3 per cent for FY 18 also projected inflation to stay in the range of 4.2-4.6
per cent in the second half of 2017-18.
 RBI continues to work towards the resolution of stressed corporate exposures in bank
balance sheets.
 Primary reasons for downward revision of growth forecast are Loss of growth momentum
in Q1 of 2017-18, adverse impact on the manufacturing sector owing to uncertainties
triggered by Goods & Services Tax (GST) implementation as per the MPC.
 On 5th and 6th December 2017 the Next meeting of RBI Monetary Policy Committee is
scheduled.

MARGINAL COST-BASED LENDING RATE (MCLR)

What is Marginal Cost of Funds based Lending Rate (MCLR) reform by the RBI?
The Reserve Bank of India has brought a new methodology of setting lending rate by commercial
banks under the name Marginal Cost of Funds based Lending Rate (MCLR). It will modify the
existing base rate system from April 2016 onwards.
As per the new guidelines by the RBI, banks have to prepare Marginal Cost of Funds based
Lending Rate (MCLR) which will be the internal benchmark lending rates. Based upon this MCLR,
interest rate for different types of customers should be fixed in accordance with their riskiness.
Periodicity of Revision
The MCLR should be revised monthly by considering some new factors including the repo rate and
other borrowing rates. Specifically the repo rate and other borrowing rate that were not explicitly
considered under the base rate system.
As per the new guidelines, banks have to set five benchmark rates for different tenure or time
periods ranging from overnight (one day) rates to one year.
The new methodology uses the marginal cost or latest cost conditions reflected in the interest rate
given by the banks for obtaining funds (from deposits and while borrowing from RBI) while setting
their lending rate. This means that the interest rate given by a bank for deposits and the repo rate
(for obtaining funds from the RBI) are the decisive factors in the calculation of MCLR.

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Why the MCLR reform?
At present, the banks are slightly slow to change their interest rate in accordance with repo rate
change by the RBI.
Commercial banks are significantly depending upon the RBI’s LAF repo to get short term funds.
But they are reluctant to change their individual lending rates and deposit rates with periodic
changes in repo rate.
Whenever the RBI is changing the repo rate, it was verbally compelling banks to make changes in
their lending rate. The purpose of changing the repo is realized only if the banks are changing
their individual lending and deposit rates.
Implication on monetary policy.
Now, the novel element of the MCLR system is that it facilitates the so called monetary
transmission. It is mandatory for banks to consider the repo rate while calculating their MCLR.
The RBI calls the effective passing of repo rate change into interest rate change by the banking
system as an important part of monetary transmission. Monetary transmission in complete sense
is the way in which a monetary policy signal (like a repo rate cut) is passed into the economy in
producing the set objectives.
Take the case of a repo rate reduction by the RBI. It is aimed to reduce overall interest rate in the
economy and thus promoting loans for consumption and investment. This consumption and
investment boost will be realized only if banks are cutting interest rate in response to the reduced
repo rate.
Previously under the base rate system, banks were changing the base rate, only occasionally. They
waited for long time or waited for large repo cuts to bring corresponding reduction in their base
rate. Now with MCLR, banks are obliged to readjust interest rate monthly. This means that such
quick revision will encourage them to consider the repo rate changes.

How to calculate MCLR

The concept of marginal is important to understand MCLR. In economics sense, marginal means
the additional or changed situation. While calculating the lending rate, banks have to consider the
changed cost conditions or the marginal cost conditions. For banks, what are the costs for
obtaining funds? It is basically the interest rate given to the depositors (often referred as cost for
the funds). The MCLR norm describes different components of marginal costs. A novel factor is the
inclusion of interest rate given to the RBI for getting short term funds – the repo rate in the
calculation of lending rate.
Following are the main components of MCLR
Marginal cost of funds;
Negative carry on account of CRR;
Operating costs;
Tenor premium.
Negative carry on account of CRR: is the cost that the banks have to incur while keeping
reserves with the RBI. The RBI is not giving an interest for CRR held by the banks. The cost of
such funds kept idle can be charged from loans given to the people.
Operating cost: is the operating expenses incurred by the banks
Tenor premium: denotes that higher interest can be charged from long term loans
Marginal Cost: The marginal cost that is the novel element of the MCLR. The marginal cost of
funds will comprise of Marginal cost of borrowings and return on net worth. According to the RBI,
the Marginal Cost should be charged on the basis of following factors:
Interest rate given for various types of deposits- savings, current, term deposit, foreign currency
deposit, Borrowings – Short term interest rate or the Repo rate etc., Long term rupee borrowing
rate Return on networth – in accordance with capital adequacy norms.

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The marginal cost of borrowings shall have a weightage of 92% of Marginal Cost of Funds while
return on net worth will have the balance weightage of 8%.
In essence, the MCLR is determined largely by the marginal cost for funds and especially by the
deposit rate and by the repo rate. Any change in repo rate brings changes in marginal cost and
hence the MCLR should also be changed.
According to the RBI guideline, actual lending rates will be determined by adding the components
of spread to the MCLR. Spread means that banks can charge higher interest rate depending upon
the riskiness of the borrower.
Powerful element of the MCLR system form the monetary policy angle is that banks have to revise
their marginal cost on a monthly basis. According to the RBI guideline, “Banks will review and
publish their MCLR of different maturities every month on a pre-announced date.” Such a
monthly revision will compel the banks to consider the change in repo rate change if any made by
the RBI during the month.
Regarding the status-quo of base rate, the initial guidelines from the RBI indicate that the Base
rate will be replaced by the MCLR. “Existing loans and credit limits linked to the Base Rate may
continue till repayment or renewal, as the case may be. Existing borrowers will also have the
option to move to the Marginal Cost of Funds based Lending Rate (MCLR) linked loan at mutually
acceptable terms.”
MCLR of Indian Bank wef 09.12.2017:
Tenors - 7 MCLR in %
Overnight 8.00
1 Month 8.05
3 Months 8.10
6 Months 8.25
1 Year 8.35
3 Years 8.55
5 Years 8.75

Latest Amendment in Gold Bonds

In the case of MLTGD, the redemption of principal at maturity shall, at the option of the
depositor, be either in Indian Rupee equivalent of the value of deposited gold at the time of
redemption, or in gold. Where the redemption of the deposit is in gold, an administrative charge at
a rate of 0.2% of the notional redemption amount in terms of INR shall be collected from the
depositor. However, the interest accrued on MLTGD shall be calculated with reference to the value
of gold in terms of Indian Rupees at the time of deposit and will be paid only in cash
PAYMENT OF INTEREST ON SAVINGS BANK ACCOUNTS:
RBI has asked banks to pay interest on savings banks account on quarterly basis or shorter
duration, a move which will benefit crores of savings account holders. While public sector banks
offer 4 per cent interest on savings deposit, private players offer as much as 7 per cent. In 2011,
the central bank had decided to give freedom to commercial banks to fix savings bank deposit
rates. While giving banks this freedom, RBI had said a uniform rate will have to be offered on
deposits of up to Rs. 1 lakh. On higher amounts, banks are allowed to offer differential rates to
depositors.
CENTRAL KYC RECORDS REGISTRY (CKYCR)
Govt. has issued a notification for setting up of Central KYC Records Registry (CKYCR) and it
would receive, store, safeguard and retrieve KYC records in digital form of a client, for which
necessary amendments to the Rules have been made. Retrieval can be made online by any
reporting entity across the financial purpose for the purpose of establishing an account based
relationship.

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NI ACT (AMENDMENT) PASSED BY THE PARLIAMENT:
Cases of bouncing of cheques can be filed only in a court in whose jurisdiction the Bank branch of
the payee lies. If a complaint against a person issuing a cheque has been filed in the court with
the appropriate jurisdiction, then all subsequent complaints against that person will be filed in
the same court, irrespective of the relevant jurisdiction area.
SIMPLIFIED FORMAT AND PROCEDURE FOR SELF-DECLARATION IN FORM
NO.15G/15H:
Under the simplified procedure of Central Board of Direct Taxes (CBDT), a payee can submit the
self-declaration either in paper form or electronically. The deductor will not deduct tax and will
allot a Unique Identification Number (UIN) to all self-declarations. The particulars of self-
declaration will have to be furnished by the deductor along with UIN in the quarterly TDS
statements. The requirement of submitting physical copy of Form15G and 15H by the deductor to
the Income tax authorities has been dispensed with. The deductor will, however be required to
retain Form 15G and 15H for seven years.
RBI CUTS RISK WEIGHT FOR INDIVIDUAL HOME LOANS:
RBI has reduced the risk weight for individual housing loans of up to Rs.75 lakhs. Minimum risk
weight for individual housing loans has been reduced from 50% to 35%. The risk weight for
commercial real estate has been left unchanged at 100%. For loans up to Rs.30 lakhs, Loan to
value (LTV) has been increased to 90.
THE NEW RISK WEIGHTS:
Loan amount and Loan to value (LTV) Risk weight (%)
Up to Rs.30 lakhs:
LTV < 80% 35
LTV > 80% TO < 90% 50
Between Rs. 30 lakhs to Rs.75 lakhs:
LTV < 75% 35
LTV > 75% TO < 80% 50
Above Rs.75 lakhs, LTV < 75% 75
GENERAL ANTI-AVOIDANCE RULES
GAAR is a concept which generally empowers the Revenue Authorities in a country to deny the tax
benefits of transactions or arrangements which do not have any commercial substance or
consideration other than achieving the tax benefit. Whenever revenue authorities question such
transactions, there is a conflict with the tax payers. Thus, different countries started making
rules so that tax cannot be avoided by such transactions. Australia introduced such rules way
back in 1981. Later on countries like Germany, France, Canada, New Zealand, South Africa etc.
too opted for GAAR. However, countries like USA and UK have adopted a cautious approach and
have not been aggressive in this regard.
Thus, in nutshell we can say that GAAR usually consists of a set of broad rules which are based
on general principles to check the potential avoidance of the tax in general, in a form which
cannot be predicted and thus cannot be provided at the time when it is legislated.

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 Negotiable Instruments Act- 1881
The NI Act states in its preamble that it seeks to define the law relating to promissory note, bill
of exchange and cheques. NI Act came into force W.E.F March 011882.This act is applicable to
entire India. The term negotiable instrument is not defined in the Act. Section 13 says that
Promissory Notes, Bills of Exchange and Cheques are negotiable instruments.
Common Features: The common features of negotiable instruments are as follows:
i. A negotiable instrument can be transferred by delivery or by endorsement and delivery,
depending on whether it is payable to the bearer or order. Transferability of the instrument may
be restricted by the maker or holder by crossing it as 'Account Payee.'
ii. A negotiable instrument confers an absolute and valid title on the transferee who takes it in
'good faith, for value, and without notice of the defect in the title of the transferor.
iii. The holder of negotiable instrument can sue in his own name and can recover the amount of
the instrument from the party liable to pay thereon as there is a right of action attached to the
instrument itself.
*Negotiable Instruments outside NI Act.(under Transfer of Property Act Sec 137)
Bill of Lading, Dock Warrant, GRs approved by IBA, Railway Receipts, Warehouse Receipts,
Wharfinger Certificates
Negotiability means transfer of the instrument to any person so as to constitute him the holder to
transfer without restriction with the transferee taking the instrument for value and in good faith
getting better and absolute title despite any defect in the title of the transferor.
Promissory note is defined under section 4. ''A Promissory Note is an instrument in writing (not
being a bank note or a currency note) containing an unconditional undertaking, signed by the
maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the
bearer of the instrument. A promissory note that is dependent on contingency would tantamount
to being an uncertain undertaking and hence cannot be treated as a promissory note.
Essential elements of a promissory note are
 It must be in writing;
 There must be express promise to pay;
 The promise must be unconditional;
 It must be signed by the maker of the note;
 The payee must be certain;
 The amount payable must be certain;
 The promise should be to pay money only and not anything other then money;
 The amount may be payable on demand or after a certain time;
 The promissory note cannot be made payable to bearer on demand. Section 31 of the RBI
Act prohibits issue of such a Promissory note except by the RBI or Central Government.
Bill of exchange is defined under section 5. ''A bill exchange is an instrument in writing
containing an unconditional order, signed by the maker, directing a certain person to pay a
certain sum of money only to, or to the order of, a certain person or to the bearer of the
instrument."
Main elements of a bill of exchange are as follows:
 Bill of exchange is used in business and trade involving the seller and buyer of
goods/services sold on credit terms.
 It has three parties - drawer (seller), drawee (buyer) and payee (beneficiary).
 Instead of paying cash, the drawee (buyer) undertakes to pay to the payee, or to his order,
a specified sum on demand (i.e. demand bill on presentment of the bill), or on a specified
future date (i.e. usance bill after acceptance).
 The drawee of a bill is not liable until he accepts the bill, indicating thereby his assent to
the drawer's order to pay.
 Demand bill is payable immediately on presentment to the drawee.

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  Usance bill is presented twice to the drawee - first for acceptance, and thereafter for
payment on the due date.
 The date of payment must be certain or ascertainable. Demand bill is payable on demand
or immediately on presentment. Usance bill is payable after specified period or at a future
date. Usance bills attract stamp duty and they need to be accepted by the drawee/ s to
legally -bind him/them for payment.

The essential elements of a bill of exchange are

 It must be in writing;
 It must contain an order to pay;
 The order must be unconditional;
 The parties must be certain;
 The sum payable must be certain;
 It must contain an order to pay money.
Cheque is defined under section 6. ''A cheque is a bill of exchange drawn on a specified banker
and not expressed to be payable otherwise than on demand and it includes the electronic image of
a truncated cheque and a cheque in the electronic form.
A cheque has three parties. The drawer is the account holder signing the cheque; drawee is
always the bank branch where the account holder maintains his account and the payee is the
beneficiary who will receive the amount mentioned in the cheque.
The cheque has to be signed in ink by the account holder or his authorized agent (through
mandate or power of attorney) as per the specimen
Printed signatures on dividend/interest warrants cheques that are issued by companies in bulk,
are also acceptable.
A cheque has to be dated, as the date constitutes a material element of a cheque.
A holder of an undated cheque may fill in the date while presenting it for payment.
A post-dated cheque cannot be paid before its due date.
An ante-dated cheque (i. e. date prior to the presentment) is payable within three months from the
date specified on the cheque.
A banker can pay a cheque written only in words where the amount in words and figures
mutually differs. But if the amount is written only in figures, the bank generally returns it.
A demand draft is a negotiable instrument and is always drawn, payable to order. A demand draft
resembles a bill of exchange; the only difference being that in the former, the drawer (bank) and
the drawee (bank) are same.
The essential elements of a cheque are
A cheque is a kind of bill of exchange;
It is always drawn on a specified banker, which means the drawee of a cheque can be a banker;
It is always payable on demand; and
Cheque includes electronic image of a truncated cheque and a cheque in an electronic form.
Presumptions in N I Act.
1) Negotiation is for consideration
2) It bears the date on which it was made or drawn
3) It was accepted within a reasonable time after its date and before maturity
4) Every transfer of NIs was made before maturity
5) Endorsements appearing of NI were made in the order in which they appear thereon
6) It was duly stamped and stamp duly cancelled when the N I stands lost
7) Holder is holder in due course

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Holder & Holder in Due Course:
Transaction Holder Holder In Due Course
Consideration Not Essential Essential
Good Faith Not Essential Essential
Title Same as Good even when transferor‟s
transferor(Defective/good) defective
Time Before or after maturity Before maturity only
Inchoate Instrument Can Complete Can Complete
Possession of the Instrument May be/may not be Possession Essential
Authority Can sue in his own name Can sue in his own name
Forged Instrument Cannot be holder Cannot be holder in due
course
Parties to negotiable instruments:
In a Bill of Exchange: - There are minimum three parties - Drawer, Drawee, Payee. There can be
other parties - Acceptor, Holder, Endorser, Endorsee, Drawee In Case Of Need and Acceptor for
Honour.
In a cheque, like a bill there are minimum three parties: - Drawer, Drawee(a banker), Payee. There
can be other parties - Holder, Endorser and Endorsee
In a promissory note: - There are minimum two parties - Maker & Payee. There can be other
parties - Holder, Endorser and Endorsee. In a cheque: - Drawer, Drawee, Payee, Holder,
Endorser and Endorsee
 The person who makes a promissory note is called the maker. The person who makes or
draws a bill or cheque is called the drawer.
 The person on whom the bill or cheque is drawn and who is directed to pay is called drawee.
In case of a cheque the drawee is always a banker.
 In case of a bill, when the drawee accepts the bill, he will become the acceptor.
 The person named in a pronote, bill or cheque, to whom or to whose order, the money is to be
paid, is called the payee. In a bill or a cheque, the drawer himself may be the payee.
 The person who endorses the negotiable instrument to another person is called the endorser.
The person to whom the negotiable instrument is endorsed is called the endorsee. When in a bill
or any endorsement thereon, the name of any person is given in addition to the drawee, to be
resorted to in case of need, such person is called drawee in case of need.
 When a bill is dishonoured by non-acceptance, the holder may allow any person to accept it
for the honour of the drawer or any of the endorsers. The person so accepting is called the
Acceptor for honour.
 "Holder in due course" means any person who for consideration became the possessor of a
promissory note, bill of exchange or cheque if payable to bearer, or the payee or endorsee thereof,
if1[payable to order], before the amount mentioned in it became payable, and without having
sufficient cause to believe that any defect existed in the title of the person from whom he derived
his title.
 Inland instrument: A negotiable instrument fulfilling the following conditions, is an inland
instrument:
Drawn in India; and Either payable in India or drawn on a person resident in India
Examples of inland bills:
 A bill drawn by Rajini in Chennai, on Zulfikar in Washington, payable in Hyderabad.
 A bill drawn by Kamal in Chennai, on John in Patna, payable in London.
 Foreign instrument: An instrument which is not an inland instrument, is a foreign instrument.

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Bearer and order instruments
 A negotiable instrument can be either a ‘bearer’ or an ‘order’ instrument. A bearer instrument
is payable to the bearer of the instrument. Generally no identification of the bearer is necessary.
An order instrument can be paid to the payee or endorsee, only on proper identification, which is
satisfactory to the paying bank
Negotiation
 A negotiable instrument may be transferred by one person to another by means of negotiation.
 A bearer instrument can be negotiated by mere delivery of the instrument.
 An order instrument can be negotiated by endorsement and delivery.
Endorsement
 When the maker or holder of a negotiable instrument signs on its face or back or on a slip of
paper attached thereto for the purpose of negotiation(called allonge), he is said to endorse the
instrument. But, in practice endorsement is made on the back of the instrument.
 An endorsement may be in full or in blank. An endorsement is in full when the name of the
endorsee is specified. An endorsement is in blank, when the name of the endorsee is not specified.
 The holder of an instrument endorsed in blank can convert it into endorsement in full, by
writing the name of the endorsee above the signature of the endorser.
 An endorsement may be restrictive endorsement, which means it restricts further
endorsement. Example: “Pay to C only” or “Pay to C for my use” or “Pay to C as my agent”
 An endorser can avoid his liability while making endorsement in which case it is called sans
recourse endorsement. Example: “Pay to C- without recourse to me”
 An endorser may give up his right in his endorsement, in which it is called a ‘facultative
endorsement’. Example: “Pay to C- Notice of dishonour waived”
 A promissory note or a bill of exchange in which no time is specified for payment, and a
cheque, are payable on demand
 The maturity of a promissory note or Bill of Exchange is the date at which it falls due. If not
payable on demand, at sight or on presentation, it will mature on the third day after the day on
which it is expressed to be payable.
a) A bill dated 8 7 2015 payable two months after date matures on 11 9 2015.
b) A bill dated 31 8 2015 payable three months after date matures on on 3 12 2015.
c) A bill dated 30 8 2015 payable three months after date matures on on 3 12 2015.
d) A bill dated 8 7 2015 payable 60 days after date matures on on 9 10 2015.
 When the day on which a promissory note or bill of exchange is at maturity is a public
holiday, the instrument shall be deemed to be paid on the next preceding business day. Example:
A bill dated 12 6 2015 payable two months after date matures on 15 8 2015. As 15 8 2015 is a
holiday, it shall be deemed to mature for payment on 14 8 2015, if it is a business day.
 When no rate of interest is specified in a promissory note, or Bill of Exchange, interest is to
calculated at the rate of 18% p.a.
 A bill payable after sight must be presented to the drawee for acceptance. If the drawee cannot
be found after reasonable search the bill will be treated as dishonoured.
 The holder of a bill must, if so required by the drawee, allow the drawee forty-eight hours
(exclusive of public holidays) to consider whether to accept or not.
 A bill is said to be dishonoured by non-acceptance when the drawee, or one of the several
drawees, defaults in acceptance. Where the drawee is incompetent to contract or acceptance is
qualified, the bill may be treated as dishonoured.

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 A negotiable instrument is said to be dishonoured by non-payment when the maker of the
promissory note, acceptor of the bill, or drawee of a cheque, makes default in payment upon being
duly required to pay the same.
 Notice of dishonour is not necessary in following cases
a) When it is dispensed with by the party entitled thereto;
b) In order to charge the drawer, when he has countermanded payment;
c) When the party charged could not suffer damage for want of notice;
d) When the party entitled to the notice cannot, after due search, be found;
e) When the acceptor is also a drawer;
f) In the case of a promissory note which is not negotiable;
g) When the party entitled to the notice, knowing the facts, promises, unconditionally, to pay
the amount due on the instrument.
 When a promissory note or a Bill of Exchange has been dishonoured by non-acceptance or
non-payment, the holder may cause such dishonour to be ‘noted’ by a notary public upon the
instrument or upon a paper attached thereto, or partly upon each.
 When a promissory note, or a Bill of Exchange, has been dishonoured by non-acceptance or
non-payment, the holder may, within a reasonable time, cause such dishonour to be noted and
certified by a notary public. Such a certificate is called ‘protest’. Protest of foreign bills is a must
when the law of the place where they are drawn requires so.
Crossing of cheques:
There are two types of crossing namely general crossing and special crossing.
 When a cheque bears across its face two transverse parallel lines it amounts to general
crossing. The word “and Company” or any abbreviation of it may or may not appear between
the parallel lines. The general crossing may or may not contain the word “not negotiable”.
 If a cheque is crossed generally, the drawee bank can pay the cheque only through a banker.
 When a cheque bears on its face, the name of a banker, it shall be deemed to be a special
crossing and is crossed to that bank. In such a case the cheque can be paid only to the bank
to which it is crossed. The two transverse parallel lines are not necessary for a special
crossing.
 If a cheque is crossed to two banks, the drawee bank cannot pay it unless one bank is acting
as an agent for the other bank.
 Not negotiable crossing is a general crossing. It does not mean that the cheque cannot be
negotiated. It implies that the transferee of the cheque cannot get a better title to the cheque
than that of the transferor. If the title of the transferor is defective, the title of the transferee
will also be defective.
 The Act does not provide for Account payee crossing. But, in practice this type of crossing has
been recognized. A cheque crossed Account Payee cannot be paid to, or collected for, any
person other than the named payee.
 A bearer cheque crossed Account Payee, in effect, is not a bearer cheque. It is payable to the
payee only through a bank.
Special Crossing:
A special crossing consists of an addition of the name of a banker across the face of a cheque with
or without two parallel transverse lines.
 Such crossing ensures that the drawee bank shall not pay the cheque to anyone than the
banker/his agent (to whom it is crossed) for collection.
 This means that a specially crossed cheque has to be routed through an account with the
named bank.

11
Who may cross a cheque
A cheque may be crossed even after issue.
 If a cheque is uncrossed, the holder may cross it generally or specially
 If a cheque is crossed generally, the holder may cross it specially
 If a cheque is crossed generally or specially, the holder may add the words ‘Not Negotiable’.
 If a cheque is crossed specially, the banker to whom it is crossed may again cross it
specially to another banker, as his agent for collection.
Protection to collecting banker
Section 131 of the Act provides protection to a collecting banker. The banker will be protected
even if the title of the person for whom the cheque is collected is defective. However, the following
conditions are to be fulfilled to avail the protection.
 The collecting banker should have acted in good faith and without negligence.
 The cheque should have been crossed before it comes in to the hands of the collecting bank.
 The collecting banker has received the payment for a customer and not in his own account.
Protection to paying banker for crossed cheque
Section 85 of the Act provides for the protection to paying banker.
 If the banker pays a crossed cheque in due course he is protected even though the amount of
the cheque does not reach the hands of the true owner.
 A banker making payment of crossed cheque, ignoring the crossing will lose statutory
protection. Such payment is not payment in due course.
 If a banker pays a cheque crossed generally over the counter or a cheque crossed specially,
other wise than to a banker, he will be liable to the true owner of he cheque for any loss
sustained by him as it is not payment in due course.
Protection to paying banker in case of forged endorsement
The Act also gives protection to the paying banker in case of forged endorsement.
 A paying banker is protected if he pays a bearer cheque to the bearer, notwithstanding the
endorsement appearing thereon, provided the payment is made in due course. Even though
the endorsement is forged, the banker is protected. The principle is ‘once a bearer always
bearer’.
 A paying banker is protected if he pays an order cheque by a payment in due course to a
person who purports claim under a valid endorsement. The protection is available even
though the endorsement is forged. The bank cannot be expected to ensure the genuineness of
the endorsements as it does not have the specimen signature of the endorsers. The paying
banker should ensure the regularity of the endorsements.
(It may be noted that the Act does not give any protection to a paying banker in case the drawer’s
signature is forged.)
Protection to a paying banker when alteration is not apparent
A banker is also entitled for protection if he pays a crossed cheque, on which the crossing is not
reasonably apparent, as if it were uncrossed, provided the bank makes the payment in due
course.
Payment in due course
The paying banker can avail protection only when the payment made is payment in due course.
Payment is due course means-
 Payment which is made in accordance with the instructions contained in the instrument;
 In good faith and without negligence;

12
 The person to whom the payment is made is in possession of the instrument;
 There should not exist any ground for believing that the possessor is not entitled to receive the
payment.
Criminal liability for bouncing of cheque (Section 138)
The drawer of a cheque shall be deemed to have committed an offence, if
 The cheque has been returned due to insufficiency of funds or exceeds arrangements;
 The cheque has been issued for legally enforceable debt;
 The cheque is not stale as on the date of presentation;
 The holder issued a notice demanding the payment from the drawer within 30 days from the
date of receipt of intimation of dishonour;
 The drawer fails to make payment within 15 days of receipt of the notice.
Other important features of this section are:

 Nominee director of a company (from Govt., FI, owned by Central / State Govt.,) shall not be
liable for prosecution.

 Delay in filing complaint after limitation period may be condoned on giving satisfactory reason.

 The evidence of complaint may be given by affidavit.

 The court can presume the fact of dishonor of cheques on production of cheque return memo of
Bank.

 The offence is compoundable.

In such a case, the drawer is liable for a fine, which may go up to 2 times of the amount of the
cheque, or an imprisonment up to two years, or both. If the cheque is issued by a company,
person in charge of the company, person responsible for conduct of the business of the company
and the company as well, shall be deemed to be guilty.
Other important provisions of the Act:
 When the day on which a promissory note or bill of exchange is at maturity is a public
holiday, the instrument shall deemed to be due on the next preceding business day.
 Sec.18 Difference in amount in words and figures, amount in words to be paid
 Sec 22 : days grace allowed for usance bill of exchange and promissory note.
 Sec 26. A minor can validly draw, endorse or negotiate an instrument. By doing so he can
make the other parties to the instrument liable. But, the minor is not liable.
 Sec.31. a banker having sufficient balance in the account of a customer shall honour the
cheque drawn on the account, provided the balance is properly applicable for payment of the
cheque. For example, if a cheque is presented on an account and the account is having
sufficient balance, but a garnishee order is issued covering the balance in the account, the
balance is not properly applicable for payment of the cheque.
 Sec 58 : Instrument obtained by unlawful means/consideration-no title possess
 Sec 85 Protection to paying banker.
 Sec 87 Any alteration on a negotiable instrument which alters any material part of it, is
termed as material alteration; and this renders the instrument void, except where the parties
concerned consent for such an alteration. The drawer with his full signature should
authenticate any material alteration in a cheque
 Sec 123 General Crossing
 Sec 124 Special Crossing
 Withdrawal slips have been removed from secured stationery items

13
 The payment and settlement system act 2007 accords legal recognition to electronic payment
systems and legal recourse to a beneficiary expecting electronic funds transfer.
 The Act provides for punishment of 2 years and twice the amount of electronic funds transfer
or both for dishonor of electronic funds transfer as has been stipulated for dishonor of
cheques under NI act 1881
 Branches should affix the account payee crossing on all the demand drafts issued for
Rs.20000/- and above.
 With effect from 01/04/2012, all cheques ,draft and bankers pay order are valid for three
months only.
 Customers will have the facility to present the DD issued by any branch on any branch
through any mode(Cash /Clearing/Transfer)even though it is drawn on a specified drawee
branch. For cancellation and issue of duplicate dd ,the issuing branch shall follow the
existing procedure and the duplicate DDs can be paid at any branch as in the case of original
DD
 Cheque Truncation System 2010 – Standard Operating Procedure for Non- CTS 2010
Standard Instruments :
 The Reserve Bank of India vide their circular dt.16/07/2013 extended time up to
31/12/2013 for withdrawal of non-CTS standard cheques from the clearing transactions and
informed that separate clearing sessions will be introduced in three CTS centres(Chennai,
Mumbai and New Delhi) for clearing such Residual non-CTS 2010 instruments (including
PDC & EMI cheques) . Non CTS sessions will commence from 01/01/2014. At present the
non-CTS sessions are being conducted only once in a week ie on Monday . If Monday
happens to be a holiday the sessions will be conducted on the previous working day and
return sessions will be next available working day after conducting the session
 Reserve Bank of India has also advised the following :
 1.Banks to issue CTS 2010 cheques only (including DD/PO) to customers and to withdraw /
replace the existing non- CTS 2010 standard cheques immediately.
 2.Not to issue fresh PDC/EMI cheques where the facility of ECS/RECS is available , and to
convert the existing PDC in such location into ECS/RECS by obtaining fresh mandates from
the borrower/customer.
 REF : CO: Circular CRA68 /2013-14 dt.30/12/2013.

Banking Regulation Act 1949 & RBI Act – Important provisions

Section Summary of provisions in the Section
5a Approved Securities
5b Banking
5c Banking Company
5e Transact Banking Business in India
5n Secured loan or advances
6-1 Banking business
6-2 Restriction on business
7 Use of Word ‘Banking’
8 Restrictions on business of trading of goods except realization of securities held by it
9 Immovable property
10 Management
11&12 Paid up capital, reserves
13 Commission/Brokerage
14/14A Prohibits a banking company from creating a charge upon any unpaid capital of the
company
15 Prohibits payment of dividend by any bank until all of its capitalized expenses have been
completely written off
17-1 To create reserve fund
18 Cash reserve
19 Permits banks to form subsidiary company for certain purposes

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19-2 No banking company shall hold shares in any company
20 Banks cannot grant loan against security of their own shares
21 Control over advances by RBI
21A Rate of Interest
22 Licensing of banking companies
23 Branch Licensing
24 Statutory Liquidity Ratio
26 Unclaimed deposits
29 Every bank has to publish its balance sheet as on last working day of March every year
on the Form A and P&L account on Form B, of 3rd Schedule of this Act.
30-I Audit – Balance sheet is to be got audited from qualified auditors.
31 Submit balance sheet and auditors
35 Inspection of Banks
35A Powers to give directions in public interest or in the interest of banking policy.
36 RBI can terminate any Chairman or any employee of a bank where it considers desirable
to do so
45 RBI has powers to apply to Central Govt. for Suspension of business by a banking
company and prepare a scheme of reconstitution or amalgamation.
45Y Preservation of Records
45ZA- Nomination
ZF
45Z Return, the paid instruments
47A RBI can impose penalty for various kinds of violations
49A Other than a banking company/RBI/SBI, no person can accept deposits of money with-
draw-able by cheque
52 Central Govt. can make rules for all matter.
Banking: Sec 5 (b): Banking means, the accepting, for the purpose of lending or investment of
deposits of money from public, repayable on demand or otherwise, and withdrawable by cheque,
draft order or otherwise.
Sec 19 : Permit banks to form subsidiary companies for certain purposes and no banking
company shall hold shares in any company whether as pledgee , mortgagee or absolute owners of
any amount exceeding 30% of its own shares and reserves or 30% of the paid up capital of that
company whichever is less.
Sec 20: Banks cannot grant loan against security of their own shares.
Licensing of Banking Companies: Sec 22
A Company cannot carry on banking business unless it holds the license issued by RBI.
Before granting license, the following conditions are to be satisfied.
 The company will be in a position to pay its present and future claims of depositors.
 The affairs of the company will not be conducted in a manner detrimental to the interest of the
depositors.
 The company has adequate capital structure and earning prospects.
 Public interest will be served by grant of license.
**( Cancellation of license to carry on banking business by Govt of India/RBI will also come
under Section 22. Under provisions of the amendment bill, 2005 Multi-state Co-operative
Societies doing banking business will also come under the control of RB Act as also RBI.
Under 36AAA RBI can super cede the Board for a period up to 5 years).
In case of a company incorporated outside India, it should be satisfied that the carrying on
of banking business by such company in India will be in the public interest and that the
Government or law of the country does not discriminate in any way against the company
registered in India and the company complies with all the provisions of the Act applicable to
banking companies incorporated outside India.

15
Restriction on opening new place of business and transfer of existing place of business: Sec 23:
Without the prior permission of the RBI, a banking company shall not open a new place of
business in India. Similarly the location of the existing place of business shall not also be
changed. However, change of location within the same city, town or village does not require
the permission of the RBI. A temporary place of business may be opened in the same city,
town or village, without the permission of the RBI, for a period not exceeding one month on
the occasion of exhibition etc. provided the bank has already a place of business in that
place.
**(Through Amendment Bill 2006, Section 56, permission to open Bank Branches in SEZ is also
conferred to RBI)
Requirement as to minimum capital and reserve: Sec 11:
In case of banking company incorporated outside India, the paid up capital and reserve shall not
be less than Rs 15 lakhs. If it has a place of business in Mumbai or Kolkata or both, then it is Rs
20 lakhs. The company shall keep this amount with the RBI in the form of cash or in the form of
unencumbered approved securities an amount, which shall not be less than this minimum
amount. Further an amount at the rate of 20% of its profit for a year in respect of business
transacted through its Indian Branches shall also be kept with the RBI in the form of cash or in
the form of unencumbered approved securities. The Central Govt may, on the basis of the
recommendations of the RBI, give exemption having regard to the adequacy of the amount already
deposited.
SLR: Sec 24:
In addition to the average daily balance which should be maintain under Sec. 42 RBI Act, a
scheduled bank shall maintain in India in cash or in gold or in unencumbered approved
securities, an amount which shall not, at the close of any business day, be less than 25% (since
removed) but not exceeding 40% of its demand and time liabilities in India, as on the last Friday
of the second preceding fortnight. In order to comply with this section, every banking company
shall submit a return to the RBI, within 20 days from the end of the month to which it relates, a
monthly return showing particulars of its assets and its demand and time liabilities in India at
the close of business on each alternative Friday during the month. In case of any shortfall, penal
interest at the rate of bank rate + 3% will be levied. If the default continues further, the penal
interest will be bank rate + 5%.
**(BR (Amendment) Act,2007 had removed the minimum stipulation of 25% of SLR so that
Central Bank can have the option to bring in more liquidity in the market, if necessary)
Assets in India: Sec 25:
Every banking company shall maintain at the close of business on the last Friday of every
quarter, the assets in India at the rate not less than 75% of its demand and time liabilities in
India.
Return of unclaimed deposits: Sec 26:
Within 30 days of close of each calendar year, every banking company shall submit a return of all
accounts in India, which have not been operated for a period of 10 years. In case of fixed deposits,
the period will be reckoned from the date of maturity.
RBI’s power to control advances: Sec 21:
The RBI may, in the interest of the public or depositors, determine the policy in relation to
advances. This may pertain to banking companies in general or a particular banking company.
The RBI may give directions with regard to:
a) The purpose for which advance may be or may not be made;
b) Margin to be maintained on secured advances;
c) The maximum advance and guarantee that may be given by any banking company to any
individual, company, firm etc.;

16
d) The rate of interest and other terms and conditions on which advance and other financial
accommodation may be made or guarantee may be given.
Sec 21A:Rate of interest charged by banks are not subject to scrutiny by courts on ground of
being excessive
Balance sheet and accounts: Sec 29:
Every banking company shall, in respect of the business transacted by it and every banking
company, in respect of business transacted in India, shall prepare profit and loss account and
balance sheet in the form provided in Third Schedule for a period of twelve months. At present, it
is prepared as on close of March.
Audit; Sec:30:
A qualified person shall audit the profit and loss account and balance sheet.
Inspection: Sec 35:
The RBI may at any time conduct inspection of any banking company. The Central
Government can also direct the RBI to conduct inspection. Annual Financial Inspection of
RBI comes under this.
Power to give direction: Sec 35-A:
The RBI may issue necessary directions to banking companies in general or any banking
company in particular if it is satisfied that it is necessary
a) In the interest of the public;
b) In the interest of banking policy;
c) To prevent the affairs of the banking company being conducted in a manner detrimental
to the interest of the depositors or banking company; or
d) To secure proper management of any banking company generally.
Punishment for certain activities: Sec 36 AD:
The following acts are punishable with imprisonment for a term, which may extend to six months,
or fine of Rs.1000, or both.
a) Obstructing any person from lawfully entering or leaving any office or place of business
of a banking company or carrying on any business thereto;
b) Holding within the office of any demonstration which is violent or which prevents or
calculated to prevent the normal business;
c) Acting in any manner calculated to undermine the confidence of the depositors.
Sec 45 ZA ZF : Nomination facilities on bank deposits safe deposits of articles and lockers
45ZG : Return the paid instruments to a customer by keeping a true copy .Customers
obtaining original instruments have to undertake to preserve instruments as prescribed by
central Govt. u/s 45Y
Sec: 45 Y:
The Central Government may, after consultation with the RBI, make rules specifying the
period for which a banking company shall preserve its books, accounts and other documents
and also the different instruments paid by it.
Sec 49A: Other than a banking company /RBI/SBI no person can accept deposits of money with-
draw-able by cheque.

17
 KYC / AML
PERIODICAL UPDATION OF KYC DETAILS
Low risk customers
Full KYC exercise will be required to be done at least every ten years for low risk individuals and
entities.
Medium risk customers
Full KYC exercise will be required to be done at least every eight years for medium risk
individuals and entities
High risk customers
Full KYC exercise will be required to be done at least every two years for high risk individuals
and entities.
(All NRI customers, Public Trusts, NBFC etc are brought to High Risk category)
Shell companies
Companies which have no physical presence in the country in which they are incorporated. The
existence is simply of a local agent or low level staff does not constitute physical presence.
Due Diligence
Due diligence means any measure undertaken by the Bank to collect and verify the information
and positively establish the identity of the customer. It means in addition to obtaining the
documents, all efforts must be taken to verify the information and ensure the genuineness of
documents, purpose and nature of business relationship, in order to ensure that the account is
opened and operated by the person authorized to do so.
Turnover / Income Criteria for Customer Risk Categorisation

Fixing of Threshold Limits in Deposit accounts

At the time of opening of accounts, branches have to ensure that the customer declares the
occupation and annual income/ turnover in the CIF opening form. The risk categorisation of
customers viz. Low, Medium or High, is also to be fixed based on the customer type and annual
income/turnover declared by the customer, as enumerated in our KYC/AML/CFT Operating
Procedures 2017-18-Chapter 6.
Once the CIF Number is generated, the occupation and income have to be entered through the
following menu:

18
1) Customer->Amend Customer Details: Enter the CIF Number and select Personal Details from
the dropdown and Enter the relevant occupation code.
2) Customer->Amend Customer Details: Enter the CIF Number and select Financial Details from
the dropdown and Enter the annual income and the threshold limit.
The indicative threshold limits for different types of customers have been furnished in the
KYC/AML/CFT-Operating Procedures 2017-18, which is reiterated below:
(i) Rs. 1 Lakh or 25% of the annual income, whichever is higher for Low Risk Individual customers
having
 No frill accounts
 Small Accounts
 Smart Kid Accounts
 Accounts opened under NREGP Scheme etc.
(ii) Rs. 2 Lakhs or 25% of the annual income, whichever is higher for Low Risk Individual
customers such as
1) Workers/Labourers/Agricultural Labourers
2) Employees with monthly Salary up to Rs.15000/- per month.
(iii) Rs. 5 Lakhs or 25% of the annual income, whichever is higher for Low Risk Individual
customers such as
 Students
 SHG Accounts
 Professionals/Employees with income up to Rs. 50000/- per month
(iv) Rs. 10 Lakhs or 25% of the annual income, whichever is higher for all other types of accounts
(v) In the case of business enterprises Rs. 10 lakhs or one month turnover, whichever is higher.
For High Risk accounts: Branches should fix the threshold limit taking note of the background of
the customer, such as the country of origin, sources of funds, the type of transactions involved
and other risk factors. However, such threshold limit shall not exceed the limits cited above.
The limits specified above are only indicative and branches may fix the threshold limits
realistically taking into account the Income, Turnover etc of the customer and any transaction
beyond the threshold limit fixed for the account should be looked into with extra caution.
Branches are advised to input in CBS screen, occupation, annual income/turnover, realistic
threshold limit and correct risk category while opening new CIFs. Branches should also undertake
a review of the threshold limit fixed in the existing accounts
Customer
For the purpose of KYC policy, ‘Customer‘is defined as :
 a person or entity that maintains an account and/or has a business relationship with the
Bank;
 one on whose behalf the account is maintained (i.e. the beneficial owner);
 beneficiaries of transactions conducted by professional intermediaries, such as Stock
Brokers, Chartered Accountants, Solicitors etc. as permitted under the law, and
 any person or entity connected with a financial transaction which can pose significant
reputational or other risks to the Banks, say, a wire transfer or issue of a high value
demand draft as a single transaction
The Prevention of Money Laundering (Maintenance of Records) Rules, 2005 has been
amended, vide Gazette Notification dated 1st June, 2017, where banks have to obtain
(1) Aadhaar number or proof of application of enrolment for Aadhaar and

19
 (2) Permanent Account Number (PAN) or Form No.60 as per Income Tax Rules,1962 from
customers desiring to open bank accounts.
Beneficial Owner
a natural person who ultimately owns or controls a client and / or the person on whose behalf a
transaction is being conducted, and includes a person who exercise ultimate effective control over
a juridical person.
(A juridical person means one who is not a natural person but recognised as a person in law like a
Partnership, Trust, Limited Company etc)
IDENTIFICATION OF BENEFICIAL OWNERS
Where the client is a Company
The beneficial owner is the natural person(s), who, whether acting alone or together, or through
one or more juridical person, has a controlling ownership interest or who exercises control
through other means. Explanation.- For the purpose of this sub-clause Controlling ownership
interest means ownership of or entitlement to more than 25 % of shares or capital or profits of
the company;
Control shall include the
1. right to appoint majority of the directors or
2. right to control the management or policy decisions including by virtue of their shareholding or
management rights or shareholders agreements or voting agreements
Where the client is a Partnership firm
The beneficial owner is the natural person(s), who, whether acting alone or together, or through
one or more juridical person, has ownership of/entitlement to
more than 15% of capital or profits of the partnership.
Where the client is an un-incorporated association or body of individuals
The beneficial owner is the natural person(s), who, whether acting alone or together, or through
one or more juridical person, has ownership of or entitlement to more than 15% of the property
or capital or profits of such association or body of individuals.
Where no natural person is identified under as above,
The beneficial owner is the relevant natural person who holds the position of Senior managing
official
Where the client is a trust
 The identification of beneficial owner(s) shall include identification of
 The author of the trust,
 The trustee,
 The beneficiaries with 15% or more interest in the trust and
 Any other natural person exercising ultimate effective control over the trust through a
chain of control or ownership
Where the client or the owner of the controlling interest is a company listed on a stock
exchange, or is a subsidiary of such a company
It is not necessary to identify and verify the identity of any shareholder or beneficial owner of
such companies.
CLOSURE OF KYC NON-COMPLIED ACCOUNTS
Where the branch is unable to apply appropriate KYC measures due to non furnishing of
information and / or non-cooperation by the customer, despite repeated reminders by banks,
branches should impose ’partial freezing‘ on such KYC non compliant accounts in a phased
manner. The procedure to be followed for imposing partial freeze is given below.

20
i A notice to be sent to the customer requesting to produce the KYC documents to the home
branch within three months. Copy of the letter to be preserved carefully for records.
ii If the customer do not summit the documents within the period, a reminder to be sent to the
customer giving another three months time to produce the KYC documents.
iii In spite of repeated requests, if the customer do not comply with the guidelines, branch may
impose a “partial freezing” by allowing all credits and disallowing all debits.
iv Customer would be free to close the account any time during the period.
v. If the accounts are still KYC non-compliant after six months of imposing initial ‘partial
freezing‘, banks may disallow all debits and credits from / to the accounts rendering them
inoperative.
vi. Further it would always be open to the Branch to close the accounts of such customers.
Branch Manager may take the decision after ensuring completion of formalities.
8.Walk-in customers for KYC purpose
A Walk-in customer, who is a non-account based customer, in normal circumstances may include
the following category of customers.
1) A ‘beneficial owner’ in case of an entity such as Partnership, Trust, Company etc who
ultimately exercises control over the entity.
2) An attorney, who operates an account on the basis of a ‘Power of Attorney’ or a ‘Mandate’ given
by the principal.
3) A Guarantor / Surety / Indemnifier in case of any loan availed by a customer / indemnity /
Bond etc
4) Any Nominee or Claimants in case of Deposits / Assets / Actionable Claims / Estates /
Contents of Locker / Pledged items / Safe custody / Valuables etc
5) One who purchases Demand Draft against cash for an amount below Rs. 50,000/-
6) One who send NEFT remittance against cash for an amount below Rs. 50,000/-
7) One who purchases Bank’s own products, Gold / Silver / Platinum, third party products etc,
for amount below Rs. 50,000/-
8) One who does a financial transaction related to payment of dues of Credit Cards, Purchase and
re-loading of Pre-paid Travel Cards etc for amount below Rs. 50,000/-
9) A beneficiary in case of transactions conducted by professional intermediaries such as Stock
brokers / Chartered Accountants / Solicitors etc.
10) One who receives the proceeds of payment of an instrument by cash, other than the Account
holder himself.
11) One who deposits money into a customer’s account, other than the Account holder or
employee/Partner/Director/Trustee in case of entity.
12) In general any person or entity connected with a financial / Non-financial transaction which
can pose significant reputational or other risk to the bank. For example: Awardees of contracts.

Public Grievance redressal mechanism

Right to Information Act
How RTI Act came into being
In 1995 Press Council of India formatted the Blueprint of RTI. In 1997 a working group under H D
Shourie was formed which submitted its report within 6 months and 3 days. Freedom of
Information Act, was enacted in 2002 but repealed consequent to enactment of RTI Act on
15.06.05. 9 out of 37 provisions of the Act are meant for immediate implementation, and the
remaining provisions to be effective after 120 days after Presidential Assent. Act came into full
force on 12.10.2005 – Applicable to Public Authorities (PA) only. Each PA will have a Principal

21
Information Officer. For State subjects and Central subjects it is headed by State and Central
Information Commissioners respectively
RTI – User friendly
Half an hour’s time for drafting the application and a court fee of Rs.10; Applicant need not deliver
in person. The application can be sent by post. One must take utmost care while framing the
question, otherwise it may generate a very vague reply from the officials. If one is confused about
which government official to send one’s RTI petition to, don’t worry. Send it to any official and
include this sentence – “If you are not the concerned authority, please forward it to the official
concerned under Section 6(3) of the RTI Act. This section makes it mandatory for the official to
forward it to the right authority. If substantial funding is done by Government, private schools,
can also come under the purview i.e. the Act is applicable to Public Authorities, i.e. institutions
funded by Government. If the information requested is not provided by the officials, within the
timeframe of 30 days, they shall have to pay Rs.250 for every day of delay from their salary;
Response to queries under RTI Act is therefore time bound , viz. 30 days.
Who, why and what
Who is to be informed – Every citizen is entitled to seek information. What is to be informed –
documents, records, opinions, advices, circulars, contracts, press releases, e-mail, etc. held in
electronic form or in any other form. Why to be informed – to promote transparency and
accountability in working of any public authority
Application a PIO can reject: Section 8 specifies items which need not be disclosed . Matters of
commercial confidence. Maintenance of fiduciary relationship – doctor and patient. Personal
information of third parties. Matters concerning security, integrity, scientific secrets of the
country, court stay cases.
Some important clauses
Section 4 speaks about proactive disclosure for which records have to be maintained and indexed
properly. Section 6 specifies procedure for applying under this Act. Section 7 speaks about
disposal of applications. Section 8 speaks exempts submission of certain information. PIO given
time within 30 days under Sec.7. If not received he can approach the Chief Information
Commissioner of the State Government or Central Government. For Central Government
organizations it will be Central Information Commissioner.
Bank is adopting single window system in disposal of applications received, whereby all
applications received will be replied only by Central Public Information Officer (CPIO). It is
observed that branches/Zonal Offices are replying to the applicants directly without referring to
CPIO which is not permitted. Hence, branches / Zonal offices are advised to transmit the
applications received under RTI without any exception for them to reply within the stipulated
time.
Applications received at Corporate office i.e. by CPIO are to be replied to the applicant within 30
days.
Similarly, the applications received by branches/ ZOs are to be replied within 5 days. As such
branches/zonal offices should transmit the applicants to CPIO within 5 days on receipt.
Branches to ensure that no unsigned application is submitted / tendered. When the applicant
comes in person a copy of the identity proof is to be obtained and scrutinized.
Fees of RS10/- is paid by way of demand draft/ IPO /cash is tendered.
Branches/ Zonal offices/depts of CO should furnish the information if any pertaining to an
application to enable CPIO to dispose of the case.
Any delay in forwarding application / omission to forward application resulting in delayed reply
attracts penalty at Rs250/- per day with a maximum of Rs25000/- This penalty will be recovered
from the salary of concerned officer apart from DP action.

22
Banking Ombudsman Scheme 2006
Customer Service
Customer service normally falls under the ambit of following 6 types; Technical Aspect deals with
accuracy in conduct of various services. Efficiency deals with speedy & prompt service. Advisory
aspects relates to professional advice by a banker to the customers. Behavioral aspect involve
treating customers well & extending normal courtesy to the customer. After Sales service relates
to assurance by the Bank to its customer that he is committing himself to a better service in
purchasing. Bank’s products. Comfort & Ambience at the banking premises.
Complaints
When there is a shortfall in the service complaints are filed by, Borrowers, Depositors and Others.
Complaints are oriented towards: Negligence in Service/ Delay in Service/ Unfair Trade
Practice/ Shortfall in Customer Service.
Banking Ombudsman:
Banking Ombudsman is a person appointed by the Reserve Bank of India to redress customer
complaints against certain deficiency in banking services.
Does the Banking Ombudsman have any legal power?
The Banking Ombudsman is a quasi judicial authority. It has power to summon both the
parties - bank and the complainant, to facilitate resolution of complaint through mediation.
How many Banking Ombudsmen have been appointed and where are they located?
As on date, 15 Banking Ombudsmen have been appointed with their offices located mostly in the
State Capitals. The addresses of the Banking Ombudsman offices have been provided in the RBI
website.
Coverage
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative
Banks are covered under the Scheme. The Scheme also provides for online submission of
complaints . It has an 'appellate authority' – Dy.Governor, RBI, for providing scope for appeal
against an award passed by the Ombudsman, both by the bank as well as the complainant; will
consider complaints from Non-Resident Indians having accounts in India in relation to their
remittances from abroad, deposits and other bank-related matters.
Filing of complaint
A complaint can be made to Banking Ombudsman, if the reply is not received from the bank
within a period of one month; after the bank concerned has received his representation the bank
rejects the complaint; the complainant is not satisfied with the reply given to him by the bank. For
filing a complaint before the Banking Ombudsman, it is essential for a complainant to first
attempt to find a satisfactory solution directly with his bank by making a written representation to
the bank named in the complaint. The complaint should, however, be made before expiry of
period of one year after the cause of action has arisen. The complaint should not be for the same
subject matter for the same parties that was settled through the office of the Banking
Ombudsman in any previous proceedings. No complaint be made before a Banking Ombudsman
on the same subject matter for which any proceedings before any court, tribunal or arbitrator or
any other forum is pending or a decree or award or a final order, has already been passed by any
such competent court, tribunal, arbitrator or forum.
Type of Complaints
The Banking Ombudsman can receive and consider any complaint relating to the deficiency in
banking services; any other matter relating to the violation of the directives issued by the
Reserve Bank in relation to banking or other services.
Redressal Process
Reply to BO to be sent within the stipulated time; if information is called, necessary information is
provided; Banking Ombudsman endeavors for settlement on receipt of the reply and proceed to
settle the matter through mediation; the Banking Ombudsman is not bound by any legal rule of

23
evidence; The Banking Ombudsman will then either REJECT or AWARD the complaint.
AWARD will be passed sometimes subject to indemnity by the complainant; For passing an award,
the Banking Ombudsman is guided by the documentary evidence placed before him by the
parties, the principles of banking law and practice, directions, instructions and guidelines issued
by the Reserve Bank of India and such other factors, which in his opinion are necessary in the
interest of justice (Max compensation Rs. 10 Lacs).
RBI amends banking ombudsman scheme; to now include complaints on mis-selling, mobile
banking from 1st July 2017
The Reserve Bank of India (RBI) has finally added complaints related to misselling of financial
products to its banking ombudsman scheme. The country's apex bank has also added mobile and
electronic banking related complaints to its ombudsman scheme.
The Banking Ombudsman Scheme 2006, is now been amended as of 1 July and, among other
things, will now include deficiencies arising out of sale of insurance/ mutual fund/ other third
party investment products by banks. Deficiencies could be of various types such as
 Improper, unsuitable sale of third party financial products
 Non-transparency or lack of adequate transparency in sale
 Non-disclosure of grievance redressal mechanism available
 Delay or refusal to facilitate after sales service by banks
Ombudsman will also entertain complaints relating to mobile and electronic banking. For
instance, delay or failure to effect online payment / fund transfer, and unauthorised electronic
payment / fund transfer. Considering that online financial crimes and vulnerability has increased
in India, it was high time issues like these were included as part of the ombudsman scheme. The
best part of the latest amendment is that banking ombudsman will now be able to pass an Award
(compensation) of a higher amount, which will be Rs 2 million from the existing Rs 1 million.
Consumer Forum
JURISDICTION OF CONSUMER

Supreme Court
(Final Appeal)

Original Jurisdiction NATIONAL COMMISSION Appellate Jurisdiction

over 1 Crore over State Commission
Revisional Jurisdiction

Original Jurisdiction Appellate Jurisdiction

over 20 lacs upto 1 crore STATE COMMISSION over District Forum
suo moto Revision
Original Jurisdiction
upto 20 lakhs DISTRICT FORUM

Definitions:
Consumer: hires or avails of any services for a consideration which has been paid, promised to be
paid or partly promised and partly paid including a beneficiary with the approval of the hirer of
service.
Deficiency: any fault, imperfection or shortcoming or inadequacy in the quality, nature and
manner of performance which is required to be maintained by law, or undertaken to be performed
under contract or otherwise in relation with the service.
Service means service of any nature made available to potential users in connection with banking
but does not include free service.
Other stipulations: Complaint is within limitation period -2 years from cause of action;
Complaint filed should be considered for admissibility in 45 days; On admission notice to opposite
24
parties is sent within 21 days ; Opposite parties to file version within 30 days extended by another
15 days; After 15 days - If no appearance by opposite parties-decided exparte; If appeared and
disputes proceeds to decide on evidence ; On evidence within 3 months the case be disposed;
Appeal - within 30 days but 50% or Rs.25,000/35000/50,000 whichever is less, of the amount of
appeal, to be deposited with the Appellate Forum.
General guidelines for complaints
Every complaint is analyzed in depth by the branch/circle on its receipt; If there is any trace of
deficiency in service, the matter may be settled amicably to mitigate the granting of compensation;
Where there is no foible / defect on the part of the Bank or where complainants are not for
settlement, the case is defended diligently till it reaches a logical end; On annual basis the Claims
made against the Bank but not acknowledged as Debts‟ are audited; Provision is made in ordered
cases where appeal is filed by the Bank; Claims not provided for form the Contingent Liability
under the head „Claims made against the Bank but not acknowledged as Debts‟; In cases where
payment is made in accordance with the orders of the Forum, STAFF ACCOUNTABILITY is looked
into; Quarterly Review Notes on status of the Consumer Complaints are placed to our Board of
Directors.
Customer Complaint Redressal Mechanism
As per the customer service policy customer complaints should be resolved immediately on receipt
of the complaint. The maximum time given for each Official for redressal of the complaint is as
follows:
Branch Manager - 5 days, Zonal Manager - 5 days, Nodal Officer - 21 days. Hence any complaint
received from any customer has to be resolved within 21 days from the date of receipt of the
complaint.
All complaints are to be registered in SPGRS within 24 hours. If the complaint can be addressed
/resolved within 24 hours the same need not be entered. All complaints to be resolved in 21 days .
If the complaint is vigilance related it is to be resolved within 30 days.
Anonymous and pseudonymous complaints :Complainants who desire to protect their identity
now have the protection under Public Interest Disclosure & Protection of Informers Resolution -
2004. The following procedure is laid down for handling anonymous and pseudonymous
complaints.
1.No action is required to be taken on anonymous complaints irrespective of nature of complaints
and such complaints need to be simply filed.
2.Complainats with vague allegations could also be filed without verification.
3.If complaint contains verifiable data Bank may take into cognizance and refer the complaint to
complainants for his consent of owning / disowning. Watch for 15 days and reminder is to be sent
for his reply. Still , if the complainant fails to reply the complaint can be treated as pseudonymous
complaint and can be filed at the branch level.

BCSBI
BANKING CODES AND STANDARDS BOARD OF INDIA
This is a Code of Customer Rights, which sets minimum standards of banking practices member
banks have to follow while they deal with individual customers.
It provides protection to customers and explains how banks are expected to deal with customers
in their day-to-day operations.
BCSBI has evolved two sets of Codes – Code of Bank’s Commitment to Customers and the
Code of Bank’s Commitment to Micro and Small Enterprises. These Codes have been adopted
by member banks of BCSBI which include scheduled commercial banks, urban cooperative banks
and regional rural banks.
BCSBI by its design and mandate is not a grievance redressal forum. However, BCSBI looks at
complaints with a view to identifying systemic deficiencies, if any, in terms of gaps in policies,
procedures and practices at the banks and initiates action for their rectification.

25
1.Objectives of the Code
The Code has been developed to:
a. promote good and fair banking practices by setting minimum standards in our dealings with
you;
b. increase transparency so that you can have a better understanding of what you can
reasonably expect from us;
c. encourage market forces, through competition, to achieve higher operating standards;
d. promote a fair and cordial relationship between you and your bank;
e. foster confidence in the banking system.
2.Application of the Code
This Code applies to all the products and services listed below, whether they are provided by our
branches or agents acting on our behalf, whether across the counter, over the phone, by post,
through interactive electronic devices, on the internet or by any other method.
a. Current accounts, savings accounts, term deposits, recurring deposits, PPF accounts and all
other deposit accounts;
b. Payment services such as pension, payment orders, remittances by way of Demand Drafts,
wire transfers and all electronic transactions e.g. RTGS, NEFT;
c. Banking services related to Government transactions;
d. Demat Accounts, Equity, Government Bonds;
e. Indian currency notes/coins exchange facility;
f. Collection of cheques, safe custody services, safe deposit locker facility;
g. Loans, overdrafts and guarantees;
h. Foreign exchange services including money changing;
i. Third party insurance and investment products marketed through our branches and / or our
authorised representatives or agents;
j. Card products including credit cards, debits cards, ATM cards, smart cards and services
(including credit cards offered by our subsidiaries/companies promoted by us).
3. Our Key Commitments to customers
To act fairly and reasonably in all our dealings with you
To help you to understand how our financial products and services work
To help you use your account or service
To deal quickly and sympathetically with things that go wrong
To treat all your personal information as private and confidential
To publicise the Code.
To adopt and practice a non - discrimination policy...........................
4. Important Time Schedule under BCSBI Code for key time commitments:
Closure of account on customer’s request 3 days
Transfer of account to other branch-opearationalise at 2 weeks
the new branch
Acknowledgment of complaint 1 week
Redressal of customer complaint (maximum) 6 week
Closure of account by bank- Notice 30 days
Settlement of Deceased claim case 15 days
Change in fee / charges- notice period 1 month
Closure / shifting of branch – Notice

26
 where no other bank has branch 3 months
where other bank has a branch 2 months
Change in credit card terms 1 month
Loan Recovery - time to visit customers in the normal 7 am to 7 pm
course
Time schedule stipulated by Ministry of finance for redressal of complaints
Stipulated by Adopted
MOF by banks

General complaints 30 days 21 days

Complaints forwarded by 21 days 15 days

RBI/MOF/MPs/VVIPs

Complaints from PM’s office 15 days 7 days

27
 Deposits and Settlement of Claims
Who cannot open Savings Bank account?
1. Government Departments / bodies depending upon budgetary allocations for
performance of their functions
2. Municipal Corporations or Municipal Committees
3. Panchayat Samitis
4. State Housing Boards
5. Water and Sewerage / Drainage Boards
6. State Text Book Publishing Corporations / Societies
7. Metropolitan Development Authorities
8. State / District Level housing Co-operative Societies
9. Any Political Party
10. Any Trading / Business / Professional Concern whether such Concern is a
proprietary or partnership firm or a company or an association
SB Smart Kid:
Target group is Children - 1 day to less than 18 years
Account can be opened jointly with father / mother as guardian
No minimum balance for non cheque operated accounts; For cheque operated accounts -
Rs.100
Other salient features:
Availability of ATM/Debit Card /Internet banking facility on consent by the parents
SB Platinum:
A SB Account suitable for HNIs and corporate executives
Minimum monthly average balance - Rs. 25000; Sweep facility when balance exceeds Rs.
50000
Salient features:
A Savings Bank Account with an option to convert your excess funds in the account to
Term Deposit as per choice of customer.
1. Period of MOD in the form of STD only and will be for 15 days to 180 days at the
option of the depositor
2. Multiples for PUSH Sweep (Sweep out multiple for creating Multi Option Deposits) is
available for Rs.10000 and multiples
3. Customer can issue the cheque freely upto the balance in the MOD (multi option
deposit) plus the balance in the SB account.
4. Push Sweep - Cut off balance for transferring to MOD A/c (threshold balance) will be
in multiples of Rs.10000/- upto a maximum of Rs.50,000 or more, at the option of the
depositor.
5. Non Maintenance of average Minimum Balance - If the total products are less than
7,50,000 in a month, a penalty of Rs.120/- per month inclusive of Service Tax will be
levied.

28
Value additions:
1. Interest will be paid at the time of maturity / closure
2. Life insurance cover for Rs. 1 lakh for age group 15 to 45 years
3. Personal Accident Insurance cover for Rs.1 lakh “IB Chatra”for age group 12 to 70
years
4. Free remittance upto maximum 2 times a year totaling Rs.25,000/-
Basic Savings Account:
Target group is Individuals in their own name or in joint names of family members:
Initial deposit – NIL, Minimum balance – NIL, KYC Procedure: Relaxed.
4 withdrawals per month including ATM;
Annual Turnover should not be more than Rs.1,00,000/-
Balance at any point of time, not be more than Rs.50,000
Withdrawal per month is restricted to Rs.10,000/- per month, in not exceeding 4
withdrawal.
Foreign remittance should not be credited.
ATM card shall be issued;
Monthly 1 DD free of cost;
Cheque book /net banking /mobile banking - On conversion to regular SB with full KYC
CURRENT ACCOUNT:
General (C/A):
Quarterly Average Balance – Rs.5000
Multi city cheque Facility; Intra city & Intercity transactions available
ATM, Nomination facility for individuals and sole proprietor concerns
PREMIUM C/A: (Sweep facility)
Suitable for Corporates, Traders, Businessmen, Entrepreneurs & HNIs
Minimum Balance – Rs.1 lakh; Threshold – Rs.2 lakhs
SWEEP multiples for PUSH Rs.25000/- & multiples
Period of MOD in the form of STD only and will be for 15 days to 180 days at the option
of the depositor
Frequency of transfer to MOD – as per choice of customer
No charges for Intra city transactions
No charges for (a) Stop payment & (b) Signature attestation. Free Bees on certain
conditions
Multi city cheque Facility; Intra city & Intercity transactions available
ATM, Nomination facility for individuals and sole proprietor concerns
SUPREME C/A:
Types of plans – A, B, C & D
Minimum balance – Rs.1 lakh / Rs.2 lakh / Rs.3 lakhs / Rs.10 lakhs respectively

29
‘Common householders’ Policy for Rs.1 lakh / Rs.2 lakhs / Rs.3 lakhs / Rs. 3 lakhs
respectively
Arogya Raksha Policy is available for Rs.3 lakhs for Plan D.
For Plan D concessional, restricted Free Bees available
Multi city cheque Facility; Intra city & Intercity transactions available
ATM, Nomination facility for individuals and sole proprietor
IB i-Freedom:
Cashy: whose business which is basically cash centric like Petrol Bunks, Retailers,
Wholesalers, Dealers with agents where sales mainly take place on cash basis.
Transy: who route all their transactions through their account by issuing cheques like
Corporates, Education Institutions, Government Departments etc.
Techy: Who are tech savvy and carry out their transactions electronically like Y Gen
customers, Auditors and IT companies.

IB I Freedom Cool Plus Prime

Required average monthly balance Rs 50000 Rs 1 Lakh Rs 5 Lakhs

Charges for not maintaining Rs 250 Rs 500 Rs 1500

minimum balance

Concession in Retail loan processing 15% 25 % 05 %

charges

Credit Card Reward Points 1.5 times 1.75 times Double

Free SMS Alert Service frequency Fortnightly Weekly Daily

Free E-statement through mail Monthly Fortnightly Weekly

Discount on normal DD changes 25 % 50 % 100 %

Free Ledger folio charges 3 pages 5 pages Unlimited

Additional no of sections free of cash 2 3 15

handling for CASHY category
customers

Non-Home Cash withdrawal – per

day for Self ---
Rs. 1 Lakh Rs. 2 Lakhs Rs. 5 Lakhs
3rd party ---
Rs. 50,000/- Rs. 50,000/- Rs.
50,000/-

Non Home Cash Deposit Rs. 1 Lakh Rs. 2 Lakh Rs. 5 Lakh
CASHY-
Rs. 75,000 Rs. 1 Lakh Rs. 2 Lakh
TRANSY &
30
TECHY -

Concession in RTGS/NEFT charges

CASHY ---
No 10 % / 20 % 20% / 30%
(Through branch / online) concession
20 % / 30% 50 % / 100
TRANSY --
10% / 20 % %
50%
TECHY
20% / 30 % 100 %
--

Target customers - Individuals, Sole Proprietor ship firms, Partnership firms,

Limited Companies, Govt. accounts, HUF, Trusts, clubs, Associations, Committees
etc. in all branches.

IB TAX SAVER SCHEME:

The investment made up to Rs. One Lakh Fifty thousand in a financial year in the
scheme by individual and HUF are eligible for deduction from income under Section 80C
of Income Tax Act.
Minimum deposit: Rs. 100 or multiples of Rs. 100/-.
Maximum amount Rs. 1,50,000/-
Eligibility: Individual or Hindu Undivided Family having Income Tax Permanent Account
Number. The Joint holder type deposit receipt may be issued to Two adults or jointly to
an adult and a minor and payable to either of the holders or to the survivor; provided
that in the case of joint holder type deposit the deduction from income under Section
80C of the Act shall be available only to the first holder of the deposit.
Type of account: Fixed deposit or Reinvestment Plan.
Tenure: Not less than 5 years i.e., 5 to 10 years.
Rate of Interest: Fixed by the bank from time to time. Senior Citizens will get 0.5% and
staff members will get 1% additional rate over the card rate.
Pledge: Shall not be pledged for a period of 5 years from the date of deposit.
Premature Closure: Shall not be en-cashed before the expiry of 5 years from the date of
receipt.
Income tax: shall be deducted in accordance with the provisions of section 194A of
section 195 of Income Tax Act.
PAN Number should be obtained and printed on the deposit receipt.
Signature of the depositor should be obtained on the deposit receipt.
The following should be rubber stamped “No loan/no foreclosure is allowed before the
expiry of 5 years”.
CAPITAL GAINS SCHEME:
All branches except rural branches are authorized to accept deposits under CGS.
Two types of Accounts - Deposit A in the form of Savings / Current A/C
Deposit B Term deposit in the form of FD / RIP.
Staff is not eligible for 1% additional interest.
Min and Maximum period of deposits for Type “B” (term deposit) as per provisions of
Section 54, 54B, 54F, 54G of the act.

31
Deposit “A” can be converted to deposit A/C “B” and vice-versa
Withdrawal from the Accounts - For withdrawal from A/C “A” - Depositor should apply in
form ”C’ with pass book. For other than initial withdrawal depositor should furnish Form
‘D’ in duplicate the details regarding the manner and extent of utilization of the amount
of immediately preceding withdrawal. Where the amount of withdrawal exceeds
Rs.25,000/- the branch shall make payment to depositor by way of crossed DD drawn in
favour of the person to whom the depositor intends to make the payment. The amount
withdrawn shall be utilized by the depositor within 60 days from the date of such
withdrawal and the amount or any part thereof which has not been utilized shall be re
deposited in the account ‘A’ immediately thereafter.
Nomination: A depositor may nominate in form “E” one or more persons but not
exceeding 3 to receive the amount to his/her credit in account “A” or “B”. No nomination
opened in favour of - opened on behalf of minor, HUF, Firm, Company, Association, body
of individuals. Interest on deposits will be treated on the same lines as interest from any
other deposit with scheduled banks.
Closing of account with the approval of Assessing Officer who has jurisdiction over the
depositor
Cheque book need not be issued for CGA “A”
Joint account cannot be opened;
Special interest rates (such as Sr. citizen) are not allowed;
Current Account is allowed to be opened as A/C “A” type;
No penalty for premature withdrawal in case of deceased account
Banks are not required to verify utilization of funds
Unclaimed deposits: Deposit accounts which are inactive / inoperative for 10 years or
more
Depositors Education and Awareness Fund Scheme, 2014: Any deposit or any
amount remaining unclaimed for more than ten years is being credited to the “Depositors
Education and Awareness Fund” (DEAF Scheme)” with RBI with effect from 23.05.2014
as notified in the “Depositors Education and Awareness Fund Scheme, 2014”. The
amount becoming due in each calendar month (i.e. proceeds of the inoperative accounts
and balances unclaimed for ten years or more) will be transferred to the FUND in the
subsequent month.
Inoperative accounts: Saving Bank and Current accounts in which there are no
operations for a period of two years and more from the date of last operation, except by
way of any charges debited or interest credited in case of Savings Bank accounts
Preferential Deposit - Any term deposit of Rs 1 crore and above accepted at a rate other
than the prevailing card rate and as approved by Funds and Investment Committee on
any day.
Retail Deposits - Those deposits accepted at Card Rate upto Rs 10 Crore.
Wholesale Deposits -Those deposits accepted at Card Rate above Rs 10 Crore
SETTLEMENT OF CLAIM:
Settlement of claims in respect of deceased depositor’s account – CHECKLIST
Branch has to check up whether any nomination is registered and if so the nominee to be
informed about nomination.
Blank claim forms to be provided to legal heirs who comes to Branch seeking advice

32
Time is to be spent to educate Legal heirs to fill the form correctly without leaving any
blanks
No claim shall be delayed or denied for want of Legal Heir certificate
No succession certificate /Court order should be insisted in a routine manner
All columns should be filled in with details (or) at least NIL and to be witnessed by 2
persons, preferably account holders of the branch, who can also attest the photo identity
Should be signed by all claimants in English or in language in which claim form is
printed
If signed in other language – should be notarized by Notary Public / Magistrate
Signature – Tamilnadu – English or Tamil; Other languages – Magistrate / Notary Public
to sign
If signed from abroad – Consulate / Notary attorney
Vouching letters from two independent persons 2 different, responsible persons like
Doctor / Teacher / Magistrate / Gazette Officer etc. who know the family for several
years and they should give their name and address on the top of the vouching letter
(respectable persons preferably account holders of the Bank) and they should mention
their account numbers
Names of all claimants mentioning relationship, occupation and present address to be
mentioned
It is to be mentioned whether the claim is by Inheritance /Will /Succession certificate or
Probate and if not by inheritance, proper proof to be enclosed
Consent letter to be signed properly by all claimants other than the one authorised to
receive, along with respective address, Photo copies of Death certificate, legal heir ship
certificate and any other certificate enclosed should be attested by branch official with
the noting ‘verified with the originals’
When it is based on a Will, it is advisable to get consent of other Legal representatives /
Legal heirs
Age of the deceased depositor should tally with that given in the Death certificate / Legal
heir ship certificate
Complete address of the depositor as on date of death to be given
Status to be filled up properly and not showed as NIL.
Religion – should be filled indicating the correct religion of the deceased depositor and in
case of Mohammaden ‘Sunni’ or ‘Shia’ to be additionally mentioned
Manager has to certify the following:
1. The particulars mentioned in Col.No.3 (a) are correct.
2. Details of deposits claimed with nos. and balance, Jewel Loan a/c nos. with details of
Gross Weight, Net Weight and value have to be mentioned.
3. Details of documents held in the case of release of EM property.
4. Locker No. with details of arrears of rent, if any.
5. There is no nomination registered in the deposits in the case of deposits where
nomination is not registered.
6. There are no direct/indirect liabilities of the deceased depositor/claimants. If there are
liabilities the same have to be mentioned by furnishing their details and the particulars
of the overdue position if any.
33
7. The persons who have signed the vouching letters are known to the bank.
8. If the loan accounts are closed the same has to be mentioned. In case JL, the person
who has repaid the account should be mentioned.
9. Branch Manager’s specific recommendations in whose favour claim has to be
recognized should be in page No.5 of Claim form itself.

Scale Designation Revised power of sanction

All Branch Managers Claims upto Rs.50,000/- and/or the value of which does not
in exceed Rs.50,000/- including “exceptional cases”
Scale I, II & III

Chief Managers in Claims upto Rs.1,00,000/- and/or the value of which does not
exceed Rs.1,00,000/- including “exceptional cases”.
VLBs/AGMs in
ELBs/ Zonal
Managers in Scale IV

Zonal Managers in Claims upto Rs.10.00 lakhs and/or the value of which does not
Scale - V exceed Rs.10.00 lakhs including Safe Deposit Locker accounts /
Safe Custody items / Securities / Title deeds / jewels, staff
claims*, exceptional cases and others

Zonal Managers in All claims without any monetary limit and safe deposit locker
Scale VI & VII accounts/safe custody items/ securities/ title deeds/ jewels and
others including ‘exceptional cases’ and staff claims*.

DGM/AGM (Law) at Claims relating to any deposit without any monetary limit and
safe deposit locker account/safe custody items/ securities/ title
CO: Legal
deeds/ jewels and others including ‘exceptional cases’, and
Department
claims relating to deceased staff.

In settling claim in respect of the account standing in the name of deceased depositors,
the photograph of all claimants attested by respectable persons known to the branch
shall be insisted where the value of the claim is above Rs.10000/-.

34
 Structured Loan Products

Product: Home Loan

Eligibility/Target Salaried Class, Professionals, Self-Employed & Businessmen
Group who have put in a minimum service/experience of 3 years.
(Including previous employment / experience and confirmed in
the present employment).
Pensioners – having adequate income to service the loan can
also avail Home Loan on selective basis with adequate risk
mitigation measures.
Staff of our Bank as well as Spouse of the staff can also avail
Home Loan. In such case the guarantee of Spouse / Staff is
compulsory.
In case of Staff Related (other than spouse) Home Loans,
personal guarantee of staff need not be insisted.

Hindu Undivided Family (HUF): If the Property is in the name

of HUF or to be purchased in the name of HUF, Loan can be
considered in the name of HUF. In such case all the members
of the HUF will be co-owners/co-applicants and should jointly
execute the relevant documents.

Age of the Minimum entry age is 18 years and Maximum exit age is 70
applicant years- Powers are given to respective sanctioning authority up
to the delegated powers.
Wherever the income of the applicant / co-applicant is reckoned
for the purpose of calculation of Home Loan Quantum,
Eligibility, Recovery, the sources for repayment after retirement
and their continuous availability / Steadiness shall be duly
ascertained and recorded in the appraisal note.
Similarly wherever the income of the applicant / co-applicant is
not reckoned for Home Loan Eligibility / recovery and where
their names are included for family / sentimental / legal / other
reasons, the reasons for inclusion of such names (as specified
by the applicants / Co-applicants) and the implications, if any,
shall be duly analyzed and recorded in the process note.

Purpose Home Loans can be considered

a) to purchase / construct a new house / flat
b) to purchase house site and construction of house thereon
c) to purchase an existing house / flat
d) to extend an existing house/ additional construction
e) to repair / renovate an existing house / flat – in such case

35
 - Max. Amount: Rs.10 lakhs.
- Max. Repayment period: 120 months.
- Margin: 30% (Minimum) on the estimate.
f) to take over Home Loans from other Banks / Housing Finance
Institutions approved by National Housing Bank for Housing
Finance
g) for reimbursement of cost incurred for purchase/construction
of house/ flat – met from own resources during the preceding
six months – ZLCC is having power.

Income Criteria Generally the income of applicant and the income of his / her
spouse are permitted to be added to compute the total income
and loan eligibility.
Income of Parents / adult Children can also be considered and
their income can also be included for loan eligibility / recovery
on following terms:
a. Their income is regular & backed by income proof
b. ECS is to be registered in favour of our bank towards regular
servicing of the loan (either fully or proportionately) in case their
salary accounts / other accounts (evidencing income streams)
are held with other banks. If their accounts are held with our
bank, suitable Standing Instructions towards regular servicing
of the loan (either fully or
Proportionately) are submitted.
c. They shall be included as Co-applicants to the Loan. Income
of other type of relatives shall not be reckoned for extending this
loan.
d. The total number of such Co-applicants should be generally
restricted to three (i.e., one Applicant + three Co-applicants)
In all cases of such joint borrowings, the disbursement shall be
made through an account held with our Bank in the joint
names of all the applicants / Co-applicants.
ZLCC is empowered to permit the following relaxations:
a. Inclusion of siblings (brothers / sisters) as co-applicants
only in case where they also have a stake in the property
b. Permitting more number of co-applicants (exceeding
three)
c. Including the income of spouses / children of such co-
applicants
Income from HUF can also be reckoned for calculating Home
Loan eligibility and the same is permitted by ZLCC / IRB

Margin Upto 20 lakh-10%, LTV 90%

36
 >20 lakh upto 75 lakh- 20% LTV 80%
Above 75 lakh- 25% LTV 75%
LTV may be calculated taking into consideration the Realizable
Value of the property instead of Market Value as per Credit Risk
Management Policy of the Bank.

Loan Amount 60 times of Gross Monthly Income subject to availability of 40%

Take Home Pay or >Rs 20,000/- after the proposed EMI and
ensuring the requisite margin.
For repair/renovation - Max. Rs 10 lakhs
In cases where the same is incurred & availed at the time of
availing Home Loan for acquiring house / flat being resold, the
amount incurred towards such repairs / renovation can be
included as a part of the total project cost (margin for such
repairs/renovation should be at par with Home Loan). The loan
component relating to such repairs / renovation shall be
disbursed only after creation of valid EM in bank’s favour.

Repayment The maximum repayment period is restricted to 30 years

(inclusive of holiday period) (or) Up to the age of 70 years (the
age by which the loan should be fully repaid) of the borrower,
whichever is earlier.
For take over accounts, the repayment period can be extended
beyond the period sanctioned by the original lender subject to a
maximum of 30 years including the period already run in the
existing institution (or) Up to the age of 70 years (the age by
which the loan should be fully repaid) of the borrower,
whichever is earlier.
Maximum repayment period for Home Loan to Repair and
Renovation is 10 years.

Clarification in In all types of joint borrowings, whenever there is a direct share

case of Joint in the property and / or wherever the income is included for
Borrowings reckoning loan eligibility / recovery, they should be taken as
applicants or co-applicants under the borrowing arrangement.
Only in cases where there are legal heirs whose concurrence is
needed & where their income is not taken for arriving at loan
eligibility, they may be taken as “Guarantors” to the loan. Hence
in all such cases their personal guarantees/ No Objection
Letters should be obtained.

Take Home Pay 40% take home pay on gross monthly income should be
maintained after the deduction of proposed EMI.
However, if the take home pay is more than Rs.20,000/-,
minimum take home pay of 40% on gross monthly income need
not be insisted

37
Interest Reset Variable / Fixed rate of interest as opted by the applicant at
the time of applying loan. In case of Fixed the period of
reset is 5 years.

Processing Processing fees 0.230% of Loan amount with a max. of

Charges Rs.20470/-.

Security Equitable Mortgage of Property purchased / constructed out of

loan proceeds.
Equitable Mortgage to be registered if there is a provision for the
same in the State where property is located

Others No pre-closure, pre-payment charges

Conditions

Appraisal & While processing the Home Loan Applications, all the
Interview: safeguards prescribed by the Bank for grant of other loans
should also be observed. First of all, when a loan application is
received, a ‘Credit Interview’ with the Applicant should be held
immediately. On the basis of the information provided in the
application and additional information gathered during the
credit interview, the proposal should be processed quickly with
due regard to the following four important aspects:
a) Financial Appraisal consists of Cost assessment, its tie-up
(own sources + Home Loan), calculation of eligible loan amount,
assessment of repayment capacity and ensuring prescribed
Loan-to-Value Ratio
b) Legal Appraisal mainly consists of examination of title of the
property to be acquired i. e. whether the security proposed is
free from all encumbrances and the borrower has clear title
enabling him to create valid mortgage in favour of the Bank.
c) Technical Appraisal is very important for ensuring the quality
of the security and its marketability. Housing loans given
should not contravene the regulations relating to Housing
Development issued by statutory authorities. Financing of
houses located in unapproved and / or new corporations /
municipalities /Panchayat areas should be discouraged.
d) Valuation of the property offered as security – by our
Approved Engineer / Valuer

Due Diligence Branches are advised to exercise ‘Due Diligence’ while

processing the applications, to maintain the quality of our
advances, by duly taking into consideration the following:
· Repayment capacity of the borrower.
·All necessary approvals are obtained (such as Building Plan,
Clearance from Town Planning Department, and Approval from

38
 Housing Society etc).
·The legal opinion on the property is clear as to title and
mortgageability.
· No subsisting encumbrances.
· Valuation of the property is comparable with prevailing market
rates.

Remuneration to 0.50% (inclusive of GST) of the Home Loan Limit with minimum
Home Loan of Rs.2000/- and a maximum of Rs 50000/-.
Counselors Remuneration shall be paid only after 20% of Home Loan Limit
(HLC) / Direct is disbursed.
Selling Agents
(DSA) When the aggregate sourcing, upon conversion is more than
Rs.10.00 crores per quarter, additional incentive of Rs 50000/-
will be paid.
The remuneration is based on Loan Automation Processing
System (LAPS) data, CBS data & Branch Manager Certificate
only.
No other payment is to be made to the DSAs in the form of
salary/allowance/out-of-pocket expenses etc.
If they do not bring in a minimum business of Rs.2 Crores in 6
months, his/their empanelment shall stand terminated
automatically.

Product: Home Loan to NRI

Eligibility/Target NRIs gainfully employed abroad (who have put in a minimum
Group period of confirmed service / experience of 2 years – including
previous employment / experience and confirmed in the present
employment) with a residual contract period of service for at
least three more years to run NRI professionals with a regular
monthly income. Branch should appraise the earning potential
of the prospective borrower to ensure timely repayment of loan.

Purpose Construction of New House/Flat, Purchase of Old House/Flat,

Addition/Alternation/Repair/Renovation

Age Entry Level: Between 21 and 50 years

Exit Level: Maximum 60 years

Margin Upto Rs.20 lakh – 10% LTV-90%

Above Rs 20 lakh upto 75 lakh- 20%,LTV-80%
Above Rs.75 lakh-25% LTV-75%
(For repairs and renovation 30% margin )
Margin to be brought in either by way of fresh inward
39
 remittances/funds from Non Resident accounts/Local funds.
Value of own Plot shall be reckoned for the purpose of margin

Loan Amount 60 times of Gross Monthly Income.

If income of spouse is included for the purpose of arriving at the
eligible loan amount then spouse should be included as co-
applicant. Net Take Home Pay of 40% of Gross pay to be
available.

Security Equitable Mortgage of Property purchased / constructed out of

loan proceeds.
Equitable Mortgage to be registered if there is a provision for the
same in the State where property is located

Repayment Maximum 15 years, including holiday period of 18 months in

case of construction of house/flat. In case of purchase of ready
built house/flat, holiday period of maximum of 6 months only to
be allowed.

Processing Processing fees 0.230% of Loan amount with a max. of

Charges Rs.20470/-.

Sanctioning As per Home loan to Residents

Authority

Others All other features / terms are as applicable to IB Home Loan to

Important Residents.
Conditions

Product: IB HOME LOAN PLUS

Eligibility/Target All our existing Home Loan customers under “Standard‟
Group category who have repaid a minimum of 12 EMI’s regularly,
provided possession of the house / flat has been taken by the
customer and valid mortgage has been created in favour of the
bank.
In case of take-over of Home Loan accounts from other banks, it
is permitted to take-over the top-up portion also under this
head subject to following terms:
Both the loan accounts viz., Home Loan and the Top-up loan
should be under Standard Category and there should not be
any overdue with the existing bank / institution.
The Home Loan should have completed at least one year of
satisfactory repayment.
At the time of taking over of Home Loans, request if any, for
Top-up loans additionally can be considered subject to the
proposed Home Loan has completed at least one year of
40
 satisfactory repayment at the erstwhile Bank.
NRIs and staff members of our bank, including retired staff are
also eligible.
All staff members/Officers who have availed Staff Housing Loan
and who have repaid a minimum of 12 installments regularly
and where the house building is completed. Staff
members/officers who have availed IBHL and converted to SHL
are also eligible and in this case 12 installments will be
reckoned including the number of EMI of IBHL.

Purpose Any bonafide purpose other than speculative purpose.

As applicable to Home Loan to Residents and NRIs-40% take
home pay on gross income after the proposed EMI. The 40%
norm may be waived by the sanctioning authority if the take
home pay after considering the EMI is more than Rs.20000/-.
For Staff, spouse income may also be included.

Margin LTV ratio of 90% or 80% or 75% as the case may be to be

maintained for home loan outstanding and 30% margin on the
residual value of the House property to be maintained for the
top up loan.

Loan Amount Minimum amount – Rs. 1.00 lakh.

Maximum amount – Rs.20.00 lakhs

Repayment 120 months

Processing 1.18% of loan amount

Charges NIL for loans to staff members/officers.

Others Number of Top-up loans (i.e., Home Loan Plus) against the
Important Home loan property at any point in time shall be restricted to
two.
Conditions
Second top-up loan can be extended only after a gap of one year
from the date of availment of the first top-up loan subject to
LTV, repayment capacity and other terms and conditions as per
the scheme

Product: LOAN FOR PURCHASE OF HOUSE SITE / PLOTBY/RESIDENTS / NRIs

Eligibility/Target As applicable to Home loan to Residents / NRIs.
Group

Purpose Purchase of house site on ownership basis (not on lease basis)

layout of which is duly approved by competent authorities.

Margin 25% on the land cost. LTV 75%.If the value of plot to be

41
 purchased is more than Rs.100 lakhs, valuations from two
independent panel valuers are to be obtained and average of the
two valuations is to be reckoned for arriving at LTV ratio.

Loan Amount This is permitted up to 36 times of the Gross Monthly Income

(as per latest salary slip – for salaried class) or 3 times of
Annual Net Income (in case of Professional & self-employed /
business category – based on average of latest two years)
subject to a maximum of Rs.300 lakhs.
To arrive at the quantum the guidelines for Home Loans are to
be followed.
For purchase of property in Rural area : Rs. 50.00 lakhs
For purchase of property in Semi-urban area : Rs.100.00 lakhs
For purchase of property in Urban area : Rs.200.00 lakhs
For purchase of property in Metro : Rs.300.00 lakhs

Repayment 180 EMI & No holiday period to be allowed

Processing 1.18% of loan amount

Charges

Others a) Property to be purchased should be in a good, accessible,

Important developed/developing area and the Bank should be able to sell
the same without problem in case of default.
Conditions
b) For NRIs/ PIOs, purchase of house site at rural area is not
permitted.
c) Property should be properly protected by fencing/compound
wall.
d) Layout approval should be approved by CMDA/DTCP or by
the respective Statutory Authority empowered for the purpose
as per local rules.
e) Spouse guarantee to be taken wherever his/her income is
taken into account for arriving at the loan eligibility.
f) Staff members can also avail loan under this scheme. In the
case of loan availed by staff / spouse the guarantee of spouse /
staff is compulsory.
g) All other guidelines as contained in the Manual of Instruction
– Conventional Advance for loans against immovable property
should be meticulously observed.
h) Interest / Installments repaid will not rank for IT benefit

Product: IB HOME IMPROVE

Eligibility/Target Existing Home Loan borrowers (both residents & non-residents)

42
Group including our staff members. Prospective home loan borrowers
who are salaried class customers /professionals / business
people.
Government officials / employees of Public Sector Companies or
Reputed Organization who have availed housing loan at
concessional interest from their respective employer (with
second charge to us) are also covered under this scheme.
Our staff members who had availed SHL are also eligible to avail
against extension of EM of SHL property.

Purpose Purchase of household furniture, kitchen racks, cupboards, TV

Sets, Fridge, Computers, wall paper provisions, lighting, interior
decorations, Air-Conditioners, Kitchen chimney, modern
gadgets for kitchen/modular kitchen & piped gas supply/cost of
digging bore well, with suitable water lifting devices like jet
pump set, compressor, solar system and immersible pump set.

Margin 15% of cost of the articles to be purchased under the loan

Loan Amount 36 times of the Gross Monthly Income, subject to a maximum of

Rs.10 lakhs.
Income of Spouse / Other Co-applicants whose income was
reckoned for calculation of Home Loan eligibility / recovery can
be included for availing this facility also.
Income of spouse / adult children can be included even if not
originally reckoned for Home Loan. However, income of other
relatives cannot be added afresh for availing this facility.

Repayment For TV, Computer & Other Electronic items with less life span:
maximum 48 months.
For others: maximum 60 months.

Processing 1.18% on loan amount

Charges

Others Guarantor of Home Loan may also give guarantee for IB Home
Important Improve also.
Conditions Interest/installments will not rank for IT benefit if loan is for
purchase of consumer items.

Security Extension of EM of property mortgaged for Home Loan. EM of

property for which the facility is availed.

43
Product: IB HOME LOAN COMBO
Eligibility/Target Individuals including Joint borrowers who have * Availed the
Group Home Loan from Indian Bank * Satisfactorily serviced the Home
Loan for at least 3 years after the Holiday Period. * Created
Equitable Mortgage * Maintained security margin of at least
15% for purchase of House / plot / construction of house. *
Home Loan account repayments are regular and the account is
in Standard Category

Purpose Under the package the borrower is entitled for any one or more
of the following loans, with concessional interest rate and
processing charges provided he / she is otherwise eligible as per
the individual loan products. * IB Vehicle Loan (Both 4 wheeler
and 2 wheeler) * Salary Loan * IB Pension Loan * IB Home
Improve

Margin As applicable to relevant schemes such as IB Vehicle loan,

Salary loan, IB Bhavishya Prakash etc.

Loan Amount Same as that of the individual schemes

Repayment As applicable to respective original scheme/s.

Security The security required to be taken under the individual schemes

should be taken and equitable Mortgage taken for the Home
Loan should be extended to cover the other loan/s sanctioned
under the package.

Others Concession of 50 % from the applicable processing charges &

Important interest rate of the respective products
Conditions The Home Loan borrowers will be eligible for any one or more of
the of the above schemes within the overall eligible limit subject
to repayment capacity and other eligibility criteria

Product: IB-HOME ADVANTAGE

Target Group All prospective Home Loan Borrowers – Resident, NRIs and Staff
Members of our Bank including retired staff members
Existing Home Loan Customers are also eligible under the scheme

Purpose The following types of Home Loans under this product can be
considered
a) to purchase / construct a new house / flat
b) to purchase house site and construction of house thereon
c) to purchase an existing house / flat
d) additional construction of existing house

44
 e) to take over Home Loans from other Banks / Housing Finance
Institutions approved by National Housing Bank for Housing
Finance.
f) for reimbursement of cost incurred for purchase / construction
of house / flat - met from own resources during the preceding six
months
However in respect of the Overdraft Limit, the borrower is allowed
to utilize the amount which he has paid as instalment in the
Home Loan Account and the limit can be considered for any
bonafide purpose other than speculative purposes.

Age: For Applicant (s)

Eligibility Residents: Entry Age: 18 Yrs, Exit Age: 70 Yrs
1. If income is taken for eligibility-
exit age is up to 75 yrs (Relaxation powers with ZLCC & CC/IRB)
Above 75 years (Relaxation powers with COLCC - GM)
2. If income is not taken for eligibility-
exit age beyond 75 yrs (Relaxation powers with ZLCC & CC/IRB)
Non Residents: Entry Age: 21Yrs, Exit Age: 60 Yrs. Maximum 70
yrs
(Relaxation powers with ZLCC & CC/IRB)

In respect of Salaried Class applicants, whose exit age goes

beyond the retirement age, the ‘post-retirement income’ of the
applicant has to be duly ascertained. It should be stipulated that
‘50% of the balance outstanding in the home loan account(s) at
the time of retirement’ is to be paid out of the terminal benefits of
such applicants – provided there is proof of sufficient, regular &
continuous income to take care of the future EMIs / repayment
commitments, otherwise, the loan should be settled in full at the
time of retirement from terminal benefits.

Quantum of  60 times of Gross Monthly Income

Loan  At the time of initial sanction of Home Loan Term Loan (HLTL),
additional Limit up to maximum of 20% of the Home Loan
Term Loan limit in the form of Overdraft shall be considered.

The OD Limit can be activated in the system as below:

 Up to 10% of the Home Loan Limit can be released only after
one year of satisfactory conduct of the account from the date of
commencement of repayment subject to borrower having
capacity to service the interest & compliance of 40% Net Take
Home Pay (NTHP) norm* and Loan to Value (LTV) norms (HL
45
 Term Loan Balance o/s + the OD Limit)
 Up to 20% of the Home Loan Limit can be considered after two
years of satisfactory conduct of the account(s) from the date of
commencement of repayment (including the OD limit given
earlier) subject to borrower having capacity to service the
interest & compliance of 40% NTHP norm* and LTV norms (HL
Term Loan Balance o/s + the OD Limit)*

*The 40% norm may be waived by the sanctioning authority if the

take home pay after considering the EMI is more than Rs.20,000/-.

 In computing the above, 60% of future rental income from the

property to be purchased/constructed/owned by the applicant
can also be included. The quantum of future rental income
should be assessed based on the locality of the property, local
market conditions, rental income, etc., as certified by the Panel
engineer
 The income of all the applicant/s and their spouses can be
added for calculation of eligibility. In case spouse’s income is
taken, he/she should be added as co applicant only.

Nature of  Term Loan 100% and additional Overdraft Limit up to 20% of

Facility the Home Loan Limit.
 Margin of 10%, 20% & 25% & LTV ratio of 90%, 80% & 75% as
the case may be as per Bank’s extant guidelines to be ensured
covering both Home Loan - Term Loan and Overdraft portions
 In respect of Takeover of Home Loan, the margin is nil, however
LTV ratio should be ensured as per the quantum slab.

Overdraft  Release of Overdraft limit can be considered after a minimum

Portion of the period of 12 months from the date of sanction (including HL-
Limit Takeover) / review of OD (in case of release upto 20% of Home
Loan Term Loan Limit) subject to a maximum (overall) of 20%
of the original Home Loan Limit.
 An undertaking letter to be obtained from the applicants at the
time of documentation that the Overdraft Limit shall be utilized
for bonafide purpose other than speculative purpose.
 The release of limits for existing accounts can be considered on
written request from the borrower, subject to eligibility (Income
& LTV)
 Under any circumstances, maximum Drawing Power under
Overdraft limit should not exceed 20% of the total Home Loan
limit sanctioned.
 OD limit can also be considered on combined limit along with
additional Home Loan availed on the same property, subject to
46
 compliance of – repayment capacity, LTV norms & time norms
as stipulated above. The additional Overdraft Limit can also be
considered as enhancement in the existing OD Limits
(sanctioned on original Home Loan limit).
 Interest charged in OD shall be serviced as and when debited
without any default during the tenor of the loan.

Income  40% take home pay on gross income after the proposed EMI for
criteria Home Loan-Term Loan portion alone.
 In respect of Overdraft Limit, it should be ensured that the
interest is to be serviced as and when debited.
 The 40% norm may be waived by the sanctioning authority if
the take home pay after considering the EMI is more than
Rs.20,000/-. This aspect is applicable while allowing the OD
limits in the system also.

Security  EM of property purchased / construction under the Home Loan

is to be taken as security. The property should be free from
prior encumbrance. Necessary stamp duty applicable to the
Registration of EM to be done with SRO (wherever applicable).
 All other aspects are as per Bank’s extant guidelines given in
Home Loan Master Circular.
 Since the facility is allowed with opening of two separate
accounts, EM is created on the overall Limit of Home Loan
with sub-limits of Home Loan (TL portion) and HL (OD
portion)
 The EM documents shall be released only after closure of
both Home Loan and OD accounts.

 The Valuation of the property shall be arrived at as per Bank’s

extant guidelines given in Home Loan Master Circular.
Valuation of
House  As per norms the residual life of the building/flat should be
Property minimum 10 years more than the repayment period of the
loan. ZLCC/CC-IRB may permit Home Loans with the residual
life of the building/flat upto 5 years more than the repayment
period of the loan.

Margin For Purchase/construction of house/Flat

Loan amount up to Rs 20. lacs- Margin-10% ,
LTV-90%
Loan amount above Rs 20. lacs up to Rs 75. Lacs- Margin-20% ,
LTV-80%
Loan amount above Rs Rs 75. Lacs- Margin-25% ,
LTV-75%
However, with regard to Overdraft Limit, LTV norm alone to be

47
 ensured and margin need not be insisted upon.

Repayment  The maximum repayment period is restricted to 30 years

(inclusive of holiday period) (or) Up to the age of 70 years (the
age by which the loan should be fully repaid) of the borrower,
whichever is earlier
 Out of the maximum repayment period restricted to 30 years
(inclusive of holiday period), the TL component shall be
recovered in 25 years and the OD limit shall be liquidated in
the last 5 years i.e., 26th year onwards. Hence irrespective of
repayment period the OD limit shall be liquidated in the last 5
years.
 During the last five years of the Tenor, OD facility will be
permitted to operate on a reducing Drawing Power
arrangement on the EMI basis, so as to ensure that entire
balance of OD facility is settled in full with interest at the end
of the tenor period.
 For take over accounts, the repayment period can be extended
beyond the period sanctioned by the original lender subject to
a maximum of 30 years including the period already run in the
existing institution.

Applicable  All existing Home Loan customers who have repaid a minimum
provision for of 12 EMI’s regularly are eligible. NRIs and Staff Members of
Existing Home our Bank, including retired staff members, are also covered
Loan accounts under the Scheme.
 The OD limit with regard to existing Home Loan accounts is
20% of the subject Home Loan Limit. Balance outstanding in
the Home Loan (+) proposed OD limit should not exceed the
original Home Loan limit.
 Wherever request for OD limit is made on Home Loan accounts
where the HL balance outstanding is more than Rs.100.00
lakhs (after 3 years from the date of original HL sanction), fresh
EVR to be obtained / verified for compliance of LTV norms
before considering sanction of the OD limit.
 CERSAI registration for the existing limits to be ensured before
considering the proposal for OD limits.
 Extension of EM is mandatory.
 MOD registration (wherever applicable).
 Repayment for the existing Home Loan limit should not be
altered. Since the Overdraft Limit is being sanctioned in
addition to existing HL Limit, repayment period shall be fixed
for this Overdraft Limit exclusively for 5 years over and above
the residual tenor of the Home Loan subject to original tenor
plus the 5 years repayment period shall not exceed 30 years.
 While sanctioning OD limits for existing Home Loan accounts,
48
 a flat processing fee of Rs.1000/- (inclusive of service tax)
irrespective of the quantum of OD limit to be recovered
(applicable only for existing HL borrowers who seek limits
under OD)
 On sanction of OD limit for existing Home Loan borrowers the
existing Home Loan product code to be changed to Home Loan
Advantage product code

The following documents are to be obtained while considering the

request:
 Request letter
 Up to date EC and tax paid receipt from the competent
authority
 Other documents as per documentation manual for loan
against title deeds viz. Composite Loan Agreement, D 57, F167,
F 191, F 192, F 196 as applicable.

Processing Fee Processing fees are as per extant guidelines taking into
consideration both Home Loan Limit & OD Limit at the time of
sanction
In respect of existing HL Borrowers who seek OD limits against
the same HL property, a flat processing fee of Rs.1000/- (inclusive
of service tax) irrespective of the quantum to be recovered

Interest Rate  Home Loan (Term Loan): As applicable to IB Home Loan

(Fixed) product.
 Overdraft: 1.00% over the applicable Home Loan rate.
 Applicant/s is/are having the option to choose either Variable
/ Fixed rate of Interest at the time of applying loan.
 Fixed Rate option is available for Home loan to Resident
Indians only. NRI Home loans can be sanctioned at variable
rate only.
 In respect of Home Loan-CRE the ROI for Home Loan for Term
Loan portion will be 1% above the applicable Home Loan ROI
and for OD portion it will be 2% above the applicable Home
Loan ROI.

All Borrowers under the scheme will get additional benefits as

follows:
Additional
Benefits 1. Debit Card
2. Credit Card – (Credit Limit is based on exclusive scoring of the
applicant – Credit Card Model)
3. Free Insurance Coverage under Pradhan Mantri Suraksha Bima
Yojana (PMSBY) for all applicant(s) for first 3 years subject to age
49
 limits 18-70 years. The premium for one member is Rs.12/- p.a.

Prepayment NIL as per the extant guidelines

charges

Others  Repaying capacity of the applicant should be ensured based on

Important the Latest Salary Income, Form 16, Income Tax Returns and
Financial Documents as the case may be.
Term

 As the OD Limit is given for consumption purpose, branches

should not issue any certificate to Income Tax authorities for
this OD Limit, enabling the borrower to seek Tax relief under
Home Loan.

In respect of NRI Borrowers:

 The repayments can be either by way of remittances from
abroad, transfer from NRE accounts, or by remittance by
close relatives through their bank a/c directly to the
borrower’s loan a/c.
 Funds of Over Draft limits sanctioned to NRI Borrowers
should not be utilized for credit to NRE rupee account of the
account holder. In this regard Branch should obtain
undertaking letter from the borrower that the utilization of
the Overdraft Limit shall be for meeting borrower's personal
requirements only and not for carrying on
agricultural/plantation activities or real estate business or
for re-lending. Payment of interest and repayment of loan
should be made by inward remittance or out of legitimate
resources in India of the person concerned

CRE Norms
 Home Loans extended upto two units / houses are to be
considered under residential mortgage category at Home
Loan interest rates. However, if the total number of such
units / houses is more than two per family, the exposure for
the third unit / house (First two houses whether purchased
out of loan or not) should be classified as Commercial Real
Estate (CRE) Exposure and the applicable rate of interest for
these loans will be as per ‘Home Loans under CRE
exposure’, which is 1% above the applicable Home Loan
interest. In respect of OD limits, it shall be 2% above the
applicable Home loan interest.

50
Product: HOME ENRICH
Target Group Resident Indian individuals having steady source of income
- Salaried Class, Businessman, Professional and Self-
employed people, Pensioners and NRIs.
- Who have put in a minimum period of confirmed service /
experience of 3 years (including previous employment /
experience and confirmed in the present employment).
II. Staff of our Bank as well as Spouse of the staff can also avail
this Loan. In such case the guarantee of Spouse / Staff is
compulsory. In case of Staff related (other than spouse) loans,
personal guarantee of staff need not be insisted.
III. Our Existing Home loan customers can also avail this loan.

Age of the Min Entry Age- 18 Max Entry Age- 65

applicant Max Exit Age-70

Purpose Repair/renovation of the Residential Dwelling Unit

Eligibility Individuals possessing a residential dwelling unit in their name

and supported by copy of the latest Tax Paid certificate/Sale
deed/Gift deed/Mutation Certificate/Partition deed.

Income As applicable to Home Loan to Residents - 40% take home pay on

Criteria gross income after the proposed EMI.
The 40% norm may be waived by the sanctioning authority if the
take home pay (after proposed EMI) is more than Rs. 20,000/- for
resident individuals.

Margin 30%

Loan Amount Minimum: Rs. 1 lakh

Maximum loan – Rs.10.00 lakhs
Maximum loan limited to 70% of the security or 70% on estimated
cost
of repairs and renovation, whichever is lower.

Repayment 10 years subject to maximum exit age of 70

Other Terms As the loan is given for repairs/renovation, branches should issue
Interest certificate enabling the borrower to seek Tax relief under
“Repairs/Renovation”.

Security 1) Lien on our Bank Term Deposits (except IB TAX Saver)

including interest accrued net of TDS;
i) Deposits can be in the name of individual/Joint names.

51
 ii) Third party deposit can also be accepted. However Guarantee
from such third party should be obtained
2) Pledge of NSCs (incl int accd), which have run for a minimum
period of 3 years
3) LIC policies - Assignment of Life Insurance Policies (to the
extent of surrender value of the policy) etc. LIC policies should
have run for a minimum period of 3 years.

Interest Reset MCLR 1 year +0.50%

Processing 1.18% of Loan amount.

Charges

Product: IND AWAS – (“Pradhan Mantri Awas Yojana (PMAY) - Housing for All (HFA)”
Eligibility To be eligible for subsidy under this scheme, the following
Criteria for important criteria to be satisfied:
Notified Towns:
Subsidy
The property and the resident of the beneficiary (for which the
Home Loan is sanctioned) should come under any one of 4041
notified towns as per Census 2011 and towns notified
subsequently will be eligible for coverage under CLSS.
First Pucca House
The property (house/flat) should be the first pucca house for
the beneficiary household (household means Borrower,
his/her spouse and their dependent children). However, it is
not applicable to cases of enhancement / incremental housing
i.e., Repairs/Renovation of the existing lone pucca house
owned by the
beneficiary
Income of the Household:
For beneficiaries under Economically Weaker Section (EWS) –
Annual household income maximum of Rs.3.00 lakhs*
For beneficiaries under Low Income Group (LIG) - Annual
household income be above Rs.3.00 lakhs upto Rs.6.00 lakhs*
For beneficiaries under Middle Income Group (MIG) –
MIG-I - Annual household income be above Rs.6.00 lakhs
upto Rs.12.00 lakhs*
MIG-II - Annual household income be above Rs.12.00 lakhs
upto Rs.18.00 lakhs
Ownership of the House
For EWS/LIG

52
 The house should be in the name of female head of the
household or in the joint name of the male head of the
household. If no adult female member in the family, the house
can be in the name of male member of the household.
However preference should be given to Manual Scavengers,
Women (preference to widows), SC/ST/OBC, Minorities,
Disabilities and Transgender.
For MIG
The house can be in the name of Male or Female head of the
family.
However preference should be given to Women (preference to
widows, Single working), SC/ST/OBC, Disabilities and
Transgender.
Lenders should link the details of Aadhaar number(s) of
beneficiary family to avoid duplication before submitting
claims to Central Nodal Agencies (CNAs).
The Ministry has identified National Housing Bank & HUDCO
as the Central Notified Agencies to channelize the subsidy to
the lending institutions and for monitoring the progress of the
scheme.

Verification of Sanctioning Authority should ensure the applicant(s) satisfy

the basic eligibility criteria stated above before entertaining
Eligibility
the proposal. Appropriate verification/inspection should be
Criteria
conducted.

Objective Resident & NRI belonging to EWS, LIG & MIG category at
attractive rates who acquire House / Flat in Metro / Urban /
Target Group
Semi-urban areas.
Staff members who are complying with the criteria of CLSS for
EWS / LIG / MIG are also eligible under this product.

Purpose Purchase of House, purchase of Flat under construction

Construction of House on the site owned.
Repairing work (EWS/LIG) / addition of rooms, kitchen, toilet
etc. to existing lone pucca house owned by the beneficiary.
In all the cases (except the Repairing work*/ Renovation* of
the existing lone kutcha / semi pucca house) the subject
house property under consideration should be the first and
only house property for the household i.e., beneficiary family,
should not own a pucca house in any part of India. An
affidavit to this effect is to be submitted by the borrower.

Definition of EWS / LIG - A beneficiary family will comprise husband, wife,

Household unmarried sons and / or unmarried daughters.

53
 MIG - A beneficiary family will comprise husband, wife,
unmarried sons and / or unmarried daughters. An adult
earning member (irrespective of marital status) can be treated
as a separate household.

Age limit Resident Non-Resident

Minimum entry age: 18 years; Minimum entry age: 21 years;
Maximum exit age 70 years Maximum entry age : 50 years
Maximum exit age 60 years

Proof of Income Salaried / Employed beneficiaries:

Salary slip / certificate, Form 16, ITRs (wherever annual gross
income exceeds taxable limit).
Self Employed / Professional and other individuals:
Self declared income certificate / Affidavit to be submitted for
annual income upto Rs.3.00 lakhs.
For annual income above Rs.3.00 lakhs Financial Statements,
ITRs to be submitted

Loan Amount Annual household Income Maximum permissible loan

Level amount

EWS beneficiaries: Five times of annual

household income
Upto Rs.3.00 lakhs
or Rs.15.00 lakhs whichever
is less

LIG beneficiaries: Five times of annual

household income
>Rs.3.00 lakhs and upto
Rs.6.00 lakhs or Rs.30.00 lakhs whichever
is less

MIG-I beneficiaries: Five times of annual

>6.00 lakhs and Upto household income
Rs.12.00 lakhs or Rs.60 lakhs whichever is
less

MIG-II beneficiaries: Five times of annual

>Rs.12.00 lakhs and upto household income or Rs.90
lakhs whichever is less.
Rs.18.00lakhs

Margin/LTV Loan amount Margin Loan to

value
(LTV)

Upto Rs.20.00 lakhs 10% 90%

54
 Above Rs.20.00 lakhs upto Rs.75.00 20% 80%
lakhs

Above Rs.75.00 lakhs 25% 75%

As per RBI guidelines cost of stamp duty, registration and

other documentation charges may be added to the cost of
house / dwelling unit for the purpose of calculating LTV
ratio only in cases where the cost of the house / dwelling
unit does not exceed Rs.10.00 lakhs.

Carpet Area EWS LIG MIG-I MIG-II

Upto 30 Upto 60 Upto 90 Upto 110

sq.mt sq.mt sq.mt sq.mt

The beneficiary EWS / LIG segment, at his / her discretion,

can build a house of larger area but interest subvention
would be limited to housing loan amount of first Rs.6 lakhs
only. (Carpet area is defined as the area enclosed within the
walls, actual area to lay the carpet. This area does not
include the thickness of the inner walls.)
Similarly beneficiaries under MIG, at his / her discretion,
can build a house of larger area but interest subvention
would be limited to housing loan amount of first Rs.9 lakhs
only for MIG-1 & Rs.12.00 lakhs only for MIG-II.

Eligible loan EWS / LIG beneficiaries:

amount for As per Government guidelines, Credit Linked Interest Subsidy
interest subsidy @ 6.50% will be allowed for loan amount upto Rs.6.00 lakhs
only irrespective of the loan size. The loan amount over and
above Rs.6.00 lakhs will be at nonsubsidized rate. The
maximum Subsidy for this category is Rs.267280/-
MIG-I beneficiaries:
As per Government guidelines, CLIS @ 4.00% will be allowed
for loan amount upto Rs.9.00 lakhs only irrespective of the
loan size. The loan amount over and above Rs.9.00 lakhs will
be at nonsubsidized rate. The maximum Subsidy for this
category is Rs.235068/-
MIG-II beneficiaries:
As per Government guidelines, CLIS @ 3.00% will be allowed
for loan amount upto Rs.12.00 lakhs only irrespective of the
loan size. The loan amount over and above Rs.12.00 lakhs will
be at nonsubsidized rate. The maximum Subsidy for this
category is Rs.230156/-
The Net Present Value (NPV) of the interest subsidy will be

55
 calculated at a discount rate of 9 %.
Subsidy will be credited by the Bank to the borrower’s Loan
account upfront. As per Government Guidelines, the borrower
shall pay EMI at applicable lending rates on the remaining
portion of the principal Loan amount. Hence the Repayment
Schedule to be regenerated after credit of entire subsidy
amount.

Security Equitable Mortgage of the property under consideration

MOD registration (wherever applicable)
CERSAI registration

Rate of Interest 1 Yr MCLR (Presently 8.50%)

For Fixed Rate home loans interest rate applicable will be 1%
above the variable ROI with all other terms and conditions
remaining the same.
For NRIs Fixed ROI not applicable

Holiday Period For construction / additions of House / Flat: Max 18 months.

For carrying out repairs / renovation to the existing kutcha
house (for EWS / LIG beneficiaries only): Max 6 months.
For purchase of ready built House / Flat: Max 3 months.

Repayment Resident: Maximum 30 years or upto the exit level age of 70

Period years (including holiday period) whichever is earlier.
Non-Resident: Maximum 15 years or upto the exit level age of
60 years (including holiday period) whichever is earlier.

Take Home Pay 40% take home pay on gross income after total deductions
including the proposed EMI or Rs.20000/- whichever is less.

Processing EWS / LIG: Upto Rs.6.00 lakhs NIL.

Charges Above Rs.6.00 lakhs 50% concession as applicable to Home
Loan subject to maximum of Rs.10235/-
MIG-I - Upto Rs.9.00 lakhs NIL.
Above Rs.9.00 lakhs 50% concession as applicable to Home
Loan subject to maximum of Rs.10235/-
MIG-II - Upto Rs.12.00 lakhs NIL.
Above Rs.12.00 lakhs 50% concession as applicable to Home
Loan subject to maximum of Rs.10235/-

Appraisal Documents to be obtained in line with existing Home Loan

format Scheme
/Documentation Loan Appraisal & Documents - Auto generated from the In

56
 house Software

Procedure for The Credit Linked Subsidy (CLSS) is being claimed through
National Housing Bank, the Nodal Agency.
claim of subsidy
Bank has designed a PMAY-CLSS Template. The navigation is:
HelpDesk --> Menu --> Other Websites --> MIS Dashboard
---> Templates ---> Pradhan Mantri Awas Yojana (PMAYCLSS)
Branches shall submit all details of information sought in the
template after each disbursement made. CO:IRV shall
consolidate, validate and upload the file in NHB website.
On successful processing, NHB shall remit eligible subsidy
amount and CO/IRV shall credit beneficiary’s Loan Account
directly under C2C with information to the respective branch.
As per Government Guidelines, the borrower shall pay EMI at
applicable lending rates on the remaining portion of the
principal Loan amount. Hence Repayment Schedule is to be
regenerated after credit of entire subsidy amount and the
revised EMI to be communicated to the Borrower.

Nodal Officer Chief Manager/IRV at Corporate Office.

57
Product: IB VEHICLE LOAN SCHEME
Eligibility/Target Salaried Class, Professionals, Businessmen, Self-employed
Group persons, our Staff, NRIs and Pensioners.
Employees of other banks are also eligible under this scheme
with NOC from employer concerned.
For NRs (individuals only), loan for purchase of 4 wheeler (to
be used by his / her family in India) may be permitted subject
to the following conditions:
i) Minimum monthly income should be equivalent to
INR:.40000/-
ii) Guarantee of resident family member to be obtained
(Spouse, Father, Mother, Son or Daughter)

ZLCC may permit the following:

Two years of minimum service / experience
In case of confirmed employees of Central Government /
State Government Departments / Undertakings - without
insisting on minimum period of service / experience

Purpose Purchase of New 2 Wheeler .(Purchase of used Two Wheeler is

not permitted)
New/Second hand 4 wheeler ( Age not more than 3 years)

Margin 2 Wheeler- 15% ( Only New Vehicle)

4 Wheeler- New Vehicle 15%,Second Hand: 40%

Loan Amount 20 times of Gross Monthly Income

2 Wheeler- Rs.10 lakh (Max) & 4 Wheeler- Rs.200 lakh ( Max)

Repayment 2 Wheeler-60 EMI ,4 Wheeler (New)-84 EMI

For used cars repayment period should be fixed based on

the age of vehicle (to be calculated from the date of
purchase of the vehicle by the first owner) subject to a
maximum period of 60 months as below

Processing 0.229% on loan amount with maximum of Rs.10191/-

Charges

Others Minimum Salary for 4 wheeler is Rs.20000/-p.m

Important For loan up to Rs.25 lakh hypothecation of vehicle and for
Conditions loan above 25 lakh- for the portion of loan beyond Rs.25 lakh
full security to be obtained in the form of EM of
property/NSC/FD/SV of LIC policies.

Security For Loans upto Rs.25 lakhs:

58
 a) Hypothecation of Vehicle purchased out of the loan
amount.
b) If considered necessary by the sanctioning authority (based
on the risk perception of the individual proposal) tangible
security / guarantee to be made available for the advance.
For loans above Rs.25 lakh:
a) Hypothecation of Vehicle purchased out of the loan
amount.
b) For portion beyond Rs.25 lakhs, 100% collateral security in
the form of EM of properties / NSC / Fixed Deposits /
Surrender value of LIC policies to be stipulated.
c) Suitable third party guarantee is to be obtained.

Payment of Authorised Four Wheeler Dealers :

Service Charges @ 1.00% of the Four Wheeler loan (Limit) with a cap of
to Authorised Rs.50000/- per loan.
Vehicle Dealers
/ Sales Sales Executives :
Executives for @ 0.25% of the Four Wheeler Loan (Limit) with a cap of Rs.
successful leads 2000/- per loan

Product: IB PENSION LOAN

Eligibility/Target Central & State Government Pensioners, Family Pensioners,
Group Re-employed Pensioners,
IB retirees both under VRS & superannuation whose pension
accounts are maintained by Branches. CRS retirees and EPF
Pensioners are not eligible for Pension Loan.

Purpose Any expenses like Medical, Education, Family & domestic

functions, marriage etc.

Margin NIL

Age Limit At the time of availing loan : For regular pensioners up to 75

years at entry level and exit age 78 years,
For family pensioners : Entry age 70 years Exit age 73 years.

Loan Amount 15 times of monthly Pension with a maximum of

Rs. 6, 00,000/- for regular pensioners (Apart from the
guarantee of spouse eligible for family pension, a third party
Guarantee from a person acceptable to the bank may be
obtained.)
59
 For Family pensioners 12 months pension Max Rs.
2,00,000/-
(A third party guarantee from a person acceptable to the
Bank may be obtained)

Repayment Maximum 60 months for regular pensioners and 36 months

for family pensioners.

Service Charges No Charges for Loan amount upto Rs.25000/-

For Loan amount more than Rs.25000/-, Rs.255/- as lump
sum.
For IB retirees – exempted from the purview of the above
service charges.

Others Security /Documents

Important 1. Authorization to recover monthly loan installment from
Conditions the SB account where pension is credited.
2. Guarantee of spouse eligible for family pension to be
obtained or of any other family member of means or a third
party guarantee acceptable to the Bank.
3. Pensioner’s Portion PPO
4. Intimation to PPA (Pension Payment Authority)
Where Branch is receiving credit of Pensions as a Crediting
Bank
The Pensioner’s portion of PPO should be obtained and
retained along with documents.
Where Branch is disbursing/ crediting Pensions:
Against request / acknowledgement of the Pensioner, a
Xerox copy of the Pensioner’s half shall be duly verified and
kept with documents.

Product: IB NSC/KVP/LIC
Eligibility/Target All properly introduced customers, whose capacity to service
Group the loan and interest is appraised. (Including all Staff
Members, VRS/ Retired staff.
Corporate/ reputed partnership firms may also be sanctioned
loan/OD against said securities under this SLP.

Purpose For any permitted bankable purposes such as Trade, Housing,

Profession, Personal consumption and educational purposes
etc

Margin Minimum 25% on Accrued/Surrender Value

60
Repayment Not exceeding 5 years for NSC/KVP & 6 years LIC Policy

Processing 0.305% on loan amount with minimum of Rs.305/-

Charges

Security Lien on NSC. Post Office Lien marking charges to be recovered

LIC: Assignment of LIC Policy in Bank’s favour.

Product : Revised IBA Educational Loan Scheme -2016

Eligibility/Target The applicant should be an Indian National
Group

Purpose Should have secured admission to a higher education

course in recognized institutions in India or Abroad
through Entrance Test/ Merit Based Selection process
after completion of HSC (10 plus 2 or equivalent).
However, entrance test or selection purely based on
marks obtained in qualifying examination may not be the
criterion for admission to some of the post graduate
courses or research programmes. In such cases,
applications of students who have secured not less than
60% marks or equivalent grade may be considered taking
into account employability and reputation of the
institution concerned.

Courses Eligible Studies in India: (Indicative list)

Approved courses leading to graduate/ post graduate
degree and PG diplomas conducted by recognized
colleges/ universities recognized by UGC/ Govt./ AICTE/
AIBMS/ICMR etc.
Courses like ICWA, CA, CFA etc. >Courses conducted by
IIMs, IITs, IISc, XLRI. NIFT, NID etc. >Regular Degree/
Diploma courses like Aeronautical, pilot training,
shipping etc., approved by Director General of Civil
Aviation/Shipping, if the course is pursued in India.
>Approved courses offered in India by reputed foreign
universities. >Other job oriented courses leading to
technical/ professional degrees, post graduate degrees/
P.G. diplomas offered by recognized institutions.
> Regular Degree/Diploma courses in nursing approved
by Indian Nursing Council or any other regulatory body
as the case may be, pursued in India.
Studies abroad:

courses offered by reputed universities.

61
 - London, CPA in USA etc
utical, pilot
training, shipping etc provided these are recognized by
competent regulatory bodies in India/ abroad for the
purpose of employment in India/ abroad.

Expenses considered i. Fee payable to college/ school/ hostel

for loan: ii. Examination/ Library/ Laboratory fee.
iii. Travel expenses/ passage money for studies abroad
iv. Insurance premium for student borrower, if
applicable.
v. Caution deposit, Building fund/ refundable deposit
supported by Institution bills/ receipts.
vi. Purchase of books/equipment’s/ instruments/
uniforms
vii. Purchase of computer at reasonable cost, if required
for completion of the course
viii. Any other expenses required to complete the course
– like study tours, project work, thesis, etc

Margin Upto Rs 4.00 lakh – NIL

Above Rs.4.00 lakh- For studies in India 5% & for
studies abroad 15%

Loan Amount Studies in India Maximum Rs.50 lakhs

Studies abroad Maximum Rs.60 lakhs

Repayment For all loans: up to 15 years

Holiday period : Course period +1 year moratorium or
after getting a job whichever is earlier

Processing NIL for studies in India .Rs.250/- per one lakh for
Charges/Other studies abroad. Can be refunded if loan is availed.
charges EM charges, wherever applicable to be recovered.
CERSAI charges of Rs.50/- plus service tax upto Rs 5
lakhs loan, Rs 100/- plus service tax for loan above Rs 5
lakhs to be recovered. CIBIL/Experian charges etc. as
applicable, to be recovered.

Others Important 1. Education loan of Rs.4 lakh is individual wise and not
family wise & family should not be taken as unit. Any
Conditions
number of application may be sanctioned upto Rs 4 lakh

62
 without insisting for any security( Ref: Adv.125
dt.03.12.2010)
2. Admission under “Management Quota” is to be
considered outside the purview of IBA educational loan
scheme.
3. Vocational/Skill development study courses, off-
campuses courses and on-site/partnership programs are
not eligible for loan under IBA Scheme since a separate
scheme is in vogue for these courses.
4. Loan application have to be disposed of in the normal
course within a period of 15 days
5. Maximum Hostel/Mess charges: Major class cities-
Rs.60000/-, Area I- Rs.50000/- Other places:
Rs.40000/- or charges prescribed by colleges whichever
is less.
6. Revised Scoring model to be followed.
7. UID & PAN number is to be obtained as and when
available.

Security Upto Rs.4.00 lakhs: Parents to be Joint borrower(s). No

security.
Above Rs. 4 lakhs and upto Rs.7.50 lakhs: Besides the
parent(s) executing the documents as Joint borrower(s),
collateral security in the form of suitable third party
guarantee is to be obtained.
Above Rs.7.50 lakhs: Parent(s) to be joint borrower(s)
together with tangible collateral security, the market
value of which is not less than the loan value, acceptable
to bank, along with the assignment of future income of
the student for payment of installments.

Insurance Life Insurance policy on the students availing

Educational Loan is to be solicited under the „New IB
Jeevan Vidya Policy‟ / „IB Vidyarthi Suraksha‟ for the
loan limit sanctioned, covering the entire period of loan
i.e. Study Period, Holiday / Moratorium Period and
Repayment Period with the consent of the student
applicant. The premium payable on the policy may be
considered as eligible amount for finance.

Minimum Age There is no specific restriction with regard to the age of

the student to be eligible for education loan. However, if
the student was a minor while the parent executed
documents for the loan, the undertaking letter (F-162) to
be obtained from him/her upon attaining majority.

63
No Due Certificate No due certificate is not to be insisted upon as a pre-
condition for considering educational loan. However,
branches may obtain a declaration / an affidavit
confirming that no loans are availed from other banks.

Product : IB EDUCATIONAL LOAN PRIME AND IB EDUCATIONAL LOAN PRIME-NIT

Name of the Premier institutions namely
College/Institution IITs/IIMs/NITs/XLRI/BITS/IISc

Courses offered by Under Graduate and Post Graduate courses, etc

the
College/Institution

Beneficiaries Students joining the aforesaid targeted premier

institutions

Loan Limit Need based loan limit up to Rs.30.00 lakh under the
framework of IBA educational loan scheme.

Margin and Nil

Processing Fees

Collateral Security Nil (Parent /Guardian will have to stand as co-

applicant)

Product: IB MODEL LOAN SCHEME FOR VOCATIONAL EDUCATION & TRAINING

Eligibility/Target The Student should be an Indian National

Group
Should have secured admission in a course run or supported
by Ministry/Dept./Organisation of Govt. or a
company/society/organisation supported by National Skill
Development Corporation or State Skill Missions/State Skill
Corporation. Preferable leading to a
certificate/diploma/degree, etc. issued by a Govt. organisation
or an organisation recognized/authorized by the Govt. to do so
The Loan scheme is eligible for coverage under credit
guarantee scheme for skill development which has been
introduced by Government of India. GOI has established
National Credit Guarantee Trustee Company (NCGTC) for this
purpose.

Course eligible Course affiliated to National Skill Development

Corporation/State Skill Mission approved by state /Central
Government
64
Minimum As required by the enrolling institution/organization as per
Qualification: NSQF.

Margin 10%

Loan Amount Loans will be in the range of Rs. 5,000/- to Rs. 150,000/-. The
estimated per month fees, based on sector & NSQF level, will
be available with the NSDC. Skill loan could be availed by
beneficiaries of other grant/reward based Government
schemes for skill training to cover the cost of such skill
training not covered under such grant/reward.

Repayment The loan will have a tenure as follows:

Loans upto Rs.50,000 - Upto 3 years
Loans between Rs.50,000 to Rs.1 lakh - Upto 5 years
Loans above Rs.1 lakh - Upto 7 years

Processing NIL
Charges

Security No collateral for such skilling loan will be taken. Banks have
to apply to the National Credit Guarantee Trust Company Ltd
(NCGTC) for credit guarantee against defaults and NCGTC will
provide such guarantee at nominal guarantee fee which shall
not exceed 0.5% of the amount outstanding. Such credit
guarantee cover will be for a maximum of 75% of the
outstanding loan amount (including interest, if any). In special
cases such as the North Eastern region (NE) and Left Wing
Extremism (LWE) affected areas the percentage may be
increased on the discretion of NCGTC.

Moratorium Upon completion of the course, repayment will start after a

Period moratorium period as indicated below:

1.Courses of duration Upto 6 months from the

upto one Year completion of the course

2.Courses of duration 12 months from the completion

above 1 year of the course

Minimum Age There is no specific restriction with regard to the age of the
student to be eligible for the loan. However, If the student is a
minor while the parents execute the documents for the loan,
the undertaking letter (F-162) is to be obtained from him/her
upon attaining majority.

Expenses a.Tuition / Course fee

Considered for b. Examination / Library / Laboratory fee
Loan

65
 c. Caution Deposit
d. Purchase of books, equipments and instruments

Product: IB BALA VIDYA SCHEME

Eligibility/Target Salaried class, professional self -employed, employees with

Group minimum 3 years of satisfactorily operated SB a/c with our
branch.

Purpose To meet cost of admission fees, term fees, cost of books,

uniforms transportation cost for students of LKG to Std.XII

Margin 5%

Loan Amount Maximum Rs.30000/- per family

Repayment 10 EMI

Processing Rs.300/- per account

Charges

Product: JEWEL LOAN TO SENIOR CITIZEN

Eligibility/Target Senior citizens drawing pension or having regular source of
Group income along with the spouse wherever possible/applicable.
Minimum age 60 years, maximum age upto 75 years at entry
level

Purpose Short term needs/consumption/medical purposes etc. for

senior citizens

Maximum 70% of market value of gold based on the value of jewels as

Eligibility per existing guidelines or 35 times of net monthly income (it
is assumed that 50% of the gross monthly income is taken as
net monthly income) whichever is less.

Loan Amount Maximum Rs.5.00 lakh

Repayment To be repaid in 35 EMI or bullet payment. Interest to be

serviced as and when charged.

Processing For limit upto Rs.1 lakh: No processing fee

Charges Limit more than Rs. 1 lakh: 0.56% of the limit sanctioned

66
 inclusive of service tax

Others LTV @ 75% of the value of jewels pledged as security is

Important maintained throughout the tenure of jewel loans.
Conditions Prepayment is permitted.
Premature renewal can be permitted after 12 months subject
to prompt repayment of EMIs.
Part redemption of jewels not permitted.
Product : Non Agri (Priority) loans against pledge of Jewels
Eligibility/Targe Any individual undertaking such activity as described above &
t Group with sufficient income to repay the loan.

Purpose This product would cover loans against pledge of jewels for
Non Agri activities under Priority sector, for purposes other
than that covered under Jewel loan to traders and not for any
speculative purpose.

Type of Facility For limits up to Rs.5.00 lakh - Short term loan with maximum
& Repayment tenor of 12 months - repayable at the end of 12th month
along with interest accrued.
For limits above Rs.5.00 lakh –
1. Short term loan with tenor up to 35 months – repayable in
monthly installments
2. Short term loan with tenor up to 33 months – repayable in
quarterly installments based on flow of income.

Interest For Short term loans with tenor up to 12 months, interest will
Application be charged to the account at monthly rests and will be
recognized on accrual basis, provided the account is classified
as ‘standard’ account.
For Short term loans with tenor >12 months up to 35 months,
interest will be charged to the account at monthly rests and
payable along with the principal at monthly/ quarterly
intervals.

Advance Value Limit should be assessed based on the activity/ purpose of

loan/ turnover etc., as per Bank’s extant guidelines for
assessment of limit, subject to loan to value of jewels, present
rate being Rs.1910/- per gram of gold ornaments of 22 carat
fineness (or) 70% of market value of gold whichever is less and
Rs.1960/- per gram for hallmark jewels of 22 carat fineness/
gold coins of 24 carat fineness (or) 70% of market value of
gold whichever is less.

Papers to be Revised loan Application form F-120B, Appraiser’s Certificate,

submitted by Proof of activity undertaken, KYC documents etc, as

67
the Applicant/s applicable

Processing 0.56 % of the limit sanctioned

Charges

Others Loan to Value (LTV) of 75% should be maintained throughout

Important the tenor of the loan.
Conditions 5-10% of gross weight should be deducted for impurities/dust
etc.
Product: Jewel loan to Traders (Priority)
Eligibility/Targe Retail Traders, Small Business/ Professional & Self Employed
t Group persons and entrepreneurs engaged in Manufacturing &
Service sector.

Purpose To meet short term production / working capital needs of

Retail Traders, Small Business/ Professional & Self Employed
persons and for entrepreneurs engaged in Manufacturing &
Service sector activities.

Type of Facility For limits up to Rs.5.00 lakh - Short term loan with maximum
& Repayment tenor of 12 months - repayable at the end of 12th month
along with interest accrued.
For limits above Rs.5.00 lakh –
1. Short term loan with tenor up to 35 months – repayable in
monthly installments
2. Short term loan with tenor up to 33 months – repayable in
quarterly installments
based on flow of income.

Interest For Short term loans with tenor up to 12 months, interest will
Application be charged to the account at monthly rests and will be
recognized on accrual basis, provided the account is classified
as ‘standard’ account.
For Short term loans with tenor >12 months up to 35 months,
interest will be charged to the account at monthly rests and
payable along with the principal at monthly/ quarterly
intervals.

Advance Value Limit should be assessed based on the activity of traders/

purpose of loan/ turnover etc., as per Bank’s extant
guidelines for assessment of limit, subject to loan to value of
jewels, present rate being Rs.1910/- per gram of gold
ornaments of 22 carat fineness (or) 70% of market value of
gold whichever is less and Rs.1950/- per gram for hallmark
jewels of 22 carat fineness/ gold coins of 24 carat fineness (or)
70% of market value of gold whichever is less.

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Papers to be Revised loan Application form F-120B, Appraiser’s Certificate,
submitted by Trader’s license, SSI Registration Certificate, Balance Sheet,
the Applicant/s Latest KYC documents, any other proof / supporting
document etc, as applicable for the activity to be undertaken.

Processing 0.56 % of the limit sanctioned

Charges

Others Loan to Value (LTV) of 75% should be maintained throughout

Important the tenor of the loan.
Conditions 5-10% of gross weight should be deducted for impurities/dust
etc.
Product : Non Priority loan against pledge of Jewels
Eligibility/Targe Any individual undertaking such activity as described above &
t Group with sufficient income to repay the loan.

Purpose Any activity including medical, consumption, domestic needs,

family functions at home like marriage, threading ceremony
etc and any such bankable activity other than for speculative
purpose.

Type of Facility For limits up to Rs.5.00 lakh - Short term loan with maximum
& Repayment tenor of 12 months - repayable at the end of 12th month
along with interest accrued.
For limits above Rs.5.00 lakh –
1. Short term loan with tenor up to 35 months – repayable in
monthly installments
2. Short term loan with tenor up to 33 months – repayable in
quarterly installments,
based on flow of income.

Interest For Short term loans with tenor up to 12 months, Interest will
Application be charged to the account at monthly rests and will be
recognized on accrual basis provided the account is classified
as ‘standard’ account.
For Short term loans with tenor >12 months up to 35 months,
Interest will be charged to the account at monthly rests and
payable along with the principal at monthly/ quarterly
intervals.

Advance Value Based on the value of jewels as per the existing guidelines.
Rs.1910/- per gram of gold ornaments of 22 carat fineness
(or) 70% of market value of gold whichever is less and
Rs.1960/= per gram for hallmark jewels of 22 carat fineness/
gold coins of 24 carat fineness (or) 70% of market value of

69
 gold whichever is less.

Papers to be Revised loan Application form F-120B, Appraiser’s Certificate

submitted by & Latest KYC documents
the Applicant/s

Processing 0.56 % of the limit sanctioned

Charges

Others Loan to Value (LTV) of 75% should be maintained throughout

Important the tenor of the loan.
Conditions 5-10% of gross weight should be deducted for impurities/dust
etc.
Branch Managers are advised to finance only such proposals
under Short Term loan with tenor up to 33/35 months, which
generate sufficient income to liquidate the liability within
33/35 months.

Product: JEWEL LOAN TO STAFF MEMBERS ( NON PRIORITY)

Eligibility/Target All permanent staff of the Bank can avail jewel loan in
Group his/her branch if the branch is implementing jewel loan or at
the nearest branch if his/her branch is not implementing
jewel loan

Purpose Loan to meet all domestic needs such as construction

/repair of house building, medical, marriage, educational
expenses and other genuine requirements

Maximum 70% of market value of gold based on the value of jewels as

Eligibility per existing guidelines or per gram rate given by the bank
whichever is less.

Loan Amount Sub Staff -Rs.25,000

Clerks -Rs.50,000
Officers -Rs.75,000

Facility Short term loan /Medium Term Loan

Repayment Short term loan (Scheme 1)

Interest and principal in one bullet payment at the end of
twelfth month.(The guidelines given for charging of interest
for non -priority jewel loan from time to time is applicable to
this scheme also)
Medium Term Loan (Scheme 2)
Principal in 36/60 monthly installment along with interest as

70
 and when debited (interest charged at monthly rests)

Appraiser fee As per norms

Processing NIL
Charges

Sanctioning Branch Manager –irrespective of the scale.

Authority If Branch Manager is the borrower then sanction in writing
should be obtained from circle office before availing the loan.

Auctioning of In case of STL, jewels will be auctioned, if they are not

Jewels redeemed
within 15th month from the date of availing the limit.
As regards MTL, if more than three installments are pending,
jewels will be auctioned as per the procedures governing
jewel loan auction.

Branches All Jewel Loan implementing branches.

Others 1. 40% take home pay(including the amount of

Important interest/principal to be serviced in the case of jewel loan to
be availed) to be ensured for MTL
Conditions
2. The period of recovery should be so fixed that the entire
loan is recovered within the service period of employee
3. For operational convenience only one account/facility to
be allowed for each staff. Enhancement of limit can be
allowed within the maximum permissible limit after closing
the earlier loan.
4. Revaluation of all the jewel packets in respect of staff loan
should be done at the time of regular branch inspection and
not random sampling.
5. Branch should report the details of sanction in the AUF on
a fortnightly basis.
6. Branch should not allow overdues under any
circumstances
7. The branch sanctioning JL should immediately inform the
details of sanction to the salary disbursing branch along with
a copy of authorization letter from the employee for debiting
the SB account towards principal and interest, if the salary
is drawn from a different branch.
8. All other accounts of the staff members should be regular
at the time of sanction of jewel loan.
9. Transfer of jewel loan from one branch to another is not
permitted.

71
10. Whenever the jewels belonging to the other family
members are pledged, they should be made a co-borrower
along with the staff members.
10. LTV @ 75% of the value of jewels pledged as security is
maintained throughout the tenure of jewel loans .

72
 MSME
Common guidelines / instructions for lending to MSME Sector

Issue of Acknowledgement of Loan Applications to MSME borrowers Banks are advised to mandatorily
acknowledge all loan applications, submitted manually or online, by their MSME borrowers and ensure that
a running serial number is recorded on the application form as well as on the acknowledgement receipt.
Banks are further advised to put in place a system of Central Registration of loan applications, online
submission of loan applications and a system of e-tracking of MSE loan applications.

Collateral
Banks are mandated not to accept collateral security in the case of loans up to Rs.10 lakh extended to units
in the MSE sector. Banks are also advised to extend collateral-free loans up to Rs. 10 lakh to all units
financed under the Prime Minister Employment Generation Programme (PMEGP) administered by KVIC.
Banks may, on the basis of good track record and financial position of the MSE units, increase the limit to
dispense with the collateral requirement for loans up to Rs.25 lakh (with the approval of the appropriate
authority). Banks are advised to strongly encourage their branch level functionaries to avail of the Credit
Guarantee Scheme cover, including making performance in this regard a criterion in the evaluation of their
field staff.

Composite loan
A composite loan limit of Rs.1 crore can be sanctioned by banks to enable the MSE entrepreneurs to avail of
their working capital and term loan requirement through Single Window.
Coir Udyami Yojana (CUY) – scheme by Coir Board
The Rejuvenation Modernization and Technology Up gradation (REMOT) scheme of coir industry has been
renamed “Coir Udyami Yojana (CUY). The scheme would cover any coir project with project cost upto Rs 10
lakhs plus working capital, which shall not exceed 25% of the project cost. The pattern of assistance under
the scheme is 40% of the project cost as Govt of India, subsidy, 55% loan from the Bank and 5% beneficiary
contribution.
Pradhan Mantri Jan Dhan Yojana – Scheme for Overdraft (OD) up to Rs 5000/- under PMJDY - Aadhaar
Seeding Non-mandatory
Regarding Sanction of Overdraft up to Rs 5000/- to BSBD Account holders under PMJDY, Department of
Financial Services (DFS) vide their letter dated 25.08.2015 directed that in the context of an interim order
dated 11.08.2015 passed by Hon’ble Supreme Court of India that Aadhar number in the bank accounts
should not be made mandatory or insisted upon for grant of overdraft.
Deendayal Antyodaya Yojana (DAY) - National Urban Livelihoods Mission
With a view to improving the livelihood opportunities for the poor in urban areas, Ministry of Housing and
Urban Poverty Alleviation (UPA) Division, Government of India vide their office memorandum No K-
14011/2/2012 – UPA/FTS-5196 dated 19th February, 2016 has decided to enhance the scope of National
Urban Livelihoods Mission. The Mission with enhanced scope is renamed as “Deendayal Antyodaya Yojana
(DAY) – National Urban Livelihoods Mission”. Mission will be implemented in all District Headquarters Towns
and all other cities with a population of 1,00,000 or more as per 2011 Census (ADV- 024 / 2016-17 dated
26.04.2016)
UDYAMI MITRA PORTAL FOR MSME
SIDBI has introduced a new interactive portal www.udyamimitra.in . It is an enabling platform which
leverages IT architecture of Stand-Up Mitra Portal and aims at instilling ease of access to MSMEs financial
and non –financial services needs. The portal , as a virtual market place endeavours to provide ‘end to end ‘
solutions not only for credit delivery but also for the host of credit plus services by way of hand holding
support , application tracking, multiple interface with stakeholders (i.e banks , service providers ,
applicants). The www.udyamimitra.in is an interactive portal to enable loans to MSMEs on the lines of
existing portal created for Stand-Up India Programme. While the existing portal www.standupmitra.in also
provides for loans under various categories such as MUDRA, stand-Up India and general MSME Loans, the
needs for an exclusive portal dedicated to varied MSME enterprise loans has been felt and the new portal
www.udyamimitra.in is designed as vehicle for these requirements. ( ADV- 93- 2016-17 dated 02.08.2016)
Revised code of Bank's commitment to Micro and Small Enterprises:-
Major changes in the MSE code is as follows:-
1. No processing fee for loans up to Rs. 5 lakh, whether sanctioned or not
2. The time norms for disposal of MSME applications complete in all aspects accompanied by documents as
per checklist, are as follows:

As per revised MSE code

Loans upto Rs 5 Lakhs Within two weeks

73
 Above Rs 5 Lakhs and up to Within three weeks
Rs 25 lakhs

Above Rs 25 Lakhs Within six weeks

CREDIT GUARANTEE FUND SCHEME FOR MICRO AND SMALL ENTERPRISES (CGTMSE)
Credit facilities eligible under the scheme
Credit facilities (Fund based and / or Non fund based) extended to a single eligible borrower in the Micro and
Small Enterprises sector for credit facility by one or more than one bank and / or financial institution jointly
and / or separately not exceeding Rs.200 lakh by way of term loan and / or working capital facilities without
any collateral security and \ or third party guarantees 3.2 Credit facility sanctioned to an eligible borrower
with interest rate upto 4% over the Base Rate (BR) will only be eligible for coverage under the CGS. { w.e.f
December 17 , 2013 – loans sanctioned before this date will continue on the existing terms}
Borrower may be sanctioned separate / distinct credit facilities, but only credit facility not backed by
collateral security / third party guarantee can be covered under the Scheme
Bank should apply for guarantee cover in respect of credit proposals sanctioned in a particular quarter prior
to expiry of the following quarter i.e. for loans sanctioned during April-June, July-September, October-
December and January-March before the expiry of July-September, October-December, January-March and
April-June respectively.
Credit Facilities not eligible under the scheme
Any credit facility in which risks are additionally covered by DICGC or RBI to the extent they are so covered
Any credit facility in which risks are additionally covered by Government or by any general insurer or by any
other person/ association of persons carrying on the business of insurance, guarantee or indemnity, to the
extent they are so covered
Credit facilities sanctioned to a borrower – who has not repaid / defaulted in respect of other limits availed by
him, either under this scheme or under other schemes mentioned above.
Any credit facility sanctioned against collateral security and / or third party guarantee.
Credit for retail trade, educational / training institutions and SHGs are not eligible for the present
Any credit facility, which does not conform to, or is in any way inconsistent with, the provisions of any law,
or with any directives or instructions issued by the Central Government or the Reserve Bank of India, which
may, for the time being, be in force
Any credit facility granted to any borrower, who has availed himself of any other credit facility covered under
this scheme or under the schemes and where the Bank has invoked the guarantee provided by the Trust or
under the schemes above, but has not repaid any portion of the amount due to the Trust or under the
schemes Any borrower or activity or undertaking ceases to come within the definition of MSE unit.
Extent of Guarantee
6.1 The Trust shall provide guarantee as under :
Category Maximum extent of Guarantee where credit facility is
Upto Rs.5 lakh Above Rs.5lakh upto Rs.50 lakh Above Rs.50 lakh upto Rs.200 lakh
Micro Enterprises 85% of the amount 75% / Rs.37.50 lakh 50% / Rs.100 lakh
in default subject to a maximum of
Rs.4.25 lakh
Women entrepreneurs / Units located in North East Region (incl. Sikkim) other than credit facility upto Rs.5
lakh to micro enterprises 80% of the amount in default subject to a maximum of Rs.40 lakh 50% / Rs.50
lakh
All other category of borrowers 75% / Rs.37.50 lakh 50% / Rs.50 lakh
Branches have to recover the guarantee fee / annual service fee from the respective borrowal accounts.
Invocation of Guarantee
The lending institution may invoke the guarantee in respect of credit facility within a maximum period of two
years from date of NPA,- if NPA is after lock-in period or within two years of lock-in period.
Credit Linked Capital Subsidy Scheme (CLCSS)
Government of India, Ministry of Micro, Small and Medium Enterprises had launched Credit Linked Capital
Subsidy Scheme (CLSS) for Technology Upgradation of Micro and Small Enterprises subject to the following
terms and conditions:
i) Ceiling on the loan under the scheme is Rs.1 crore
ii) The rate of subsidy is 15% for all units of micro and small enterprises up to loan ceiling at Sr. No. (i)
above.
iii) Calculation of admissible subsidy will be done with reference to the purchase price of plant and
machinery instead of term loan disbursed to the beneficiary unit.
iv) SIDBI and NABARD will continue to be implementing agencies of the scheme.
Credit Guarantee Fund for Micro Units (CGFMU) Scheme for MUDRA loans
Government of India through Ministry of Finance, Dept. of Financial Services has notified the Credit
Guarantee Fund for Micro Units (CGFMU) for Mudra Loans
The fund and the scheme will be managed and operated by National Credit Guarantee Trustee Company Ltd.
(NCGTC) which is a wholly-owned trustee company of Government of India.

74
Salient features of Credit Guarantee Fund for Micro Units (CGFMU):
The Credit Guarantee will be available for micro loans under the aegis of Pradhan Mantri Mudra Yojana, up
to the specified limit (currently Rs.10 lakh) extended by Member Lending Institutions (MFIs) to an eligible
borrower without any collateral security and / or third party guarantees.
New or Existing Micro unit / enterprise as defined in the MSMED Act 2006, sanctioned since 8th April 2015
shall be covered under the scheme.
Further, Overdraft loan amount of Rs. 5,000/- sanctioned under PMJDY accounts shall also be eligible to
cover under Credit Guarantee Fund.
Loans sanctioned in 2016-17, for the activities allied to agriculture upto Rs. 10.00 Lakhs (excluding crop
loans, land improving such as canals, irrigation, wells) and services supporting to Agri. allied activities,
which promote livelihood or are income generating shall also be covered under Credit Guarantee Fund for
Micro Units (CGFMU) Scheme.
Pattern of coverage is Portfolio basis.
The lending institution shall pool all its outstanding micro loans extended against sanctions effected on or
after April 08, 2015 as at the end of a quarter (quarter ended March, June, September and December) as
part of the portfolio during the base year and ensure to submit the information required by NCGTC for giving
guarantee cover with regard to the micro borrowal account during the currency of the portfolio.
The Maximum interest rate to be charged by a Member Lending Institution (MLI) on MUDRA Loans should
not in any case, more than 12% p.a. for Shishu category (loans upto Rs. 50,000/-) and there is no interest
rate stipulations for Kishore and Tarun loans.
Guarantee fee payable is 1% p.a. (Standard Base Rate) of the sanctioned amount (Limit) plus Risk premium
based on NPA level in the portfolio of the Bank.
Extent of the Guarantee: In the nature of ‘First Loss Portfolio Guarantee’, wherein first loss to the extent of
5% of the crystallized portfolio of the MLI, will be borne by the MLI and therefore, will be excluded for the
claim. Out of the balance portion, the ‘extent of guarantee’ will be to a maximum extent of 50% of ‘Amount in
Default’ in the portfolio or such other percentage as may be specified by the Fund from time to time on a pro-
rata basis.
Credit Guarantee Scheme for Stand Up India (CGSSI) – for the loans sanctioned under Stand Up India
Scheme
Government of India through Ministry of Finance, Dept. of Financial Services has notified the Credit
Guarantee Scheme for Stand Up India (CGSSI) vide Gazette Notification No. S.O. 1499 (E). Dt. 25.04.2016
under the Trust Fund, Credit Guarantee Fund for Stand Up India (CGFSSI). The fund and the scheme will be
managed and operated by National Credit Guarantee Trustee Company Ltd. (NCGTC) which is a wholly-
owned trustee company of Government of India.
Our Bank has become a Member Lending Institution (MLI) by registering with National Credit Guarantee
Trustee Company (NCGTC), vide our Banks’ Board approval Dt.02.08.2016.
Salient features of Credit Guarantee Scheme for Stand Up India (CGSSI):
The Credit Guarantee will be available for all MSME Loans conforming to the norms of Stand Up India
Scheme over Rs. 10 Lakh & up to Rs. 100 Lakh inclusive of Working Capital, to a single borrower particularly
for SC/ST/Women (relatively excluded sections of population) for setting up of Greenfield enterprises without
any
Collateral security and / or third party guarantees.
The Maximum interest rate to be charged by a Member Lending Institution (MLI) on Stand Up India Loans
should not in any case, more than 3% p.a. over the Base Rate (MCLR).
Guarantee fee is 0.85% p.a. (Standard Base Rate) of the sanctioned amount plus Risk premium based on
NPA level in the portfolio of the Bank and the details are
The Guarantee cover would be available as below;
Loan Amount Guarantee Cover
Above Rs. 10.00 Lakh and UptoRs. 50.00 Lakh Above Rs. 50.00 Lakh and Upto Rs. 100.00 Lakh
80% of amount in default, subject to a maximum Rs. 40.00 Lakh (PLUS) 50% of amount in
default,
of Rs. 40.00 Lakh subject to overall ceiling of Rs. 65.00 Lakh

Credit Guarantee Fund Scheme for IBA Model Educational Loans for pursuing higher education in
India and abroad for limits upto Rs.7.50 lakh (CGFSEL)
Government of India through Ministry of Human Resource Development / Department of Higher Education
has notified the Credit Guarantee Fund Scheme for Education Loans (CGFSEL), vide Gazette Notification
No.18-1/2013-U.5 (Vol.III) dated September 16, 2015 under the Trust Fund, i.e. Credit Guarantee Fund for
Education Loans (CGFEL). The fund and the scheme will be managed and operated by National Credit
Guarantee Trustee Company Ltd. (NCGTC) which is a wholly-owned trustee company of Government of India.
Under Credit Guarantee Fund Scheme for Education Loans (CGFSEL), National Credit Guarantee Trustee
Company Ltd (NCGTC) will provide guarantee cover for educational loans upto Rs.7.50 lakh without any
collateral security and third party guarantee. Such loans should conform to the “IBA Model Educational Loan
Scheme for pursuing Higher Education in India and Abroad”.
Our Bank has become a Member Lending Institution (MLI) by registering with National Credit Guarantee
Trustee Company (NCGTC), vide our Banks‟ Board approval dt.02.11.2015. Educational loans sanctioned
75
under IBA Scheme upto a limit of Rs.7.50 lakh on or after 16th September 2015 are eligible under this
scheme.
The salient features of the scheme are as follows:
The credit guarantee will be available for educational loans upto Rs 7.50 lakh without any collateral security
and third party guarantee (Parents / spouse can be co-obligant / joint borrowers). Such loans should
conform to the “IBA Model Educational Loan Scheme for pursuing Higher Education in India and Abroad”.
Annual Guarantee fee will be 0.50% p.a. of the outstanding loan amount which would be absorbed by the
bank.
The maximum interest rate to be charged by a Member Lending Institution (MLI) on Education Loan is Base
Rate plus up to 2.00%.
The guarantee cover would be available for 75% of the amount in default which would be settled as under:
- 75 per cent of the guaranteed amount will be paid on preferring the eligible claim by the lending institution
within 30 days, subject to the claim being otherwise found in order and complete in all respects.
- The balance 25% of the guaranteed amount will be paid after obtaining a certificate from the Member
Lending Institution (MLI) that all avenues for recovering the amount have been exhausted.

STRUCTURED PRODUCTS
IND SME SECURE:
Coverage All Micro, Small & Medium Enterprise (both manufacturing and Service) borrowers as per
extant definition of Government of India

Eligibity All MSME units – existing (with good track record) as well as fresh (with satisfactory
promoters’ track record, group affiliation and viable project). It shall be ensured that the
account is not a restructured / rescheduled one, none of the group accounts are NPA with
other banks / FIs and due diligence has to be made.
KYC, due diligence and other related norms of the Bank are applicable. Compliance to be
ensured by BM / Sanctioning authority. CIBIL report on the borrower / promoters /
shareholders / guarantors to be verified and ensured that their dealings are satisfactory
RAM rating / Scoring model is mandatory depending on the credit exposure and entry level
rating as per CRM policy as below should be complied with.
In case of accounts with credit exposure up to Rs.50.00 lacs, BBB rating as per scoring
model
case of accounts with credit exposure above Rs.50.00 lacs, Obligor rating BBB as per
RAM rating

Exposure Minimum Exposure: Above Rs 10.00 lac

Ceiling(FB+NFB
Maximum Exposure: No ceiling

Margin 25% on stocks and book debts

25 % on plant & machinery in case of new machines
50% on plant & machines in case of second hand machines 10% cash margin on NFB
facilities
30% margin on building Minimum
100% coverage of Bank exposure (FB&NFB) by way of realizable sale value of immovable
properties (Properties taken as primary and collateral) and LIC policy / NSC / RBI bonds.
In case of Non Fund based facilities viz Guarantee & LC, uncovered portion net of margin
should be covered by way of realizable sale value of properties. If any property held as
security for the other credit limits like HL etc; sanctioned to the borrower / guarantor
outside IND SME Secure, is extended to the credit facilities under IND SME Secure to the
borrower, then, the residual value of the property should be calculated after taking the
margin on the property stipulated as per sanction terms for that credit limits, for assessing
the security coverage under IND SME SECURE

Quantum of Working Capital up to Rs 5.00 crore: 20% of accepted annual turnover. Working capital
credit above Rs 5.00 crore: MPBF (2nd method). Fund Based Working Capital limit will be
sanctioned as OCC / PC or SOD.
Working capital
1. OCC/PC/Secured OD limits up to of Rs 25 lakhs.
2. OCC / PC for limits above Rs.25.00 lacs

76
 OCC / PC limit - Extant guidelines as per policy of the Bank to be complied.
SOD limit with 30% margin on land & building. Assessment of limit should be done based
on turnover method subject to availability of security value with stipulated margin as per
scheme. Drawing power shall be based on property security value (realizable sale value).
Stock & Book Debts can be considered as collateral. Unit inspection on monthly basis.
Annual stock & book debt statement with age wise classification of book debts to be
obtained for SOD limits up to Rs.25.00 lacs.
Adhoc limit to the tune of 20% may be permitted for maximum three months with
additional interest of 2% over applicable rate.
Non Fund Based Limits :- Guarantee and LC limits may be assessed as per extant
guidelines and need based facilities / limits may be considered on merits All types of Fund
Based (excluding IBN / FBN) and Non Fund Based limits should be included in the overall
exposure under IND SME Secure. IBN /FBN limits may be assessed as per extant
guidelines (outside MPBF) and need based facilities / limits may be considered on merits.
IBN/FBN may be considered outside IND SME Secure. PC, FBP, FBN may also be
considered

Term Loan Takeover of Term Loans and Sanction of Fresh Term Loans for creation of new assets, for
expansion of capacity, purchase of machinery subject to availability of cash flow / DSCR to
service term loan as per extant guidelines.Financing for purchase of second hand
machines is also permitted subject to the following conditions In case of indigenous
machines, age of the machines should be maximum of three years and the residual life of
the machine should be satisfactorily longer than the repayment period proposed. Second-
hand machines to be financed should be valued by a panel engineer of the Bank,
preferably by a Mechanical Engineer, certifying the current value, residual economic life of
those assets and the working conditions of the machines In case of imported machines,
the residual life of the machine should be satisfactorily longer than the repayment period
proposed. An approved chartered engineer should be engaged to evaluate the
economic/residual life of the machinery, its capacity, comparative worth, the working
conditions of the machines etc.
Guidelines on financing of second hand assets as per loan policy / CRM Policy to be
complied

Interest rates As per the latest circular

Processing Term Loan- 1.17% upfront fee on limit sanctioned, inclusive of service charges. Working
charges capital (FB+NFB)- As per extant CO guidelines (Circular GENL 52 / 2015 - 16 dated
17.11.2015)

Review/Renewal The account should be reviewed by sanctioning authority once in 6 months and renewed
annually.

Monitoring & Common Application Form as per our circular ADV – 26 / 2017-18 dated 12.05.2017
Other aspects
Past performance of the borrower including operations with previous banker should be
carefully looked into and market enquiries made. Due diligence to be exercised to ensure
that difficult / default borrowers of other banks are not taken over. Take over from other
banks should not be resorted in a routine / casual manner. Borrowers with good turnover
and those who are leading in their area of operations shall be preferred for finance under
this scheme. Proper care should be taken at pre sanction and post sanction stages.
Prerelease audit and feedback report should be submitted as per CO guidelines. Branch
should ensure filing of charges and satisfaction of charges as applicable to other advances.
Managers should personally inspect the properties offered towards confirming genuineness
of ownership and the reasonableness of valuation of these. Their reports of visit and
assessment should be part of the document. In states like Tamil Nadu, where registration
of EM is not expensive / registration of EM is mandatory, branches should ensure
registration of EM All the properties offered as securities should be duly and
comprehensively insured with bank clause. EC is to be obtained by branch every year and
the same shall form part of renewal process Personal guarantee of partners / directors and
mortgagors are to be obtained as per extant guidelines.
DL for working capital facility (OCC) shall be arrived on the basis of paid for stocks and
eligible book debts (up to 90 days old – age may be extended up to 180 days in deserving
cases) with 25% margin on stocks and book debts.

77
 For operational convenience / flexibility and in view of availability of EM property as
security under the scheme, sanctioning authorities may permit inclusion of business
related moulds, dies etc. (with life span up to 1 year) along with goods in transit in the
eligible current assets for DL subject to the condition that these items are free from any
other charge / lien / hypothecation and have not been financed by us by way of term loan.
Advance payments towards procurement of raw material / spares etc. and any such
business related current assets may also be considered eligible for DL calculations, if
documentary proof in support of such payments is obtained. Margin against such current
assets shall be 25%. Simplified monthly stock statement showing opening stock,
purchases, and cost of sales and closing stock to be obtained. Detailed stock and book
debt statement (with age-wise break up) at the end of each quarter to be obtained.
Certification by CA is not mandatory. Verification of stocks and book debts to be carried
out by branch officials on monthly basis. CMA data and MSOD to be obtained as per Loan
Policy / CO guidelines. QIS to be obtained in case of exposure above Rs.5.00 crores
Processing charges / upfront fee and EM creation charges to be recovered as per CO
guidelines. Pre-payment charges shall be as per extant norms. Credit Rating / External
rating should be done as per extant guidelines from CO. Turnover in the account should
be continuously monitored and it should be ensured that minimum 80% of the turnover
achieved is routed through the Bank account. Indications of lower turnover in the account
should be attended immediately. Existing customers of our bank satisfying the criterion
are also eligible.

IB MICRO:-
Coverage All Micro (Manufacturing and service sector ) units – Priority Sector - as per extant definition
of Govt of India
Activities not eligible for CGTMSE cover (like retail trade, educational institutions, SHG etc;)
should not be financed under this product

Eligibility All Micro units (Manufacturing and service sector – Priority Sector) – existing units (with good
track record) as well as fresh units (with satisfactory promoters’ track record, satisfactory
experience of the promoter in the field and viable project).
It shall be ensured that the account is not a restructured / rescheduled one, none of the
group accounts are NPA with other banks / FIs and due diligence has to be made. CIBIL
report on the borrower / promoters / shareholders to be verified and ensured that their
dealings are satisfactory KYC norms of the Bank should be strictly complied with RAM rating
is waived. However, entry level rating based on scoring model as per CRM Policy should be
complied with. No takeover of borrowal accounts is permitted under this
product

Constitution Individual / Proprietary / Partnership / Private Limited Companies

Exposure Maximum Exposure : Rs 20.00 lacs per borrower Nature of facility - Composite loan

Quantum of The nature of facility proposed is composite loan and hence, both term loan and working
Credit & capital requirement should be assessed as under 20% of the estimated annual turnover can
Purpose be given as working capital. Estimated month wise sales for 12 months to be taken and the
sales estimates should be justifiable based on the past level of activity of the unit/ experience
of the promoter. Loan can be given with a margin of 25% for purchase of machines /
equipment , other fixed assets, interiors, initial expenditure in commencing a unit etc. Term
loan requirement plus working capital requirement should be given as composite loan.
Promoter’s contribution should be brought up front. Loan should not be given for any
speculative purpose / advances restricted under loan policy.

Interest rat MCLR(One Year) + 1.70% = 11.15% (0.50% concession for Women Entrepreneur

Securities Primary Securities : 1. Assets created out of the loan. 2.CGTMSE cover to be taken –
Mandatory
No collateral security or third party guarantee should be taken under this product

Loan facility Composite Loan

Repayment 60 EMIs after a holiday period of 6 months. Interest need not be serviced during the holiday
period of six months and the interest accrued during the holiday period along with the
78
 principal to be paid in 60 EMIs. (Total repayment period 66 months)

Proc charg Upfront fee at 0.57% inclusive of service tax

Other 1. Application form as per our circular dated 23.05.2017.

conditions
2. Proper care should be taken at pre sanction and post sanction stages. Branch Manager
should ensure existence of the unit and pre Sanction inspection report should be part of the
documents.
3.Enduse of funds should be ensured by the Branch Manager and documentary proof for the
same to be kept along with the documents. Stock statement for the first month after
disbursement should be obtained and kept along with documents as a proof of end use of
working capital component and stamped receipt in respect of term loan component.
4.Insurance to be taken for assets created out of the loan / assets held as security as per
guidelines from time to time
5. CGTMSE Coverage is mandatory. Annual premium to be paid within the stipulated time. All
guidelines of CGTMSE scheme to be followed meticulously.
6. Units should be inspected at least once in a quarter and condition of the working of the
unit should be recorded. Securities charged to the Bank are to be periodically verified /
inspected as per extant guidelines
7.Guidelines of CGTMSE should be strictly complied with at all levels
8. Pre- release audit and feedback report should be submitted as per circular ADV 82 / 2005-
06 dated 30.09.05.
9. Branch should ensure filing of charges as applicable to other advances.
10. Personal guarantee of partners / directors to be obtained as per extant guidelines.
11.In case of accounts with annual turnover more than a 1.00 crores, audited financial
statements to be submitted.
12. CMA data, MSOD and periodical stock statement need not be obtained
13. Symptoms of sickness , if any, should be diagnosed at the earliest and the account to be
closely monitored
14. All guidelines from time to time / Loan Policy / Credit Risk Management Policy to be
complied with
15. Zonal Offices to monitor regarding CGTMSE cover for accounts sanctioned under this
product.

IB VIDYA MANDIR:-
Eligibility Reputed Educational institutions

Purpose Construction estimates shall be vetted by panel valuer and their reasonableness analyzed
by the sanctioning authority.

Margin Upto Rs.2.00 lacs – Nil

Above Rs.2.00 lacs – 10% for Equipments & other fixed assets 25% for Building. (Land
should be owned by the borrower / promoter / Guarantor

Interest rates MCLR + spread ranging from 11.30% to 15.15 % at present depending upon rating(ADV/
007 dated. 04.04.2016)

Processing 1.17% upfront fee on limits sanctioned, including service charges

fees

Papers a) Estimation / valuation from our Bank approved engineer b) Legal opinion for clear, valid
required and marketable title to the property given as security to Bank c) EC for 13 years d) Plan
approval Municipality, Corporation etc
e) If any grant / aid is given for the same purpose, our loan amount should be reduced to

79
 that extent
f) Building insurance premium could be included in the loan component for the first year
and thereafter the institution should bear the same

Repayments Repayments shall be fixed on the basis of cash flows / fee receipts (monthly / quarterly /
half yearly / annual), subject to compliance with prescribed DSCR norms (both year-wise
and cumulative average) Max. period as per stipulations made under Discretionary power
norms/ Loan Policy / Credit Risk Management policy from time to time. (Presently field
level functionaries can consider Term Loans upto 10 years including holiday period).
Instead of EMIs, principal shall be recovered in installments as per cash flow projections
and interest (including that during holiday period) shall be paid as and when debited.
Braches shall have Escrow mechanism on fee receipts. All fee receipts/ other income
shall flow into separate Escrow account. Only after earmarking funds required to serve
Bank dues (installments and tentative interest till next fee receipts), funds from Escrow
account shall be transferred to Current account for withdrawals / day to day operations
of Educational Institutes.

Other aspects To finance construction of pucca building with reinforced Cement Concrete (RCC) roofing or
upgradation of thatched roofing of school buildings with alternatives like asbestos cement
sheets, fibre glass, GI sheets, red mud plastic sheet , Acquisition of all the equipments
(Project cost may include cost of security equipment / fire alarm /fire extinguisher etc.)

Security Up to Rs.2 lakhs :Personal guarantee of Promoters

For above Rs.2 lakhs :EM of school Building /other collateral securities

IB DOCTOR PLUS:-
Eligibility Individuals / registered partnership firm / Limited Company / Trust etc. Key promoters or
their spouse should be qualified medical practitioners, with satisfactory track record

Purpose To set up clinic, clinic cum residence, nursing home, hospital, X Ray or pathological labs,
medical stores, purchase of vehicles / ambulance etc. OR for expansion / renovation /
modernization of existing premises.(MSME / Service Enterprise category)

Amount of Minimum : Rs.1.00 lakh .Maximum: as per discretionary powers for various sanctioning
Loan authorities

Margin Only two slabs: Upto 5 lac 10%, Over 5 lac 20% Margin of 15% in rural and
semi urban centres for both the slabs

Interest MCLR + spread ranging from 11.15% to 14.65 % at present depending upon rating(ADV/ 007
rate dated. 04.04.2016)

Repayment Maximum period up to 120 months including moratorium period of 12 months or stabilization
of cash inflows from the project, whichever is earlier.

Security Loans upto Rs 10 lac:Hypothecation of assets created out of loan amount. No collateral
security / third party guarantee and to be covered under CGS of CGTMSE.
Loans above Rs 10 lac:Hypothecation of assets and LIC policy assigned in favour of the Bank
or other collateral security, so as to ensure compliance with Loan Policy guidelines in respect
of security coverage.
Sanctioning authority to explore the possibility of Key man insurance policy duly assigned to
the Bank.

Paper Proof of Professional Qualification, Audited B/S for 3 years, if unit is existing ,Project report for
required proposed new unit ,IT Returns for 3 years of the promoters, Statement of account for 6 months
of the unit or promoters, Quotation from reputed dealer for the equipment / vehicle to be
purchased , Estimate duly approved by panel engineer for renovation of existing premises ,Sale
agreement for the proposed purchase of immovable property along with building plan,
valuation by panel engineer and legal opinion from panel valuer

Processing Upto Rs 5 lac: Nil for first time borrowers Above Rs 5 lac: 0.30% on loan
fee amount.

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Other Working capital shall be assessed based on cash budget method.
features
Availability of cash flow / DSCR to service term loan shall be assessed as per extant
guidelines
The account shall be reviewed once in 6 months and renewed annually
Pre-payment charges shall be as per extant norms.

IB CONTRACTOR:-
Eligibility 1. Contractors in the line of business for at least 3 years. 2. Should have made net profit for last
two year
3. KYC, due diligence and other related norms of the Bank are applicable. Compliance to
be ensured by BM / Sanctioning authority. 4. Income Tax Returns of the borrower(s) to be
obtained and analysed.
5. Takeover of accounts from other Banks is permitted subject to compliance with prescribed
take over norms

Purpose To finance contractors carrying out work orders from various Central /State Govt. departments
/ reputed PSUs/ reputed Corporates.(Micro & Small Enterprises/ Priority Sector)

Target All well-established contractors (civil, mechanical, electrical etc.) falling under Micro & Small
group Enterprise sector, performing contracts for Central / State Govt. / reputed PSUs / reputed
Corporates.
Sub-contractors carrying out works relating to Central / State/ PSU dept. may be covered,
selectively, under the loan product subject to the following:
• Sanctioning powers shall be vested with the ZLCC only
• Additional risk factors associated with such proposals (scope of contract awarded to the sub-
contractor vis-à-vis total contract, competence and integrity of the main contractor, prospect of
release of payments after completion of sub contract etc.) shall be thoroughly appraised by the
BM/ZM.

Constitution Individual/Proprietary/registered Partnership/ Pvt. Limited Companies

Facility Fund Based: Secured OD / BP Term Loan to procure equipments Non Fund Based: Guarantee
/ LC

Amount of Min. Above Rs 10.00 lac per borrower Max. Rs 5.00 crore per borrower (FB+NFB) Max. Rs 10.00
Loan crore per group (FB+NFB)

Margin 50% on EM property for Secured OD 20% on equipments / Term Loan 15% for Bill Finance
10% against Guarantees / LC
Zonal Managers may relax the margin by maximum 10% for FB limits on case to case basis on
merits

Int. rate MCLR + spread ranging from 11.30% to 15.15 %

Repayment Term Loan shall be repayable in max. 84 months, including holiday period. DSCR to be as per
Loan Policy guidelines. Interest (including that for holiday period) shall be recovered as and
when debited.Tenor of Bank guarantee as per Loan Policy norms.

Application
form As per Common Application Form prescribed under MSE Code

Assessment Turnover method, subject to complying with prescribed margin on EM property as above.
Projected / accepted sales to be justified on the basis of past track record, orders in hand and
available infra-structure with the contractor.

Security MTL – Hypothecation of equipments purchased by availing MTL SOD – EM of property (Min.
200% of the limit)
Rural / agricultural property shall not be accepted. Third party property may be accepted with
81
 approval from the ZM.
BG- Counter guarantee by applicant. Cash margin by way of FDR. Portion uncovered by
cash margin should be covered with advance value of security LC- Cash margin by way of FDR
and Hyp. Of stocks procured against LC
BP- Undertaking from the debtors to make payment directly to the Bank.Documentation to be
done as per extant CO guidelines.

Processing
fee As per norms

Monitoring Compliance with Entry Level rating as per Credit Risk Management policy shall be ensured.
Two valuation reports from different panel valuers shall be obtained. Legal audit to be
conducted irrespective of limit. Payments against Term Loans shall be made directly to the
equipment suppliers. Withdrawals from SOD account shall be monitored and shall be for
genuine business purposes. Turnover in the account to be monitored on monthly basis
and reconciled with annual receipts projections / orders in hand. Books of account
(inventory, receivables, creditors) should be scrutinized on quarterly basis and end use of
funds ascertained. There should be healthy operations in SOD account. BP facility to be allowed
only after getting letter from the debtor (PSU/ Govt deptt/ reputed Corporate) of the
contractor to the effect that payment shall be made directly to the Bank. Quarterly progress
report in respect of contracts against which bank guarantees are outstanding should be
obtained and analysed. Guarantees should be extended after looking into the reasons for
seeking such extensions and not as a matter of routine.
EM property to be inspected on half yearly basis by bank officials. All securities to be insured
with Bank clause,QIS, CMA and Stock audit may not be insisted upon.Limit is to be reviewed /
renewed within a maximum of one year. Pre payment charges – As per CO norms. Eligible
contractors shall have the option to avail credit facilities under IND SME Secure scheme.

MY OWN SHOP:-
Eligibilty Individuals, Professionals and Self-employed people, firms (registered partnership
firms, companies) and businessmen.
(Micro / Small – Service Enterprise) The applicant should have been in the activity for a
minimum period of 3 years. (Micro / Small – Service Enterprise) Minimum period in business
may be reduced to 2 years instead of 3 years by ZMs.

Age Not more than 50 years of age at the time of availing the facility. (The ceiling of age can be
extended upto 60 years by ZMs)

purpose To purchase new commercial space / shop and also second hand purchase provided the
residual life of commercial space is not less than actual repayment period plus 2 years,
and / or fresh construction, renovation of the business premises. Estimates to be vetted by
panel valuer and all statutory approvals to be ensured. Takeover of existing loan of Standard
asset category given for similar purpose from other banks / FIs. The applicant may acquire
the property for own business and even for letting out to third party entrepreneurs / traders
provided rental income is routed through our loan account.

Amount of In case of individuals / professionals, 36 times monthly gross income or 60 months net
loan income, whichever is higher.
In case of self-employed professionals, gross income net of tax before deducting depreciation
may be considered while computing the eligible amount. Income of co-borrower can be
included in arriving the quantum. In case of firms / company, five times the cash profit of
immediate preceding year or four times average cash profit for last three years, whichever is
higher
Maximum loan amount: Rs 50 lac ZM may permit upto Rs 75 lac

Margin Minimum 25% on the value of property. In case of purchase of ready built commercial space,
the borrower should bring in full margin amount prior to release of limits by the Bank. It
shall be on pro rata basis where construction is involved.

Int rate As par circular

82
Repayment As per stipulations made under Discretionary power norms / Loan Policy / Credit Risk
Management policy from time to time. (Presently, field level functionaries can consider
Term Loans upto 10 years including holiday period)

Holiday Maximum of three months for ready built commercial space and maximum of 12 months
period from date of first disbursement where property is under construction. Interest to be
serviced during holiday period.

Prepayment
ch 2% of the drawing limit to be levied in case of takeover by other Banks / FIs

Insurance Property to be insured with Bank’s clause at the borrower’s cost

cost

Security EM on commercial property to be acquired

Personal guarantee of partners / directors in individual capacity
Security may include third party guarantee having NW not less than loan amount in case of
individual borrowers, in cases where margin available is 25%. In case margin is maintained
at minimum 40%, third party guarantees not to be insisted. Eligible accounts to be covered
under CGTMSE scheme and no third party guarantee to be taken for such accounts.
No collateral / third party guarantee to be taken for loans upto Rs.10 lac to MSME borrowers
and accounts to be covered under CGS of CGTMSE

Papers to be 1) Balance sheet for last three years

submitted
2) IT / WT returns for last three years
by
applicant 3) Copy of shop act license wherever applicable
4) Sales tax returns for last three years
5) Copy of bank pass book / statement for last one year
6) Agreement of sale / sale deed entered into with builder
7) EC for 13 years showing nil encumbrance
8) Approved building plan
9) Parent documents for 30 years
10) Valuation report from panel engineer and legal opinion
11) Satisfactory credit opinion from existing banker in case of
takeover of limits
12) NOC from builder / housing society wherever applicable
13) Wherever license is required, they should get the same from competent authority
14) In the plan, it should be approved by competent authority as commercial and / or
residential and no deviations should be allowed from the approved plan

Proce
charge 0.60% of loan amount

TRADE WELL WORKING CAPITAL for OCC/OD

Eligibility Group Traders/Trading Enterprises. Maximum investment in equipment upto Rs.5 crore.as
defined in MSMED Act 2006.
The Traders should have minimum 3 years’ experience with good standing in the market.
ZLCC may relax this condition on case to case basis after ensuring the bonafides of the
Trader. No other relaxation is permitted in the Scheme. New enterprises can be financed
outside the purview of structured Trade Finance by BMs within their delegated powers. It
shall be ensured that the account is not a restructured / rescheduled one, none of the
group accounts are NPA with other banks / FIs and due diligence has to be made. KYC,

83
 due diligence and other related norms of the Bank are applicable. Compliance to be
ensured by BM / Sanctioning authority. CIBIL report on the borrower / promoters /
shareholders / guarantors to be verified and ensured that their dealings are satisfactory
RAM rating / Scoring model is mandatory depending on the credit exposure and entry
level rating as per CRM policy as below should be complied with.
In case of accounts with credit exposure upto Rs.50.00 lacs, BBB rating as per scoring
model
In case of accounts with credit exposure above Rs.50.00 lacs, Obligor rating BBB as per
RAM rating

Purpose To meet working capital needs of trading activity

Security/Margin 1.For SOD upto Rs.50 lakh Immovable Property-33% NSC/KVP/IVP - 10%
2.For SOD above Rs.50 lakh & upto Rs.2 crores
Primary Security-
Immovable security- 40% on Realisable Sale value (other than Agriculture property)
IVP/NSC/KVP -25% Govt .Securities - 20% Other security as per Banks
norms
Collateral: Stocks & Book debts equal to the limit sanctioned.
For OCC Limit Securities:
Primary : Stocks & Book debts (upto 90 days) with 15% Margin. Collateral : Immovable
property and or other tangible security value should be minimum of 100% of the limit
sanctioned.
ZLCC may consider collateral upto 50% of the sanctioned limit (subject to 1% additional
interest above the applicable rate), on a selective basis on business considerations. ZLCC
may consider taking agricultural land situated at places other than rural area as collateral
security or primary security (if primary security for Sec OD limit – margin at 50% of
realizable sale value) subject to verification of local laws as to permissibility of taking such
property as security, including extension of Security
NFB LIMIT: NFB limits may be sanctioned within the sanctioning powers as delegated in
the Credit and Credit related administrative powers. Securities: Primary: Portion
uncovered with cash margin shall be covered with realizable sale value of EM property /
liquid securities. Personal guarantee/s of Proprietor/ Partner/s / Director/s for all the
cases.
Other terms:
1. All the above margin requirements are applicable for both existing and new customers.
2. Taking leased properties as Primary / Collateral security :

While the branches may strive for freehold properties, in selected metropolitan centres like
Mumbai, Delhi, Chennai, Kolkata and centres where Local Development
Authorities/Housing Development Corporations of State Government let out properties on
long term lease, ZLCC may exercise discretion to approve leasehold (instead of freehold)
properties as primary/collateral under the Trade Well Scheme. Precautions as to proper
assessment of value of leasehold rights should be taken. For OCC upto Rs.10 crore
Primary Security: Stock & Book Debt with 15% margin Collateral: Immovable property &
others tangible security of 100% of limit sanctioned

Eligible Amount Total Fund based (Working Capital and Term Loan) and Non-fund based (Working Capital)
Minimum per borrower exposure :- Rs.0.10 crores
Maximum per borrower exposure :- No ceiling. Of which Ceiling under: Term Loan Upto
Rs 5.00 crores

Working capital Working capital (Fund based) can be availed as Secured OD/ OCC:
Secured OD / OCC Limit upto Rs 2.00 crores. Above Rs.2.00 crores – Only OCC Limit.

84
Assessment: Assessment of eligible working capital limit as per Loan Policy / CRM Policy guidelines,
which is as below , at presehnt
Working Capital limit upto Rs 5.00 crore – Turnover method
Working capital limit above Rs 5.00 crores – MPBF method.
While assessing eligible working capital limit under turnover method, adequate care
should be given in case of accounts wherein the period of working capital cycle is less.
Working capital: Renewal every 1 year.
Term Loan: Maximum 60 months (excluding holiday period of 6 months) with minimum
DSCR 1.30. Minimum required current ratio is 1.10. Other key financial parameters as
per Loan Policy / CRM Policy should be complied with.

Interest rate Interest rate as applicable for both working capital and term loans

Repayment Working capital to be reviewed periodically.

ProceCharges 50% concession in processing charges / upfront fee Waiver of processing fee/upfront fee
at the time of takeover. EM charges as per guidelines

Take-over As per Loan Policy / CRM Policy

Insurance Adequate insurance against all risks should be taken Waiver of burglary insurance can be
permitted by ZLCC after satisfying that alternatives are sufficient to overcome the same.

Submission of Wherever stock is considered as primary security: • Submission of stock statements on

stock/book debt quarterly basis is mandatory for all the accounts irrespective of limit. • In respect of limits
statements allowed as OCC / OD – Book Debts, Drawing Power (DP) to be marked and operations to
be allowed as per the available DP. • In all the cases, Stock inspection to be conducted
once in a quarter and recorded.
Wherever stock is considered as collateral security: • In respect of limits allowed as
Sec OD, since the primary security is immovable properties / other securities (other than
stock and book debts), borrowers may submit stock & book debt statement once in a year
for limits upto Rs.0.50 crore. For limits more than Rs 0.50 crores, stock statement is to be
submitted on a quarterly basis. • Stock inspection to be conducted once in a quarter.

Others Terms CMS facility should be provided to the Customers wherever feasible.
 Branch should canvass more business for the bank from the Trader customer like
SB/ RD accounts of family members and cross selling of other products.
 Other operational guidelines on Trade finance/ related area, from time to time.

TRADE WELL TERM LOAN

Eligibility Retail/Wholesale Traders
Group

Purpose Term Loan: Purchase/setting up infrastructure like hoarding, display panels, show cases,
basic office amenities like computer hardware billing equipment, safety equipment, furniture
lay out for storage purchase of air conditioner, delivery van, trolley etc.

Margin Building: 50%, plant & machinery : 25%

Loan Maximum term loan of Rs.5 crore

Amount

Security Primary: Charge on asset created out of Term Loan

Collateral security: Immovable property and or other tangible security value should be

85
 minimum of the limit sanctioned.

Rate of As per latest circular

Interest

Proce 50% concession in processing charges / upfront fee Waiver of processing fee/upfront fee at
Charges the time of takeover. EM charges as per guidelines

86
 BALANCE SHEET AND RATIO ANALYSIS
Prudent industrial investments and finance encourage rapid and healthy growth of the economy
and the common tools in analyzing financial requirements are given below:
Balance Sheet Analysis:- The balance sheet will help the banker to assess the financial position
of the company (Financial strength and weakness). Financial ratios, cash and funds flow, Break
even, are some important tools in the hands of bankers, with which major credit decisions can be
taken.
Ratio analysis:Ratios can be broadly categorized into five : 1) Liquidity 2) Solvency/
Leverage/ Capital Structure 3) Turnover / Operational 4) Profitability
Liquidity: To assess whether the company can meet its short term commitments in time.
Current ratio: Current Assets / Current Liabilities: If the ratio falls below ‘1’ the company would
be in serious liquidity problem. Please refer annexure at the end of the chapter for our
benchmark ratios for existing and new borrowers. Quick Ratio: Current assets minus Inventory
or stock divided by Current Liabilities: To find out what is the percentage of stock in total current
assets.
Solvency / Leverage: To assess the company’s long term commitments, and to what extent the
company has leveraged its funding. (Interest service ratio, DSCR, and D:E, Total indebtedness
ratio, Fixed asset coverage ratio).Financial leverage results from the use of funds obtained at a
fixed cost which could increase the return to share holders, as long as profit before interest and
taxes exceed fixed interest cost. Fixed interest cost may be deemed as the fulcrum of a lever. FACR
– Assets charged to the bank only to be taken for calculation.
a) Interest Coverage Ratio: Earnings before interest, depreciation and Tax divided by
Interest. As per our policy it should be 1.5 to 2.00. The meaning is that if 10 lakh
interests is to be paid to the bank in a year the company has to generate a minimum of
Rs.15 lakh to 20 lakh profit.
b) DSCR: Debt Service Coverage Ratio: Net Profit after tax + Depreciation + Other
amortizations if any + Interest on Term Loan Divided by Interest on Term Loan +
Installment on term loan. The concept is very simple. Whether the company will be able to
generate sufficient profit to pay the interest and principal. As per our policy the ratio
should be 1.5 to 2.00 and in any year of term loan frequency, it should not be less than
1.25.
c) Debt Equity Ratio: Total Long Term Debt / Equity. Please refer annexure at the end of
the chapter for our benchmark ratios for existing and new borrowers.
d) TOL/TNW: Total outside Liability / Total Net Worth. Please refer annexure at the end of
the chapter for our benchmark ratios for existing and new borrowers.
e) Security coverage Ratio is no longer a benchmark ratio.
Operational/Turnover ratios: mainly serve as base for arriving at working capital requirements.
a) Debtors turnover ratio: To assess the period, for which the company is giving credit for
its sales. Net Credit Sales / Avg Debtors (outstanding during one year). Net Credit Sales =
Gross Credit Sales – Returns. This ratio shows how rapidly debts are collected.
b) Creditors turnover ratio: To assess the period for which the company is availing credit
for its purchases.
c) Inventory turnover ratio: To assess for how many times the company has turned the
inventories into production and sales.
d) Current Asset Turnover Ratio: To assess the operating cycle of the firm and assess
working capital accordingly.
e) Fixed asset turnover (FAT) ratio: Net Sales / Avg Net Fixed Assets To assess for how
many time the company has turned its Fixed Assets, in volume as sales. Higher the ratio,
performance is good. All ratios are not indicative of the quality of the assets. To get a clear
picture, comparison with industry level benchmark is to be made.
87
Networking capital (NWC)
 Long term source of fund namely capital and term liabilities are utilized for long term uses
viz. creation of fixed assets, intangible assets, and miscellaneous assets. In case of
surplus, it is to be utilized for financing current assets. This surplus is called NWC, Net
Working Capital. Hence, NWC is contribution of from Long Term Sources for financing
Total Current Assets or working capital.
 Gross Working Capital = TCA ( Total Current Assets ) = OCL + NWC + BB (Bank
Borrowings)
 TCA – OCL = WCG (Working Capital Gap) , the extent to which TCA can be financed out of
other current liabilities.
 WCG needs to be financed from two other sources viz. NWC and BB.
 Therefore, WCG = NWC +BB
 The company should meet its NWC requirement from its long term sources.
 Return on investment = Profit before tax and interest / Investment
 Investment = Net worth + Interest Bearing Liabilities.
Profitability Ratio is of two types viz. in relation to Sales and Investments
 In relation of sales :
1. Gross Profit Ratio : Gross Profit / Net Sales * 100
2. Net Profit Ratio : Net Profit / Net Sales *100

 In relation of Investments :
1. Return on Assets , RoA : Net Income / Total Assets
2. Return on Capital Employed , ROCE : (EBIT/ Avg Total Capital
Employed)
Break Even Analysis is applied in appraising the profitability of new projects.
 Fixed costs are expenses of fixed nature and overheads which does not vary with increase
/ decrease in production. Variable Costs are those which vary with the volume of sales
(e.g. Raw material and selling cost).
 Sales – Variable Cost = Contribution.
 Break Even Point = Fixed Cost / Contribution per unit
 The breakeven point will generally be high in a capital intensive plan.
 For a non-NBFC, manufacturing company, its public deposits are unsecured and long
term liability. Debentures, public deposits, DPG, loan installments, payable during the
year are the company’s current liability. Preliminary expenditure is classified as intangible
asset which is to be written off in due course. Fixed assets – depreciation = Net block.
Fixed asset coverage ratio must be always greater than one and as our Loan Policy it should be
1.20.
Sources and application (Funds flow) :
 Sources of funds are the capital mobilized through issue of shares, sale of machinery, net
profit generated for the year, availing Bank OD, etc.
 Application of funds are - Payment of taxes, adjustment of Long term liability, Purchase
of raw material, Purchase of vehicle etc. Debentures converted into shares (Neither Source
nor Application).

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Deferred tax liability shall not be added with net worth of the company. Deferred tax asset should
be reduced for net worth computation. For calculation of ratios deferred tax liability need not be
added with TOL
Cash flow and Funds flow :
For a firm which is having a positive funds flow, cash flow can be negative. (Reason -the firm
might have booked profit by selling heavily on credit. Fund flow is nothing but “Sources and
application of funds”.
All liabilities are sources : 1) Owner’s stake 2) Long term liability 3) Short term
liability.
All Assets are applications : 1) Fixed Asset 2) Current Asset 3) Non Current Asset 4) Intangible
Asset.

Annexure - I

Financial Parameters for working capital and Term loan/DPG ( Applicable For Existing
Advances)

Facility Benchmark ZLCC @ COLCC(GM) $

Current Ratio (for working Capital)

General 1.33 1.10 1.00

EOU 1.10 1.00 1.00

Tea/Sugar (incld
AMTL) 1.00 1.00 1.00

Mid-Corporate (Mfg.) 1.10 1.00 1.00

Large (Mfg.) 1.10 1.00 1.00

Trade & Services 1.10 1.00 1.00

Infrastructure 1.10 1.00 1.00

TOL/TNW (For working Capital & Term Loan)

General 3:1 4:1 5:1

Mid-Corporate (Mfg.) 4:1 5:1 6:1

Large (Mfg.) 4:1 5:1 6:1

Trade & Services 6:1 7:1 8:1

Infrastructure 6:1 7:1 8:1

Contractors (FB only) 3:1 4:1 5:1

Contractors(FB+NFB) No benchmarking to
be stipulated

DER (For Term Loan)

General 2:1 2.50:1 3:1

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Mid-Corporate (Mfg.) 3:1 4:1 4.50:1

Large (Mfg.) 2:1 2.50:1 3:1

Trade & Services 2:1 2.50:1 3:1

Infrastructure 4:1 5:1 6:1

Interest Coverage
Ratio (WC 1.50 1.25 1.10

DSCR (TL) Avg. 1.50 Min 1.25 Avg. 1.25 Min 1.00 Avg. 1.25 Min 0.90

FACR (TL) 1.20 1.20 1.00

Security Coverage
(WC) 1.20 1.20 1.00

Annexure - II

Financial Parameters for working capital and Term loan/DPG ( Applicable For
Fresh Advances)

Facility Benchmark ZLCC @ COLCC(GM) $

Current Ratio (for working Capital)

General 1.33 1.10 1.00

EOU 1.10 1.00 1.00

Tea/Sugar (incld
AMTL) 1.00 1.00 1.00

Mid-Corporate (Mfg.) 1.25 1.10 1.10

Large (Mfg.) 1.33 1.10 1.00

Trade & Services 1.10 1.00 1.00

Infrastructure 1.33 1.10 1.00

TOL/TNW (For working Capital & Term Loan)

General 3:1 4:1 5:1

Mid-Corporate (Mfg.) 3:1 4:1 5:1

Large (Mfg.) 4:1 5:1 6:1

Trade & Services 6:1 7:1 8:1

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Infrastructure 4:1 5:1 6:1

Contractors (FB only) 3:1 4:1 5:1

DER (For Term Loan)

General 2:1 2.50:1 3:1

Mid-Corporate (Mfg.) 3:1 4:1 4.50:1

Large (Mfg.) 2:1 2.50:1 3:1

Trade & Services 2:1 2.50:1 3:1

Infrastructure 4:1 5:1 6:1

Interest Coverage Ratio

(WC & TL) 1.50 1.25 1.10

Avg. 1.50 Avg. 1.25 Min 1.00

DSCR (TL) Min 1.25 ………..

FACR (TL) 1.20 1.20 1.00

Security Coverage (WC) 1.20 1.20 1.00

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 Corporate Credit

Questions and Answers

Question Answer

What do you mean by Mid Other than MSME where our exposure is from Rs. 5 crore
Corporate: to Rs. 100 Crores subject to turnover in the account
within Rs.500 Crores excluding NBFC.

Why we should verify suppliers To determine actual price, units financial stability to
credentials while verifying end use supply the material in time, unit is having sufficient
of funds infrastructure to supply the machine in time. Etc.

Methodology to assess Corporate Based on cash budget/cash flow only and for loans to
loan to improve NWC. improvement of NWC should not be more than 5 years.

Time norms for sanction of BM Power 30 days, ZM Power 45 days, Corporate office
corporate loans 90days

Short review of account
Branch Managers of Scale- 4 and above can undertake
Short review (for a period of 3 months) on the existing
terms and conditions for the ZLCC / ZLSCC authority
sanctioned accounts and the same shall be reported in
the regular renewal proposal.
A short review of CO authority sanctioned accounts may
be considered by the ZLCC on the existing terms and
conditions and same shall be reported in the regular
renewal proposal.

Such reviews are valid for maximum of three months only

and there can be only two such short reviews during the
intervening period before regular review / renewal by the
relevant authority.

Take over account Other than MSME accounts rating to be ‘BBB’ as par
external rating in case of Rs 5 crore and above accounts..

Audited financial statement Need not to ask if the loan Rs. 20 lakhs or turnover Rs. 1
crore (for professionals Rs. 25 lakhs income) for non
corporate accounts.

Second legal opinion In all advances other than SLP with EM property, If the
advance is more than Rs. 75 lakhs and for SLP it is Rs. 1
crore.

Rating of downgraded accounts To be reviewed quarterly.

Partial release of security Valuation report of Security held with the bank should
not be more than six months old.

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Fixation of repayment Holiday period + monthly/quarterly/half yearly
commencement date in BANCs repayment period to be fixed as par sanction ticket.

TNW in project finance In Infra projects, where project assets are considered as
intangible asset , that need not be considered at netting
of TNW for calculation of ratios.

For where consortium is All exposure above Rs,.500 crore ( except A rated NBFC,
mandatory MFI and PSU) to be considered under consortium finance

Loan delivery system for above Rs 50% of total assessed limit should be sanctioned as
250 crore WCDL/Bill finance and should be payable within six
months.

What is JLA Joint lending Arrangement for single borrower exposure

more than Rs. 150 crores.

Green field project New business group, back ground of the group to be
verified

Brown field project Revival of sick project, utmost care to be taken

Take out finance – Way for Take out financing structure is essentially a mechanism
Infrastructure finance sanctioned at designed to enable banks to avoid asset liability maturity
CO mismatch that may arise out of extending long tenor
loans to infrastructure projects.

Guidelines for Corporate Loan
Corporate Loan request can be considered only on
selective basis to existing above BBB rated customers if
the purpose of the loan is to improve the NWC. The power
to consider corporate loan is vested with Corporate Office
level committees. Repayment should be supported by
cash flows/DSCR and the repayment of corporate loan for
NWC improvement should be restricted to 5 years.
However, we may fall in line with Joint Lenders’ Forum
(JLF) wherever Corporate Loan is proposed as part of
Corrective Action Plan (CAP) and the same shall be
limited as per our Bank’s share in the consortium / MBA.
Respective sanctioning authority shall consider sanction
of Corporate Loan, if the same is as part of CAP and
within the delegated credit powers.

What will be the security coverage The security coverage ratio for the Corporate Loan should
ratio for corporate loan be in line with the bench mark stipulated for term loans
i.e. Security coverage ratio of 1.20.

Rejection of credit proposal of MSE In case of MSE advances, rejection / curtailment of limit
or any Priority sector advance sought should be done only with the approval of the next
higher authority.

Financing Solar / wind power Credit limits to infrastructure sector of Solar and Wind
projects – Important aspects to be Power projects can be considered from the level of ZLCC
looked into while sanctioning and above under their respective delegated credit powers.
While considering the proposals for Solar Power and wind

93
 power the sanctioning authorities should ensure that
necessary Power Purchase Agreements (PPA) are in place
and the project cost is comparable with guidelines issued
by Central Electricity Regulatory Commission (CERC)
from time to time

Financing Road Project - Important While assessing project cost in respect of road projects, it
aspects to be looked into while should be ensured that the total project cost not to
sanctioning exceed the cost approved by NHAI (National Highways
Authority of India). Disbursement of loans to road
projects to be done only in respect of project where at
least 80% of Right of Way is made available.

Whether borrowers under Borrowers may be permitted to open current account with
consortium can open current a bank outside the consortium only for a specific purpose
account with other banks outside after obtaining NOC from the Consortium
the consortium

Who can participate in consortium The meeting must be presided by ZM / SIC of the zone
meeting / JLF meeting where our (not less than AGM) for all consortium accounts. For CO
bank is leader or member..? Accounts, ZO should take mandate from the CO before
attending the meeting. However, in respect of stressed
accounts which fall within the CO Powers, the JLF /
Consortium Meeting should have participation of
Department Head / Official deputed by Department Head
not less than the rank of AGM from CO

Wherever group or group exposure Financial statements of consolidated group have also to
is Existing – While sanctioning / be analysed and comments on the same to be furnished
renewal as provided for in the revised Board Appraisal Format.
Group power also to be referred for deciding who has to
sanction while sanctioning / renewal of any account of
group,

What is Viability Gap Funding Viability Gap Funding (VGF) Means a grant one-time or
Scheme (VGF)? deferred, provided to support infrastructure projects that
are economically justified but fall short of financial
viability
Government of India has notified a scheme for Viability
Gap Funding to infrastructure projects that are to be
undertaken through Public Private Partnerships. It will be
a Plan Scheme to be administered by the Ministry of
Finance with suitable budgetary provisions to be made in
the Annual Plans on a year-to- year basis.
The quantum of VGF provided under this scheme is in
the form of a capital grant at the stage of project
construction. The amount of VGF will be equivalent to the
lowest bid for capital subsidy, but subject to a maximum
of 20% of the total project cost. In case the sponsoring
Ministry/State Government/ statutory entity propose to
provide any assistance over and above the said VGF, it
will be restricted to a further 20% of the total project cost.
Support under this scheme is available only for
94
 infrastructure projects where private sector sponsors are
selected through a process of competitive bidding
The Scheme, inter-alia, requires that the Lead financial
Institution enters into an agreement with the Empowered
Institution (Govt of India) for the Scheme

Who has to do any TEV study and For credit proposals up to Rs 25.00 cr. No separate
submit report ? viability report need be insisted upon. The viability can be
assessed based on the project report / credentials
submitted by the applicant apart from the due diligence /
market report etc.

For credit proposals above Rs 25.00 cr. and up to Rs

50.00 cr. technical viability report by an IDO / an Official
with engineering background to be obtained.

For credit proposals beyond Rs 50.00 cr. The project

should be independently verified and certified regarding
the viability and feasibility.

Hence, all credit proposals (fresh/addition/expansion)

beyond Rs. 50 crs, should be accompanied by an
independent TEV
study report In case of exposure below Rs 50.00 cr.
respective
sanctioning authority may also refer for an independent
TEV study on case to case basis.

Third Party interference in All appraisal notes should contain a clause “No Third
processing party is involved at any stage in the loan sanction
process’’.
credit proposals

All loan proposals that are submitted to Corporate Office

should be accompanied by a Certificate signed by Branch
Manager/ Zonal Manager stating that no third party is
involved at any stage in the process of loan proposal.
Circular ADV-183/2015-16 dated 19.12.2015

Review/Renewal of Advances
Term loan accounts will be reviewed as per the structured
format devised by Credit Monitoring Cell (CMC).
In respect CO sanctioned Term loan accounts, standard
and regular, periodical review on existing terms and
conditions to be done by COLCC (GM) except for Any
reset of interest with reduction in existing rate structure.

Brand Name No loan can be sanctioned against the exclusive security

of assignment of Brand Name either under
consortium/MBA

95
Bench Mark Parameters for working i. The credit rating shall be a minimum of CRISIL A or its
capital advance to NBFCs equivalent
(including PSU)
ii. External Rating as per CRM policy
iii. Shall have a minimum capital adequacy ratio of 15%
iv. Gross NPA and net NPA shall be less than 4.50% and
2.50%, respectively (In view of the modified guidelines on
NPA
norms for NBFCs stipulated by RBI and CRISIL A rating,
the Gross NPA and Net NPA level have been revised)
v. Total borrowings shall not exceed 16 times of NOF

Obtaining of Quotes for Short term

In view of the business opportunity and time lines for
submission of quotes on a case to case basis COLCC(ED)
Loans / Quotes for loans to PSUs
can approve quotes for the accounts falling up to the
etc
powers of CAC. For other accounts CAC can approve the
quotes. While quoting it should be clearly stated that the
same is only ‘in principle’ approval and subject to final
sanction / approval by the competent authority as per
Bank’s rules and quoting the amount and rate of interest
is not binding the Bank or any of its Officials in any form.

Who can sanction Secured OD The powers for sanction of Secured OD are given in CP 19
facility for CRE and other than of booklet on Credit and Credit related Administrative
CRE..? powers. In addition to the above, Secured OD can be
considered for all bankable purposes except CRE by
ZLCC up to their
delegated powers.

In case of CRE exposure (including residential housing),

as far as possible shall be sanctioned in the form of a
project specific term loan. SOD for CRE (including CRE-
RH) can be considered
selectively by fixing the Drawing Limit (DL) based on the
projected cash flows / sale of the inventory. In any case,
the SOD should be fully repaid once the CRE (including
CRE-RH) project is completed and sold.

For obtaining administrative clearance for CRE projects,

Credit Risk Management policy 2017-18 guidelines to be
referred

Submission of Monthly Select Applicable to all manufacturing concerns enjoying

Operational Data (MSOD) working capital limit of Rs 50.00 lakh except for MSME
SLPs where they are specifically exempted

Submission QIS Quarterly Information System (QIS) is applicable for

borrowers enjoying working capital limit of Rs.1 crore and
above from the banking system except for MSME SLPs

96
 where they are specifically exempted.

Powers for considering in-principle NBG is to be obtained for total exposure of aboveRs 10
clearance for new credit proposals crores fresh proposal before regular sanction.
(NBG Clearance)

It is delegated to the NBG at Zonal Offices headed by

DGM and GM upto their respective discretionary credit
sanction powers i.e. uptoRs 15.00 crores for DGM headed
Zones and uptoRs 30.00 crores for GM headed Zones (as
per extant delegated credit sanction powers).

For NBG proposals involving exposure above Rs. 10

crores and beyond the powers as mentioned above
COLCC (GM) committee at Corporate office will consider
in principle clearance up to their power.

In respect of exposures falling under the powers of

COLCC(ED) and above, NBG committee at corporate office
will consider the in principle clearance.

CIBIL recovery charges Commercial Reports Rs.805.00

Consumer Reports Rs.30.00

Inclusion of “Wilful Defaulter” All agreements have to be authenticated with will ful
clause in Loan and Guarantee defaulter clause and format of the same available in
Agreements circular ADV 124 dt 7/9/2016

Different Schemes for Stressed Reserve Bank of India has now come out with revisions in
Assets by RBI the schemes for stressed assets under the following
categories
1) Scheme for Sustainable Structuring of Stressed Assets
2) Flexible Structuring of Existing Long Term Project
Loans to Infrastructure and Core Industries.
3) Strategic Debt Restructuring Scheme
4) Prudential Norms on Change in Ownership of
Borrowing Entities (Outside Strategic Debt Restructuring
Scheme)
5) Norms on Income Recognition, Asset Classification and
Provisioning pertaining to Advances – Projects Under
Implementation – Change in Ownership
6) Loans to Projects under Implementation – Date of
Commencement of Commercial Operations (DCCO)

97
Scheme IB -Rental

Scope of the Loan above Rs. 5 crores will be covered under IB-Rental (Loan uptoRs
Scheme 5 crores under the existing IB-Rent Encash Scheme)

Target Owners of Freehold Property (Commercial/Residential) who have let

Group out or propose to let out the property to eligible lessee/Tenants.

Eligible Lessee/Tenant may be any of the following :

Lessee/Ten
Partnership Firms , Reputed Corporates , Multi National Companies ,
ant
State & Central PSUs , Government Undertakings , Banks including
our Bank , Insurance Companies , Financial Institutions , Societies ,
Trusts , Schools & Colleges , Limited Liability Partnerships
In case of non-corporate lessees (i.e., Partnership Firms, LLPs,
Societies, Trusts, Schools & Colleges managed by any of such entities)
should be well established having minimum 5 years of satisfactory
commercial operations in India and enjoying good market standing &
reputation
Proper due diligence on the tenant / lessee to be made. For the
purpose of verification of satisfactory payment record, credit reports of
Credit Information Companies such as CIBIL to be verified. The score
should be above 700, wherever applicable.

Purpose Any bankable purpose other than for speculative /prohibited

purposes.
A declaration shall be obtained from the borrower indicating the
purpose for which the loan is being sought and availed, backed by an
undertaking to utilize the same for the intending purpose. The
Declaration obtained from the Borrower may be taken as final as
regards end use of funds.
Borrower should also undertake not to utilize the loan proceeds for
speculative and such other activities as restrained by the lender/Law.
Such declaration/certificate as furnished by the borrower and
accepted by the bank shall be considered as final once the proceeds
were credited to the operating account of the borrower for utilization
of the same for the intended declared purpose.

Bank’s Loan Policy Imperatives

A price sensitive approach to add fresh business under corporate and industrial credit
with due regard for the opportunity cost of retaining existing clientele.
External Bank loan rating for exposures of above Rs 10.00 Crore for all borrowers (except
MFIs)
The main objectives of our Bank’s Loan Policy are:
Loan Policy of the bank is aligned with the strategic objective of positioning the bank as
Retail and Mid segment Bank.

98
Adoption of a forward-looking and market-responsive approach within the framework of
policy guidelines for moving into profitable new areas of lending which are emerging in
the market.Enlarging client base of Non-Retail Credit without compromising on quality of
assets.
Cautious approach to sensitive sectors, mainly real estate sector, sectors under negative
outlook / stress.
Credit Strategies
Mid Corporate – Emphasis on asset quality
Mid corporate segment is identified for exposure to corporates above Rs 5 Crore and up
to Rs 100 Crore (excluding NBFCs & MSMEs) from our Bank or turnover upto Rs.500.00
Crore. To give fillip to quality credit growth with better returns, sharp focus is to be given
by Zonal Managers under this segment. With the intent to improve lending to mid
corporate, a separate IND Mid Corporate Vertical has been formed.
Corporate Lending – Selective Approach
Emphasis is given to rating of the borrower to ensure better quality of credit. It is the
endeavour of the Bank to extend credit to good quality corporate clients ensuring
optimum returns. Better the rating of the corporate; the more is the safety of principal
and income to the Bank. Competitive constraints under corporate lending need to be
overcome to a large degree by adopting some of the strategies listed below:
Careful selection of corporate and institutional exposures after thorough appraisal of
risks
Assessment of the volumes generated against the value in terms of income earned
while approving corporate credit requests with due regard for pricing.
The additional requirements of existing customers with good external and internal
ratings should be addressed in totality with speed and flexibility in terms. While
assessing the working capital needs of existing borrowers, adequate provision should be
built in to meet the seasonal variations in credit requirements taking into account peak
and lean seasons
Bank believes in being selective in choosing corporate exposures with an eye on pricing
considerations and focus on the mid-corporate segment.
New Business Group
New Business Group has been constituted at Corporate Office and also at Zonal level for
catering the requirements of the new customers for considering the acceptability of the
borrower, level of exposure and pricing.
New Business Group shall consider in-principle / prima facie acceptance of the client
before submission of detailed proposal,
Clearance of New Business Group Committee shall be obtained for fresh proposals of
only new borrowers seeking credit facilities above Rs 10.00 Crore and the same is not
required in case of existing borrowers seeking enhancement in limits. For the group
accounts of existing satisfactorily conducted accounts, NBG clearance is not needed.
Clearance accorded by New Business Group Committee shall be valid for a period of 90
days only. NBG clearance is only in principle approval for evincing interest in the
proposal. Sanction is subject to compliance of bank’s policy guidelines.
New Business under consortium/Multiple banking arrangement
In case of credit limits aggregating to Rs 10 Crore or less, efforts should be made to bring
the account under sole banking arrangement with our Bank provided the financials of
the unit are sound.
99
In respect of borrowers enjoying credit facilities of above Rs 10 Crore under multiple
banking arrangements, efforts should be made to finance under a formalized consortium
arrangement.
However, any fresh exposure to borrowers having fund based and non fund based limit of
Rs.500.00 Crore& above from the banking system (other than specifically permitted
categories of advances in this policy) shall be under Consortium Arrangement only. Any
relaxation can be permitted by Management Committee only.
Joint Lending Arrangement (JLA):
The scheme is applicable to all lending arrangements, for a single borrower with
aggregate credit limits (both fund based and non-fund based) of Rs 150 Crore and above
involving more than one Public Sector Bank.
In case of Joint Lending Arrangement, the following time frames are prescribed
i) For sanction of Fresh / Enhanced credit facilities (including Export Credit):
Should not be more than 90 days from the date of applications / proposals received
together with required details / information supported by requisite financial and
operating statements by the Lead Bank
ii) For renewal of credit facilities at existing level (including Export Credit):
Should not be more than 45 days from the date of applications / proposals received
together with required details / information supported by requisite financial and
operating statements by the Lead Bank
Corporate Loans:
Corporate Loan request can be considered only on selective basis to existing combined
rating IB-BBB and above (Internal Rating) rated customers and same is restricted to 20%
of the working capital facility, if the purpose of the loan is to improve the NWC. The
power to consider corporate loan is vested with Corporate Office level committees.
Repayment should be supported by cash flows/DSCR and the repayment of corporate
loan for NWC improvement should be restricted to 5 years.
IND MID CORPORATE VERTICAL
IND Mid Corporate Vertical handles exposure to corporates above Rs 5 Crore and up to
Rs 100 Crore (excluding NBFCs & MSMEs) from our Bank or turnover upto Rs.500.00
Crore.
Restriction on granting advances to Government / Semi-Government
Branches should not finance for construction of buildings meant purely for Govt/ semi
Govt offices including municipal/ panchayat offices. However, branches may grant loans
for activities, which will be refinanced by institutions like NABARD
Restriction on granting advances to Public Sector entities which are not corporate
Projects undertaken by public sector entities which are not corporate bodies (ie public
sector undertakings which are not registered under the Companies Act or which are not
corporations established under the relevant statute) may not be financed.
In case of housing projects which the government is interested in promoting, either for
weaker sections or otherwise a part of the project cost may be met by the Government
through subsidies made available and/or contributions to the capital of the institution
taking up the project. In such cases finance should be restricted to the project cost
excluding the amount of subsidy/ capital contribution from the Government. The
branches should ensure the commercial viability of the project.

100
Guidelines for Financing Infrastructure Projects
Infrastructure projects are often financed through Special Purpose Vehicles.
Often, the size of the funding requirement would necessitate joint financing by
Banks/FIs or financing by more than one Bank under Consortium or Syndication
arrangements. In such cases, RBI permitted participating Banks / FIs may, for the
purpose of their own assessment, refer to the appraisal report prepared by the lead Bank
/ FI or have the project appraisal jointly. We may follow the same.
Credit limits to infrastructure sector of Solar and Wind Power projects can be considered
from the level of ZLCC and above under their respective delegated credit powers.
Credit limits to other infrastructure sector (other than Solar / Wind power, Educational
Institution, hotel and hospital) can be considered from the level of COLCC(GM) and above
under their respective delegated monetary powers.
Financing Road Projects
Disbursement of loans to road projects to be done only in respect of projects where at
least 80% of Right of Way is made available and public notice for acquisition of remaining
20% of land is issued.
Take-out Financing:
Under the arrangement, bank financing the infrastructure projects will have an
arrangement with any other financial institution for transferring to the latter the
outstandings in their books on a pre-determined basis.
Investment in Commercial Papers/Short Term NCDs and other Corporate Bonds of Non-
Borrower Companies:
i) In case of non-borrower companies, Universe of Companies will be drawn up by
Integrated Treasury and appropriate limits will be sanctioned by the competent
authority.
ii) However, in case of borrower companies, the investment limits/inclusion in universe
has to be approved at the time of sanction of credit limits.
Non-banking Financial Companies (NBFCs)
Working Capital credit needs of NBFCs (Asset Finance Companies, Investment
Companies and Loan Companies) will be assessed based on second method of lending
(MPBF).
Term loan needs will be assessed based on the cash flow.
The credit proposals from NBFCs (including PSUs) shall conform the following:
i. External Rating as per CRM policy
ii. Shall have a minimum capital adequacy ratio of 15%
iii. Gross NPA and net NPA shall be less than 4.50% and 2.50%, respectively (In view of
the modified guidelines on NPA norms for NBFCs stipulated by RBI and CRISIL A rating,
the Gross NPA and Net NPA level have been revised)
iv. Total borrowings shall not exceed 16 times of NOF. Other financial benchmarks need
not be considered for NBFCs

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Syndication of Loans
The market for syndication of loans is active. When a corporate approaches the Bank for
funding its project and where the Bank may not meet the entire financial needs of the
borrower, the balance term loan / working capital finance would be syndicated.
Appraisal of large-sized projects and term loans:
All fresh borrowal accounts with total exposures of Rs.500.00 crs (fund based and non
fund based) & above from banking system shall be considered under Consortium
arrangement only.
All high value proposals more than Rs 5 crores will be subjected to joint appraisal with
Zonal Office.
Hard and Soft Cost:
While appraising large sized project for Term Loans, the project cost may be examined by
bifurcating into hard cost and soft cost. Though generally, it is advisable that hard costs
are financed with proper margin, the soft costs (For eg. Patents rights, Leasehold rights,
Goodwill, Royalty, and Technical Know-how.) have to be critically examined, vis-à-vis, the
stipulation of margin to be insisted, provided the soft cost adds value to the project and
can be realized at the time of selling of the project .
Concept of Wilful Defaulters – RBI guidelines
The identification of willful default, oriented on diversion of funds / siphoning of funds
would have to be judgment of the lenders based on ‘Objective facts and circumstances of
the case’. Further the identification should also bear in mind the track record of the
borrowers and should not be decided on isolated transactions / incidence. Further, most
importantly the default should be categorized as wilful and for the same, it should be
‘intentional, deliberate and calculated’.
RBI has clarified that this treatment of guarantors who are not Directors and non group
corporate guarantors as willful defaulters, based on their guarantee liability would apply
only prospectively and not to cases where guarantees have been taken prior to the
Circular. RBI has also clarified / stipulated that this position should be made known to
the guarantors at the time of execution of the guarantee and therefore it has become
imminent to incorporate the same in the Credit policy as well as our loan documentation.
In case such a person is already on the Board of the borrowing company, it would take
expeditious and effective steps for removal of that person from its Board. Nominee
directors are excluded for this purpose.
Wherever there are Govt. undertakings, it should be ensured that the names of Directors
are not reported. If the lenders desire a specific certification from the borrowers /
auditors regarding diversion / siphoning of funds by the borrower, the lender should
award a separate mandate to the auditors for the purpose and to facilitate the same
appropriate covenants are to be incorporated in the loan agreements, to enable award of
such a mandate, by the lenders to the borrower / auditors.
Branches shall refer this circular regarding Mechanism of identification of wilful default,
Constitution of Screening Committee and Review Committee, Criminal action against
wilful defaulters, Dissemination of information to RBI & Credit Information Companies
etc.,
Opening of Trust and Retention Account (TRA) for Consortium/MBAs
To improve the credit discipline in opening of Trust and Retention Account (TRA) it has
been made mandatory for lending under Consortium / Multiple Banking Arrangement to
control diversion of funds by the delinquent borrowers.

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TRA mechanism has been a common feature in financing of infrastructure projects. It
seeks to protect the project lenders against the credit risk (the risk of debt service
default) by insulating the cash flows of the project company. This is done through
shifting the control over future cash flows from the hands of the borrowers (project
company) to an independent agent, called TRA agent, duly mandated by the lenders.
The infrastructure projects are executed through a separate company created for the
purpose (called 'Special Purpose Vehicle' - SPV) and the shares of the SPV would
normally be held, among others, by the sponsors of the project. The cash flows of
the SPV (project company) are subjected to a TRA arrangement. Under this arrangement,
the lenders, the borrower and the TRA agent enter into a tri-partite agreement, which
provides for all revenues of the project to be directed into a single account, maintained
with the designated TRA agent. The lenders, in consultation with the borrower, draw up
a detailed mandate for the TRA agent as to periodic transfer and utilisation of funds
available in the TRA. The mandate basically spells out the manner and purpose of
various payments including the debt service to the lenders. The payment to the lenders is
to be made directly by the TRA agent, as per its mandate, without any intervention by the
borrower. For operational convenience, the TRA could be sub-divided into several sub-
TRAs dedicated to separate heads of expenses / purposes. In case of multi-currency cash
flows, there could also be separate TRAs with the same agent or different TRA agents for
handling the cash flows in various currencies. Thus, the TRA agent acts as a trustee on
behalf of the lenders and ensures that the cash flows are accessible to the borrower /
project company, strictly as per the mandate. Thus, the TRA mechanism could be viewed
as a sophisticated version of the traditional 'No Lien' accounts, on which the concerned
bank could not exercise its right of general lien.
A Trust and Retention Account mechanism needs to be distinguished from an Escrow
Account arrangement, though the two are somewhat similar. An Escrow Account is an
arrangement for safeguarding the borrower against its customers from the payment risk
for the goods or services sold by the former to the latter. This is achieved by removing the
control over the cash flows from the hands of the customer to an independent agent, who
in turn could ensure appropriation of cash flows as per the its mandate. The Escrow
arrangement provides for directing a pre-determined payment stream from the customers
of the borrower to a special account maintained with a designated agent. Payment /
deposit by the user / buyer into such an account is assumed to be a valid discharge of
his liability to the supplier of the goods / services. An Escrow arrangement involves
parties different from the parties in a TRA mechanism. The Escrow arrangement would
involve usually four parties: the lender, the borrower, the customers of the borrower and
the Escrow Agent. The mandate to the Escrow Agent would normally be finalised by the
lenders in consultation with the borrower and its customers.
Thus, for instance, in financing of a power plant which sells its power generated to a
SEB, the Escrow arrangement would involve the power producer (borrower), the SEB
concerned (customer), the bank / FI (lenders) and the Escrow Agent (a designated bank).
The SEB would agree to direct its collection centres to deposit the electricity charges
received from retail consumers, into a designated account with the designated bank
(Escrow agent) and to direct its bulk consumers to deposit their payments directly with
the Escrow Agent in the specified account. The Escrow Agent would then appropriate the
funds in the Escrow account as per the priority laid down in the Escrow Agreement.
Opening of Current Accounts by Branches - Need for Discipline
While opening a current account, branches should verify the data available in CRILC
database whether the customer is availing of credit facility from another bank. Further
branches may also seek ‘NOC’ from the drawee bank where the initial deposit to current
account is made by way of a cheque.

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For the purpose of verifying the CRILC database at the time of opening the account, a
link has been provided in Helpdesk with the following Navigation: Desk officer >>
Deposits >> CRILC - Borrower. After verification, branches have to make entry in the
respective opening forms for having verified the same.
Strategic Debt Restructuring Scheme (SDR)
The general principle of restructuring of stressed asset should be that the shareholders
bear the first loss rather than the debt holders. With this principle in view and also to
ensure more ‘skin in the game’ of promoters, JLF / Corporate Debt Restructuring Cell
(CDR) may consider the following options when a loan is restructured:
Possibility of transferring equity of the company by promoters to the lenders to
compensate for their sacrifices;
Promoters infusing more equity into their companies;
Transfer of the promoters’ holdings to a security trustee or an escrow arrangement till
turnaround of company. This will enable a change in management control, should
lenders favour it.
Branches shall refer this circular for further guidelines in this regard.
Monitoring of Devolved LC liability - SMA tracking based on Devolved LC Liability
The total liability in the running account viz., OCC/KCC/PC/OD including Adhoc facility
and the devolved LC liability of the customer will be clubbed together for the purpose of
SMA monitoring / compliance to IRAC norms. CO: Project Office will push the reports on
a periodical basis and branches / zonal offices should verify the reports and
discrepancies, if any, should be brought to the notice of Project Office / Credit Division.
Discount Rate for Computing Present Value of Future Cash Flows
According to RBI, for the purpose of determining the diminution in fair value of loans on
restructuring, rate equal to the actual interest rate charged to the borrower before
restructuring may be used to discount the future cash flows. In cases where the existing
credit facilities to a borrower carry different rates of interest, the weighted average
interest rate (with share of each credit facility in the total outstanding of the borrower as
on the date of restructuring being used as weights) may be used as the discounting rate.
This discount rate may be used to discount both the pre-restructuring cash flows as well
as post-restructuring cash flows.
The above methodology may be consistently used wherever it is required to compute
fair/present value of loans including for the purpose of computing net present value of
project loans as required in terms of circular ADV-184 / 2014-15 on Flexible Structuring
of Existing Long Term Project Loans to Infrastructure and Core Industries. This will be
applicable to all projects where changes in amortization schedule have been carried out
under the above circular.
Coir UdyamiYojana (CUY) – scheme by Coir Board
The Rejuvenation Modernization and Technology Up gradation (REMOT) scheme of coir
industry has been renamed “Coir UdyamiYojana (CUY). The scheme would cover any coir
project with project cost upto `.10 lakhs plus working capital, which shall not exceed
25% of the project cost. The pattern of assistance under the scheme is 40% of the project
cost as Govt of India subsidy, 55% loan from the Bank and 5% beneficiary contribution.
The scheme will be implemented through field offices of the Board. Coir Board has
developed software for on-line registration of the application. Any applicant anywhere in
India can register their name through online in coir board website. The details of the Coir
UdyamiYojana are available at the website of the Board.

104
The applications received at the field offices of the Board will be referred to the committee
constituted for the purpose viz., Regional level Selection Committee (RLSC) for its
consideration. The RLSC will scrutinize the applications and recommend for EDP
training. After the EDP training, the applications are forwarded to the Banks for sanction
of the loan.
Exchange of Credit Information Reports (CIR) by Banks
The revised parameters for the Net Means approved by the Managing Committee of IBA
and as per comparative detail of the existing guidelines and revised guidelines for issue of
Credit Reports to other banks/ Financial Institutions except this all other existing
guidelines on the subject matter shall continue.
Revised Board Format for High Value loan proposals
Our Management Committee has revised the existing Board Format for credit proposals
(for limits of Rs.1 cr and above) by suitably incorporating fields for Loan Tracking, CRILC
status, Joint Lender Forum (JLF), Methodology for Assessment of Working Capital,
arrival of Drawing Power etc. along with the checklist for Project proposals particularly
for Infrastructure.
Framework for Revitalising Distressed Assets in the Economy- Review of the Guidelines on
Joint Lenders' Forum (JLF) and Corrective Action Plan (CAP)
Based on the feedback received on the existing guidelines and in order to give a senior
level representation to JLF so as to enable Boards of Banks to approve the decisions
taken by JLF, following changes are stipulated by RBI:
The JLF will finalise the CAP and the same will be placed before an Empowered Group
(EG) of lenders, which will be tasked to approve the rectification / restructuring packages
under CAPs.
The JLF –EG shall have the following composition:
i. A representative each of SBI and ICICI bank as standing members.
ii. A representative each of the top three lenders to the borrower. If SBI or ICICI Bank is
among the top three lenders to the borrower, then a representative of the fourth largest
or a representative each of the fourth and the fifth largest lenders as the case may be.
iii. A representative each of the two largest banks in terms of advances who do not have
any exposure to the borrower and
iv. The participation in the JLF-EG shall not be less than the rank of the Executive
Director in a PSB or equivalent.
The JLF convening Bank will convene the JLF-EG and provide the secretarial support to
it. Branches shall refer this circular, with regard to
i. Restructuring of doubtful accounts under JLF
ii. Disagreement on restructuring as CAP and Exit Option
iii. Duration of application of extant penal provisions (5% in case of Standard account
and accelerated provision in case of NPAs) and
iv. Strategic Debt Restructuring (SDR) Scheme
Porting of unit inspection module in help desk The Unit Inspection module is available in
HELP DESK > INHOUSE APPLICATION. The navigation for generation of the Unit
Inspection
Report is as follows:

105
Login with the S.R.No., A& L Password and IBGA no. of the branch
In the screen click Data Entry
In the Data Entry screen fill in all the columns without leaving any field.
On clicking Submit button, report is generated with Reference number and print menu
appears.
By click of print button, the print-out of the report can be obtained.
Updation of the already generated report is also possible from the reports module. This
can be done by giving account number/date of inspection.
Guidelines on Commercial Real Estate Proposals - Getting NOC / No Dues Certificate
from department/Authority:
Following guidelines should be complied while dealing with the CRE proposals pertaining
to Commercial Real Estate.
1. Certificate at regular intervals should be obtained from the relevant statutory
authority that all the dues payable to the authorities have been paid and no amount is
outstanding
2. Close watch on the contribution of margin money by the promoter to be observed so as
to ensure that there is no diversion of funds by the promoter
3. Verification of source of margin money contributed by the promoter to be ensured
before sanctioning the finance as a common prudence.
Independent Evaluation Committee-Framework for Revitalising Distressed Assets in the
Economy
With regard to JLF Master Agreement & Details of Independent Evaluation Committee
(IEC) Framework for Revitalising Distressed Assets in the Economy, banks should
contact any IEC member through the Institution only. The details of the Independent
Evaluation Committee (IEC) are given in this circular for the convenience of field level
functionaries.
Refund of Margin Money in case of Expired Bank Guarantees
In terms of the amendment in Section 28 of the Indian Contract Act 1872, invocation
clauses
on Bank Guarantee, even issued to Government Department, would be valid and banks
would be liable only if Bank Guarantee has been invoked within the invocation period as
stipulated in the recent amendment. If not invoked within the invocation period, there do
not seem to be any valid reason for the banks to retain the margin money after the
invocation period. In such cases it is not necessary whether the original guarantee
document is returned to the bank or not. In view of the above, in respect of guarantees
issued after the Amendment of the Contract Act in 2012, banks need not retain margin
money after invocation period is over. However, before returning the margin money,
branches should ensure strict compliance of the procedure regarding reversal of liability
in respect of guarantees which have not been returned by the beneficiary, as stipulated
in the conventional advances manual under clause No 11.5 and 11.6, page No 16.29
Chapter No 16.
Modification in delegation of Powers for NBG proposals
Please refer our circular No. Adv/20/2015- 16 dt 13.05.2015 on loan policy guidelines
wherein it is stipulated that clearance of New Business Group Committee shall be
obtained for all new proposals of only new borrowers seeking credit facilities above Rs.10
crores. Considering the need for accelerated credit growth the powers have been revised

106
for considering in-principle clearance for new credit proposals from new borrowers be
delegated to the NBG at Zonal Offices headed by DGM and GM upto their respective
discretionary credit sanction powers i.e. uptoRs. 15.00 crores for DGM headed Zones and
uptoRs. 30.00 crores for GM headed Zones (as per extant delegated credit sanction
powers).
Directions of Special Committee (Monitoring of Large Value Frauds)
Unit Inspection should be conducted as follows with regard to loans sanctioned by
Branch Managers under MDL Powers. Whenever the loan is sanctioned by BM, next unit
visit should be by ABM or any other officer of the Branch. Henceforth field level
functionaries should ensure to the extent guidelines of the Bank and Unit Inspection
should be carried out on regular basis for all borrowal accounts and it should be done on
rotation basis amongst all Officers of the Branch.
Monitoring of Consortium / JLF accounts and obtaining of directions and submission of
minutes.
It is advised that immediately after the formation of JLF, Branches should furnish the
copy of the JLF Agreement to Corporate Office, Credit Division for the loans sanctioned at
Corporate Office without fail.
Quarterly meetings of JLF are to be conducted and minuted. Whenever the notice for the
meeting is received, the Zonal Office/Branch should forward the copy of the Agenda
immediately to Corporate Office pending issues in the account and obtain suitable
directions from the appropriate authority. It must be ensured that the position / views of
the Bank are recorded in the Minutes of the Bank. If Bank’s views/observations are not
minuted, a suitable rejoinder must be sent to leader/other Banks by the Branch/Zonal
Office.
JLF meetings should be attended by a Senior Officer of the Bank without fail. The
minutes of the meeting should be forwarded to Corporate Office, Credit Department
immediately.
WHERE WE ARE LEADER:
A. The consortium meetings should invariably be conducted once in a quarter. In case of
restructured account or accounts causing concern, the frequency may be once in a
month.
B. The agenda for the meeting should be carefully drafted by the branch in consultation
with Zonal Office. All pending issues / directions pending compliance /performance
details/irregularities observed/views of member banks / decisions to be taken must form
part of the agenda. Any pending request from the borrower may also be included in the
agenda.
C. A background note on the agenda items must be prepared and approved by ZM.
Thereafter it may be circulated to member banks and the borrower.
D. The agenda and the background note should be forwarded to Functional General
Manager at Corporate Office at least one week in advance. The Zonal Office should give
their views / recommendations on the agenda items and seek concurrence / approval
from the sanctioning authority before the meeting. E. The meeting must be presided by
officials as delegated in our Booklet on Credit and Credit related Administrative Powers.
F. The minutes of the meeting should be prepared the next day and approved by the
Zonal Manager. No issue should be recorded as having been approved by the consortium
unless prior mandate from Corporate Office had been obtained on the issues for the
accounts falling under the powers of CO. G. The approved minutes should be circulated
to the member banks / Corporate Office within 3 days of the meeting.

107
WHERE WE ARE A MEMBER:
Keep in regular touch with the leader to call for consortium meeting once in a quarter.
The notice for the meeting and agenda should be forwarded by the branch to Zonal
Office and Branch/ Zonal Office to give their comments on each issue to Corporate Office
and seek mandate, wherever required, sufficiently in advance.
Our Bank’s representative shall not give assent to any decision unless they have the
mandate from Corporate Office / ZLCC.
For induction of an additional banker into the consortium where we are already a
member for CO sanctioned accounts, approval for COLCC (GM) to be obtained. The
approval shall be subject to consent by majority of members and availability of gap
within the assessed limit.
The above guidelines should be followed in Coordination Committee Meetings under
Multiple Banking Arrangement also except where there is no leader; the Bank having the
largest share of financing the borrower will be the coordinator.
Revision of fee structure by CERSAI
Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest (CERSAI) has revised the fee as under, w.e.f 1.2.2016:
1. Creation or modification of Security Interest in favour of secured creditors: (FORM I) -
Rs.100 for a loan above Rs.5 lakh and Rs.50 for a loan upto Rs.5 lakh.
2. Satisfaction of any existing Security Interest (FORM II): no charges
3. Securitisation or reconstruction of financial assets (FORM III) - Rs.500
4. Satisfaction of securitisation or reconstruction transactions (FORM IV) - Rs.50
5. Any application for information recorded / maintained in the Register by any person -
Rs.10
6. Condonation of delay up to 30 days - Not exceeding 10 times of the basic fee, as
applicable.
Modifications in the Interest Rate Cap under Credit Guarantee Scheme (CGS) of CGTMSE
On 30.09.15, CGTMSE had placed the interest cap up to 2% and 3% over the Base Rate
for loans up to 50 lakh and loans above 50 lakh respectively on loans eligible for
guarantee cover. CGTMSE decided (Nov 16, 2015) to restore the earlier Interest Rate Cap
of 4% over the Base Rate i.e. any credit facility which has been sanctioned by MLI, under
Credit Guarantee Scheme (CGS), to an eligible borrower, with interest rate more than 4%
over its Base Rate (BR) will not be eligible for coverage under the CGS.

108
 Priority sector
The categories under priority sector are as follows:
1. Agriculture
2. Micro, Small and Medium Enterprises
3. Export Credit
4. Education
5. Housing
6. Social Infrastructure
7. Renewable Energy
8. Others
The new avenues / categories under Priority Sector are as under:-
Agriculture:
Agriculture infrastructure:
Loans for construction of storage facilities (warehouses, market yards, godowns
andsilos) including cold storage units/ cold storage chains designed to store
agricultureproduce/products, irrespective of their location.Soil conservation and
watershed development.
Plant tissue culture and agri-biotechnology, seed production, production of bio
pesticides, bio-fertilizer, and vermi composting. For the above loans, an aggregate
sanctioned limit of Rs100 crore per borrower from the banking system, will apply.
Agri Ancillary activities:
Loans up to Rs5 crore to co-operative societies of farmers for disposing of the
produce of members.Loans for setting up of Agriclinics and Agribusiness
Centres.Loans for Food and Agro-processing up to an aggregate sanctioned limit
of Rs100crore per borrower from the banking system.
Loans to Custom Service Units managed by individuals, institutions or
organizations , who maintain a fleet of tractors, bulldozers, well-boring
equipment, threshers, combines, etc., and undertake farm work for farmers on
contract basis.
Bank loans to Primary Agricultural Credit Societies (PACS), Farmers’ Service
Societies (FSS) and Large-sized Adivasi Multi-Purpose Societies (LAMPS) for
onlending to agriculture.Loans sanctioned by banks to MFIs for on-lending to
agriculture sector as per theconditions specified in paragraph 19 of these Master
Directions.
Social infrastructure
Bank loans up to a limit of Rs 5 crore per borrower for building social
infrastructure for activities namely schools, health care facilities, drinking water
facilities and sanitation facilities including construction/ refurbishment of
household toilets and household level water improvements in Tier II to Tier VI
centres.Bank credit to Micro Finance Institutions (MFIs) extended for on-lending

109
to individuals and also to members of SHGs/JLGs for water and sanitation
facilities will be eligible for categorization as priority sector under ‘Social
Infrastructure’, subject to the criteria laid down in paragraph 19 of these Master
Directions.
Renewable Energy
Bank loans up to a limit of Rs 15 crore to borrowers for purposes like solar based
power generators, biomass based power generators, wind mills, micro-hydel
plants and for non-conventional energy based public utilities viz. street lighting
systems, and remote village electrification.For individual households, the loan
limit will be Rs10 lakh per borrower.
Targets /Sub-targets for Priority sector
(i) The targets and sub-targets set under priority sector lending for all scheduled
commercial banks operating in India are furnished below:

Categories Domestic scheduled commercial Foreign banks with less

banks and Foreign banks with 20 than 20 branches
branches and above

Total Priority 40 percent of Adjusted Net Bank 40 percent of Adjusted Net

Sector Credit [ANBC defined in sub Bank Credit [ANBC defined
paragraph (iii)] or Credit Equivalent in sub paragraph (iii)] or
Amount of Off-Balance Sheet Credit Equivalent Amount
Exposure, whichever is higher. of Off-Balance Sheet
Exposure, whichever is
Foreign banks with 20 branches
higher; to be achieved in a
and above have to achieve the Total
phased manner by 2020 as
Priority Sector Target within a
indicated in sub paragraph
maximum period of five years
(ii) below.
starting from April 1, 2013 and
ending on March 31, 2018 as per
the action plans submitted by them
and approved by RBI.

Agriculture 18 percent of ANBC or Credit Not applicable

Equivalent Amount of Off-Balance
Sheet Exposure, whichever is
higher.
Within the 18 percent target for
agriculture, a target of 8 percent of
ANBC or Credit Equivalent Amount
of Off-Balance Sheet Exposure,
whichever is higher is prescribed
for Small and Marginal Farmers.
Foreign banks with 20 branches
and above have to achieve the
Agriculture Target within a
maximum period of five years
starting from April 1, 2013 and
110
 ending on March 31, 2018 as per
the action plans submitted by them
and approved by RBI. The sub-
target for Small and Marginal
farmers would be made applicable
post 2018 after a review in 2017.

Micro 7.5 percent of ANBC or Credit Not Applicable

Enterprises Equivalent Amount of Off-Balance
Sheet Exposure.
The sub-target for Micro
Enterprises for foreign banks with
20 branches and above would be
made applicable post 2018 after a
review in 2017.

Advances to 10 percent of ANBC or Credit Not Applicable

Weaker Equivalent Amount of Off-Balance
Sections Sheet Exposure, whichever is
higher.
Foreign banks with 20 branches
and above have to achieve the
Weaker Sections Target within a
maximum period of five years
starting from April 1, 2013 and
ending on March 31, 2018 as per
the action plans submitted by them
and approved by RBI.

Additionally, domestic banks are directed to ensure that the overall lending to
non-corporate farmers does not fall below the system-wide average of the last
three years achievement. All efforts should be maintained to reach the level of
13.5 percent direct lending to the beneficiaries who earlier constituted the direct
agriculture sector. The applicable system wide average figure for computing
achievement under priority sector lending will be notified every year. For FY 2015-
16, the applicable system wide average figure is 11.57 percent.
(ii) The Total Priority Sector target of 40 percent for foreign banks with less than
20 branches has to be achieved in a phased manner as under:-

Financial Year The Total Priority Sector as percentage of ANBC or

Credit Equivalent Amount of Off-Balance Sheet

111
 Exposure, whichever is higher

2015-16 32

2016-17 34

2017-18 36

2018-19 38

2019-20 40

The additional priority sector lending target of 2 percent of ANBC each year from
2016-17 to 2019-20 has to be achieved by lending to sectors other than exports.
The sub targets for these banks, if to be made applicable post 2020, would be
decided in due course.
(iii) The computation of priority sector targets/sub-targets achievement will be
based on the ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposures,
whichever is higher, as on the corresponding date of the preceding year. For the
purpose of priority sector lending, ANBC denotes the outstanding Bank Credit in
India [As prescribed in item No.VI of Form ‘A’ under Section 42 (2) of the RBI Act,
1934] minus bills rediscounted with RBI and other approved Financial
Institutions plus permitted non SLR bonds/debentures under Held to Maturity
(HTM) category plus other investments eligible to be treated as part of priority
sector lending (e.g. investments in securitised assets). The outstanding deposits
under RIDF and other funds with NABARD, NHB, SIDBI and MUDRA Ltd. in lieu
of non-achievement of priority sector lending targets/sub-targets will form part of
ANBC. Advances extended in India against the incremental FCNR (B)/NRE
deposits, qualifying for exemption from CRR/SLR requirements, as per the
Reserve Bank’s circu;ars.
Computation of Adjusted Net Bank Credit (ANBC)
Bank Credit in India [As prescribed in item No.VI of Form ‘A’ I
under Section 42 (2) of the RBI Act, 1934].

Bills Rediscounted with RBI and other approved Financial II

Institutions

Net Bank Credit (NBC)* III (I-II)

Bonds/debentures in Non-SLR categories under HTM category+ IV

other investments eligible to be treated as priority sector
+Outstanding Deposits under RIDF and other eligible funds with
NABARD, NHB, SIDBI and MUDRA Ltd. on account of priority
sector shortfall + outstanding PSLCs

Eligible amount for exemptions on issuance of long-term bonds for V

infrastructure and affordable housing as per circular
DBOD.BP.BC.No.25/08.12.014/2014-15 dated July 15, 2014.

Eligible advances extended in India against the incremental FCNR VI

(B)/NRE deposits, qualifying for exemption from CRR/SLR
112
requirements.

ANBC III+IV-V-VI

Agriculture
The lending to agriculture sector has been defined to include (i) Farm Credit
(which will include short-term crop loans and medium/long-term credit to
farmers) (ii) Agriculture Infrastructure and (iii) Ancillary Activities. A list of eligible
activities under the three sub-categories is indicated below:

Farm credit A. Loans to individual farmers [including Self Help Groups (SHGs) or Joint Liability
Groups (JLGs), i.e. groups of individual farmers, provided banks maintain
disaggregated data of such loans] and Proprietorship firms of farmers, directly
engaged in Agriculture and Allied Activities, viz., dairy, fishery, animal husbandry,
poultry, bee-keeping and sericulture. This will include:
(i) Crop loans to farmers, which will include traditional/non-traditional plantations
and horticulture, and, loans for allied activities.
(ii) Medium and long-term loans to farmers for agriculture and allied activities (e.g.
purchase of agricultural implements and machinery, loans for irrigation and other
developmental activities undertaken in the farm, and developmental loans for allied
activities.)
(iii) Loans to farmers for pre and post-harvest activities, viz., spraying, weeding,
harvesting, sorting, grading and transporting of their own farm produce.
(iv) Loans to farmers up to Rs50 lakh against pledge/hypothecation of agricultural
produce (including warehouse receipts) for a period not exceeding 12 months.
(v) Loans to distressed farmers indebted to non-institutional lenders.
(vi) Loans to farmers under the Kisan Credit Card Scheme.
(vii) Loans to small and marginal farmers for purchase of land for agricultural
purposes.
B. Loans to corporate farmers, farmers' producer

organizations/companies of individual farmers, partnership firms and co-operatives of farm

engaged in Agriculture and Allied Activities, viz., dairy, fishery, animal husbandry, poultry,
and sericulture up to an aggregate limit of Rs2 crore per borrower. This will include:
(i) Crop loans to farmers which will include traditional/non-traditional plantations and hort
and, loans for allied activities.
(ii) Medium and long-term loans to farmers for agriculture and allied activities (e.g. purchas
agricultural implements and machinery, loans for irrigation and other developmental act
and developmental loans for allied activities.)
(iii) Loans to farmers for pre and post-harvest activities, viz., spraying, weeding, harvesting,
grading and transporting of their own farm produce.
(iv) Loans up to Rs50 lakh against pledge/hypothecation of agricultural produce (including
receipts) for a period not exceeding 12 months.
Agriculture
infrastructure

113
 1.Loans for construction of storage facilities (warehouses, market yards, godowns and silo
cold storage units/ cold storage chains designed to store agriculture produce/products, irr
their location.
ii) Soil conservation and watershed development.
iii) Plant tissue culture and agri-biotechnology, seed production, production of bio-pesticid
bio-fertilizer, and vermi composting. For the above loans, an aggregate sanctioned limit of
100 crore per borrower from the banking system, will apply.
Ancillary
activities
(i) Loans up to Rs5 crore to co-operative societies of farmers for disposing of the produce o
(ii) Loans for setting up of Agriclinics and Agribusiness Centres.
(iii) Loans for Food and Agro-processing up to an aggregate sanctioned limit of Rs100 cror
system.
(iv) Loans to Custom Service Units managed by individuals, institutions or organizations w
fleet of tractors, bulldozers, well-boring equipment, threshers, combines, etc., and undert
for farmers on contract basis.
(v) Bank loans to Primary Agricultural Credit Societies (PACS), Farmers’ Service Societie
Multi-Purpose Societies (LAMPS) for on-lending to agriculture.

(vi) Loans sanctioned by banks to MFIs for on-lending to agriculture sector as per the con
specified in paragraph 19 of these Master Directions.
(vii) Outstanding deposits under RIDF and other eligible funds with NABARD on account
priority sector shortfall.

For the purpose of computation of achievement of the sub-target, Small and

Marginal Farmers will include the following:-
- Farmers with landholding of up to 1 hectare (Marginal Farmers). Farmers with a
landholding of more than 1 hectare and up to 2 hectares (Small Farmers).
- Landless agricultural labourers, tenant farmers, oral lessees and share-
croppers, whose share of landholding is within the limits prescribed for small and
marginal farmers.
- Loans to Self Help Groups (SHGs) or Joint Liability Groups (JLGs), i.e. groups of
individual Small and Marginal farmers directly engaged in Agriculture and Allied
Activities, provided banks maintain disaggregated data of such loans.
- Loans to farmers' producer companies of individual farmers, and co-operatives
of farmers directly engaged in Agriculture and Allied Activities, where the
membership of Small and Marginal Farmers is not less than 75 per cent by
number and whose land-holding share is also not less than 75 per cent of the
total land-holding.
Micro, Small and Medium Enterprises (MSMEs)
Limits for investment in plant and machinery/ equipment: The limits for
investment in plant and machinery/equipment for manufacturing / service
enterprise, as notified by Ministry of Micro, Small and Medium Enterprises, vide
S.O.1642(E) dated September 9, 2006 are as under:-

114
Manufacturing Sector
Enterprises Investment in plant and machinery

Micro Enterprises Does not exceed twenty five lakh

rupees

Small Enterprises More than twenty five lakh rupees

but does not exceed five crore rupees

Medium Enterprises More than five crore rupees but does

not exceed ten crore rupees

Service Sector

Enterprises Investment in equipment

Micro Enterprises Does not exceed ten lakh rupees

Small Enterprises More than ten lakh rupees but does

not exceed two crore rupees

Medium Enterprises More than two crore rupees but does

not exceed five crore rupees

Bank loans to Micro, Small and Medium Enterprises, for both manufacturing and
service sectors are eligible to be classified under the priority sector as per the
following norms:
Manufacturing Enterprises
The Micro, Small and Medium Enterprises engaged in the manufacture or
production of goods to any industry specified in the first schedule to the
Industries (Development and Regulation) Act, 1951 and as notified by the
Government from time to time. The Manufacturing Enterprises are defined in
terms of investment in plant and machinery.
Service Enterprises
Bank loans up to ` 5 crore per unit to Micro and Small Enterprises and ` 10 crore
to Medium Enterprises engaged in providing or rendering of services and defined
in terms of investment in equipment under MSMED Act, 2006.
Khadi and Village Industries Sector (KVI)
All loans to units in the KVI sector will be eligible for classification under the sub-
target of 7.5 percent prescribed for Micro Enterprises under priority sector.
Other Finance to MSMEs
(i) Loans to entities involved in assisting the decentralized sector in the supply of
inputs to and marketing of outputs of artisans, village and cottage industries.
(ii) Loans to co-operatives of producers in the decentralized sector viz. artisans,
village and cottage industries.
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(iii) Loans sanctioned by banks to MFIs for on-lending to MSME sector as per the
conditions specified in paragraph 19 of these Master Directions.
(iv) Credit outstanding under General Credit Cards (including Artisan Credit
Card, LaghuUdyami Card, Swarojgar Credit Card, and Weaver’s Card etc. in
existence and catering to the non-farm entrepreneurial credit needs of
individuals).
(v) Overdrafts extended by banks after April 8, 2015 uptoRs5,000/- under
PradhanMantri Jan DhanYojana (PMJDY) accounts provided the borrower’s
household annual income does not exceed Rs 100,000/- for rural areas and Rs
1,60,000/- for non-rural areas. These overdrafts will qualify as achievement of
the target for lending to Micro Enterprises.
(vi) Outstanding deposits with SIDBI and MUDRA Ltd. on account of priority
sector shortfall.
To ensure that MSMEs do not remain small and medium units merely to remain
eligible for priority sector status, the MSME units will continue to enjoy the
priority sector lending status up to three years after they grow out of the MSME
category concerned.
Export Credit
The Export Credit extended as per the details below will be classified as priority
sector.

Domestic banks Foreign banks with 20 Foreign banks with

branches and above less than 20 branches

Incremental export credit
over corresponding date of
the preceding year, up to 2
percent of ANBC or Credit
Equivalent Amount of Off-
Balance Sheet Exposure,
whichever is higher, effective
from April 1, 2015 subject to
a sanctioned limit of up to
Rs25 crore per borrower to
units having turnover of up
to Rs100 crore.
Incremental export credit over Export credit will be
corresponding date of the allowed up to 32
preceding year, up to 2 percent percent of ANBC or
of ANBC or Credit Equivalent Credit Equivalent
Amount of Off-Balance Sheet Amount of Off-Balance
Exposure, whichever is higher, Sheet Exposure,
effective from April 1, 2017 (As whichever is higher.
per their approved plans,
foreign banks with 20 branches
and above are allowed to count
certain percentage of export
credit limit as priority sector till
March 2017).

Export credit includes pre-shipment and post shipment export credit (excluding
off-balance sheet items) as defined in Master Circular on Rupee / Foreign
Currency Export Credit and Customer Service to Exporters issued by our
Department of Banking Regulation.

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Education
Loans to individuals for educational purposes including vocational courses
uptoRs10 lakh irrespective of the sanctioned amount will be considered as eligible
for priority sector.
Housing
Loans to individuals up to Rs28 lakh in metropolitan centres (with population of
ten lakh and above) and loans up to Rs20 lakh in other centres for
purchase/construction of a dwelling unit per family provided the overall cost of
the dwelling unit in the metropolitan centre and at other centres should not
exceed Rs35 lakh and Rs25 lakh, respectively. The housing loans to banks’ own
employees will be excluded. As housing loans which are backed by long term
bonds are exempted from ANBC, banks should either include such housing loans
to individuals up to Rs28 lakh in metropolitan centres and Rs20 lakh in other
centres under priority sector or take benefit of exemption from ANBC, but not
both.
Loans for repairs to damaged dwelling units of families up to Rs5 lakh in
metropolitan centres and up to Rs2 lakh in other centres.Bank loans to any
governmental agency for construction of dwelling units or for slum clearance and
rehabilitation of slum dwellers subject to a ceiling of Rs10 lakh per dwelling unit.
Social infrastructure
Bank loans up to a limit of ` 5 crore per borrower for building social
infrastructure for activities namely schools, health care facilities, drinking water
facilities and sanitation facilities in Tier II to Tier VI centres.
Renewable Energy
Bank loans up to a limit of ` 15 crore to borrowers for purposes like solar based
power generators, biomass based power generators, wind mills, micro-hydel
plants and for non-conventional energy based public utilities viz. street lighting
systems, and remote village electrification. For individual households, the loan
limit will be ` 10 lakh per borrower.
Others
Loans not exceeding ` 50,000/- per borrower provided directly by banks to
individuals and their SHG/JLG, provided the individual borrower’s household
annual income in rural areas does not exceed ` 100,000/- and for non-rural areas
it does not exceed ` 1,60,000/-.
Loans to distressed persons [other than farmers already included under III (1.1) A
(v)] 12 not exceeding ` 100,000/- per borrower to prepay their debt to non-
institutional lenders.
Overdrafts extended by banks upto ` 5,000/- under PradhanMantri Jan-
DhanYojana (PMJDY) accounts provided the borrowers household annual income
does not exceed ` 100,000/- for rural areas and ` 1,60,000/- for non-rural areas.
Loans sanctioned to State Sponsored Organisations for Scheduled Castes/
Scheduled Tribes for the specific purpose of purchase and supply of inputs
and/or the marketing of the outputs of the beneficiaries of these organisations.

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Weaker Sections
Priority sector loans to the following borrowers will be considered under Weaker
Sections category:-
(a) Small and marginal farmers;
(b) Artisans, village and cottage industries where individual credit limits do not
exceed Rs 1 lakh
(c) Beneficiaries of (NRLM) , NULM & SRMS
(d) Scheduled Castes and Scheduled Tribes
(e) Beneficiaries of Differential Rate of Interest (DRI) scheme;
(f) Loans to Self Help Groups;
(g) Loans to distressed farmers indebted to non-institutional lenders;
(h) Loans to distressed persons other than farmers not exceeding 1 lakh per
borrower to prepay their debt to non-institutional lenders;
(j) Loans to individual women beneficiaries up to 1 lakh per borrower;
(k) Persons with disabilities
(l) Overdrafts up to Rs. 5000 under PMJDY accounts provided the borrower’s
household income does not exceed Rs.1,00,000/- for rural areas and
Rs.1,60,000/- for non-rural areas.
(m) Minorities communities as may be notified by Govt. of India from
time to time.
Investments by banks in securitized assets
(i) Investments by banks in securitised assets, representing loans to various
categories of priority sector, except 'others' category, are eligible for classification
under respective categories of priority sector (direct or indirect) depending on the
underlying assets provided:
(a) thesecuritised assets are originated by banks and financial institutions and
are eligible to be classified as priority sector advances prior to securitisation
and fulfil the Reserve Bank of India guidelines on securitisation.
(b) theall inclusive interest charged to the ultimate borrower by the originating
entity should not exceed the Base Rate of the investing bank plus 8 percent
per annum.
The investments in securitised assets originated by MFIs, which comply with the
guidelines in Paragraph VIII of this circular are exempted from this interest cap
as there are separate caps on margin and interest rate.
(ii) Investments made by banks in securitised assets originated by NBFCs, where
the underlying assets are loans against gold jewellery, are not eligible for priority
sector status.
Transfer of Assets through Direct Assignment /Outright purchases
(i) Assignments/Outright purchases of pool of assets by banks representing loans
under various categories of priority sector, except the 'others' category, will be
eligible for classification under respective categories of priority sector (direct or
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indirect) provided:
 the assets are originated by banks and financial institutions and are
eligible to be classified as priority sector advances prior to the purchase
and fulfil the Reserve Bank of India guidelines on outright
purchase/assignment.
 the eligible loan assets so purchased should not be disposed of other than
by way of repayment.
 The all inclusive interest charged to the ultimate borrower by the
originating entity should not exceed the Base Rate of the purchasing bank
plus 8 percent per annum.
The assignments/Outright purchases of eligible priority sector loans from MFIs,
which comply with the guidelines in Paragraph VIII are exempted from this
interest rate cap as there are separate caps on margin and interest rate.
(ii) When the banks undertake outright purchase of loan assets from banks/
financial institutions to be classified under priority sector, they must report
the nominal amount actually disbursed to end priority sector borrowers
and not the premium embedded amount paid to the sellers.
(iii)Purchase/ assignment transactions undertaken by banks with NBFCs,
where the underlying assets are loans against gold jewellery are not eligible
for priority sector status.
Inter Bank Participation Certificates
Inter Bank Participation Certificates (IBPCs) bought by banks, on a risk sharing
basis, shall be eligible for classification under respective categories of priority
sector, provided the underlying assets are eligible to be categorized under the
respective categories of priority sector and the banks fulfill the Reserve Bank
guidelines on IBPCs.
Priority Sector Lending Certificates
The outstanding priority sector lending certificates (after the guidelines are issued
in this regard by the Reserve Bank of India) bought by the banks will be eligible
for classification under respective categories of priority sector provided the assets
are originated by banks, and are eligible to be classified as priority sector
advances and fulfil the Reserve Bank of India guidelines on priority sector lending
certificates.
Bank loans to MFIs for on-lending
(a) Bank credit to MFIs extended for on-lending to individuals and also to
members of SHGs / JLGs will be eligible for categorisation as priority sector
advance under respective categories viz., Agriculture, Micro, Small and
Medium Enterprises, and 'Others', as indirect finance, provided not less
than 85 percent of total assets of MFI (other than cash, balances with
banks and financial institutions, government securities and money market
instruments) are in the nature of “qualifying assets”. In addition, aggregate
amount of loan, extended for income generating activity, should be not less
than 50 percent of the total loans given by MFIs.

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(b) A “qualifying asset” shall mean a loan disbursed by MFI, which satisfies the
following criteria:
(i) The loan is to be extended to a borrower whose household annual income in
rural areas does not exceed ` 1,00,000/- while for non-rural areas it should not
exceed ` 1,60,000/-.
(ii) Loan does not exceed ` 60,000/- in the first cycle and ` 100,000/- in the
subsequent cycles.
(iii) Total indebtedness of the borrower does not exceed ` 1,00,000/-.
(iv) Tenure of loan is not less than 24 months when loan amount exceeds `
15,000/- with right to borrower of prepayment without penalty.
(v) The loan is without collateral.
(vi) Loan is repayable by weekly, fortnightly or monthly installments at the choice
of the borrower. c) Further, the banks have to ensure that MFIs comply with the
following caps on margin and interest rate as also other ‘pricing guidelines’, to be
eligible to classify these loans as priority sector loans.
(i) Margin cap: The margin cap should not exceed 10 percent for MFIs having loan
portfolio exceeding ` 100 crore and 12 percent for others. The interest cost is to be
calculated on average fortnightly balances of outstanding borrowings and interest
income is to be calculated on average fortnightly balances of outstanding loan
portfolio of qualifying assets.
(ii) Interest cap on individual loans: With effect from April 1, 2014, interest rate
on individual loans will be the average Base Rate of five largest commercial banks
by assets multiplied by 2.75 per annum or cost of funds plus margin cap,
whichever is less. The average of the Base Rate shall be advised by Reserve Bank
of India.
(iii) Only three components are to be included in pricing of loans viz., (a) a
processing fee not exceeding 1 percent of the gross loan amount, (b) the interest
charge and (c) the insurance premium.
(iv) The processing fee is not to be included in the margin cap or the interest cap.
(v) Only the actual cost of insurance i.e. actual cost of group insurance for life,
health and livestock for borrower and spouse can be recovered; administrative
charges may be recovered as per IRDA guidelines.
(vi) There should not be any penalty for delayed payment.
(vii) No Security Deposit/ Margin are to be taken.
(d) The banks should obtain from MFI, at the end of each quarter, a Chartered
Accountant’s Certificate stating, inter-alia, that the criteria on (i) qualifying
assets, (ii) the aggregate amount of loan, extended for income generation activity,
and (iii) pricing guidelines are followed.
Monitoring of Priority Sector Lending targets
To ensure continuous flow of credit to priority sector, there will be more frequent
monitoring of priority sector lending compliance of banks on ‘quarterly’ basis
instead of annual basis as of now. The data on priority sector advances have to be

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furnished by banks at quarterly and annual intervals as per revised reporting
formats, the guidelines for which will be issued separately.
Non-achievement of Priority Sector targets
Scheduled Commercial Banks having any shortfall in lending to priority sector
shall be allocated amounts for contribution to the Rural Infrastructure
Development Fund (RIDF) established with NABARD and other Funds with
NABARD/NHB/SIDBI, as decided by the Reserve Bank from time to time. For the
year 2015-16, the shortfall in achieving priority sector target/sub-targets will be
assessed based on the position as on March 31, 2016. From financial year 2016-
17 onwards, the achievement will be arrived at the end of financial year based on
the average of priority sector target /sub-target achievement as at the end of each
quarter.
The interest rates on banks’ contribution to RIDF or any other Funds, tenure of
deposits, etc. shall be fixed by Reserve Bank of India from time to time.
The misclassifications reported by the Reserve Bank’s Department of Banking
Supervision would be adjusted/ reduced from the achievement of that year, to
which the amount of declassification/ misclassification pertains, for allocation to
various funds in subsequent years.
Non-achievement of priority sector targets and sub-targets will be taken into
account while granting regulatory clearances/approvals for various purposes.
Common guidelines for priority sector loans
Banks should comply with the following common guidelines for all categories of
advances under the priority sector.
Rate of interest
The rates of interest on bank loans will be as per directives issued by our
Department of Banking Regulation from time to time.
Service charges :No loan related and adhoc service charges/inspection charges
should be levied on priority sector loans up to ` 25,000.
Receipt, Sanction/Rejection/Disbursement Register
A register/ electronic record should be maintained by the bank, wherein the date
of receipt, sanction/rejection/disbursement with reasons thereof, etc., should be
recorded. The register/electronic record should be made available to all inspecting
agencies.
Issue of Acknowledgement of Loan Applications
Banks should provide acknowledgement for loan applications received under
priority sector loans. Bank Boards should prescribe a time limit within which the
bank communicates its decision in writing to the applicants.
Definitions/Clarifications
1. On-lending: Loans sanctioned by banks to eligible intermediaries for onward
lending only for creation of priority sector assets. The average maturity of priority
sector assets thus created should be broadly co-terminus with maturity of the
bank loan.

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2. Contingent liabilities/off-balance sheet items do not form part of priority sector
target achievement. However, foreign banks with less than 20 branches have an
option to reckon the credit equivalent of off-balance sheet items, extended to
borrowers for eligible priority sector activities, along with priority sector loans for
the purpose of computation of priority sector target achievement. In that case, the
credit equivalent of all off-balance sheet items (both priority sector and non-
priority sector excluding interbank) should be added to the ANBC in the
denominator for computation of Priority Sector Lending targets.
3. Off-balance sheet interbank exposures are excluded for computing Credit
Equivalent of Off -Balance Sheet Exposures for the priority sector targets.
4. The term “all inclusive interest” includes interest (effective annual interest),
processing fees and service charges.
5. Banks should ensure that loans extended under priority sector are for
approved purposes and the end use is continuously monitored. The banks
should put in place proper internal controls and systems in this regard.
KISAN CREDIT CARD (KCC) SCHEME:
During November 2011, the Department of Financial Services, Ministry of
Finance, Government of India constituted a Working Group under the
Chairmanship of ShriT.M.Bhasin, our Chairman and Managing Director,
comprising members from Reserve Bank of India, NABARD and National
Payments Corporation of India (NPCI) to review the existing KCC scheme and
suggest changes to make it a Smart Card cum Debit Card.
The recommendations of the Working Group have been accepted by the
Government of India. Our Bank has adopted the revised KCC scheme and the
guidelines for implementation by our branches.
The salient features of the guidelines include the following
Purpose:
a. To meet the short term credit requirements for cultivation of crops
b. Post-harvest expenses
c. Produce marketing loan
d. Consumption requirements of farmer households
e. Working capital for maintenance of farm assets and activities allied to
agriculture, like dairy animals, inland fisheries etc
f. Investment credit requirements for agriculture and allied activity like pumpsets,
sprayers, dairy animals etc
Eligibility:
a. All Farmers – Individuals / Joint borrowers who are owner cultivator
b. Tenant Farmers, Oral Lessees & Share Croppers
c. Self Help Groups or Joint Liability Groups of Farmers including tenant
farmers, share
Croppers etc

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Fixation of credit limit / Loan amount:
The credit limit under the Kisan Credit Card may be fixed as under:
All farmers other than marginal farmers:
a. For farmers raising single crop in a year
Short term limit:
Scale of finance for the crop (as decided by District Level Technical Committee) x
Extent of area cultivated + 10% of limit towards post-harvest / household /
consumption requirements + 20% of limit towards repairs and maintenance
expenses of farm assets + crop insurance, PAIS and asset insurance.
Term loans for investments towards land development, minor Irrigation,
purchase for farm equipment’s and activities allied to agriculture:
The quantum of credit for term and working capital limit for agricultural and
allied activities etc., is to be arrived at based on the unit cost of the asset/s
proposed to be acquired by the farmer, the allied activities already being
undertaken on the farm, repayment capacity vis-a-vis total loan burden devolving
on the farmer, including existing loan obligations.
The Kisan Credit Card limit is to be arrived as under:
First year limit for crop cultivation purpose arrived at as above plus 10% of the
limit towards cost escalation / increase in scale of finance for every successive
year ( 2nd, 3rd, 4th and 5th year) and estimated Term loan component for the
tenure of Kisan Credit Card i.e. five years.
b. For farmers raising more than one crop in a year, the limit is to be fixed as
above depending upon the crops cultivated as per proposed cropping pattern for
the first year and an additional 10% of the Limit towards cost escalation /
increase in scale of finance for every successive year (2nd, 3rd, 4th and 5th year).
It is assumed that the farmer adopts the same cropping pattern for the remaining
four years also. In case, the cropping pattern adopted by the farmer is changed in
the subsequent year, the limit may be reworked. The long term loan limit based
on the proposed investments during the five year period is to be arrived at as
described above.
Maximum Permissible Limit: Short term loan limit arrived for the 5th year plus
the estimated Long Term loan requirement for five years will be the Maximum
Permissible Limit (MPL) and treated as the Kisan Credit Card Limit.
Fixation of Sub-limits:
For other than Marginal farmers:
(i) Short term loans and term loans are governed by different interest rates. At
present, short term crop loans are covered under Interest Subvention Scheme/
Prompt Repayment Incentive scheme. Further, repayment schedule and norms
are different for Short term loans and Term loans. Hence, in order to have
operational and accounting convenience, the card limit is to be bifurcated into
separate sub limits for short term cash credit limit cum savings account and term
loans.

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(ii) Drawing limit for short term cash credit should be fixed based on the cropping
pattern. The amounts for crop production, repairs and maintenance of farm
assets and consumption may be allowed to be drawn as per the convenience of
the farmer. In case the revision of scale of finance for any year by the district
level committee exceeds the notional hike of 10% contemplated while fixing the
five year limit, a revised drawable limit may be fixed and the farmer be advised
about the same. In case such revisions require the card limit itself to be enhanced
(4th or 5th year), the same may be done and the farmer be so advised. For term
loans, installments may be allowed to be withdrawn based on the nature of
investment and repayment schedule drawn as per the economic life of the
proposed investments. It is to be ensured that at any point of time the total
liability should be within the drawing limit of the concerned year.
For Marginal Farmers:
A flexible limit of Rs.10,000 to Rs.50,000 be provided (as Flexi KCC) based on the
land holding and crops grown including post-harvest warehouse storage related
credit needs and other farm expenses, consumption needs etc. plus small term
loan investments like purchase of farm equipments, establishing mini
dairy/backyard poultry as per assessment of Branch Manager without relating it
to the value of land. The composite KCC limit is to be fixed for a period of five
years on this basis.
Disbursement:
The short term component of the KCC limit is in the nature of revolving cash
credit facility. There is no restriction in number of debits and credits. The drawing
limit for the current season/year could be allowed to be drawn using any of the
following delivery channels.
a. Operations through branch
b.Operations using Cheque facility
c.Withdrawal through ATM / Debit cards/ Rupaya cards
d.Operations through Business Correspondents and ultra thin branches.
e. Operations through PoS available in Sugar Mills/ Contract farming companies,
etc.,
especially for tie-up advances
f.Operations through Point of Sale (PoS) available with input dealers
g.Mobile based transfer transactions at agricultural input dealers and mandies.
The long term loan for investment purposes may be drawn as per installment
fixed.
As the CC limit and the term loan limit are two distinct components of the
aggregate card limit bearing different rates of interest and repayment periods,
until a composite card could be issued with appropriate software to separately
account transactions in either sub limits, two separate electronic cards may be
issued.
Validity:
i. The Kisan Credit Card is valid for 5 years subject to an annual review.
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ii. The review may result in continuation of the facility, enhancement of the limit
or cancellation of the limit / withdrawal of the facility, depending upon increase
in cropping area / pattern and performance of the borrower.
iii. When extension and/or re-scheduling of the period of repayment on account
of natural calamities affecting the farmer is granted, the period for reckoning
the status of operations as satisfactory or otherwise would get extended
together with the extended amount of limit. When the proposed extension is
beyond one crop season, the aggregate of debits for which extension is granted
is to be transferred to a separate term loan account with stipulation for
repayment in installments.
Rate of Interest (ROI):
ROI linked to Base Rate. However, if Government supported interest subvention is
provided for any component of the limit, the rate of interest is to be fixed
accordingly. (Presently interest rate for short term crop loans/KCC sanctioned to
farmers up to Rs 3.00 lakh is 7% as per extant interest subvention scheme of
Government of India). The long term loan limit under KCC is linked to base rate.
Margin:
For crop loans, no separate margin need be insisted as the Margin is inbuilt while
fixing the Scales of Finance. For term loan component, it will be in conformity
with the guidelines of RBI from time to time.
Security:
Security will be applicable as per RBI guidelines prescribed from time to
time.Security requirements are as under:
- Hypothecation of crops up to card limits of Rs 1.00 lakh as per RBI extant
guidelines.
- With tie-up for recovery: Hypothecation of Crops up to card limit of Rs.3.00
lakh without insisting on collateral security.
- Collateral security by way of mortgage of immovable property is to be obtained
for loan limits above Rs.1.00 lakh in case of non-tie-up and above Rs.3.00
lakh in case of tie-up advances.
Repayment:
The repayment is linked to harvest and marketing of the produce without the
need to bring the debit balance in the account to zero at any point of time. The
term loan component will be repayable depending on the type of activity/
investment as per the existing guidelines applicable for investment credit
Other features:
a. Interest Subvention/Incentive for prompt repayment is applicable as advised
by Government of India.
b.Crop Insurance is mandatory. The KCC holder should have the option to take
benefit of Assets Insurance, Personal Accident Insurance Scheme (PAIS), and
Health Insurance (wherever product is available and have premium paid
through his/her KCC account). Necessary premium will have to be paid on the
basis of agreed ratio between bank and farmer to the insurance companies

125
 from KCC accounts. Farmer beneficiaries should be made aware of the
insurance cover available and their consent is to be obtained, at the application
stage itself.
c.One time documentation at the time of first availment and thereafter simple
declaration (about crops raised / proposed) by farmer from the second year
onwards.
d.No processing fee should be charged up to a card limit of Rs 3.00 lakh.
e.Farmers to be provided with KCC Short Term sub-limit cum SB account so as to
allow credit balance in KCC cum SB accounts to fetch interest at savings bank
rate. A separate folio needs to be maintained for the long term sub-limit until
both the sub-limits are integrated through an electronic card with suitable
software.
FINANCING SELF HELP GROUPS (SHGs)
SHGs may be an informal group or registered under the Societies Registration Act and
State Co-operative Act or as a partnership firm. People who are homogeneous in
terms of socio economic background or traditional occupation come together for a
common cause for the benefit of group members. Generally a Self Help Group may
consist of 10-20 persons (in any case it should not exceed 20 members) with not more
than one member per household. A person should not be a member of more than one
group.
GUIDELINES 2012:
Dept. of Financial Services, Ministry of Finance, GOI has informed that,
 In those Govt. sponsored schemes which have back ended subsidy and
release of subsidy is contingent on repayment of term loans, the SHG’s can
be extended term loans in such schemes.
 The term loans can also be given to those SHGs in such cases where the
SHG undertake a group activity and the loan from the bank is taken by
the SHG to undertake the activity.
 The SHG will get a cash credit limit in all cases other than those mentioned
above. The members’ inter-se will get a term loan from the group.
The vital / key areas of the revised guidelines on financing Self Help Groups are
given below:
a. Two stage rating regiment has been introduced to ensure only quality assets
are acquired by branches, one for the sponsoring NGOs and the other for
rating the SHGs.
b. NGO Rating: Rating parameter for the selection of NGOs/Voluntary Agencies
(VAs) /Self Help Promoting Institutions (SHPIs) have been introduced, for
assessment of NGOs/VAs/SHPIs who sponsor the SHGs for the purpose of
entertaining them as facilitators for lending.
c. As per the rating matrix, SHGs formed by “A” rated NGOs, are only permitted
to open SB account with the branch. As per circular No. ADV/17/14-15 dated
20 Feb 2015, the minimum score under trade record under rating matrix now
reduced to 6 from 15.
d. Zonal Offices are advised to rate all the NGOs associating with the branches in
their zone under SHG lending and review the rating annually on an ongoing
basis.
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e. Improvised SHG Rating and Dual rating: Qualitative parameters in SHG
rating format have been stipulated. Dual rating system for new and matured
groups is stipulated. Entry level scoring has also been raised from 50% to
75% and above.
f. Strengthening Pre and Post sanction guidelines: Pre-sanction and post
sanction monitoring guidelines have been enumerated for the guidance of
branches.
g. Auditing of the books of account of the SHGs has been made compulsory
from second credit linkage onwards.
h. Operational area of the Branch: Specific operational area for the branches
i.e. a maximum operational jurisdiction of 25 kms from the branch is
stipulated.
i. Phasing of credit disbursement from the Bank in such a way that not more
than 50% of the SHG members take loan at a given time is being insisted in
compliance with GOI directions.
j. Utilization of loan for economic activity: Purpose for which the loan should
be utilized by the members is being specified now. i.e. Major portion of the first
dose of loan is permitted to be utilized for consumption purpose and
repayment of existing external debts based on actual need. From the second
dose onwards at least 75% of the loan should be used for income
generating activities.
k. Type of facility: Loans can be sanctioned as Cash Credit Facility only except
for (1) Govt. sponsored schemes which have back ended subsidy (2)
Wherein the SHG undertake a group activity, where term loans can be
granted.
l. Quantum of loan and Maximum loan limit: Changes have been made in the
method of computing eligible quantum of loan. The quantum of loan is fixed at
4,8,10 times of corpus of the group for the first, second and third linkage
onwards respectively. Minimum period of 12 months between every dose is
stipulated to avoid ever greening of the loan. Maximum quantum of loan for
first, second, third, fourth and fifth linkage without collateral security is
stipulated as Rs.1 lakh, Rs.3 lakhs, Rs.5 lakhs, Rs.7.50 lakhs and Rs.10
lakhs respectively. For limits beyond Rs.5 lakhs sanctioning power is vested
with the Zonal Level Credit Committee (ZLCC).
m. All SHG members KYC to be complied.
GOVERNMENT SPONSORED SCHEMES:
DRI:In addition, members of SC/STs satisfying the income criteria
(Rs.18000/- in rural area and Rs.24000/- in urban area)of the scheme can
also avail of housing loan up to Rs 20,000/- per beneficiary over and above the
individual loan of Rs 15,000/- available under the scheme.
Atleast 2/3 of DRI advances should go to Rural and Semi urban areas and not
less than 40% of total loan given under DRI should go to SC/STs. Apart from
the above income ceiling, the beneficiaries should also comply with land ceiling
criteria viz the size of land owned by him should not exceed 1 acre in case of
irrigated land or 2.5 acre in case of non-irrigated land. This land holding
criteria is not however applicable to SC/ST beneficiaries.

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National Urban Livelihood Mission (NULM)
This is a poverty alleviation program aimed at targeting URBAN poor. NULM
has replaced SJSRY.

NULM will focus on providing financial assistance through

provision of interest subsidy on loans to support establishmen
Objective
of individual and group enterprises and Self Help Groups o
urban poor.

Applications Applications sponsored by Urban Local Bodies

All members of group or individual urban poor should have an

Eligibility
age of 18 years at the time of applying bank loan

Project cost – Maximum Project cost :Rs 200000; Repayment: 5 to 7 year

Individual – (Moratorium period 6-18 months)
NULM - SEP- Eligibility: 5 members with minimum of 70% members from
I(self-employment urban poor families. Project cost: maximum Rs.10,00,000/-
program) Repayment:5 to 7 years(moratorium 6 -18 months)
NULM - SEP-
Group (Self-
employment
program)

Interest Int. subsidy will be the difference between the prevailing rate o
subsidy on interest charged by bank (card rate) and 7% per annum, on al
SHG loans to SHGs of urban poor, will be reimbursed to bank.
loans(SHG-
Bank An additional 3 % int. subvention will be provided to all Women
Linkage) SHGs (WSHGs) who repay loan in time.

i. Not less than 30% to women. ii. 3% to disabled persons.

iii. SC/STs must be benefitted to the extent of the proportion o
Reservation
their
strength in the local population

No collateral security/guarantee. Only hypothecation of assets

Security
Created, CGTMSE cover.

SwarnaJayanthi Gram SwarozgarYojana (SGSY) has been restructured as

National Rural Livelihoods Mission (NRLM)Ajaeevika vide Circular No. ADV 39
dated 29.6.13. & ADV-143 /2014-15 dated: 19.12.2014
National Rural Livelihoods Mission (NRLM)
NRLM will provide continuous hand-holding support to SHGs, and their
federations. This was missing in SGSY. Under NRLM this support will be provided
to a great extent by capacitating the SHG federations and by building a cadre of

128
community professionals from among the poor women. The federations and the
community professionals will be imparted the necessary skills by the mission.
The objective of NRLM is to ensure that SHG s are enabled to access repeat
finance from Banks, till they attain sustainable livelihoods and decent living
standards. This was missing in SGSY, where the emphasis was on one time
support.
Women SHGs and their Federations
Women SHGs under NRLM consist of 10-15 persons. In case of special SHGs i.e.
groups in the difficult areas, groups with disabled persons, and groups formed in
remote tribal areas, this number may be a minimum of 5 persons.
NRLM will promote affinity based women Self –help groups.
Financial Assistance to the SHGs
Revolving Fund (RF):
NRLM would provide a Revolving Fund (RF) support to SHGs in existence for a
minimum period of 3/6 months and follow the norms of good SHGs, i.e. they
follow ‘Panchasutra’ – regular meetings, regular savings, regular internal lending,
regular recoveries and maintenance of proper books of accounts. Only such SHGs
that have not received any RF earlier will be provided with RF, as corpus, with a
minimum of Rs. 10,000 and up to a maximum of Rs. 15,000 per SHG. The
purpose of RF is to strengthen their institutional and financial management
capacity and build a good credit history within the group.
Capital Subsidy has been discontinued under NRLM:
No Capital Subsidy will be sanctioned to any SHG from the date of
implementation of NRLM.
Community Investment support Fund (CIF)
CIF will be provided to the SHGs in the intensive blocks, routed through the
Village level/Cluster level Federations, to be maintained in perpetuity by the
Federations. The CIF will be used, by the Federations, to advance loans to the
SHGs and/or to undertake the common/collective socio-economic activities.
Introduction of Interest subvention:
NRLM has a provision for interest subvention, to cover the difference between the
Lending Rate of the banks and 7%, on all credit from the banks/ financial
institutions availed by women SHGs, for a maximum of Rs 3,00,000 per SHG.
This will be available across the country in two ways: In 150 identified districts,
banks will lend to all the women SHGs @7% up to an aggregated loan amount of
Rs 3,00,000/- . The SHGs will also get additional interest subvention of 3% on
prompt payment, reducing the effective rate of interest to 4%. ii. In the remaining
districts also, NRLM compliant women SHGs will be registered with SRLMs. These
SHGs are eligible for interest subvention to the extent of difference between the
lending rates and 7% for the loan uptoRs. 3 lakhs, subjected to the norms
prescribed by the respective SRLMs. This part of the scheme will be
operationalized by SRLMs.

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Role of banks:
Opening of Savings accounts: The role of banks would commence with opening
of accounts for all the Women SHGs, SHGs with members of Disability and the
Federations of the SHGs. The ‘Know Your Customer’ (KYC) norms as specified
from time to time by Reserve Bank of India are applicable for identification of the
customers.
Lending Norms:
Eligibility criteria for the SHGs to avail loans
• SHG should be in active existence at least since the last 6 months as per the
books of account of SHGs and not from the date of opening of S/B account.
• SHG should be practicing ‘Panchasutras’ i.e. Regular meetings; Regular savings;
Regular inter-loaning; Timely repayment; and Up-to-date books of accounts;
• Qualified as per grading norms fixed by NABARD. As and when the Federations
of the SHGs come to existence, the grading exercise can be done by the
Federations to support the Banks.
• The existing defunct SHGs are also eligible for credit if they are revived and
continue to be active for a minimum period of 3 months.
Loan amount:
Emphasis is laid on the multiple doses of assistance under NRLM. This would
mean assisting an SHG over a period of time, through repeat doses of credit, to
enable them to access higher amounts of credit for taking up sustainable
livelihoods and improve on the quality of life. The amount of various doses of
credit should be as follows:
• First dose : 4-8 times to the proposed corpus during the year or Rs. 50,000
whichever is higher.
•Second dose: 5-10 times of existing corpus and proposed saving during the next
twelve months or Rs. 1 lakhs, whichever is higher.
• Third dose: Minimum of Rs. 2 lakhs, based on the Micro credit plan prepared by
the SHGs and appraised by the Federations/Support agency and the previous
credit history
• Fourth dose onwards: Loan amount can be between Rs. 5-10 lakhs for fourth
dose and/or higher in subsequent doses. The loan amount will be based on the
Micro Credit Plans of the SHGs and their members.
Type of facility and repayment:
SHGs can avail either Term loan or a CCL loan or both based on the need. In case
of need, additional loan can be sanctioned even though the previous loan is
outstanding. Repayment schedule could be as follows:
• The first dose of loan will be repaid in 6-12 installments
• Second dose of loan will be repaid in 12-24 months.
• Third dose will be sanctioned based on the micro credit plans; the repayment
has to be either monthly/quarterly
/half yearly based on the cash flow and it has to be between 2 to 5 Years.
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 • Fourth dose onwards: repayment has to be either monthly/quarterly /half
yearly
based on the cash flow and it has to be between 3 to 6 Years
Security & Margin:
No collateral & no margin will be charged up to Rs 10.00 lakhs limit to the SHGs
No lien should be marked against savings bank account of SHGs & no
deposits
should be insisted while sanctioning loans.
Prime Minister’s Employment Generation Program (PMEGP):
Ministry of MSME, Govt. of India has launched a scheme during 2008 viz.“Prime
Minister’s Employment Generation Program (PMEGP)” to empower the first
generation entrepreneurs to set up Micro Enterprises across the country by merging
the KVIC’s “Rural Employment Generation Program (REGP)” scheme with “Prime
Minister RozgarYojana (PMRY)” scheme.
Objectives:
(i) To generate employment opportunities in rural as well as urban areas of
the Country through setting up of new Self-employment
ventures/projects/Micro Enterprises.
(ii) To bring together widely dispersed traditional Artisans/ rural and urban
unemployed youth and give them Self-employment opportunities to the
extent possible, at their place.
(iii) To provide continuous and sustainable employment to a large segment of
traditional and prospective Artisans and Rural and Urban unemployed
youth in the country, so as to help arrest migration of Rural youth to Urban
areas.
(iv) To increase the wage earning capacity of Artisans and contribute to
increase in the growth rate of Rural and Urban employment.
Salient features:
 A Credit linked Central sector scheme
 Setting up of Micro Enterprises across the country
 Higher rate of Government subsidy for marginalized sections of society for
promoting inclusive growth
 Below poverty line (BPL) families are also eligible for assistance under the
scheme
 Rs 25 lakhs - Maximum cost for project/unit under Manufacturing Sector and
Rs.10 lakhs for Project / Unit under Business / Service sector
 Minimum Educational qualification- VIII pass for the projects under
Manufacturing Sector costing above Rs 10 lakhs and for the projects under
Business / Service sector costing above Rs 5 lakhs.
 Backward & Forward Linkages support for awareness, Project formulation,
Entrepreneurship Development Program (EDP) training of two to three weeks

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 duration, marketing support, electronic tracking of applications of
beneficiaries etc. are envisaged.
 Handholding through Rajiv Gandhi UdyamiMitraYojana for beneficiaries under
the PMEGP scheme.
 Project profiles will be provided for selection of projects by beneficiaries
 Khadi& Village Industries Commission (KVIC), a Statutory body under the
Ministry of MSME, is the single Nodal Agency for implementation of the
scheme.
 The scheme is implemented by KVIC/ State Khadi and Village Industries
Board (KVIBs) in Rural area as defined under KVIC Act and by District
Industries Centers (DICs) in Urban and other Rural areas.
 Special focus with higher rate of subsidy for Rural areas under the scheme. At
least 60% outlay will be earmarked for setting up of projects in Rural areas.
 Involvement of Public Sector Banks for expeditious and regular credit flow
 Dovetailing Credit Guarantee Fund Trust Scheme to help the Entrepreneurs
for collateral security free loans
 No Income ceiling for the family
Subsidy levels:

Categories of beneficiaries under Own Rate of Subsidy

PMEGP contribution (% of Cost of
(% Cost of project)
project)

Area Urban Rural

General Category 10% 15% 25%

Special Category (including SC /ST/ 5% 25% 35%

OBC/ Minorities/Women, Ex-
Servicemen, Physically Handicapped,
NER, Hill and Border areas)

1. The maximum cost of the project/unit admissible under manufacturing sector

is Rs. 25 lakhs.
2. The maximum cost of the project/unit admissible under Business/Service
sector is Rs.10 lakhs.
3. The balance amount of the total project cost will be provided by Banks as
Term loan
Comprehensive Financial Inclusion under mission mode:
“SampoornaVitteyeaSamaveshan”
The Banking Industry in India has grown both horizontally and vertically, but the
branch penetration in rural areas has not kept in pace with the rising population
and the need for accessible financial services. Even after decades of bank
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nationalization, we still find usurious money lenders in rural areas continue to
exploit the poor.
The present proposal of comprehensive financial inclusion under mission mode
envisages provision of affordable financial services to all citizens within a reasonable
distance. It comprises of the following six pillars.
1. Universal access to banking facilities: Mapping of each district into Sub
Service Area (SSA) catering to 1000 -1500 households in a manner that every
habitation has access to banking services within 5 km by 14th August, 2015.
Urban wards are also to be allocated to banks and coverage of all households
shall be done by deploying BCs.
2. Proving Basic Savings Bank Accounts with OD facility and Rupay Debit
Card:
The effort would be to cover all households with banking facilities by
August,2015 by opening two bank accounts, one for husband and other for
wife. All existing dormant accounts are to be re activated. Facility of an
overdraft of Rs.5000/- through Rupay Debit Card to every banking account
holder to be ensured.
3. Financial Literacy Program:
Financial literacy is a prerequisite for effective financial inclusion which will
ensure that financial services reach the unreached and under reached. It is
proposed to extend the financial literacy program to block level from district
level at present by March 2016.
4. Creation of Credit Guarantee Fund:-
It is proposed to create a credit guarantee fund to cover the defaults in
overdraft accounts.
5. Micro Insurance:-
The fifth pillar of the plan is to provide micro insurance to all the eligible
people by 14th August, 2018
6. Unorganised sector Pension scheme like “ swavlamban”:
The sixth and final pillar relates to old age income security. The encourage
workers in the unorganised sector to save voluntarily for their old age, an
initiative called “Swavlamban Scheme” was launched in the year 2010.
PMJDY also envisages:
1. Providing of mobile banking facilities – USSD - to all – which is already
available. All the staff should get themselves acquainted with the facility and
popularise the same.
2. Aadhaar Enabled Payment System (AEPS).
3. Transfer of subsidies / incentives to the Bank account of the beneficiaries of

taking into consideration, number of households, contiguity of the area and cost
involved to bank (Each FBC to service about 1500 households within 5 kms
radius).
In urban wards, banking services are to be provided by the branches and
requirement of FBCs should be recommended only under exceptional
circumstances.
Uniforms (jacket, Cap and Sling bag) are to be provided to all FBCs.

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For opening of accounts, simplified application forms prescribed by Department
of Financial Services with a request clause to issue RuPay Debit Card and
authorising the Bank for using Aadhaar details for KYC purpose, should be used.
Wherever available, Aadhaar card only should be obtained as KYC document for
opening of accounts. CO:FID has initiated steps for opening of accounts in
branches and on POS machines using Aadhaar number as e-KYC document and
the details will be communicated shortly.
Department of Financial Services has advised that till 26-01-2015, all branches
should conduct camps for opening of accounts on all Saturday from 8.00 AM to
8.00 PM in the Sub Service Areas (SSAs) and wards alotted to them.
As per the directions of DFS, FBCs should be given a monthly remuneration of
not less than Rs. 5000/- (inclusive of fixed and variable component). Under our
renewed contract with the Service Provider, fixed pay of Rs. 1500/- per month is
agreed and the rate of variable pay is also enhanced considerably to ensure that a
performing FBC can easily earn a monthly income of more than Rs. 5000/-. FBCs
should be motivated to involve themselves actively in enrolling new accounts /
existing accounts, improving the number of transactions and canvassing RD, FD,
KCC etc. so as to earn a minimum remuneration of Rs. 5000/- per month.
Under PradhanMantri Jan-DhanYojana, it is directed by DFS, GOI that at least
one Basic Savings Bank Account is to be opened for all households in the country
and a Kit containing Pass Book, RuPay Debit Card and Financial literacy
materials is to be supplied to all the BSBD Account holders. The RuPay Debit
Cards issued to the BSBD Account holders under PMJDY will have inbuilt
accident insurance cover up to Rs. 1,00,000/-. (Rs. One Lakh only)
Based on the feedback received from the field level functionaries, DFS has
informed that to avail the benefit of insurance and Overdraft facility under
PMJDY even the existing account holders are opening new accounts with banks
and applying for RuPay Debit Cards. Hence, DFS has clarified that the benefits
under PMJDY will be available to the existing BSBD Account holders also and
advised the banks to educate the existing account holders who approach for
opening of another account under the scheme. Banks were further advised to
issue RuPay Debit Cards to existing account holders after obtaining an
application / request to this effect.
The amended clause of the NPCI circular reads, “RuPay cardholders will be
eligible for the compensation on only one RuPay Card per cardholder or per
customer even if multiple cards of different banks are meeting the eligibility
criteria. The choice of the card for the claim would rest with the customer”.
To comply with the directions of DFS, GOI, we have fixed the rate of interest on
overdrafts allowed in all Basic Savings Bank Deposit Accounts @ 12% p.a with
immediate effect. Necessary changes have been made in the system to charge
interest @base rate +2% or 12% whichever is lower.
Benefit transfer for LPG (DBTL): process to be followed by branches for
linking the LPG ID of the consumers with Bank Accounts:-
Union Cabinet in its meeting held on October 18, 2014 decided to re-launch the
Modified Direct Benefit Transfer for LPG Consumers (DBTL) Scheme from

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 November 15, 2014 in 54 districts (Annexure 1). The DBTL scheme will then be
extended to entire country from January 1, 2015.
As per the terms of the scheme, Aadhaar number is not mandatory for availing
LPG subsidy and transactions can happen in the Bank account of LPG consumer
even in the absence of Aadhaar number.
Option I:
Oil Marketing Companies (OMC) will collect the Account Number, Account Name,
IFSC code and send the data to banks for verification.
Option II:
Customer will approach the bank with a Mandate Form containing consumer
number, LPG ID and Account number to which the LPG ID is to be linked.
The process and operations for Option-I will be handled centrally by the Service
Branch, Chennai. They will download the input file received from the OMC
through NPCI, validate the details with CBS and upload the response file to the
NPCI again at the end of the day.
For Option–II, the process flow is as explained below.
Customer will approach the branches with LPG ID (New digit 17 Consumer ID)
given by OMC.
1. Customer will hand-over the branch the Mandate Form provided by the OMC
and the customer should also submit a copy of cash memo or SMS message sent
to their mobile which contains LPG ID.
2. Branches should manually compare the consumer name with the account
name in CBS. Consumer name can be one of the Joint Names, if the account is a
joint account.
3. At the time of name comparison
a. If there is complete mismatch the branches will reject such requests and
intimate the customer accordingly.
b. If there is partial match the branches may decide whether to proceed to link
the account number as per our internal process or reject such requests. If there
is complete match branches may proceed with processing the linking request. 4.
Screen is provided in Help Desk for capturing the consumer information and
register the Linking request.
Rupaya Card:
Rupaya card was introduced by NPCI as an indigenous card payment network.
The availability of insurance is subject to the condition that the card holder
should perform minimum one successful financial or non-financial transaction
through any channel (ATM/ POS machine) once in 45 days
The PMJDY sets out to provide a BSBD account to every family who till now had
no bank
account. The bank account comes with a Rupay debit card having a built in
accidental cover of rupees one lakh.

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Eligibilty:
1. The person should normally be the head of the family or an earning member of
the family and should be in the age group of 18 to 59. In case the head of the
family is 60 years or more of age, the second earning person of the family in the
above entioned age group will be covered, subject to eligibility.
2. Person must have a RuPay Card and Bio-Metric Card linked to bank account
or in process of being linked to bank account if not already there.
3. The account can be any bank account including a small account.
4. For the coverage to be effective the above RuPay Card should be valid and in
force.
5. Only one person in the family will be covered in the Bima Scheme and in case
of the person having multiple cards / accounts the benefit will be allowed only
under one card i.e. one person per family will get a single cover of Rs.30,000/-,
subject to the eligibility conditions.
6. The life cover of Rs 30,000/- under the scheme will be initially for a period of 5
years, i.e. till the close of financial year 2019-20. Thereafter, the scheme will be
reviewed and terms and condition of its continuation, including the issue of
future payment of premium by the insured thereafter, would be suitably
determined.
Ineligible Categories:
i. Central Government and State Government employees (in service or retired) and
their families.
ii. Employees (in service or retired) of Public Sector Undertakings, Public Sector
Banks, any entity owned by Central Government, any entity owned by a State
Government or any entity jointly owned by the Central Government and any State
Government, and their families.
iii. Persons whose income is taxable under I.T. Act 1961 or are filing the yearly
Income Tax return or in whose case TDS is being deducted from the income, and
their families.
iv. Persons who are included in the AamAadmiBimaYojana covering 48
occupations defined under the Scheme, and their families.
v. Otherwise eligible account holders, who have life cover on account of any other
scheme of the Bank against the account, shall have to choose between the two
schemes and derive benefit from only one.
vi. All persons who do not fulfil the basic eligibility conditions of the scheme.
Death Benefit Eligibility:
The nominee of the accountholder will be entitled to receive death benefit of
Rs.30,000/- in case of the unfortunate death of the accountholder on account of
any, cause.
Exit from Scheme: The person will exit the scheme on reaching age 60 years i.e.
on the day the person turns 60 years.

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Claim Settlement:
a) The Claim amount of Rs.30,000/- is payable to the nominee(s) of the
accountholder. The Risk cover will be provided to the person from his age of 18
(Completed) till he attains the age of 60 years completed i.e. eligibility will cease
on turning 60 years and he will exit the scheme on the day the person turn 60
years.
b) The claim settlement process will be decentralized to the Offices of LIC. The
Process followed will be as follows:
I. Claim papers will be collected by the District Branch / Nodal Branch of the
concerned Bank and submitted to the Pension & Group Scheme Units of LIC for
processing of Claims.
II. The Claim will be paid to the nominee who is the nominee in the Bank
Account.
III. The Claim amount will be credited to Bank account of the nominee through
APBS/NEFT.
Further clarifications on the guidelines for compliance while
operationalizing the benefit of life cover under PMJDY:-
i. Given the systemic constraints and delays that might exist, while PMJDY bank
accounts and life cover under it are to be expeditiously and comprehensively
linked to a Aadhaar Card, benefits under it (with necessary safeguards against
multiple claims etc.) shall not be denied if the process of Aadhaar registration and
linkage to PMJDY / life cover has not been completed when a claim arises.
ii. Similarly, registration and benefit under life cover will not be denied if the
RuPay card is still in the process of being issued.
iii. The beneficiary will exit from the scheme on attaining the age of 60 years or
closure of the scheme, whichever is earlier, as implied by two separate existing
provisions in the guidelines.
iv. NPCI may not be required to enter into the agreement / MoU with LIC and IBA
for providing this life cover benefit. LIC may do so expeditiously with IBA
(representing the PSBs), and operationalize the arrangement on an immediate
basis.
v. There should be exemption / relaxation in all those cases who have enrolled for
a Bank account with a RuPay card but are in the process of being registered for
benefit under life cover, for any death claims which arise during the intervening
period.
vi. LIC will check eligibility under AABY of persons to be covered under life cover
and register them under AABY if they are eligible, in which case the benefit will
not accrue under the life cover. While servicing death claims under life cover, LIC
will check enrolment of the deceased under AABY and service the claim under it
when admissible, and under life cover only if not admissible under AABY.
Jewel Loan

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Purpose
Jewel loans against gold ornaments and articles are intended to meet the
expenses for carrying out the seasonal agricultural operations and acquiring
other assets without necessitating the farmers to undergo the routine formalities
of producing all relevant credentials/documents which are otherwise required to
be furnished in respect of other loans. Jewel loans can be sanctioned by the
authorized branches against gold ornaments and articles only but not against
primary gold. Jewel Loans can be sanctioned either as Short Term Loans or Term
Loans.
Ornament means a thing, in a finished form meant for personal adornment or for
the adornment of any idol or deity or any other object of religious worship, made
or manufactured from gold whether or not set with stone or gems (real or
artificial), of pearls (real, culture or imitation) or with all or any of them and
includes parts pendant or broken pieces of ornament.
Articlemeans anything, (other than ornament in a finished form), made or
manufactured
from or containing gold and includes any gold coin and broken pieces of an article
but does not include primary gold.
Primary goldmeans gold in any unfinished or semi-finished form and includes
ingots, bar blocks. Slabs, billets, shots, pellets, rods, sheets, foils and wires
Our Bank is providing Jewel loans to the customers under two sectors i.e. both
Priority and Non-Priority. Tailor made schemes have been formulated by our
Bank to meet the requirements of various customers against pledge of jewelry.
Jewel loan is granted asper gram rate or 70% of the market rate whichever is
lower .The rates are stipulated by CO/RBD for 22 carat fineness and for Hall
Mark Jewels of 22 carat fineness/ gold coins of 24 carat fineness.

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 Prudential Norms
An asset, including a leased asset, becomes non performing when it ceases to generate income for
the bank
A non performing asset (NPA) is a loan or an advance where;
i. interest and / or installment of principal remain overdue for a period of more than 90 days
in respect of a term loan,
ii. the account remains ‘out of order’ as indicated below, in respect of an Overdraft / Cash
Credit (OD/CC),
iii. the bill remains overdue for a period of more than 90 days in the case of bills purchased
and discounted,
iv. the installment of principal or interest there on remains overdue for two crop seasons for
short duration crops,
v. the installment of principal or interest there on remains overdue for one crop season for
long duration crops,
vi. the amount of liquidity facility remains outstanding for more than 90 days, in respect of a
securitisation transaction undertaken in terms of guidelines on securitisation dated
February 1, 2006.
vii. in respect of derivative transactions, the overdue receivables representing positive mark-to-
market value of a derivative contract, if these remain unpaid for a period of 90 days from
the specified due date for payment.
Banks should, classify an account as NPA only if the interest due and charged during any quarter
is not serviced fully within 90 days from the end of the quarter.
‘Out of Order’ status:
An account should be treated as 'out of order' if the outstanding balance remains continuously in
excess of the sanctioned limit/drawing power. In cases where the outstanding balance in the
principal operating account is less than the sanctioned limit/drawing power, but there are no
credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to
cover the interest debited during the same period, these accounts should be treated as 'out of
order'.
Hence an account becomes NPA:
1. Term Loan: Interest of installment of principal remaing overdue for a period of more than 90
days in respect of a term loan.
2. OD/OCC – A/c out of order for more than 90 days
a) Outstanding balance above limit for 90 days
b) no credit for the last 90 days
c) credits not sufficient to cover interest
d) irregular, no stock statements for the last 180 days
3. Regular credit limits not reviewed/renewed within 180 days from the due date; adhoc not
regularised within 90 days
4. Bills purchased – Bills if overdue for more than 90 days. Even if one bill is classified as NPA,
the entire BP account and all other facilities of the borrower are to be classified as NPA.
5. Defaulted Guarantee or devolved LC – When it become fund based and remain overdue for 90
days
6. Agriculture Loans STPL / MTL –
a) Interest and / or installment remains overdue

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 (i) 2 crop seasons for short duration crops
(ii) 1 crop season for long duration crop, on the Standard Asset End date
b) Other Accounts like allied activities – Amount receivable remains overdue for more than
90 days
Standard Asset End date:
• For short duration crops : Crop period + Marketing period + Two crop seasons = eg Paddy:
5 + 2 + 24 (12 + 12)= 31 Months.
• For long duration crop: Crop period + Marketing period + One crop season = e g. Sugar
Cane: 18 + 2 + 18 = 38 Months.
NPA Classifications - exemptions
 LOD/NSC/LIC/KVP
 SHL/SVL & other staff loans where interest is payable after principal – NPA only when
installments in default
 When account is re-phased/restructured before it slips to NPA category - SMA
 Exemptions made as per RBI guidelines- Agriculture loans due to natural calamities.
Interest on NPA should be classified under MOI, without vouching.
Prudential norms application should be borrower wise and facility or account wise, hence all
credit facilities of a borrower is having uniform asset classification.
An asset may be straight away classified as Doubtful / Loss asset, depending upon the erosion in
the value of securities or non availability of security. If the realizable value of security is less than
50% of the value assess by the bank or accepted by RBI at the time of last inspection it should be
classified as doubtful and if it is less 10% of the outstanding as loss asset.
Accounts classified as fraud should be classified as loss asset and full provision (100%) made
irrespective of security and date of NPA.
Migration / Slipping of NPA account from one category to another ( SS to D1, D1 to D3, D2 to D3)
is purely based on age of NPA.
Upgradation of loan accounts classified as NPAs
If arrears of interest and principal are paid by the borrower in the case of loan accounts classified
as NPAs, the account should no longer be treated as nonperforming and may be classified
as ‘standard’ accounts.
General Principles and Prudential Norms for Restructured Advances:
Banks may restructure the accounts classified under 'standard', 'sub-standard' and 'doubtful'
categories but Banks can not reschedule / restructure /renegotiate borrowal accounts with
retrospective effect.
Normally, restructuring can not take place unless alteration / changes in the original loan
agreement are made with the formal consent / application of the debtor. However, the process of
restructuring can be initiated by the bank in deserving cases subject to customer agreeing to the
terms and conditions.
No account will be taken up for restructuring by the banks unless the financial viability is
established and there is a reasonable certainty of repayment from the borrower, as per the terms
of restructuring package
Restructuring of advances could take place in the following stages :
(a) before commencement of commercial production / operation;
(b) after commencement of commercial production / operation but before the asset has been
classified as 'sub-standard';

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(c) after commencement of commercial production / operation and the asset has been classified as
'sub-standard' or 'doubtful'.
The accounts classified as 'standard assets' should be immediately re-classified as 'sub-standard
assets' upon restructuring where regulatory concessions are not available in areas like consumer
and personal advances; advances classified as capital market exposures; and advances classified
as commercial real estate exposures.
The non-performing assets, upon restructuring, would continue to have the same asset
classification as prior to restructuring and slip into further lower asset classification categories as
per extant asset classification norms with reference to the pre-restructuring repayment schedule.
Any additional finance may be treated as 'standard asset', up to a period of one year after the first
interest / principal payment, whichever is earlier, falls due under the approved restructuring
package.
In case a restructured asset, which is a standard asset on restructuring, is subjected to
restructuring on a subsequent occasion, it should be classified as substandard.
Provisioning norms of NPAs
Sub Standard: A substandard asset would be one, which has remained NPA for a period less than
or equal to 12 months.
Doubtful Assets: An asset would be classified as doubtful if it has remained in the substandard
category for a period of 12 months
Loss Assets: A loss asset is one where loss has been identified by the bank or internal or external
auditors or the RBI inspection but the amount has not been written off wholly.
Broadly speaking, classification of assets into above categories should be done taking into account
the degree of well-defined credit weaknesses and the extent of dependence on collateral
security for realisation of dues.
The classification of an asset as NPA should be based on the record of recovery. Bank should not
classify an advance account as NPA merely due to the existence of some deficiencies which are
temporary in nature such as non-availability of adequate drawing power based on the latest
available stock statement, balance outstanding exceeding the limit temporarily, non-submission of
stock statements and non-renewal of the limits on the due date, etc.
Provisioning for Standard Advances.
• Direct Advances to Agriculture and SME: 0.25%
• All other advances: 0.40%.
• Commercial Real Estate Projects: 1.00%.
• Commercial Real Estate Residential: 0.75 %
• Housing Loans extended at teaser rates: 2%.
• Any NPA account upgraded to standard: 2% for first year of up gradation.
• Provision for delayed implementation of project
• Infra: 0.40% till 2 years from DCCO (Date of commencement of commercial operation). 2%
from 3rd and 4th year.
• Non infra: 0.40% upto 6 months from DCCO and 2% for the next 6 months.
New Provisioning norms for Restructured Advances:
• 3.50 per cent - with effect from March 31, 2014 (spread over the four quarters of 2013-14)
• 4.25 per cent - with effect from March 31, 2015 (spread over the four quarters of 2014-15)
• 5.00 per cent - with effect from March 31, 2016 (spread over the four quarters of 2015-16)
RBI guidelines on general provisioning as per IRAC norms vis- a-vis actual practice followed by
our Bank or NPAs is as of now are reproduced hereunder:
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 Asset Category RBI Stipulation Indian Bank

Secured - 15% Secured - 15%

Sub - Standard
Unsecured* - 25% Unsecured* - 25%

Doubtful Unsecured upto 1

year 100% 100%

Doubtful Secured upto 1 year 25% 25%

Doutful 1-3 year secured 40% 40%

Doubtful 1-3 years unsecured 100% 100%

D3 (> 3 Years) secured 100 %

/unsecured 100%

Loss 100% 100 %

RBI norms permit Banks to make additional provisions for NPAs at higher than prescribed rates.
The decision of making provision over and above the general regulatory norm was taken by the
Bank, over a period of time so as to build up reserves against possible loss. Such a reserve is
being built while the market conditions are conducive and financials are strong.

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 Various Recovery Tools and Measures
Non performing Assets are a drag on the Bank’s profitability and affect the Bank
in reduction of interest income, provisioning, affects the balance sheet and
present uncomfortable indices. Once the assets are stressed and the accounts
slipped into NPA, concerted efforts need to be taken expeditiously for resolving the
NPAs through all channels of recovery.
Recovery strategy to be adopted varies from one account to another and account
specific action needs to be adopted for desired result. Some of the commonly
adopted measures are :
 Lok Adalats
 SARFAESI Action
 Filing of suit / Recovery application before competent legal forum
 Insolvency Laws / Laws on Liquidation
 Invocation of personal guarantee
 Classification and reporting as Wilful Defafulters
 Compromise settlement / OTS
LOK ADALAT
Lok Adalats can be conducted covering pre-litigation as well as post-litigation
cases (DRT as well as Civil Court cases). Besides valuable time lost in the
litigation before Civil Courts / DRTs, expenses in respect of small loans work out
to about 20% on an average. On the other hand, in Lok Adalat mechanism, there
is no payment of court fee, advocate fee etc. and Bank gets a decree in a days’
time. It is advisable to resort to Lok Adalat mechanism and get an award, rather
than file a civil suit. The discretion vested in effecting settlement cannot be to the
extent of imposing an Award on unwilling participant - be it bank or borrower and
when the terms are not agreeable to all parties concerned.
The real results will be borne out only when adequate number of Lok Adalats are
organized and made successful and all small loan borrowers are made to come for
settlement and recovery effected. Atleast a minimum of two Lok Adalats have to
be organised every quarter.
Government of India in consultation with Reserve Bank of India, has now decided
that the monetary ceiling of cases to be referred to Lok Adalats, organised by Civil
Courts shall stand enhanced to Rs.20 lakhs. In view of this all proceedings
pending before Civil Courts, wherein the total amount due upto the date of
settlement is Rs.20 lakhs or below, can be referred for settlement before Lok
Adalats organised by State Legal Services Authorities, District Legal Services
Authorities and Taluk Legal Services Authorities.
SARFAESI Act
we can proceed under SARFAESI Act, even in accounts where Recovery
Applications are pending.
Proceedings only against Security - Under the Act, Banks can take possession
and sell/ transfer only the properties which were offered as security by way of
mortgage, hypothecation etc.,

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Liability should be above Rs 1.00 lakh and be classified as NPA - Provisions of the
SARFAESI Act can be made use of for realization of assets classified as sub-
standard, doubtful or loss asset as per the directions/ guidelines relating to Asset
Classification issued by RBI i.e. it should be classified as an NPA by the Bank and
the total dues to be recovered by the Bank should be above r.1.00 lakh.
Application of Limitation Act - Claim should be made within the period of
limitation prescribed under Limitation Act 1963. That is, when the demand notice
is issued under SARFAESI Act, Limitation should be available, based on loan
documents / last renewal / Acknowledgement of Debt (D-11). Generally, the
period of limitation available is three years from the date of loan documents / last
renewal/ last AOD for hypothecation and if it is to be based on mortgae - twelve
years from date of creation of mortgage/ Last AOD.
Initiation of SARFAESI action by issuance of demand notice will not save
limitation for suit filing and similarly having done suit filing will not save
limitation for SARFAESI action.
Suit filed accounts - Even in suit filed cases (including cases pending before
DRTs), if the period of limitation is available based on loan documents/ last
renewal / AOD (like in the instance of non-suit filed cases), then measures under
the Act can be taken. In the case of non-suit filed accounts the following aspects
have to be borne in mind:
1. If security is sufficient to cover the dues fully or there is nothing other than the
security, bank may issue notice and proceed under the Act.
2. if security is not sufficient and recovery by proceeding against other assets, is
necessary, bank would have to proceed under the Act before filing Suit / Recovery
Application sufficiently early so that proceedings under the Act could be
completed before the expiry of the period of limitation and bank could file
Recovery Application / Suit thereafter for the balance within the limitation period.
Decreed Cases - The word ‘Debt’ has been defined to mean and include the same
term as in ‘DRT Act’. Going by the same money due under a decree is ‘Debt’.
Therefore even civil court decreed cases, RC issued cases and Lok Adalat Awards,
we may treat the money due under such decrees as ‘Debt’ and the security
interest has culminated in the decree and therefore SARFAESI action can be
initiated within 12 years from date of Decree/RC,
wherever mortgage interest is involved. Here, it has to be borne in mind that there
is no distinction between a preliminary decree and a final decree for SARFAESI
action and therefore even where preliminary decree is obtained, Bank may issue
demand notice based on the same.
Exemptions:
The Act is not applicable to –
 Security interest created in **Agricultural land.
 Security interest created for securing repayment of any financial asset not
exceeding Rs 1.00 lakh
 Assets in which the Amount due is less than 20% of the principal amount
and interest thereon

144
  Lien on any goods, money or security, creation of security in air crafts or
vessels, conditional sale, hire purchase or lease or any other contract in
which no security interest has been created.
o Rights of unpaid seller, properties not liable to attachment under
Section 60 (1) of CPC (Eg. Tools of artisans, personal belongings like
wearing apparel, bedding etc., of judgement debtor, stipends and
gratuities allowed to pensioners of Government or of Local Authority,
wages of labourers and domestic servants, all monies payable under
LIC Policy of the judgement debtor etc.,) and such other items as may
be exempted under respective State Amendments.
 Pledge of movables
** Herein the important aspect to be borne in mind is that if the land is not used
for agricultural purposes it will not fall under the exemption. Care should be
taken to ensure that the exempted categories do not come under the ambit of
such identified accounts.
Guarantor liability and pledge - By resorting to measures under the Act, the
rights of Bank as secured creditor to proceed against the guarantors is not taken
away. Similary the right to sell the pledged goods under general law also subsist.
Consortium accounts and / or Joint Finance - In the case of financing by more
than one secured creditors under consortium arrangement or joint financing,
bank is not entitled to exercise the powers under Sec13 (4) of SARFAESI Act
unless secured creditors representing not less than 75% in value of the amount
outstanding ( the total amount due to be payable) agree/consent for such action.
This consent is required only at the stage of taking possession etc (Sec 13(4)
measures) and not necessarily at the stage of issuance of Demand Notice.
Recovery Agents :
Under SARFAESI Act, Bank is entitled to issue demand notice, take possession
and effect sale of securities without intervention of Court or Tribunals. For this
purpose, the Authorised Officer is at liberty to make use of the services of
specialised agencies (Recovery Agents) in activities like taking possession,
drawing inventory, making security arrangements, effecting sale, etc.
Furthermore even in other process of recovery like in the suit filing process, for
the purpose of identifying other assets, to co- ordinate/liaison with Government
Agencies, Municipal authorities, the registration authorities and Recovery Officer
of DRT, Officials of the Court etc, the services of Recovery Agents would be of
immense help.
While empaneling Recovery Agents, it shall be ensured by them that Principle of
Natural Justice and the guidelines laid down in Indian Bank Model Code for
Collection of Dues and Repossession of Securities (CDRS Code) is adhered to.
Our Bank has approved to entrust Agri Loans, Educational Loans, MSE Loans,
SHG loans etc., with balance below Rs.10 lakh, to Business Correspondents /
Self Help Groups / Community Bank Co-ordinators after empanelment of them as
Recovery Agents.

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PRIVATE TREATY :-
Amendments are made in SARFAESI Act which facilitate / encourage private
treaty mode of sale by making it abundantly clear that the terms of sale through
private treaty mode is only to be settled / decided between the secured creditor
and the proposed purchaser and the borrower need not be involved, but the
borrower / guarantor / mortgagor has to be notified of the sale process that bank
intends to adopt through Private Treaty mode.
Branch / Zonal Office can consider adopting private treaty mode, if the attempts
of sale by bank through public mode of sale namely auction or tender process has
failed twice or thrice, despite marketing efforts of the bank and Authorised
Officer, with realistic Reserve Price of the property.
Insolvency & Bankruptsy Code:
Insolvency and Bankruptcy Code (IBC) has been put in place with effect from
28.05.2016. The main feature of IBC IS THAT FIRST THERE IS A MECHANISM
TERMED ‘Insolvency resolution’, by which a resolution process is envisaged
through revival / rehabilitation, etc., through insolvency professionals and if this
process fails, the liquidation process would begin.
Invocation of Personal Guarantee in case of borrower company defaults:
In all eligible cases, wherein security offered by the Guarantor(s) are involved,
Bank has to initiate SARFAESI action just as they would proceed against the
security offered by the Principal Debtor.
Wherever there are pledge of shares belonging to that of the Guaranto(s) /
Corporate Guarantor(s), bank needs to take recourse, by issuing notices and
thereafter transfer the pledged shares in the name of the Bank and proceed to sell
off the shares.
Even in cases where security interest is not created on assets of guarantor, at the
time of filing suit, Bank necessarily have to make prayer to attach the personal
assets of the guarantor / mortgagor and also to get an order of non alienation
against such assets.
Declaring as Wilful Defaulters:
RBI has evolved guidelines as regards classification of certain categories of
borrowers as ‘Wilful Defaulters’. The main intent and purport of classification of a
borrower as wilful defaulter would be to have a credit discipline, help to
disseminate credit information pertaining to wilful defaulters and also insures
that further Bank finance is not made available to them.
Compromise Settlement / OTS :
Compromise Settlement or One Time Settlement has been found to be one of the
quickest and easiest routes to resolve and recover our dues in most of NPAs.
Compromise / Negotiated settlements may be considered in an account where
exiting from the account by accepting a reasonable sacrifice is better option than
to continue with the legal battles for uncertain period and for an uncertain result.
In all cases where the advance is secured by tangible assets, the economics of the
compromise proposal should be determined in such a manner that it is always
advantageous to the Bank.

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Factors attribute for OTS option are :
 Failure of unit due to commercial or technical reasons.
 Government policies affecting functioning of the unit,
 Court orders
 Death of principal promoter
 Non-availability / loss / depletion of securities etc.
Reference Recoverable Amount (RRA) is the basic amount which the Bank shall
generally insist for accepting a compromise settelement from the
borrower/guarantor etc. Factors like Availability of securities, its saleability, cost
of realisation, networth of the borrowers/guarantors etc. are to be taken into
account before going for OTS.
Applicable interest rate to be applied for computing Notional Dues and as
discounting rate for Net Present Value (NPV) purpose will be 10.25% simple.
No compromise proposal should be rejected at the Branch Manager’s level. It
should be referred to the next higher authority for decision.

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 DOCUMENTATION AND LEGAL ASPECTS
What is a document?
Sec 3 of the Indian Evidence Act and Sec 3(18) of General clauses Act defines a
document as 'any matter written, expressed or described upon any substance by means
of letters, figures or marks or by more than one of these means intended to be used or
which may be used for the purpose of recording that matter’
According to Sec 2 (14) of Indian Stamp Act, the document include every document by
which any right or liability is or proposed to be recorded
What is documentation?
The execution of documents in proper form and according to the law is known as
'Documentation'. It means the whole process of obtaining the signature of borrowers on
the necessary documents after proper stamping and registration thereof wherever
necessary and complying with other connected formalities therewith.
Documentation - Why?
The documentation is a must as documents are useful
for
 Identification of borrower
 identification of security
 recording the transaction as a written evidence
 creation of charge on security
 settlement of terms and conditions
 prevention of fresh charge on security
 deciding the period of limitation
 settlement of rights and remedies of the lending banker against the
borrower
 filing suits and enforcing claim
Requisites of Documentation
The document should
 contain correct name(s) of party(ies)
 contain proper recital or narration
 be properly stamped
 be current and legally enforceable
 contain the amount of loan / facility, interest and overdue interest, if any,
chargeable, give description of security if any
 describe how consideration has passed on
 give terms of repayment
 give major / Important terms and conditions mutually 'agreed
upon

148
  give place and date of execution
 be duly registered wherever required, with the appropriate
authority
Type of documents
The nature and type of documents depend upon the type of borrower availing the
facilities, type of security to be offered, type of facility being availed and the type of
charge to be created for the facility. The details are as follows:
Types of Borrowers

Borrower Document

Sole proprietary concern Letter of Proprietorship

Partnership Firm Partnership Deed

Joint Hindu Family, Karta Form

Society/Club/ Association

Joint Stock Companies  Resolution of the Governing Body

 Certificate of Incorporation
 Certificate of Commencement of Business
Copy of Board's Resolution
 Memorandum & Articles of Association

Type of Security
 Hypothecation Agreement of Crop/ Livestock/ goods/ vehicles/
Machineries/ Book Debts
 Pledge of goods (indigenous/imported)/Govt. Securities (NSC)/Shares etc.
 Letter of lien on Deposits
 Assignment of LIC Policies
Types of facility

Demand loans Demand Promissory Note

Cash Credit/Overdraft Letter of continuity

Term Loan Term Loan Agreement

Types of Charge
 Hypothecation
 Pledge
 Lien / Set off
 Assignment
 Mortgage
In order to make the documents legally valid and enforceable in the court of law, the
documents should not only be executed correctly and properly but also to be executed
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by persons who have legal capacity and are competent to enter into legal contract.
Minors, Lunatics, Insolvents are not competent to contract and are not eligible for
executing the documents
In case of individual borrowers, the documents should be executed by them in their
personal capacity singly
In case of individuals borrowing jointly with others then the documents should be
executed by them jointly and severally
In case of Joint Hindu Family, if the ‘Karta’ is empowered to sign on behalf of the
Joint Family, the 'Karta' can execute the document
In case of Joint Hindu Family Karta is not empowered, then all male adult members of
the Joint Family should sign and on behalf of minor members (Males), the guardians
should sign
In case of Partnership Firm, all the partners of the Firm should execute the document in
their twin capacities i.e. both in their personal capacity and in their capacity as partners
of the firm
In case of Companies, the duly authorized persons as per Company's Board Resolution
or under power of attorney can execute the document
What is defective documentation?
Defective documentation may also invalidate and/or affect the lenders rights.
The following are some of the common instances of defective documentation:
 Inappropriate documents (i.e. documents not relevant to the type of advance and
the type of securities offered etc.)
 Incomplete set of documents
 Documents not properly filled in/partially filled in/incorrectly filled in/not filled in
at all
 Documents unstamped or inadequately stamped or improperly stamped
 documents with stamps affixed after date of execution of documents
 Unauthenticated corrections / overwriting’s / erasures / cancellations / insertions
 Documents executed by persons / agents having no authority to execute such
documents
 Documents executed by persons incompetent to contract i.e. who have no legal
capacity to contract / borrow, etc.
 Documents not executed properly by the authorised persons, as per bye-laws,
articles of association / resolutions, etc.
Who is called an “executants” of a document?
The party executing a document is known as an "Executants". The Executants should be
competent to contract.
What is a power of attorney?
A Power of Attorney is a document which empowers a specific person to act on behalf of
the person who is executing the same, by which a person is authorized to appear and act
on behalf of a person who is executing the power of attorney. A power of attorney may
also be given by a person to another to appear before any Court, Tribunal or Authority or
before a Co-operative Society or any Body or Association. The person who is given the
powers is called a "Constituted Attorney".
Types of Power of Attorney?
There are two types of Power of Attorney, namely:
150
1. General Power of Attorney
This type of a Power of Attorney gives general powers to the person in whose favor the
document is executed. The Constituted Attorney is authorized to perform all kinds of acts
and to execute any document on behalf of the person who has so executed that
document.
2. Special Power of Attorney
Such a Power of Attorney gives the person, power/s only for specified act/s or
transactions. In this case the power has to be strictly adhered to and the Constituted
Attorney cannot do anything for which he is not duly empowered by the Power of
Attorney.
Necessity of a Power of Attorney?
It is generally executed when a person wants to authorize someone to carry out any
activity which he would have undertaken if he would be personally capable of doing the
same. It is an authorization, which confers powers akin to that of the Principal on the
person for a temporary period of time.
Precaution to be taken while Execution of a Power of Attorney?
(WHEN POWER OF ATTORNEY IS EXECUTED IN INDIA)
• The Power of Attorney should be executed on a non-judicial stamp paper of the
requisite value as per the stamp duty prevalent in the respective state.
• Each page of the Power of Attorney and wherever the blanks are filled in should be
signed by the principal / the grantor. Notarisation of power of attorney is not mandatory;
however in such instances, care should be taken to verify that the power of attorney has
been executed in the presence of at least two witnesses & that the names and residential
addresses and signatures of the witnesses are also clearly specified / made in the power
of attorney.
(WHEN POWER OF ATTORNEY IS EXECUTED OUTSIDE INDIA)
• The Power of Attorney should be first typed on a plain sheet of paper.
• The signature(s) of the principal / grantor should be attested by any authorised official
of the Indian Embassy / Indian Consulate / Trade Commissioner of India / Notary Public
in the country where the principal / grantor resides.
• The Power of Attorney should be then sent to India and stamped. The Constituted
Attorney should sign the Power of Attorney on the last page in the presence of a Notary
Public / signature of the Constituted Attorney should be witnessed by two persons as
stated above.

INDIAN STAMP ACT AND LAW OF LIMITATION

Applicability of Stamp Act?
The Stamp Act 1881 extends to whole of India except J & K.
State Governments can amend the Act or enact a new act and prescribe the rate of
stamp duty for instruments other than those in the Union List.
What are the Different kinds of stamps?
1. Judicial (Used as per Court Fees Act for filing of suits etc)
2. Non Judicial (Used as per provision of Indian Stamp Act for commercial transactions)
and

151
3. Postal stamps.
Important Points to be noted:
 Documents are to be duly stamped to make them valid and legally enforceable at
times of need. As per Sec 2(11) of the Indian Stamp Act 1899, a document is deemed
to be duly stamped if it bears an adhesive stamp or impressed stamp of not less than
the proper amount and that such stamp has been affixed or used in accordance with
the law for the time being in force in India.
 Sec 17: Documents must bear the current stamp and must be stamped before or at
the time of execution.
 Every adhesive stamp affixed on documents is required to be cancelled as per Sec 12
of the Indian Stamp Act.
Registration of Loan Documents:
The law relating to registration of documents is contained in Registration Act 1908.
Under Sec 17 of the Act the following documents require compulsory registration.
1. A Mortgage deed
2. Lease of immovable property where the period of lease is one year or more
3. A sale deed in respect of a property
4. An assignment of some right, title or interest in a property made through a deed
Registration should be done at the Registrar of Assurances (Sub Registrar) under whose
jurisdiction the property falls (Sec 28/29)
Sec 23 of the act states that all documents which are required to be registered should be
presented at the office of Registrar or Sub Registrar within 4 months from date of
execution.
Period of Limitation:
The schedule to the Limitation Act 1863 specifies the period of Limitation as the time
from which period begins to run. There is a legal relation between the document and the
Limitation Act. The law of limitation bars the judicial remedy once the period of limitation
expires. Therefore it is of paramount importance for bankers to keep the documents
alive.

Nature of Document/Charge Limitation Period

Demand Promissory
(i) 3 years from the date of execution
Note;

(ii) Bill of Exchange / Promissory note

3 years from the date of presentation of

a) Payable at sight
bill

b) Payable at a fixed time after date 3 years from the date of bill/note

Payable i 3 years from the date on which the

(iii) Agreements and loan
in nrelative

installment
installments fall due
s

152
 (iv) Mortgage

Money repayable on demand

(a) 12 years from date of mortgage deed
and no

installment repayments are

agreed to

Repayable in installments for 12 years from the date on which the

(b)
recovery relative

of defaulted Installments fall

installment due

In case of default of any

(c) 12 years from the date of default
installment of

Principal or interest, .the whole

of the

Mortgage amount becomes

payable

DP
(d) Personal liability of mortgagor 3 years from the date of
N

/ Acknowledgement of
debt

When a document can be revived or its limitation period can be extended?

(i) Renewal of document
(ii) Obtaining acknowledgements of debt
(iii) Part payment before the expiry of limitation period either by himself or his duly
authorised agent
Document is thus an important primary source of evidence for the lending banker.
Hence it is of prime importance to complete and comply with all the legal formalities
correctly during execution of documents, its stamping, its subsequent registration (if
any) etc. as per legal provisions laid down in respective Acts so that such documents
shall be admitted in the Court of Law as enforceable evidences for claiming the rights
and remedies of lending banker at times of need.

FREQUENTLY ASKED QUESTIONS ON SARFAESI

What is SARFAESI?
The Securitization and Reconstruction of Financial Assets and Enforcement of Security
Interest Act 2002 (SARFAESI Act)
Where it is applicable?
Under the Act, Banks as a secured creditor by issuing demand notice (60 days time) can
take possession and sell/ transfer the properties which were offered as security by way of
mortgage, hypothecation etc.,
153
Which accounts are eligible for SARFAESI?
The loan a/c should be classified as an NPA by the Bank, and the total dues payable by
borrower to bank / to be recovered by the Bank should be above Rs. 1.00 lakh and the
a/c should be secured by way of hypothecation/mortgage etc.
Is the Limitation Act applicable for accounts coming under SARFAESI?
Yes. Claim should be made within the period of limitation prescribed under Limitation
Act 1963. That is, when the demand notice is issued under SARFAESI Act, Limitation
should be available, based on loan documents / last renewal / Acknowledgement of Debt
(D-11).
What are the exemptions under SARFAESI Act?
The Act is not applicable to –
a) Security interest created in **Agricultural land.
b) Security interest created for securing repayment of any financial asset not
exceeding Rs 1.00 lakh
c) Assets in which the Amount due is less than 20% of the principal amount and
interest thereon
d) Lien on any goods, money or security, creation of security in air crafts or
vessels, conditional sale, hire purchase or lease or any other contract in which no
security interest has been created.
e) Rights of unpaid seller
f) Properties not liable to attachment under Section60 (1) of civil procedure code
(CPC) (Eg. Tools of artisans, personal belongings like wearing apparel, bedding
etc., of judgment debtor, stipends and gratuities allowed to pensioners of
Government or of Local Authority, wages of labourers and domestic servants, all
monies payable under LIC Policy of the judgments debtor etc.,) and such other
items as may be exempted under respective State Amendments.
g) Pledge of movables
Whether sanction to initiate SARFAESI action is to be obtained?
Branches are required to obtain sanction for initiation of SARFAESI action and it is the
Zonal Manager who has to give necessary clearance / permission.
Who can be nominated as Authorized Officer?
As per security interest (enforcement) Rules, an Officer not less than a Chief Manager are
to be the Authorised Officers (AO). The Zonal Manager will nominate the Authorised
Officer for each account.
What is the role of Authorised Officer?
Rights by the Bank as secured creditor under SARFAESI Act has to be done through an
"Authorized Officer” from the stage of issuance of Demand Notice and up to the stage of
issuance of sale certificate in favour of the successful bidder. All steps under SARFAESI
Act are done by the bank through the Authorised Officer (AO) only.
Who can issue Demand Notice under SARFAESI Act?
The Authorised officer nominated by Zonal Office should issue Demand Notice.
What is the period of Demand Notice and from when the period starts?

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The period stipulated in Demand Notice is 60 days and for calculation of time the period
starts from the date of Acknowledgement of Notice by all the Borrowers /Guarantor /
mortgagors
If the demand notice is acknowledged on different dates, from which date 60 days
period will start?
The 60 days period starts from the last date of receipt by borrower/ guarantor
/mortgagor
What is to be done if the notice is not received by the borrowers or guarantor?
If the notice is not received or not delivered for any reasons, paper publication is to be
done in 2 local newspapers including one in vernacular language were the parties
resides.
What is the next step after the expiry of 60 days of notice?
After the expiry of 60 days from the last date of acknowledgement of demand notice, the
AO has to take physical possession of the property mortgaged to the Bank.
Within how many days of taking possession, notice is to be published?
Within 7 Days from the date of possession including the possession date, paper
publication has to be published in 2 newspapers; one among them is in vernacular
language where the parties resides.
What is to be done if the AO anticipates resistance/law & order problem etc.?
AO is at liberty to approach Chief Metropolitan Magistrate (CMM) or the Dist. Magistrate
(DM) with an application seeking assistance in taking possession / control under
SARFAESI act.
What is the purpose of CAVEAT?
CAVEAT means: - Give the other side notice and to follow principles of natural justice.
The purpose of caveat is to ensure that no ex-parte orders are passed by DRT in any
Securitisation appeal without hearing the bank /secured creditor.
When do we have to file CAVEAT?
Immediately after taking possession, i.e on the date of publication of possession notice in
news paper. Bank should file caveat before DRT and High Courts (wherever it is
accepted) to avoid ex-parte orders.
What is the validity of CAVEAT filed at DRT? And what is to be done after the
expiry of Caveat?
The CAVEAT will be in force for 90 days from the date of filing CAVEAT. Care should be
taken to ensure that another caveat is filed after the validity period of 90 days to keep it
alive.
What is reserve price and who will fix the Reserve Price?
R.P is the sale price for which the security will be sold in public auction. Security
Enforcement Committee (SEC) shall fix the Reserve Price based on the proposal
submitted by the AO and BM after analysis the value of property (DSV, MV, RSV) and
mode of sale recommended within two days from the date of receipt of valuation report of
the property.
Who are the members of SEC?
Security Enforcement Committee (SEC) comprising the Zonal Manager, Heads of the
Departments - Recovery, Legal, Expenditure, Premises, Inspection, and administration
may be constituted at Zonal Offices, with a minimum of three members.
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Can AO be the member of SEC?
No
How does SEC fix the Reserve Price?
The SEC may consider the Reserve/upset price even 10 to 25% less than the valuation,
taking into account the realizable value of the assets at the given point of time but shall
not be less than the distress value given by the Approved Valuer or 75% of the market
value whichever is higher.
How does SEC fix EMD?
SEC shall fix the EMD of movable assets and immovable assets offered as securities in
such a manner that it shall be 10% of the reserve price subject to a maximum of Rs.50
lacs and a minimum of Rs.10,000/-
What is to be done if the sale is not successful?
In case the sale is not successful for want of bidders and/or on default of the purchaser
to deposit the purchase price in time, the property could be brought for resale after
observing guidelines for fixing the upset price, EMD, other procedural aspects, etc. and
after obtaining permission from the appropriate authority
What is the Reserve Price for the property under RESALE?
If it is a Resale for want of bidders, Reserve price to be suggested by the SEC at 80% of
distress sale value or 60% of the market value whichever is higher with the permission of
SEC,
Within how many days from the date of physical possession, publication of sale
notice is to be made?
Sale notice should be published in two local newspapers including one vernacular is to
be done within 7 days after issuing sale notice to the parties (B/G/M)
How many days of gap should be maintained for the publication of sale notice to
auction date?
There should be clear 30 days from the date of publication of sale notice to the date of
sale
What will be normal terms of payment for Successful bidder and within how many
days the successful bidder has to comply with the norms?
Once the bidder is declared as successful bidder he/she/they has /have to pay 15 % of
sale price(not reserve price) immediately and balance of 75% to be payable within 15
days
What is other procedure after full payment has been received from successful
bidders?
Once sale price is paid, sale certificate has to be issued and then AO will get it registered
in the Sub- Registrar Office where the property is situated (within 4 months from the
date of sale certificate issued). Purchaser has to bear Stamp duty (Registration charges
and expenses)
In case of surplus / short fall for loan outstanding vs. total sale proceeds, what are
the steps to be followed by bank?
Once entire sale price is paid the same has to be appropriated towards the loan dues and
balance if any should be returned to the borrower/guarantor concerned. If sale proceeds
are not sufficient to cover loan dues, the bank has to file a suit /recovery application at
DRT for recovery of dues.

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Common Mistakes in the Process of Recovery under SARFAESI Act:
• Delay in serving Demand Notice after the account has been slipped to NPA, even
after AO is nominated.
• Not ensuring the correct address of the borrower/mortgagor/guarantor before
serving Demand Notice
• Demand notice is not complete in all respects.
• Mistakes in notice like Balance Outstanding, MOI, MOX, Date of NPA, Date of D
11, Schedule of Property etc.
• Date of serving , acknowledgement, due date for symbolic possession not diarized
and followed
• Evidence not created for having taken symbolic possession.
• Market Value of the property not properly ascertained before recommending to
SEC
• Delay in paper publication after symbolic possession.
• No proper marketing/advertising about the property under sale for finding bidders
• Not sending notice to SRO of the concerned locality
• Not contacting borrowers after the notice is served.
• Not keeping the documents live.
• Taking possession only on the basis of acknowledgement received from one of the
parties i.e. Borrower or Mortgagor or Guarantor
• Delay in taking actual possession.
• Not approaching DMM of eviction in case the house is let out.
• Not obtaining caveat without anticipating that the borrower may approach court
for stay
Importance of Central Registry?
 Sec: 20 of SARFAESI Act provides for setting up of a Central Registry for the
purpose of registration of transactions of securitization, wherein all kinds of
security interest created, be it by way of mortgage, hypothecation, assignment or
otherwise are to be registered irrespective of the type of borrowers.
 “The objective of setting up a Central Registry is to prevent frauds in loan cases
involving multiple lending from different banks on the same immovable property”.
RBI.
 The Central Registry of Securitization, Asset Reconstruction and Security Interest
of India (CERSAI – cersai.org.in), a Government Company, licensed under Sec.25
of the Companies Act, 1956 has been incorporated for the purpose of operating
and maintaining the Central Registry under the SARFAESI Act 2002.
 With existence of a Central Registry, it would be virtually impossible for a borrower
to raise loans twice against the same property or raise loans using forged
documents.
 Initially transactions relating to Securitization and Reconstruction of financial
assets and those relating to Mortgage of deposit of title deeds are to be registered
with the Central Registry. The records maintained by the Central Registry will be
available for search by any lender or any other person desirous of dealing with
property.
 Registration of charges to be done irrespective of whether the branch is a notified
one or not.
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 The particulars of every transaction should be filed with the Central Registrar
within a period of 30 days from the date of such transaction.
 In case there is a delay in filing the transaction an application in specific form
stating the reasons for the delay should be filed within 30 days of the expiry date
of the 30 days original filing date with payment of additional fees.
 Branches have to furnish the EM Creation or Extension of EM details to the Zonal
Offices who in turn will submit the details online to the Central Registry.
 Branches to ensure that the details furnished to the Zonal Offices are uploaded to
the Central Registry and they get the Asset ID Number generated by the system on
uploading the data by the ZO to the Central Registry to ensure that the data is
uploaded.
 EM of agricultural lands need not be filed with the Central Registry.

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 Foreign Exchange
What is Foreign Exchange?
Foreign exchange is the mechanism by which currency of one country is converted into
currency of another country. Foreign exchange means any currency other than the local
currency which is used in settling International transactions and includes deposits, credits and
balance payable in any foreign currency, drafts, traveler cheques, LCs or bills of exchange,
expressed or drawn in Indian Currency but payable in FC,/ drawn by banks, institutions or
persons outside India, but payable in Indian currency.
Role of Reserve Bank of India
With the introduction of Foreign Exchange Management Act (FEMA) 1999 with effect from 1st
June 2000, the objective of Reserve Bank of India has shifted from conservation of foreign
exchange facilitating external trade and payment and promoting the orderly development and
maintenance of foreign exchange market in India.
Reserve Bank of India issues licenses to Authorised Dealer (ADs) Banks, Full Fledged Money
Changers(FFMCs) and other selected Financial Institutions to deal in foreign exchange.
Amendments/Liberalisations made by RBI on FEMA guidelines are informed through AP (DIR
Series) circulars.
Authorised Dealers (ADs)
Scheduled commercial Banks currently authorized by RBI to deal in foreign exchange as
Authorised Dealers (ADs) Category I. Such ADs are permitted to deal in all current and capital
account transactions according to RBI directions issued from time to time. They are permitted to
open and maintain accounts in foreign currencies in foreign centers. They can buy and sell foreign
currencies under the powers delegated to them. They can maintain the accounts of non-residents.
FFMCs (Full Fledged Money Changers), Co-operative banks, select Regional Rural Banks (RRBs)
and other entities are known as Authorised Dealer-Category II. The major activities of these
authorised persons are specified non-trade related current account transactions, the activities
permitted to Full Fledged Money Changers etc.
Select Financial and Other Institutions are known as Authorised Dealer-Category III. The major
activities permitted to them are transactions incidental to the foreign exchange activities.
Foreign Exchange Dealers’ Association of India (FEDAI)
This is an Association of ADs formed with the approval of RBI. The aim of the Association is to
ensure that uniformity is maintained in the handling of all forex transactions.
Following are the important functions of FEDAI:
i. Issuing Guidelines and Rules for Forex Business
ii. Training of bank personnel in the areas of Foreign Exchange Business
iii. Accreditation of Forex Brokers
iv. Advising/Assisting member banks in settling issues/matters in their dealings
v. Representing member banks with Government/RBI/Other Bodies
vi. Announcing various rates on a periodical basis.
Classification of Branches
As per Reserve Bank of India requirement, branches of our Bank handling foreign exchange
business are classified into three categories as under:
Category A Offices and branches maintaining independent foreign currency accounts in their own
names. The Treasury Branch falls under Category A.
Category B Offices and branches not maintaining independent foreign currency accounts but
operating on the accounts maintained by Category A branches. These branches are called Forex
Authorised Branches (FABs)
Category C All other offices and branches handling foreign exchange business through Category
A or B offices/branches and these branches as known as Non-Authorised Branches (NABs).
FEMA – Some Important Definitions
FEMA 2 (m) ‘Foreign Currency’ - Means any currency other than Indian Currency.
FEMA 2 (n) – ‘Foreign Exchange’ means foreign currency & includes:
i.Deposits, credits and balance payable in any foreign currency,

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 ii.Drafts, traveler cheques, LCs or bills of exchange, expressed or drawn in Indian Currency
but payable in FC,/ drawn by banks, institutions or persons out side India, but payable in
Indian currency.
FEMA 2(o) – ‘Foreign Security’ means any security in the form of
 shares, stocks, bonds, Debentures or any other instrument denominated or expressed in
FC, but whose redemption or any form of return such as interest or dividends is payable in
Indian Currency.
Section 5 of FEMA, 1999
 Release of foreign exchange to residents for various current account transactions
 Schedule I - expressly prohibited items
 Schedule II - permitted by the ADs if prior approval from the Ministry/Dept of GoI
is secured
 Schedule III- prior approval of the RBI required for remittance exceeding these
limits.
Exchange transaction
A transaction which involves conversion of one currency into that of another is a foreign exchange
transaction. A foreign exchange transaction may arise out of exports or imports or remittances
into or from the country. The rate at which the conversion is done is the rate of exchange the spot
exchange rate refers to the current exchange rate.

Interbank and Merchant transaction

A foreign exchange transaction between two banks is ‘inter bank transaction’. In our bank inter
bank deals are undertaken only by Treasury branch. Foreign exchange transactions between the
bank and the customers is known as ‘Merchant transactions’. The discussion in this chapter
focuses on Merchant Transactions.
Purchase Transaction
In a ‘Purchase Transaction’ the bank acquires foreign currency from the customer and pays him
the local currency. Purchase of export bills, payment of DD drawn in foreign currency are
examples of purchase transactions.
In a ‘Sale Transaction’ the bank sells foreign currency to the customer receiving from him Indian
rupees. Retirement of import bills, issue of DD in foreign currency are examples of sale
transactions.
Exchange Quotations
In the interbank market the exchange quotation has two rates - one for buying and the other for
selling the foreign currency. Which of the two rates is for buying or for selling is to be interpreted
according to the method of quotation.
Direct Quote
An exchange rate quotation where the foreign currency is the standard (fixed) unit and the rate is
expressed in variable units of the home currency is called ‘Direct Quotation’ or ‘Home Currency
Quotation’. In other words, the exchange rate for a foreign currency is expressed in terms of units
of local currency equal to one unit of foreign currency. Direct method of quotations are presently
being used in India.
Eg : US $ 1.00 = Rs.47.50/55.
Here buying rate is Rs.47.50 and selling rate is Rs.47.55 per dollar for the quoting bank.
Indirect Quote
If in an exchange rate quotation , the home currency is the standard (fixed) unit and the rate is
expressed in variable units of the foreign currency, it is known as ‘Indirect Quotation’ or ‘Foreign
Currency Quotation’. In other words, under this type of quotation, the exchange rate is quoted in
terms of the number of units of foreign currency equal to a unit of local currency.
Eg : Rs.100 = US $ 2.1050/1070
Here buying rate is USD 2.1070 and selling rate is USD2.1050 per Rs.100 for the quoting bank.
Ready, Tom, Spot and Forward Transactions
In a Ready or Cash transaction, the exchange rate is agreed upon and the exchange of currencies
is done on the same day.
In a Tom transaction, the exchange of currencies take place on the next business day following
the day when the transaction is closed.
In a spot transaction the exchange of currencies take place on the second succeeding business
day following the day when the transaction is closed.
In a forward transaction, the exchange of currencies take place at a specified future period, at an
exchange rate predetermined on the date of the contract.
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Base Currency / Term Currency
In exchange system quote is given by stating the number of units of "term currency" (or "price
currency" or "quote currency") that can be bought in terms of 1 "unit currency" (also called "base
currency"). For example, in a quote that says the EUR/USD exchange rate is 1.4320 (1.4320 USD
per EUR), the term currency is USD and the base currency is EUR.
There is a market convention that determines which is the base currency and which is the term
currency. In most parts of the world, the order is: EUR – GBP – AUD – NZD – USD – others. Thus
if you are doing a conversion from EUR into AUD, EUR is the base currency, AUD is the term
currency and the exchange rate tells you how many Australian dollars you would pay or receive
for 1 euro. Cyprus and Malta which were quoted as the base to the USD and others were recently
removed from this list when they joined the euro.
Nostro accounts:
Any bank in the world, for undertaking foreign exchange transactions have to open an account
with banks in various other countries known as Nostro accounts. When banks in India open
accounts with banks abroad in their currency, it is known as Nostro account.
Vostro Account
When a bank abroad is opening account with a bank in India in INR, we call it as Vostro account
Loro Account Loro accounts are generally held by a 3rd party bank, other than the account
maintaining bank or with whom account is maintained
What is a Mirror account?
It is an office account maintained by a “A category” branch. As we saw earlier, “A category” branch
maintains the Nostro account for the bank as a whole. All B category branches of the bank will be
operating the account. To monitor the operations in the account and to make reconciliation of
transactions easier, this account is maintained. True to its name, it will reflect all the transactions
taking place in the Nostro account. All debits to the Nostro account will appear as credit in the
Mirror account and all the credits to Nostro account will appear as debit in the Mirror account
Who is an NRI?
As per FEMA NRI is a person who has gone out of India or who stays outside India, in either case
 for the purpose of gain full employment outside India,
 for undertaking business or vocation outside India,
 for education abroad,
 for any other purpose, in such circumstances as would indicate his intention to
stay outside the country for an uncertain period
As per IT act, NRI is a resident who had stayed outside the country for a period of more than 182
during the previous financial year. As per FEMA, intent to stay abroad is important factor for
deciding the NRI status. In the case of IT act, physical stay is the important factor in deciding the
status.
Who is a PIO?
PIO is a foreign citizen:
Who has ever held an Indian passport, or
The person's parents, grandparents or great grandparents were born in and were permanent
residents of India and never moved to (i.e. were never nationals of) Bangladesh and Pakistan, or
The person is the spouse of a citizen of India or of a PIO and has been so for two years or more,
and
The person and his/her parents, grandparents or great grandparents must not have been a
national of Bangladesh or Pakistan at any point of time.
NRIs are permitted to open NRE, NRO & FCRN (B) accounts
NRE account can be opened in the form SB/CA/RD/Term Deposit and denominated in INR. The
rate of interest on SB is 3.50% as applicable to domestic deposit. The minimum period of Term
deposit is 1 year & Maximum period of deposit is 10 years. Short Term Deposit cannot be opened
as the minimum period of deposit is 1 year. Only the following credits are permitted in to NRE
accounts:
a) Foreign Inward remittance
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 b) DD/Cheques drawn in foreign currency
c) Tendering of Foreign currency / Travellers Cheque during personal
visit
d) Transfer from FCNR(B) / Other NRE accounts

Joint account is permitted. Joint account holder can be NRI or Resident Indian. If resident
Indian, the joint account holder should be a close relative as deified in Companies Act 2013 and
the mode of operation of the account should be F or S Clause. Nomination is allowed and POA can
also operate the account. But POA can transfer the funds outside the country only in favour of
the account holder. No TDS on interest earned on the deposits as they are exempted from Tax and
therefore no form 15G / 15H should be obtained from NRE account holders.
Funds held in these accounts can be freely repatriated. Also funds can be transferred from NRE
to FCNR(B) and Vice Versa. Funds from NRE can also be transferred to NRO account. But
transfer of NRO to NRE is restricted to a maximum of equivalent of USD 1 million per financial
year subject to payment of applicable taxes in India.
 NRE term deposits should be opened for a minimum term of one year.
 No interest is payable on NRE term deposits pre-closed before one year from the date of
opening of the said deposit.
 Interest rates on NRE and NRO deposits cannot be higher than those offered on comparable
domestic rupee deposits.
 Interest rates applicable to deposits for 3 years period will be applicable for deposits for terms
more than 3 years also.
 Additional interest rate of one % per annum payable to Bank’s own staff are not available in
respect of NRE/NRO deposits.
 No penalty for foreclosure of Term Deposit upto Rs.15 lakhs. 0.75% foreclosure charges for
deposit above Rs.15 lakhs.
What is FCNR(B) Deposit
This deposit denominated in foreign currency. Only term deposit can be opened – FD & RIP. No
Short Term Deposit can be opened as minimum period of deposit is 1 year. Maximum Period of
deposit is 5 years
As per RBI guidelines this deposit can be opened in any permitted currency. In our Bank this
deposit can be opened in nine currencies – USD, GBP/STG, EUR, JPY, AUD, CAD, SEK, DKK &
CHF.
Foreclosure is permitted – No penalty for foreclosure – applicable interest rate will be paid for the
period deposit. If foreclose before 1 year, then no interest will be paid. Joint account is permitted.
Even resident can be joint account holder, provided resident joint account holder should be a
close relative as defined in Companies Act 2013 & mode of operation should be F or S. No tax on
interest earned on FCNR(B) Deposit. No interest rate concession to staff/ex-staff/senior citizen.
Transfer of fund is permitted to FCNR to NRE and vice versa. Loan against FCNR(B) is permitted
and loan to third party against FCNR deposit is also permitted
What are the features of NRO deposit?
It is similar to domestic deposits. Local rupee also can be deposited into this account.
SB/CA/TD/RD/VRD can be opened. Minimum period of deposit is 15 days and maximum 10
years. Transfer from one NRO to another NRO account of the same person or others are not
permitted. Staff/Ex-staff members and senior citizen/Ex-staff senior citizen are not eligible for
concessional rate of interest. Interest on SB and RD is also subject to TDS. TDS is 20% (under
sec.80TTA). No Form 15G/15H to be obtained in respect of NRI Customers. Foreclosure as
applicable to domestic term deposit
Whether NRIs can be Joint Holders in Resident’s SB/EEFC/RFC Accounts ?
Individual residents in India are now permitted to include non-resident close relative(s) as joint
holder(s) in their resident bank accounts, namely, Savings (SB), Exporter Earners’ Foreign
Currency (EEFC) and Residents’ Foreign Currency (RFC) accounts, on ‘Former or Survivor’ basis.
Whether Residents can be Joint Holders in NRE/FCNR Accounts
Non-Resident Indians (NRIs)/Person of Indian Origin (PIO), are now permitted to open Non-
Resident (External) (NRE) Rupee Account Scheme/Foreign Currency (Non-Resident) (FCNR)

162
Account (Banks) Scheme with their resident close relatives(s) as Joint Holder(s) on ‘Former or
Survivor’ basis only, w.e.f 01.09.2016.
Whether loan to NRI against securities in India ?
Banks may grant loans against NR(E) and FCNR(B) term deposits either to the depositors or third
parties.
 The term “loan” shall include all types of fund based/non-fund based facilities.
 Rupee loans in India to be allowed to depositor / third party without any ceiling to the
extent of balance outstanding in the NRE/FCNR(B) accounts, subject to usual margin
requirements.
 Foreign currency loans in India / outside India to be allowed to depositor / third party
without any ceiling to the extent of balance outstanding in the NRE /
 FCNR(B) accounts, subject to usual margin requirements.
 In case of FCNR(B) deposits the margin requirement shall be notionally calculated on the
rupee equivalent of the deposits in accordance with para 9(2) of Schedule-2 of Foreign
Exchange Management (Deposit) Regulations, 2000.
 The Facility Of Premature Withdrawal Of NRE / FCNR (B) Deposits Shall Not Be Available
Where Loans Against Such Deposits Have Been Availed.
 The existing loans which are not in conformity with the above instructions shall continue
for their existing term and shall not be rolled over / renewed. As roll over in CBS is automated,
branches are instructed to identify such accounts where roll over is not to be permitted and
take up well in advance with Project Office to ensure compliance in this regard.

Whether residents can repay the loans given to NRI Close Relatives
Resident individuals are now granted general permission to repay loans availed of in Rupees from
banks in India by their NRI close relatives. Earlier repayment of loans by close relative in respect
of Rupee loan availed by NRIs was restricted only to housing loans.
Whether residents can bear Medical Expenses of NRIs
Residents will now be allowed to bear the medical expenses of visiting NRIs/PIOs close relatives.
Earlier, residents were allowed to make payment in rupees towards meeting expenses on account
of boarding, lodging and services related to it or travel to and from and within India of a person
resident outside India and who is on a visit to India.
What are different type of Foreign Currency Accounts that a Residents can open ?
Exchange Earner’s Foreign Currency Account (EEFC). Enables exporters and other exchange
earners to retain a portion of their receipts in foreign exchange with an AD. Balances retainable:
100% - For all the resident exporters. Only current account - no credit facilities either fund or
non-fund based should be permitted against the security of the EEFC balances. Balance can be
transferred to NRE/FCNR account on change of status from Resident to Non Resident. Export
packing credit can be allowed to be adjusted out of such funds. As per the latest guidelines, the
funds credited to be EEFC account during a month should be utilized in full by end of
succeeding month.
RFC Account: A resident in India who was earlier an NRI (One year stay abroad) and became
resident on or after 18/04/92. This deposit is denominated in Foreign Currency. Any foreign
exchange acquired from abroad can be credited. SB, Current, Fixed Deposit permitted. No
restrictions including investment overseas. Banks are free to determine interest rates.
RFC (Domestic) Account: A resident in India who acquired foreign exchange while on a visit to
abroad, from a person on visit to India or by way of gift or honorarium etc. Held in Foreign
currency. Only Current account permitted. No interest payable. Repatriation for permissible
current and capital account
What is FCRA?
FCRA – Foreign Contribution Regulation Act, 1976 - The Act stipulates that: no foreign
contribution shall be accepted by a candidate for election; correspondent, columnist, cartoonist,
editor, owner, printer or publisher of a registered newspaper; judge, government servant or
employee of any Corporation; member of any legislature; political party or office bearer thereof;
and individuals or associations specifically notified under section 10 (a) of Foreign Contribution
(Regulation) Act, 1976 who have been prohibited from receiving foreign contribution.
government may prohibit / stipulate prior permission for accepting any foreign
contribution

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 association having definite cultural, economic, educational, religious, and social program
should get themselves registered with the Ministry of Home Affairs, Govt. of India, New
Delhi
Before crediting any inward receipt of funds, received in favor of any of the above mentioned
associations meticulously observe
To insist upon permission of Central Govt. (Ministry of Home Affairs).
Obtain copy of permission letter, if prior permission obtained.
Not to afford credit to the account of such associations which are not registered with MHA
under FCRA, 1976.
Not to afford credit to the account of such associations as have been directed to receive
foreign contributions only after obtaining permission of the Central Govt.
Not to allow the credit of the proceeds of the cheques / demand drafts etc. to the
organizations of political parties (including their branches and units) unless a letter
containing the prior permission of Central Government under the FCRA, 1976 is
submitted.
Acceptance of donation from foreign source
Organizations / associations can accept contributions from a “foreign source” only if they are
registered with the MHA / GOI. It is to be noted that the account opened for the purpose of
receiving contribution / donation should not pass any other regular credits.
What is Export Finance?
Export Finance is a short term, working capital finance allowed to an exporter for manufacturing,
processing, packing and after shipment of goods / rendering service to the date of realization of
export proceeds. Export Finance consists of two stages viz., Stage 1 : Pre-Shipment Credit and
Stage 2 : Post-Shipment Credit.
Who are eligible to avail export Finance?
Eligible borrowers for Export Finance: Exporter of goods & Service, indirect exporters, exporters of
agri products, sub-suppliers, contractors and deemed export
Indirect Exporters: Rupee Export Packing Credit to Manufacturer Suppliers who do not have
export orders/letters of credit in their own name and goods are exported through the State
Trading Corporation/Minerals and Metal Trading Corporation or other export houses, agencies
etc.
Sub-Suppliers: Packing credit can be shared between an Export Order Holder (EOH) and sub-
supplier of raw materials, components etc. of the exported goods as in the case of EOH and
manufacturer suppliers.
Deemed Export :Transactions in which the goods supplied do not leave the country and the
payment for such supplies is received either in Indian Rupees or in free foreign exchange refers to
deemed export. It includes Supply of goods against licenses issued under duty exemption
scheme, EPZ, STP,EOU, EHTP and projects funded by UN agencies etc.,
What is pre-shipment Credit?
Pre-Shipment Credit:
Pre-Shipment Credit refers to any loan or advance granted or any other credit provided by the
bank to an exporter for financing the purchase, processing, manufacturing or packing of goods
prior to shipment for export of goods / services from India.
Types of Pre-Shipment Credit
Packing Credit – (for financing the purchase, processing, manufacturing or packing of goods prior
to shipment for export of goods / services )
Advance against receivables from the Government like duty drawback etc.,
Advance against Cheques / drafts representing advance payment.
Foreign Currency Pre-shipment Finance (Foreign currency Packing Credit - FCPC)

What is quantum of Advance under export finance?

a)Pre-shipment finance should not exceed the FOB value (Free On Board) of the goods or
domestic cost of production, whichever is less. Margin as stipulated must be maintained.
Where the order / LC is on CIF ‘basis’ and ‘its’ amount should be reduced to FOB value
before deducting the margin
What is the Period of Advance for Pre-shipment Finance?
Period for which the pre-shipment finance can be extended at concessional rates, as determined
by RBI, is 360 days for all types of commodities, from the date of advance. If pre-shipment
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advances are not adjusted by submission of export documents within 360 days from the date of
advance, the advances will cease to qualify for prescribed rate of interest for export credit to the
exporter ab initio..
What are the means by which Packing Credit can be adjusted / liquidated?
Liquidation of Packing Credit refers to adjustment of packing credit. The liquidation can be by
1) proceeds of bills drawn for the exported commodities on its purchase, discount etc.
2) Repaid / prepaid out of balances in Exchange Earners Foreign Currency A/c (EEFC A/c)
3) From rupee resources of the exporter to the extent exports have actually taken place.
4) Packing credit in excess of export value can be permitted to liquidate the excess PC by export
bills drawn in respect of by-product to be adjusted either in cash or by sale of residual by-
product oil within a period not exceeding 30 days from the date of advance to be eligible for
concessional rate of interest.
What is Substitution?
Repaying / liquidating of packing credit with proceeds of export documents relating to any other
order covering the same or any other commodity exported by the exporter are known as
substitution. Substitution is permitted only to Exporter clients who have a good track record.
What is Running Account' Facility?
Pre-shipment Credit ‘Running Account’ facility in respect of any commodity, without insisting on
prior lodgment of letters of credit / firm export orders may be extended, depending on the
judgment regarding the need to extend such a facility to exporters whose track record has
been good as also to Export Oriented Units (EOUs)/ Units in Free Trade Zones / Export
Processing Zones (EPZs) and Special Economic Zones (SEZs). Running account facility should not
be granted to sub-suppliers.
What is a Post-Shipment Credit and what is different type of post shipment finance
Post shipment Credit means any loan or advance granted or any other credit provided by the bank
to an exporter after shipment of goods / rendering services to the date of realization of export
proceeds. Types of Post-Shipment Credit are:
1. Export Bill Purchased / Negotiated / Discounted
2. Advance against bill sent on collection basis
3. Advance against undrawn balance
4. Advance against Duty Drawback receivable from Government.
5. Post shipment Credit in Foreign currency (FC – FBN/FBP/FBD)

What is Period for post shipment finance?

Demand bills - Normal Transit Period (NTP) as specified by FEDAI – 25 days for all bills drawn in
FC
Usance bills - Maximum duration of 270 days from date of shipment inclusive of Normal Transit
Period (NTP) and grace period, if any.
Fixed Due Date - Due date is reckoned from the date of shipment or date of Bill of Exchange, NTP
shall not be applicable
How Post-shipment finance can be liquidated?
Liquidation of Post shipment Credit refers to adjustment of packing credit. The liquidation can be
by
 Proceeds of export bills received from abroad in respect of goods exported / services
rendered.
 Repaid / prepaid out of balances in Exchange Earners Foreign Currency Account
(EEFC a/c)
 From the proceeds of any other unfinanced (collection) bills.

Whether Export Credit can be availed in Foreign Currency

Exporter can avail, both pre-shipment and post-shipment credit in foreign currency in one of the
convertible currencies viz USD,GBP,JPY, EUR etc. PCFC (Packing Credit in Foreign Currency) can
also be availed in one convertible currency in respect of order invoiced in another convertible
currency. The risk and cost of cross currency transaction will be that of exporter. The instruction
with regard to rupee export credit applies to export credit in foreign currency, unless otherwise
specified. The lending rate should not exceed 3.5% over LIBOR/EURO LIBOR/EURIBOF.
Customers are allowed to book forward contract in any permitted currency of their choice,

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What is an Import Licenses?
Except for goods included in the restricted item require license under the Foreign Trade Policy in
force, freely open letters of credit and allow remittances for import. The earlier name " license " is
now termed as "authorization". Import authorizations are issued by Regional Offices of DGFT.
While opening letters of credit, the ‘For Exchange Control purposes’ copy of the license should be
called for and special conditions, if any, attached to such licenses should be adhered to. After
effecting remittances under the license, Authorised Dealer may preserve the copies of utilised
license /s till they are verified by the internal auditors or inspectors.
What is time limit for normal imports?
In terms of the extant regulations, remittances against imports should be completed not later than
six months from the date of shipment, except in cases where amounts are withheld towards
guarantee of performance, etc. Interest in respect of delayed payments, usance bills or overdue
interest for a period of less than three years from the date of shipment may be permitted.
What is time limit for import of books?
Remittances against import of books may be allowed without restriction as to the time limit.
What is amount advance remittance for import of goods
Advance remittance for import of goods may be allowed upto USD 200000 or its equivalent.
If the amount of advance remittance exceeds USD 200,000 or its equivalent, standby Letter of
Credit or a guarantee from an international bank of repute situated outside India or a guarantee
of an AD Category – I bank in India, if such a guarantee is issued against the counter-guarantee of
an international bank of repute situated outside India, is obtained.
What is amount advance remittance for import of services?
Advance remittance for import of services may be allowed upto USD 500000 or its equivalent.
If the amount of advance remittance exceeds USD 500,000 or its equivalent, standby Letter of
Credit or a guarantee from an international bank of repute situated outside India or a guarantee
of an AD Category – I bank in India, if such a guarantee is issued against the counter-guarantee of
an international bank of repute situated outside India, is obtained.
What is Bill of Entry Form?
Bill of entry is the evidence for import of goods into India. It is issued by Customs Authorities.
Importers should submit the bill of entry for all the import made by them to Authorised Dealer. In
case of all imports, where value of foreign exchange remitted/ paid for import into India exceeds
USD 100,000 or its equivalent, it is obligatory on the part of the AD Category to ensure that the
importer submits Bill of Entry / Customs Assessment Certificate or Postal Appraisal Form. If it is
not submitted the same will be reported to RBI on a half yearly statement called BEF statement.
What is a Letter of Credit?
Letter of Credit - an undertaking by a bank, in the importing country, on behalf of the
importer/buyer, to the exporter/seller, stipulating that if specified documents conforming to LC
are presented within a stipulated date the bank establishing the credit will pay the amount.
What are the Types of LCs
 Irrevocable Credit – Cannot be cancelled / amended without the consent of all the
parties (As per Article 3 of UCP 600, in the absence of any indication to the effect that it is
revocable or irrevocable, the credit shall be deemed to be irrevocable).
 Revocable Credit - The undertaking by the LC opening bank can be Revoked,
Cancelled, Amended, at any time, without notice to the beneficiary. The issuing bank
remains liable for bills negotiated before the LC was cancelled/ revoked. This LC is not
acceptable to Banks.
 Confirmed LC - additional undertaking (only irrevocable LC) by confirming bank
normally in the exporter’s country, payment will be made to the exporter if the terms of the
credit are met
 Payment Credit (sight credit /payment / Against presentation of requisite
documents to the nominated paying bank / The draft to be drawn on the paying bank
mentioned in the credit.
 Deferred Payment Credit - Payment to be made by the nominated bank / due dates
as per the terms of the credit / No Bill of Exchange

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  Negotiation Credit- Allow negotiation by any bank / Restrict negotiation to a
particular bank  Restricted LCs
 Acceptance Credit - Usance bill of exchange is mandatory / BOE shall be drawn on
a specified bank indicating the tenor / The drawee bank will accept the drafts and honor
the same by making payment on the determined due date.
 Revolving LC- amount availed is reinstated and is available for negotiation again
 Transferable LC- original beneficiary can transfer to one/many other beneficiaries.
Cannot be transferred to third beneficiary. A credit can be transferred only if it is
specifically indicated on the LC.
 Back-to-Back LC- against the security of another credit, may be a local credit,
another LC is opened based on export LC.
 Red/Green-Clause Credit -enables the beneficiary to avail pre-shipment credit.
Beneficiary defaulting LC opening bank to reimburse the lending bank
 Standby LC- A substitute for guarantee and issued to cover situations of non-
performance- Normally issued in countries where regulations PROHIBIT the issue of
guarantees by the banks– e.g. USA, Japan
 Any discrepancy to be notified to the negotiating bank within 5 banking days.

What are the important regular Statements submitted to RBI

 R-Returns
 AD Banks should furnish, on half-yearly basis, a consolidated statement in Form
XOS giving details of all export bills outstanding beyond six months from the date of export
as at the end of June and December every year.
 Authorised dealers may forward a statement in Form EBW, every half year, to the
Regional Office of Reserve Bank under whose jurisdiction they are functioning, indicating
details of write offs allowed under their delegated powers.
 B E F. - statement of non submission of bill of entry
 ENC- statement of Export Bills negotiated / sent for collection during fortnightly
period
What is the premium for Export Credit Insurance-Whole-Turnover Pre- Shipment Credit
(ECIB-WT-PC)?
@ Rs13.50 paise per Rs 100/- on a daily product basis. The premium is to borne by the exporter
What is the premium for EXPORT CREDIT INSURANCE-WHOLE-TURNOVER POST
SHIPMENT CREDIT (ECIB-WT-PS)?
The ECGC premium on post shipment credit should be borne by the bank and the premium is Rs
13.5 paise per Rs 100/- on a daily product basis. The premium is borne by banks

What is SWIFT?
SWIFT – Stands for Society for Worldwide Interbank Financial Telecommunications. It is a co-
operative society registered in Belgium having its headquarters at Brussels. The first message was
sent over the SWIFT network in May 1977 and all 15 founder countries became live on the
system. Main objective of SWIFT is standardization, processing and transmission of international
financial messages like payment orders, letters of credit, documentary collections etc. The main
advantage of message standardization is that SWIFT messages are computer readable and hence
can be easily processed.
What is Form 15CA & Form 15CB?
A person making a remittance (a payment) to a Non Resident or a Foreign Company has to submit
Form 15CA. This form is submitted online. In some cases, a certificate from a Chartered
Accountant in Form 15CB is required before uploading Form 15CA online. In Form 15CB, a CA
certifies details of the payment,
Here are the details regarding these forms –
 In some cases Form 15CA and certificate from CA in Form 15CB are not required. This is
when remittance is towards the list of 28 items mentioned in Rule 37BB.
 Certificate in Form 15CB is not required when remittance does not exceed Rs 50,000
(single transaction) and Rs 2,50,000 (in total in a financial year). Only Form 15CA is has to be
submitted in this case.

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  Certificate in Form 15CB is not required if lower TDS has to be deducted and a certificate
is received under section 197 for it or lower TDS has to be deducted by order of the AO. Only
Form 15CA is to be uploaded in such a case.
 In all other cases, if there is a remittance outside India, the person who is making the
remittance will take a CA’s certificate in Form 15CB and after receiving the certificate submit
Form 15CA to the government online.
What is UCO 600?
UCP 600 is the latest version of the rules that govern letters of credit transactions worldwide. UCP
600 is prepared by International Chamber of Commerce’s (ICC) Commission on Banking
Technique and Practice. Its full name is 2007 Revision of Uniform Customs and Practice for
Documentary Credits, UCP 600, and (ICC Publication No. 600). The ICC Commission on Banking
Technique and Practice approved UCP 600 on 25 October 2006. The rules have been effective
since 1 July 2007.
What are the Important features of UCP 600 ?
UCP 500 was the rules that had been in implementation before UCP 600. There are several
significant differences exist between UCP 600 and UCP 500. Some of these differences are as
follows;
 The number of articles reduced from 49 to 39 in UCP 600;
 In order to reach a standard meaning of terms used in the rules and prevent
unnecessary repetitions two new articles have been added to the UCP 600. These newly
added articles are Article 2 “Definitions” and Article 3 “Interpretations”. These articles
bring more clarity and precision in the rules;
 A definitive description of negotiation as “purchase” of drafts of documents;
 New provisions, which allow for the discounting of deferred payment credits;
 The replacement of the phrase “reasonable time” for acceptance or refusal of
documents by a maximum period of five banking days.
 Repetitive, redundant and ambiguous language was eliminated.
 A new Article on “Definition of Terms” and “Interpretations” was added for clarity.
 The document examination period was reduced from 7 to 5 days.
 Numerous discrepancy issues were eliminated.
 A new provision on applicant/beneficiary addresses was added.
 Transport document shipment dates and their impact on presentation time were
clarified.
 Easier-to-understand transportation articles were created.

Remittances Facility for Resident

Outward remittance :
For Personal Visit Abroad -Max: USD 250000 (or equivalent)
Business Visit – Max -USD 250000(or equivalent)
(Currency Component)- Maximum amount permitted: US$ 3000 (or equivalent) per ticket /
traveller - Except
Iraq / Libya <= US$5000, Iran / Russian Federation and other CIS countries - Full Amount
Travel to and/or residents of Nepal and Bhutan (clause (b) of Rule 3 of FEMA) – Nil
It is not mandatory for Authorised Dealers to endorse the amount of foreign exchange sold for
travel abroad on the passport of the traveller. However, if requested by the traveller, they may
record under their stamp, date, signature and details of foreign exchange sold for travel.
Education abroad – USD 250000
Medical treatment abroad – USD 250000,
Maintenance of NRI Abroad – USD 250000
Immigration / Employment Abroad – USD 250000,
But total remittance under Rule 5 – Schedule III including remittance under LRS during a
financial year should not exceed equivalent of USD 250000
Liberalised Remittance Scheme of USD 250000 for resident individuals
 Remit up to USD 250000 / F Y.
 Permitted transactions - Current / Capital A/c.

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  For undertaking transactions under the Scheme, resident individuals may use the
application-cum-Declaration Form and it is mandatory to have PAN number to make
remittances under the Scheme.
 The limit of USD 250000 under the Scheme also include remittances as per Rule 5
– Schedule III of FEMA
 An investor can retain and reinvest the income earned on investments made under
the Liberalised Remittance Scheme.
Surrendering of FX
 To be surrendered to an authorized person within 180 days from the date of its
receipt
 Where the aggregate value of FX in form of currency notes, TCs brought in at any
one time exceeds USD 10000 or its equivalent, and / or, the aggregate value of foreign
currency notes brought in at any one time exceeds USD 5000 or its equivalent,
Currency to be declared at the time of entering into India by a person to Custom
Authorities in Currency Declaration Forms (CDF)
 Issue FIRC  in form BCI against receipt of inward remittances  on security
paper as proof of inward remittance if the amount is more than Rs.15000/-.
 A returning traveller is permitted to retain with him, foreign currency travelers
cheques and currency notes up to an aggregate amount of USD 2000 and foreign coins
without any ceiling beyond 180 days. (cf. Notification No. FEMA 11/2000-RB dated
May 3, 2000). Foreign exchange so retained, can be utilized by the traveller for his
subsequent visit abroad
 Where a person approaches an Authorised Person for surrender of unspent/
unutilized foreign exchange after the prescribed period of 180 days, Authorised Person
should not refuse to purchase the foreign exchange merely on the ground that the
prescribed period has expired.
While remitting
 Endorsement of Passport for FX issued not mandatory
 International Credit Cards (ICCs) – not limited by individual limits
 ICC settled debit to FC a/c  only direct remittance to Card Issuer
 IDC – limits as prescribed in FEMA Section 5 schedule III.
 IDC payments>USD100000 per calendar year – send statement to RBI
INWARD REMITTANCE
XpressMoney / MONEYGRAM / Western Money Union (Nodal Branch- Treasury Branch)
 Not eligible for credit to NRE / FCNR accounts.
 Arrangement with UAE Exchange Centre for instant Money transfer by NRIs to
resident Indians.
 Payments up to Rs.50,000/- can be paid to the beneficiaries in cash at all
branches on identification and if more than Rs.50,000/- by Account credit / BPO
 The beneficiary can receive a maximum amount of USD 2500 as single remittance
and maximum of 30 remittances in an year.
 Money Gram – 8 digit reference / Xpress Money – 16 digit reference / Western
Money Union – 10 digit reference
SPEEDREMIT (Replaces MT)
Purpose Remittances from Singapore to India, to the credit of accounts with
Indian Bank

Parent Branch INDIAN BANK Singapore

Benefits Considerable reduction in transit time. The Twin facility of 'Speed Remit'
combined with 'Internet Banking - view' will assure speed, safety and
comfort for the remitters

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New Electronic Funds Transfer Arrangement with UAE Exchange House, Abudhabi.
Service Provider: M/s UAE Exchange Centre, LLC Abudhabi.
 Inward remittance can be credited to NRE account also.
 Amount will be directly credited to the account by the Treasury.
 Credits under Trade transactions also permitted upto a maximum of
Rs.15,00,000/- per transaction.
Latest RBI guidelines remittances from abroad

 Rupee Drawing Arrangements: It has been decided to increase the limit of trade
transactions from the existing Rs.5 lakhs to Rs.15 lakhs.
 Money transfer service scheme: Direct to account facility: Foreign inward
remittance can be directly credited by the recipient bank to other KYC compliant bank
accounts through NEFT or IMPS etc subject to conditions. The amount should not be
credited to non KYC compliant accounts and NRE /NRO accounts.
Latest in FX
100% FDI IN e-Commerce Retailing
At present, 100 per cent FDI is allowed only in business-to-business (B2B) e-commerce and not in
the retail segment. The Government has now permitted 100 per cent FDI in the market place
format of e-commerce retailing via automatic route with a view to attract more foreign
investments. The Government also clarified that single brand retailers can sell via the e-commerce
route but barred foreign ownership in an inventory based model.
NRI remittance for Subscription to Chit Funds
RBI decided to permit Non-Resident Indians (NRIs) to subscribe to the chit funds, without limit,
on non-repatriation basis subject to a condition that, the subscription to the chit funds shall be
brought in through normal banking channel, including through an account maintained with a
bank in India
RBI opens up New Pension Scheme (NPS) to NRI
RBI has decided to enable National Pension Payment System as an investment option for NRIs
under FEMA. NRI can pay the subscription either through inward remittance or out of funds held
in NRE / FCNR (B) accounts.
Foreign Trade Policy (2015-20)
Government of India has released Foreign Trade Policy (FTP) for 2015-2020 on 31.3.2015. This
new Trade Policy comes into effect from 01.4.2015. The new trade policy seeks to strengthen
merchandise and services exports with a targeted value of $900 billion by 2020.
In a drastic change of stance in keeping with global trading norms under the World Trade
Organization (WTO), the new FTP sought to consolidate all previous export incentive schemes
under the following two categories:
1. Merchandise Exports from India Scheme (MEIS)
2. Services Exports from India Scheme (SEIS).
The MEIS has replaced the following five existing schemes:
1. Focus Products Scheme,
2. Market-linked Focus Products Scheme,
3. Focus Market Scheme,
4. Agriculture Infrastructure Incentive Scrips
5. Vishesh Krishi Grameen Udyog Yojana (VKGUY)
On the other hand, SEIS has replaced the existing Served From India Scheme (SFIS).
Significant Announcements
 MEIS & SEIS incentives to be available to SEZs, too
 FTP to be aligned to Make in India, Digital India and Skills India initiatives
 Duty credit scrips to be freely transferable and usable for payment of custom duty, excise
duty and service tax
 Basic customs duty paid in cash or to the debit of scrips eligible for duty drawback
 Trade facilitation and ease of doing business by way of online filing of documents and
emphasis on paperless trade
 Eligibility criteria for grant of ‘Status” to an exporter is revised
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  Deemed export will be now considered for export performance
 Export obligation period for defence, military store, aerospace and SCOMET items (Special
Chemicals, Organisms, Materials, Equipment and Technologies) etc., under Advance
Authorization is extended from 18 months to 24 months.
All scrips issued under MEIS and SEIS and the goods imported against these scrips will be fully
transferable. This means that scrips issued under export from India schemes can now be used for
payment of customs duty for import of goods, payment of excise duty on domestic procurement of
inputs or goods, and payment of service tax.
In an effort to push the domestic content requirement, measures have been adopted to encourage
procurement of capital goods from indigenous manufacturers under the EPCG scheme by
reducing specific export obligation to 75 per cent of the normal export obligation.
The FTP also introduced a concept of import appraisal mechanism which will be done on a
quarterly basis by the commerce department. In a view to boost exports from Special Economic
Zones (SEZs) the government also expanded the benefits under MEIS and SEIS to the units
located inside the tax-free zones. The Govt. is proposed to extend the incentives (MEIS & SEIS) to
units located in SEZs also.
The FTP from now on will have a mid-term review after two and a half years, except for exigencies.
By implementing Foreign Trade Policy FTP 2015-2020 (FTP 2015-20), the India’s share in world
trade is expected to double from the present level of 3% by the year 2020.
Interest Equalization Scheme - Export Credit
The Cabinet Committee on Economic Affairs has given its approval for Interest Equalisation
Scheme (earlier called Interest Subvention Scheme) on Pre & Post Shipment Rupee Export Credit
with effect from 1st April, 2015 for five years. The scheme will be evaluated after three years. The
rate of interest equalisation would be 3 %. The scheme would be available to all exports of MSME
and 416 tariff lines. Scheme would not be available to merchant exporters. Financial implication
of the proposed scheme is estimated to be in the range of Rs. 2500 crore to Rs. 2700 crore per
year. Government has already made a provision of Rs 1625 Crore in the Budget for the year 15-
16.
ECB guidelines: Significant changes
External Commercial Borrowings (ECB) refer to commercial loans availed from non-resident
lenders with minimum average maturity of 3 years. Borrowings raised under the ECB framework
can have one of the following forms. ECB could be raised in the form of Bank loans, Securitized
instruments (e.g. floating rate notes and fixed rate bonds, non-convertible, optionally convertible
or partially convertible preference shares / debentures), Buyers’ credit, Suppliers’ credit; Foreign
Currency Convertible Bonds (FCCBs), Financial Lease; and Foreign Currency Exchangeable Bonds
(FCEBs)
The significant changes / highlights of the revised frame works of ECB are as below:-

Track Min Average Maturity Period

Track I & III 3 years for ECB upto USD 50 million or its
equivalent.
5 years for ECB beyond USD 50 million or its
equivalent.

Track I 10 years irrespective of the amount.

While Track I & Track II is for ECB denominated ECB, the track III is for raising ECB
denominated Indian Rupee

Eligible ECB Borrowers:

Eligible borrowers under Track I, are Companies in manufacturing, and software development
sectors. Shipping and airlines companies,. SIDBI, Units in Special Economic Zones (SEZs) &
Exim Bank.

Eligible borrowers under Track II are, all entities listed under Track I, Companies in infrastructure
sector, Holding companies, Core Investment Companies (CICs), Real Estate Investment Trusts

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(REITs) and Infrastructure Investment Trusts (INVITs) coming under the regulatory framework of
the SEBI.

Eligible borrowers under track III include all listed entities under Tract II besides, all NBFCs,
NBFCs-MFIs, Not for Profit companies registered under the Companies Act, 1956/2013, Societies,
trusts and cooperatives (registered under the Societies Registration Act, 1860, Indian Trust Act,
1882 and State-level Cooperative Acts/Multi-level Cooperative Act/State-level mutually aided
Cooperative Acts respectively), NGOs which are engaged in micro finance activities1 & Companies
engaged in miscellaneous services viz. research and development (R&D), training (other than
educational institutes), companies supporting infrastructure, companies providing logistics
services. Developers of Special Economic Zones (SEZs)/ National Manufacturing and Investment
Zones (NMIZs) are also covered under Track III.

Individual Limits
ECB can be raised through either under automatic route or under approval route. Under
automatic route no prior approval is required while RBI’s prior approval is mandatory under
approval route. The maximum limit that can be raised under automatic route per financial year
for all the three tracks are:
 Companies in infrastructure and manufacturing sectors - Upto USD 750 million
 Companies in software development sector - Upto USD 200 million
 Entities engaged in micro finance activities - Upto USD 100 million
 Remaining entities - upto USD 500 million
ECB proposals beyond aforesaid limits will come under the approval route.
All in Cost - The ceiling on all in cost for Track I with minimum average maturity period of 3 to 5
years - 300 basis points per annum over 6 month LIBOR or applicable bench mark for the
respective currency. For ECB with average maturity period of more than 5 years – 450 basis
points per annum over 6 month LIBOR or applicable bench mark for the respective currency.
Track II, the maximum spread over the bench mark will be 500 basis points per annum. For Track
III, the all-in-cost should be in line with the market conditions.
Hedging –
In case of ECB in foreign currency, the hedging is to be done by the borrowers. If the, ECB is
denominated in rupees, the hedging should be done by the lenders.
End Use of funds
With regard to end use, now ECB could be used for any purpose. If ECB is raised under Track II,
it cannot be used for Investing in capital market, Using the proceeds for equity investment
domestically; On-lending to other entities with any of the above objectives and Purchase of land.
TRADE CREDITS FOR IMPORTS INTO INDIA
Trade Credits (TC) refer to credits extended for imports directly by the overseas supplier, bank and
financial institution for maturity of less than three years. Depending on the source of finance,
such trade credits include suppliers’ credit or buyers’ credit.
Suppliers’ credit / Buyers’ credit
Suppliers’ credit relates to credit for imports into India extended by the overseas supplier, while
buyers’ credit refers to loans for payment of imports into India arranged by the importer from a
bank or financial institution outside India for maturity of less than five years. It may be noted that
buyers’ credit and suppliers’ credit for 5 years and above come under the category of External
Commercial Borrowings (ECB) which are governed by ECB guidelines.
The supplier credit is being preferred by the importer for financing their import need over the
domestic finance on account of cheaper interest rates. However if there is adverse depreciation in
rupee can make the trade credit costlier. Hence importer availing trade credit should hedge their
foreign currency exposure. If the foreign currency exposure on account of trade credit is not
hedged, it affects banks as they need to keep more provision towards that exposure.
As per the latest RBI guidelines, trade credit can be raised in rupee also. All the conditions that
apply for raising for trade credit in foreign currency is applicable for rupee trade credit as well.
Foreign lenders of such trade credits will be eligible to hedge their exposure in rupees through
permitted derivative products in the onshore market with a bank in India.
Amount and Maturity
The maximum amount for import into India under Trade Credit is USD 20 million per import
transactions. However the maturity period for import capital goods can be upto one year from the
date of shipment or upto the operating cycle whichever is lower. Trade credit for import of capital
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goods can be upto five years from the date of shipment with ab-initio contract period of six
months. No roll-over/extension will be permitted beyond the permissible period.
Guarantee by Banks for Suppliers’ credit / Buyers’ credit
Banks (Authorized Dealers) are permitted to issue Letters of Credit/guarantees/Letter of
Undertaking (LoU) /Letter of Comfort (LoC) in favour of overseas supplier, bank and financial
institution, up to USD 20 million per transaction for a period up to one year for import of all non-
capital goods permissible under Foreign Trade Policy (except gold, palladium, platinum, rhodium,
silver etc.). The period of such Letter of Credit / LoU / LoC has to be co-terminus with the period
of credit reckoned from the date of shipment. The Guarantee / LC / LoU / LoC can be issued
maximum period of 3 years in case of capital goods. The AD banks are not permitted to issue
Letters of Credit / Guarantees / Letter of Undertaking (LoU) / Letter of Comfort (LoC) in favour of
overseas supplier, bank and financial institution for the extended period beyond three years.

Masala Bonds
The Reserve Bank of India (RBI) in the first bi monthly monetary policy for 2015-16 released on
29th September 2015, allowed Indian companies to issue Masala Bonds. A Masala bond is a
rupee denominated bond issued to offshore investors settled in dollars. Maximum amount of USD
750 million per annum can be issued under automatic route. Even though an amount higher than
that can be issued, it requires prior approval of RBI.
Overseas borrowings by Indian companies have been on the rise as firms sought to take
advantage of the lower cost of capital in markets like US and Europe. In the year 2014, Indian
companies raised $ 30.51 billion via External Commercial Borrowings(ECBs). The cost of hedging
the currency risk involved in foreign currency borrowings take away part of the advantage of lower
borrowing costs. So, allowing companies to issue rupee denominated bonds will transfer any
currency risk to the investor rather than the seller. So a need was felt and the same is addressed
by RBI now.
Any corporate or body corporate is eligible to issue rupee denominated bonds overseas. Real
Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) coming under the
regulatory jurisdiction of the securities and Exchange Board of India are also eligible.
Type of the instrument
Only plain vanilla bonds are allowed. They can be issued in Financial Action Task Force (FATF)
complaint financial centers only. They can be placed either privately or listed on exchanges as per
host country regulations.
Any investor from FATF compliant jurisdiction can invest in these bonds. Banks incorporated in
India will not have access to these bonds in any manner whatsoever. However Indian banks can
act as arranger and underwriter. In case of underwriting, holding can not be more than 5 % of the
issue size after 6 months of issue. On such holdings prudential norms are applicable as per the
stipulations as on that date.
Maturity Period
Minimum period of maturity is 5 years. The call and put option, if any, shall not be exercisable
prior to completion of minimum maturity.
End Use
There are no restrictions on end use, except for Real estate activities other than for development of
integrated township/ affordable housing projects, Investing in capital market and using the
proceeds for equity investment domestically, Activities prohibited as per the foreign direct
investment (FDI) guidelines, On lending to other entities for any of the above purposes and for
purchasing land.
Provisions for hedging the risk
The overseas investors are eligible to hedge their exposure in rupee through permitted derivative
products with category 1 AD banks in India. Hedging can also be done by accessing the domestic
market through branches/ subsidiaries of Indian banks abroad or branches of foreign bank with
Indian presence on a back to back basis.
FDI vs FII
Foreign investment in India can broadly be classified into two categories - Foreign direct
investment (FDI) and investment made by foreign institutional investors (FIIs). In both of these
cases, foreign money enters the Indian markets and fuels growth of economy, industries and
capital market. However, with the number of increasing regulations in India, it is not easy for
foreign money to enter the markets. There are strict guidelines laid down by market regulator
SEBI (Securities and Exchange Board of India) for seeking approvals and documentation for FDI.
Also, there are several restrictions laid down on the exit of this money.
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On the other hand, FII is mainly characterized as portfolio investment i.e. quick money entering
the Indian capital market for short-term. Due to its short-term nature, the regulators have laid
down fewer guidelines on FII than on FDI. But, the fact remains that foreign money cannot enter
Indian markets without regulatory approvals.
Participatory Notes
Participatory notes also called P-notes are offshore derivative instruments with Indian shares as
underlying assets. These instruments are used by foreign investors who are interested in betting
on Indian securities but not keen on registering with the capital market regulator SEBI.
Participatory notes are not used within the country. They are used outside India for making
investment in shares listed in the Indian Stock Market. That These notes allow foreign high net
worth individuals, hedge funds and other investors to put money in Indian markets without being
registered with SEBI, thus making their participation easy and smooth. P-Notes also aid in saving
time and costs associated with direct registrations is why they are also called offshore derivative
instruments. Participatory notes are issued by brokers and FIIs registered with SEBI.
The investment is made on behalf of these foreign investors by the already registered brokers in
India. For example, Indian-based brokerages buy India-based securities and then issue
participatory notes to foreign investors. Any dividends or capital gains collected from the
underlying securities go back to the investors.
Depreciation of Currency vs Devaluation of Currency
If a country’s currency has depreciated it will mean that this country's money has less purchasing
power in other countries because of the depreciation. Depreciation of currency happens in those
currencies which are linked to floating exchange rate and it is likely to change / vary on day to
day basis (in actual practice popular currency rates) change almost every few minutes / seconds).
A floating exchange rate means that the global investment market determines the value of a
country's currency. These countries allow supply and demand to determine the value of their
currency relative to the currencies of other countries. Depreciation occurs when the forces of
supply and demand cause the value of their currency to drop. To check the high volatility, as a
prudent measure, almost all central banks of the respective countries try to influence the
exchange rates through various means so as to curb such volatility, yet in the end it is the free
market that determines the exchange rate of all the currencies linked to floating exchange rate.
These days all major economies use a floating exchange rate. Thus, Appreciation / Depreciation
(only marginal change) of all such currencies regularly occurs a number of times during the period
market remains open. It is only in rare cases that currency depreciates or appreciates by a wide
margin. Such changes happen if something major happens on economic / political front of such
country or in the global markets.

Devaluation of Currency
Devaluation of a currency happens in countries with a fixed exchange rate (or also where it is
managed floating rate). In a fixed-rate economy, it is the government that decides what its
currency should be worth compared with that of other countries. In this case, usually the
government pledges to buy and sell as much of its currency as needed to keep its exchange rate
the same. The exchange rate can change only when the government decides to change it. If a
government decides to make its currency less valuable, the change is called devaluation.
Impact of depreciation or devaluation of the currency on economy of the Country
Broadly speaking both has similar impact in the short term. Both of these (i.e. depreciation or
devaluation) help the companies which are exporting goods as a drop in the value of the home
currency allows the other countries to import goods at a cheaper price from the country whose
value has depreciated / devalued. Thus, exports from country whose currency has devalued /
depreciated are likely to increase. On the other hand, the citizens will find it costly to buy goods
which are imported from other countries as such goods will become costly. Thus, this is likely to
benefit the economy to remain competitive in the international market. These events are good for
companies that sell the goods produced from domestic raw material, and also to companies that
export to other countries.
A drop in home currency exchange rate makes it more expensive for local people to buy goods
from other countries, as import of such goods becomes costlier after depreciation / devaluation.
Thus, they will either buy more goods manufactured by domestic companies or reduce their
consumption of goods from abroad.

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Long Term Impact of Depreciation or Devaluation of the Currency
Depreciation of the currency is a slow process and value of the currency automatically gets
adjusted by the market forces. Thus, once the currency of a country has depreciated, the
investors from other countries will see an opportunity and are likely to shift from other economies.
This will help in boosting the economy which may in the long run even push back the value of the
currency. On the other hand in case of devaluation, there is less trust in the economy and once
currency is devalued, Government finds it very difficult to revalue the same by government dictate
as there will be fear that such revaluation can backfire and put the economy in risk mode.
Foreign Direct Investment (FDI) in India ––Insurance sector
The extant FDI policy for Insurance sector has since been reviewed by the Government of India
and accordingly it has been decided to enhance the limit of foreign investment in insurance sector
from 26 to 49 % under the automatic route subject to certain terms and conditions.
Online submission of Form A2 by the remitter
With a view to facilitating miscellaneous remittances and reducing paperwork associated with
payment transactions, it has been decided that Authorised Dealer banks, offering internet
banking facilities to their customers may allow online submission of Form A2. Besides, they may
also enable uploading/submission of documents, if and as may be necessary, to establish the
permissibility of the remittances under the extant rules or regulations framed under the Foreign
Exchange Management Act, 1999 (FEMA). Remittances that do not require any documentation
(e.g. certain transactions under the LRS) may be put through on the basis of the Form A2 alone.
To start with, remittances on the basis of online submission alone will be available for
transactions with an upper limit of USD 25,000 (or its equivalent) for individuals and USD
100,000 (or its equivalent) for corporates.
Settlement of Export/ Import transactions in currencies not having a direct exchange rate
As per the existing guidelines, export proceeds for exports from India and import payments for
imports to India may be received / made in any mode in accordance with the directions issued by
the Reserve Bank of India to the Authorized Dealers from time to time.
To further liberalize the procedure and facilitate settlement of export and import transactions
where the invoicing is in a freely convertible currency and the settlement takes place in the
currency of the beneficiary, which though convertible, does not have a direct exchange rate, it has
been decided that AD Category-I banks may permit settlement of such export and import
transactions (excluding those put through the ACU mechanism), subject to conditions as under:
a. Exporter/ Importer shall be a customer of the AD Bank,
b. Signed contract / invoice is in a freely convertible currency,
c. The beneficiary is willing to receive the payment in the currency of beneficiary instead of the
original (freely convertible) currency of the invoice/ contract/ Letter of Credit as full and final
settlement,
d. AD bank is satisfied with the bonafides of the transactions, and;
e. The counterparty to the exporter / importer of the AD bank is not from a country or
jurisdiction in the updated FATF Public Statement on High Risk & Non Co-operative Jurisdictions
on which FATF has called for counter measures.
Diamond Dollar Account (DDA) Scheme
Firms and companies dealing in purchase/ sale of rough or cut and polished diamonds / precious
metal jewellery plain, minakari and/ or studded with/ without diamond and/or other stones, with
a track record of at least 2 years in import / export of diamonds / coloured gemstones / diamond
and coloured gemstones studded jewellery /plain gold jewellery, and having an average annual
turnover of Rs 3 crore or above during preceding three licensing years, may open and maintain
DDA with AD Category–I banks, subject to the following terms and conditions:-
a) The exporter should comply with the eligibility criteria stipulated in the Foreign Trade
Policy of the Government of India, issued from time to time.
b) The DDA shall be opened in the name of the exporter and maintained in US Dollars only.
c) The account shall only be in the form of current account and no interest should be paid on
the balance held in the account.

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 d) No intra-account transfer should be allowed between the DDAs maintained by the account
holder
e) An exporter firm/ company shall be permitted to open and maintain not more than 5
DDAs.
f) The balances held in the accounts shall be subject to Cash Reserve Ratio (CRR) and
Statutory Liquidity Ratio (SLR) requirements.
g) Exporter firms and companies maintaining foreign currency accounts, excluding EEFC
accounts, with banks in India or abroad, are not eligible to open Diamond Dollar Accounts.
Permissible Credits:
i. Amount of pre-shipment and post-shipment finance availed in US Dollars.
ii. Realisation of export proceeds from shipments of rough, cut, polished diamonds and diamond
studded
jewellery.
iii. Realisation in US Dollars from local sale of rough, cut and polished diamonds.
Permissible Debits:
i. Payment for import/ purchase of rough diamonds from overseas/ local sources.
ii. Payment for purchase of cut and polished diamonds, coloured gemstones and plain gold
jewellery from local
sources.
iii. Payment for import/ purchase of gold from overseas/ nominated agencies and repayment of US
Dollars
loans availed from the bank.
iv. Transfer to rupee account of the exporter.
Online Payment Gateway Service Providers(OPGSPs)
As per existing guidelines, Category-I banks have been permitted to offer the facility to repatriate
export related remittances by entering into standing arrangements with Online Payment Gateway
Service Providers (OPGSPs) in respect of export of goods and services
To facilitate e-commerce, it has been decided to permit AD Category-l banks to offer similar facility
of payment for imports by entering into standing arrangements with the OPGSPs.
Booking of Forward Contract
All resident individuals, firms and companies who have actual or anticipated foreign exposures to
book foreign exchange forward and FCR-INR option contracts upto USD 1,000,000 (USD 1 million)
without any requirement of documentation on the basis of simple declaration as against the
existing limit of USD 250000. While the contracts booked under this facility would be normally be
on a deliverable basis, cancellation and rebooking of contracts are permitted. Based on the track
record of the entity, concerned AD Cat-I bank call for underlying documents, if considered
necessary, at the time of rebooking or cancellation.
MODIFICATION IN LEVY OF PENAL CHARGES FOR PRE-MATURE WITHDRAWAL OF NRE
TERM DEPOSITS

Period run Deposits above Rs.15 lakhs

1 year and above Eligible rate will be the applicable card rate
for the actual period run prevailing on the
date of deposit less 0.75% p.a. as
foreclosure charges.

No foreclosure charges to be levied for deposits in the name of staff / ex staff / ex

staff cum senior citizen

 In the case of premature withdrawal of NRE term deposits for conversion into
Resident Foreign Currency (RFC) Account the bank should not levy any penalty for
premature withdrawal

Premature Withdrawal Of NRE Term Deposits For Conversion Into Resident Foreign
Currency (RFC) Account – No Levy Of Penalty

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As per the guidelines of RBI, in the case of premature withdrawal of NRE term deposits for
conversion into Resident Foreign Currency (RFC) Account, the bank should not levy any penalty.
However, Bancs system will apply penalty clause for all pre-matured closures of NRE Term
Deposits. In such cases, where NRE term Deposit is foreclosed for conversion into Resident
Foreign Currency account, the penal charges debited by the system is to be manually reversed.
Import of Goods into India – Evidence of Import
An importer has to submit as evidence of import the exchange control copy of the Bill of Entry for
home consumption or the exchange control copy of the Bill of Entry for warehousing, in the case
of 100% Export Oriented Units (EOUs); or Customs Assessment Certificate or Postal Appraisal
Form as declared by the importer to the Customs Authorities.
With the establishment of Free Trade Warehousing Zones / SEZ Unit warehouses, imported goods
can be stored therein, for re-export / re-selling purposes for which Customs Authorities issue Ex-
Bond Bill of Entry. AD banks are advised to consider the Bill of Entry issued by Customs
Authorities named as Ex-Bond Bill of Entry or by any other similar nomenclature, as evidence for
physical import of goods. In cases where goods have been imported through couriers, the Courier
Bill of Entry, as declared by the courier companies to the Customs Authorities, may also be
considered as evidence of import of goods.
Bank Finance to Factoring Companies
As per the existing guidelines, Banks can extend financial assistance to support the factoring
business of Factoring Companies who derive at least 75 per cent of their income from factoring
activity and the receivables purchased / financed, irrespective of whether on 'with recourse' or
'without recourse' basis, form at least 75 per cent of the assets of the Factoring Company.
The latest amendment by RBI stipulates that an NBFC, for registering as NBFC-Factor shall
ensure that its financial assets in the factoring business constitute at least 50 per cent of its total
assets and its income derived from factoring business is not less than 50 per cent of its gross
income. Accordingly, the criteria regarding asset and income of factoring companies eligible for
bank finance as mentioned have also been revised to 50% from 75%.
Rupee Drawing Arrangement - Increase in trade related remittance limit
RBI has Increased the limit of trade transactions under the Rupee Drawing Arrangements (RDAs),
from the existing Rs. 5, 00,000/- (Rupees Five Lakh only) per transaction to Rs. 15,00,000/-
(Rupees Fifteen Lakh only) per transaction.
Liberalised Remittance Scheme (LRS)
AD banks may now allow remittances by a resident individual up to USD 250,000 per financial
year for any permitted current or capital account transaction or a combination of both. The
permissible capital account transactions by an individual under LRS are:
 Opening of foreign currency account abroad with a bank
 Purchase of property abroad
 Making investments abroad
 Setting up Wholly owned subsidiaries and Joint Ventures abroad;
 Extending loans including loans in Indian Rupees to Non-resident Indians (NRIs)
who are relatives as defined in Companies Act, 2013.
All the facilities (including private/business visits) for release of exchange/remittances for current
account transactions available to resident individuals under Para 1 of Schedule III to the Foreign
Exchange Management (Current Account Transactions) Rules, 2000, as amended from time to
time, shall now be subsumed under the overall limit of USD 250,000.
However, for emigration, expenses in connection with medical treatment abroad and studies
abroad, individuals may avail of exchange facility for an amount in excess of the overall limit
prescribed under the LRS, if it is so required by a country of emigration, medical institute offering
treatment or the university respectively. Gift in Indian Rupees by resident individuals to NRI
relatives as defined in the Companies Act, 2013 shall also be subsumed under the LRS limit.
Simplification and Revision of Declaration Form for Exports of Goods/Softwares
To liberalize and simplify the procedure relating to export, the requirement of declaring the export
of Goods /Software in the SDF in case of exports taking place through the EDI ports has been
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dispensed with, as the mandatory statutory requirements contained in the SDF have been
subsumed in the Shipping Bill format. In case of export from non-EDI ports, the
“Export Declaration Form” (EDF) which been devised to declare all types of export of goods
from Non-EDI ports and a common “SOFTEX Form” to declare single as well as bulk software
exports. The EDF will replace the existing GR/PP form used for declaration of export of Goods.

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 Ancillary Services &Third Party Products
Penal interest for Delayed Reporting/Wrong Reporting/Non-Reporting of Currency Chest
Transactions
Reporting of Currency Chest Transactions
The minimum amount of deposit into/withdrawal from currency chest will be Rs.1,00,000/- and
thereafter, in multiples of Rs.50,000/- Penal interest shall be levied at the rate of 2% over the
prevailing Bank Rate for the period of delayed reporting/wrong reporting/non-reporting /inclusion
of ineligible amounts in chest balances
Doorstep Banking
Format of Agreement for Doorstep Banking – D115
Services Offered under the Scheme:
Pickup of Cash
Pickup of Cheques and other instruments
Delivery of Cash/Drafts at the doorstep of individual Customers.
Delivery of Cash / Drafts at the doorstep of Corporate Customer / Government Departments /
PSUs etc., against Cheques received at the counter and not against cash
Eligible Customers
Corporate Customers, Government Departments, Public Sector Undertakings, Business firms and
such other establishments, who are having good business connections can avail all the above
services. Those who are having sufficient business connections / Elite customers, who is having
business dealings with our bank can avail the first three services
Service Charges:
Up to Rs.20 lakhs - Rs.500/- per occasion Above Rs.20 lakhs up to Rs.50 lakhs – Rs.750/- per
occasion
Above Rs.50 lakhs up to Rs.2 crores – Rs.1000/- per occasion
Conveyance – Actual taxi fare
a. Rs.25/- per km with a minimum of Rs.500/- is payable, if Bank’s cash van is used.
b. The above charges are exclusive of service tax.
If courier is employed for rendering the service, a flat rate of Rs.100/- per visit to the customer's
place shall be charged apart from actual courier charges
ATAL PENSION YOJANA (APY)
Eligibility:
1. The age of the subscriber should be between should be between 18 to 40 years
2. He / she should have a savings bank account / open a savings bank account.
3. The prospective applicant should be in possession of mobile number and its details are to be
furnished to the bank during registration.
4. Minimum contribution period is 20 years
Guaranteed Pension:
In an effort to help the unorganized section of the Indian society, the Government of India
introduced the “Atal Pension Yojana” in June, 2015. The Atal Pension Yojana is administered by
the PFRDA (Pension Fund Regulatory and Development Authority) under the National Pension
System (NPS).
APY, a pension scheme for citizen of India focused on the unorganised sector workers. Under this
scheme, the guaranteed minimum pension of Rs. 1000/-, Rs 2000/-, Rs. 3000/- Rs. 4000/- and
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Rs. 5000/- per month will be given at the age of 60 years depending on the contributions by
subscribers until the death of the subscriber.After the death of the account holder, the spouse will
be entitled to get the exact same pension amount as the subscriber, until the death of the spouse.
The nominee will receive the entire pension amount accrued by the account holder after the death
of the subscriber and his spouse.
Government Contribution:
Govt. of India would contribute 50% of the subscriber’s contribution or Rs 1000 per annum
whichever is lower to each eligible subscriber account for a period of five years i. e from 2015-16
to 2019-20. APY is now open to all subscribers regardless of their status of being a beneficiary of
any statutory social security scheme or income tax payers.Guaranteed pension will be available to
the above category of subscribers. However, the Government’s co-contribution will not be available
to them.
Defaulted Payments:
Branches need to inform subscribers for maintaining adequate balance in their bank account to
facilitate the auto-debit from their account for monthly contributions. Non –maintenance of
required balance in savings bank on specified date will be considered as default and attracts
additional charges for the delayed payments.

Monthly Penalty
contributions

Up to Rs 100 Rs.1 per month

Rs 101 to Rs 500 Rs. 2 per month

Rs 501 toRs Rs. 5 per month

1000
Rs 10 per month
Above Rs 1000

The premium will be deducted from the account holder’s savings bank account through ‘auto
debit’ facility in one installment on obtention of consent from the customer
Withdrawal from APY:
When a subscriber completes 60 years, the guaranteed fixed pension amount would be given to
him as per the contribution done previously with 100% annuitisation of benefits. Under specific
circumstances like, the subscriber’s untimely death or sudden illness occurring before the age of
60, the accrued pension amount will be handed out to the subscriber or the nominee. This will be
applicable as mentioned in the Pension Fund Regulatory and Development Authority Regulations
(Exits and Withdrawals under the National Pension System), 2015. Any subscriber who has got
co-contribution from the Government can also voluntarily choose to withdraw or exit the Atal
Pension Yojana scheme. The bank will refund only the contribution amount given by him
including the interest earned on all the contributions. The account maintenance charges will be
deducted from the refund amount. The co-contribution amount from the Government and the
interest earned for that amount will not be refunded.
PradhanMantriJeevanJyotibimaYojana(PMJJBY):
PMJJBY will be an Insurance Scheme offering life insurance cover for death due to any reason. It
would be a one year cover, renewable from year to year. The scheme would be offered /
administered through LIC and other Life Insurance companies willing to offer the product on
similar terms with necessary approvals and tie ups with Banks for this purpose. Participating
banks will be free to engage any such life insurance company for implementing the scheme for
their subscribers.
Eligibility:
All individual account holders of participating banks in the age group of 18 to 50 years will be
entitled to join. In case of multiple bank accounts held by an individual in one or different banks,

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the person would be eligible to join the scheme through one bank account only. Aadhar would be
the primary KYC for the bank account.
Benefits: Rs.2 lakh is payable on member’s death due to any cause.
Premium: Rs.330/- per annum per member. The premium will be deducted from the account
holder’s bank account through ‘auto debit’ facility in one instalment, as per the option given, on or
before 31 st May of each annual coverage period under the scheme.
Appropriation of Premium:
1) Insurance Premium to LIC / insurance company : Rs.289/- per annum per member
2) Reimbursement of Expenses to BC/Micro/Corporate/Agent : Rs.30/- per annum per member
3) Reimbursement of Administrative expenses to participating Bank: Rs.11/- per annum per
member
PradhanMantriSurakshaBimaYojana (PMSBY)
- for all customers in the age
group of 18 to 70 years.

every year.
The Insurance cover is available at the same premium amount and without requirement of
medical check- up for all eligible people irrespective of their age
Benefits:
Death – Rs.2 lakhs
Total and irrecoverable loss of both eyes or loss of use of both hands or feet or loss of sight of one
eye and loss of use of hand or foot – Rs.2 lakhs
Total and irrecoverable loss of sight of one eye or loss of use of one hand or foot – Rs.1 lakhs
Appropriation of Premium:
1) Insurance Premium to Insurance Company: Rs.10/- per annum per member
2) Reimbursement of Expenses to BC/Micro/Corporate/Agent : Rs.1/- per annum per member
3) Reimbursement of Administrative expenses to participating Bank: Rs.1/- per annum per
member
Credit Cards
There are two categories of credit card issued by our Bank. They are Personal credit card and Visa
business card
1. Personal Credit Cards
Global Classic card, Global Platinum card Global Gold card and Bharat card
Features Platinum Card Gold Card Bharat Card Classic Card
1 Acceptability Global GlobalDomestic Global
2 Affiliation VISA VISAVISAVISA
3 Eligibility a.Nationality Indian National & NRIs Indian National &NRIs Indian Nationals Indian
National & NRIs
b. Age 18- 80 years 18- 80 years 25-60 years 18- 80 years
c. Minimum Monthly Income Rs.12500/- Rs.12500/- Rs.5000/- Rs.12500/-
d. PAN No Mandatory MandatoryPan No / Form 60 & Voter ID Mandatory
e. Mobile Phone / E mail ID Desirable DesirableDesirableDesirable
4 Revolving Credit limit Rs.1,00,000/- to

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Rs.2,99,999/- Rs.20,000 to Rs.99,999/- Rs.10,000 to Rs.19,999/- Rs.25,000 to Rs.75000/-
5 Cash Advance Facility 40% of credit limit 40% of credit limit 25% of credit limit 40% of credit
limit
2. Visa Business Card
1. No Joining Fee for IB Visa Business Card.
2. No Annual Fee
3. Cash Advance Fee –Rs. 50/-
4. Surcharge on: - Petrol and all products / services offered at petrol pumps at Rs.10/- or 2.5% of
transaction amount whichever is higher. - Railway tickets at Rs.10/- or 1.80% whichever is higher
5. Interest Free Credit Period for purchases: - Minimum 15 days & Maximum upto 45 days
- 15 days time is provided for making the payment from the billing date. Usage of the Credit Card
on the first day of billing cycle would provide 45 days interest free credit whereas using the card
one day prior to the last day of the billing cycle would give 15 days interest free credit (Billing
Cycle runs from25th of the previous month to 24th of current month)
- Interest free period for a purchase will not be available if the outstanding balance for the
previous Statement Period is not paid in full before the Payment Due Date.
Finance charges:
1. Cash withdrawals -2.25% per month from the date of transactions (Annualized Percentage Rate
27.00%p.a till date of payment. (Interest will be provisionally calculated up to payment due date
and based on actual payment date will be refunded).
2. Purchase Transactions -1.99% per month from the date of transactions (Annualized Percentage
Rate 23.88%p.a
The above categories of credit card are issued in association with VISA. Important features of the
aforesaid categories of credit card recapitulated / brought forth in this circular.
ATM/Debit Cards:
Our bank has 4 types of debit cards – Maestro card, Master card, International EMV cards and
Rupay cards

MC Charges ** MAESTRO Debit MASTER Card INTERNATIONAL Normal RuPay

Card Debit Card EMV CARDS Cards (other
than PMJDY)

AMC for first FREE FREE FREE FREE

year

AMC from Rs.100/- + service Rs.100/- + service Rs.150/- + service tax Rs.100/- +
second year tax i.e.Rs.115/- per tax i.e.Rs.115/- per i.e.Rs.173/- per year service tax
onwards year year i.e.Rs.115/-
per year

** The above charges are not applicable for the Senior Citizen Debit Cards and Biometric Debit
Cards.

Applicable Charges **
Nature of Service (Inclusive of Service
Tax)

Issue of Duplicate PIN Rs . 25.00

Unblocking of Hot listed Cards (De-hot listing) Rs. 50.00

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Issue of ATM / Debit Card along with PIN (master/maestro/platinum/Ru- Rs. 152.00
pay cards)

Issue of EMV master card (chip embedded) Rs. 252.00

** Postage / Courier charges extra as applicable

Charges for cash withdrawal Non financial transaction

ATMs
SB CA SB CA

Indian Bank ATM Free Free Free Free

Other Banks ATM (Domestic)

Metro ATMs* : 3 Free
Transactions/ Month Rs. 20/- per Rs. 10/- per
Free Free
transaction transaction
Non Metro ATMs : 5 Free
Transactions/ Month

Other Banks ATM (Domestic)

For transactions exceeding Rs. 20/- per Rs. 20/- per Rs. 10/- per Rs. 10/- per
Free transactions in a transaction transaction transaction transaction
month

Rs.100/- plus Rs.100/- plus Rs.20/- plus Rs.20/- plus

Master Card (International)
taxes taxes taxes taxes

Third party products:

IB HOME SURAKSHA - (Kotak Mahindra Old Mutual Fund Insurance Ltd.

Type Single premium policy

Eligibility New Home loan borrowers

Age 18 – 65 yrs; Max age at exit 75 years

Amount 1 lakh – 200 lakhs; Min.3 years Max: 20 years

Premium As per table; Scheme available for NRIs also but medical check up in
India

Other features Tax Benefit Sec.80C; Only Declaration of Good Health – Loan of Rs.40
lakhs age 18 -35 yrs; Loan of Rs.30 lakhs age >35 yrs up to 45yrs; Loan
of Rs.20 lakhs age >45yrs up to 55yrs; Loan of Rs.10 lakhs age >55yrs up
to 59 yrs.
Commn:15% on net premium

IB YAATRA SURAKSHA - UIIC

Type Covering death/disability due to accident on Domestic Travel tours by

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 Road, Rail and Waterways

Eligibility All customers; 5 – 20 members per group

Age 3 yrs – 70 yrs

Amount Sum insured – Rs. 1 lakh / 1.5 lakhs / 2 lakhs

Premium Plan A, B & C

Other features Death / permanent disability / partial disability / loss of limbs & medical
expenses +add ones like baggage loss + detour (Optional) ; A very low
premium of Rs.13 /Rs.17 /Rs. 22 for plans A/B/C for an amount of Rs.1
lakh, +Tax as per applicable

IB VIDYARTHI SURAKSHA - TIE-UP WITH METLIFE

Type Group life insurance Cover

Eligibility All Educational Loan borrowers (compulsory); Single premium policy

Age 15-60 yrsMaximum exit 70 years

Amount Ins. Cover for balance outstanding at the time of entry or limit sanctioned
whichever is less Minimum: Rs. 0.10 lakh; Maximum: Rs.25.00 lakh

Premium As per Table; IT Rebate sec 80C

Other features No Insurance cover for 90 days except death due to accident;
Commission. - 15% on premium. Min 3yrs Max 25 yrs
Medical Checkup: No medicals a)For Rs.7.50 lakhs upto 55years
b) For Rs.15.00 lakhs upto 45 years
c) For Rs.25.00 lakhs upto 35 years

IB JeevanKalyan - LIC

Type Yearly renewable, Term assurance

Eligibility All accounts, death only

Age 18-55 yrs

Amount Rs.1 lakh

Premium 18-35yrs – Rs.125; 36-45yrs – Rs.482; 46-55yrs – Rs.579

Other features Medical check up - No(Only Declaration of Good Health required).

Waiting period -First 45 days (Not applicable for accident). Tax
benefit under sec 80C

IB CHHATRA - UIIC

Type Yearly renewable; Personal accident Insurance policy

Eligibility All account Holders Death due to accident only

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Age 12-70 yrs

Amount Rs.1 lakh

Premium Rs.25/- p.a. inclusive of service tax

Other features Death claim due to Accident. Tax benefit under sec 80C. Medical
checkup - No(Only Declaration of Good Health required).

IB VARISHTHA –
LIC

Type Yearly renewable; Life cover with Double accident benefit Insurance
policy

Eligibility Senior Customers Term deposit a/c holders

Age 56-64 yrs

Amount Rs. 0.50 lakh only; In case of death due to accident Rs.1.00 lakhs

Premium Rs.702/-p.a.

Other features No medical check up (Only Declaration of Good Health required);

Rebate under sec 80C of IT Act

IB GRIHA JEEVAN - LIC

Type Group mortgage Redemption assurance; Term cover – Min 3 yrs, max
20 yrs

Eligibility Home loan Mortgage borowers

Age Age at entry level – Min 18 yrs, max 60 yrs Age at the time of entry-
Max 65 yrs for exit

Amount Rs.50000 to Rs.50 lakhs (outstanding balance in loan a/c)

Premium As per Table; IT benefit under S-80c; Basis of premium – Age,

outstanding loan amt at entry date, term of loan, remaining term of
loan

Other features Medical Examination - Not needed for age up to 45 for loans upto
Rs.10 lacs
Required for
i) loan exceeding Rs. 5 lacs for the age group 46-50.
ii) for all loans above Rs.10 lacs and for all borrowers aged above 50
medical check up& report required. Fees to be borne by borrower.

IB JEEVAN VIDYA - LIC

Type Group life insurance Cover

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Eligibility Educational Loan borrowers (compulsory) Single premium policy

Age 16-50 yrs; cover ceases at 60 yrs. Coverage minimum 3 yrs and
maximum 12 yrs

Amount Ins. Cover for balance outstanding at the time of entry or limit
sanctioned whichever is less
Maximum Rs.15 lakhs India; Rs.25 lakhs Abroad

Premium As per Table; IT Rebate sec 80C

Other features No Insurance cover for 45 days except death due to accident;
Commission - 12% on premium amt ;Medical checkup: Required in
the following cases :-
1. Loan exceeding Rs.5.00lakhs for the age group of 46 & above.
2. Loan exceeding Rs.10.00lakhs for the age group of 36 & above.
3. Loan exceeding Rs.15.00lakhs for the age group of 35 above

AROGYA RAKSHYA
– UIIC

All A/c holders of Indian Bank

Eligibility

Entry level 3 months to 65 years and renewal age is unlimited and

Age Group with no medical check-up

Plans Offered Plan A : A/c holder+Spouse+2 dependent Children (1+3) - Age Group
up to 35* years
Plan B : A/c holder+Spouse+2 dependent Children (1+3) - Age Group
> 35* years
Plan C : A/c holder+Spouse+2 dependent Children + dependent
Parents (1+5) - for Age Group >35* years
* Refers to age of the eldest member covered under the group

* Mediclaim cover - Floater policy for members of the family covered

(i.e. A/c holder, Spouse, 2 *Children & *Parents )
* Personal Accident Death Cover - A/c holder - 100% of Mediclaim
Type of Cover
Sum Insured (SI), Spouse - 50% of Mediclaim SI and *Children - 25%
each of Mediclaim SI subject to the total claim settlement not to
exceed eligible/opted sum insured. Parents however not covered.
* Nomination facility available

Sum Assured and

Premium * Rs.1 lakh to Rs.10 lakhs. Enhancement allowed only at the time of
renewal up to the next higher slab only. (i.e.Rs.0.50 lakh per year up
to Rs.5 lakhs SI and Rs.1 lakh per year from Rs.6 lakhs to Rs.10
lakhs SI respectively)
Waiting Period - Waiting period of 30 days in the First year for Coverage (except for
accident).
Whether Cashless
Treatment Available? Yes, subject to certain conditions and only at the Network Hospitals

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Renewal administered thru TPAs

* Renewal allowed on Annual basis with 30 days of Grace Period from

the date of expiry of policy.
* Portability allowed subject to customer submitting the copy of
previous policy and No Claim Certificate from the existing TPA so as
to avoid any delay in the settlement of claim at a later date.
Tax Benefit
Maternity Expenses U/s 80 D.
Available at no additional cost after initial waiting period of 9 months
& for first two children only
Covering for pre-
existing diseases. All Pre-existing diseases to get coverage after 36 months of
continuous coverage of such insured person.
Loyalty Incentive
-Insured shall be entitled for a Free Medical Checkup to be carried
out by the companies approved by TPAs after THREE claim free
completed policy years at a cost not exceeding 1% of average sum
insured for the last continuous Three Years of ArogyaRaksha policy /
any health policy issued by United India Ins.Co.Ltd
Reimbursement of
For treatment while the insured is away at these places either on
Expenses - Nepal &
holiday or business purposes. Cashless facility however is not offered
Bhutan in INR
under this extension

Other terms and

Please refer to ArogyaRaksha Policy Scheme features made available
conditions
in UIIC “ArogyaRaksha Portal” or can also be obtained from any of
our branches.

JANASHREE BIMA
YOJANA-LIC

Purpose / Objective
To provide life coverage.

Eligibility
Members of SHGs, Joint Liability Group (JLG), RythuMithra
Group(RMG), Artisans, Farmers Club, Men groups, youth club etc
financed by Indian Bank, between ages 18-59 years and below the
poverty line.

* In the event of death of the members of sum of Rs.30000 will

Benefits become payable.
* In the event of death by accident or partial disability due to
accident the Rs.75000/- will be payable
The children of the members covered under JBY scheme will be given
scholarships on selective basis under ShikshaSahayaYojana scheme.
Scholarships to the wards in classes 9,10,11 and 12 @ Rs.100 per
month to 2 children per family

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Premium Annual premium – Rs.200/- per member. Out of this Rs.100/- is
borne by Social Security Fund established by Govt of India with LIC.
Hence, the member has to pay only Rs.100/- per annum.
Assured Life coverage of Rs.5000/- in the event of death or the
spouse of the member to the spouse of the group members with an
extra premium of Rs.25 per member per annum.
Value added
To provide health coverage for whom regular medi claim policy is
beyond reach.
Members of SHGs, Joint Liability Group (JLG), RythuMithra, Group,
Artisans, Farmers Below Poverty Line (BPL) families, who have
opened No frills account under FI in both rural and urban areas. Age
between 5 and 65 years. 3 months kid upto 5 years children
(provided one or both parents are covered).
UNIVERSAL
HEALTH CARE-UII
On the death of the earning Head of the family, Nominee will be paid
to a maximum of Rs.2500/-. In the event of illness / accident
hospitalization expense per illness maximum Rs.15000/- and all
Purpose/Objective claim put together Rs.30000/- per member or per family in a year
will be paid.
If the earning Head of the Family is hospitalized due to accident /
illness for which there is valid claim under section / disability
compensation @ Rs.50/- per day up to a maximum of Rs.750.

Net premium
Rate Rate per
Particul Subsid for BPL
Benefits per annum(
ars y(RS.) Families
day(RS.) RS.)
p.a.(RS.)

Individu
1.00 35.00 200.00 165.00
al

Family
1.50 548.00 300.00 248.00
(5)

Family
2.00 730.00 400.00 330.00
(7)

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Latest in IT Products

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Internet Banking
Net Banking with Green Pin
 Customers can apply for Net Banking online.
 Customers can set their OWN GREEN PIN for both Login & for Transaction
 Customers can enable Net Banking with the authentication of Debit Card without visiting
the branch.
 Facility is also available to enable at Branch
Facilities available in net banking:
 Funds Transfer ( up to 5 lacs per day )
 Balance Enquiry /Download statement of accounts
 E-TDA opening /closing
 Get Online interest / TDS Certificate
 Utility Bill payment facility
 Form A2 uploading for International Remittance
 Digital Signature for net banking
 Online APY registration
 Online Aadhaar Seeding
 Facility provided for enquiry of cheques. Details of cheques issued, presented and the
images of cheques presented are made available.
 Facility for ordering cheques online
 Online submission of form 15G and 15H
 Online e filing of income tax returns
Corporate Net Banking (CNB)
 This facility is available to the Corporate customers by accessing the Internet from
anywhere throughout the year (on 24x7x365 basis) for various Banking and financial
services under single umbrella.
 CNB is designed with such flexibility that it can cater to the banking needs of small as well
as big corporate clients.
 Users will be given individual user ID and passwords for log in and transactions, with the
restrictions on the transaction amounts, as required by the Corporate in their application
for CNB.
 Every user can have the reports of the transactions made by them during the day, at the
end of his / her session.
 All reports of the transactions made by all the users of the corporate are made available to
the Account Administrator, on a daily basis.
 Account Administrator can disable / enable the users according the needs of the company
and can stipulate timings of login and logout depending on the shifts for which users are
available.
 Based on the requirement of the Corporate, the Account Administrator can be provided
with Transaction facility also or may be restricted to view facility only as the case may be.
 The services, ideally suited to meet the requirements of modern day customers, are :
o Viewing and enquiry details of all accounts including limits wherever applicable, real time
status, details and status of all cheques. Download /Save/Print option for statement of
accounts.
o Online funds transfer facility
o Funds Management
o Upload features – facility for bulk uploads of transactions through online funds transfer,
NEFT / RTGS etc.
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 o Account administration and management - for better administration and management,
control and security with facility to allot log-in time restrictions for different users.
Facility to disable users during absence from duty. Multi level authorization.
o Requests / Mails / alerts
o In addition to the above, the following distinct features are also available:
 Upload features – Salary uploads, dealers commissions / invoice payments
etc., through real time funds transfer, NEFT / RTGS facility etc.
 Internet Mail option to correspond with the Home Branch.
 Mail alerts on all funds transfer operations to the initiator.
 Other Conditions:-
o OD/OCC customers, (other than OD against Deposits), shall be allowed CNB facility with
the approval of the respective General Manager (Credit) at HO based on the
recommendation of the Sanctioning Authority. For OD against Deposits respective
Branch Manager shall approve the CNB facility.
o Per day limit allowed is related to all accounts mapped to the same CIF only. As such,
Individual limits cannot be fixed for OD/OCC or CA or SB.
IndPay – Mobile Banking application
 Protected by SSL Certification
 Mobile application is compatible with Android, Windows & iOS.
 Customers can download from Google Play Store ,Windows Store, Apple Store
 Customers can set their OWN GREEN PIN for both Login & for Transaction
 Customers can register for IndPay through Net Banking user id and Password or ATM
Card or MPIN.
 MPIN & MTPIN are with 4 digits numerical passwords, MPIN gets locked after 3 incorrect
attempts
 Fund transfer within the Bank from one account to another
 Fund transfer to accounts in other banks through IMPS – 24 x 7 x 365
 Fund transfer to accounts of other banks using NEFT scheme of RBI.
 Available at free of cost. However, customer should have Data Plan for Internet on mobile
phone.
 There is a daily limit of Rs.50, 000 for the aggregate of funds transfer per user.
 Balance Enquiry of accounts linked under CIF Number
 Mini statement (last five transactions) of the accounts.
 E-TDA opening / closing
 Utility Bill payment like Electricity , Telephone and Mobile bills.
 New Facilities Available :
1. Scan and Pay Facility using QR code for payment to Indian Bank Accounts.
2. Cheque Book Request
3. Cheque Stop Payment Request
4. Mobile Recharge /D2H /Utility Bill Payments.
5. Can open or close term deposits online through e-Deposits-eTda
6. M-Passbook facility to view the last 50 transactions SB /OD/E-Purse accounts
7. Facility for registering ,modifying, cancelling Standing Instructions
8. Transaction lock-unlock in net and mobile banking

BHIM
Salient features of BHIM
 BHIM – Bharat Interface for Money
 Works by using UPI – Unified Payment Interface
 Money transfer takes place within seconds from account to account using VPA/Mobile
Number/QR Code/Bank account+IFSC Code.
 For BHIM application Android mobile ( OS version 4.2 and above ) is needed.
 BHIM was developed as an app by NPCI
 Cash transfer limits through this BHIM are Rs.10000/- per transaction and Rs.20000/-
per day
Customers :

191
  Funds can be transferred to any bank account using Mobile No, Payment Address,
Account No and IFSC code.
 Money is credited to the beneficiary account instantly
 No need of beneficiary account details
 Customers can pay their bills using “Scan and Pay “ option
 Customers can request money from their friends and family
Merchants:
 Merchants can easily print and display their QR Code for receiving payments
 Merchants can also receive payment from their customers using Mobile No, Payment
Address, Account No and IFSC code.
 Account balance and Transaction history can be viewed

BHIM Aadhaar Pay

Customers:
 No need to carry cash/card
 Card details will be integrated in the Mobile App
 Scan QR code and pay the bills
Merchants:
 Merchants can get payments from their customers by using Aadhaar number of their
customers
 Very low MDR Charges
 Fast and Secure

Bharat QR
Customers:
 Need not carry cash/card
 Card details will be integrated in the Mobile App
 Scan QR code and pay the bills
Merchants:
 No monthly Rental
 No connectivity charges
Scan & Pay
Customers:
 Indian Bank Account Holders can use scan and pay and pay option in Indpay App and
pay their bills
 No need to carry cash/cards
 No need to stand in Queue
Merchants:
 Funds get credited in real time
 No commission / charges to be paid
 Maintenance free
POS
 Merchants can get the payments easily from customers using debit/credit cards
 No Hidden Charges
 Exact amount can be paid
 Easy dispute management and charge back system
 Secure and fast payment services
 Instant intimation of credit and debit to merchants and customers
Mobile Banking- IndMobile
 SMS Banking Services
o Balance Enquiry
o Query on last 3 transactions
o Cheque Status enquiry

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 o Instant Mobile Funds Transfer upto Rs.5000/- for migrant workers
 Funds transfer within the Bank, NEFT, IMPS services upto Rs.50,000/-
 Payment of Credit Card dues
 Payment of TNEB bill via SMS 24 x 7
 Protected by End to End Encryption
 Can be accessed only through registered mobile number.
 Application password is of 6 digits. Pin gets locked after incorrect attempts of 10 times.
 MPIN is 4 digits. After 3 incorrect attempts of M-PIN the status of M-PIN will get locked.
 Customer can change the MPIN through normal SMS mobile banking of ‘IndMobile’
application
 This mobile banking facility is presently extended to the accounts of Individuals / Sole
Proprietory concerns, and Joint accounts with E or S facility only.
ATM / Debit Card
 Information to be displayed in ATM Room –
o ATM-ID: - 8 characters for Bank’s ATM, 12 characters for outsourced ATM.
o Toll Free No. 1800-425-00000
o Dos and Donts
o Procedure for lodging complaints
o Customer complaint form
o Notice about disabling Cash Retraction Facility in ATM
 Issued FREE of charge, Card renewal charges – Rs.50/- plus Service Tax
 The Maestro Debit cards can be used for purchase of merchandize/services from
commercial establishments/service organisations that display the "Mastercard", "Maestro"
and "Cirrus" logo.
 There are 23 million POS terminals and 1 million ATMs globally that accept Maestro Debit
Cards.
 Round-the-clock cash withdrawals, Instant Fund transfer to other Indian Bank
accounts 24 x 365 ( Per day limit Rs.50,000/-).
 24 hrs cash and cheque deposits.
 Request can be given for a cheque book through ATM.
 It can be used in ATMs that accept MasterCard / Maestro / Cirrus cards.
 Green PIN facility for Debit cards.
 Facility for Green PIN Generation for both Debit and Credit Cards available to customers
through our ATMs.
 Debit Card to Debit Card Transfer of funds between select banks. Facility available for our
customers and other bank customers in our ATMs.(Rs 5000 per transaction and Rs 25000
per month)
 Debit Card to Account Transfer of funds within our bank. Facility available for our
customers only in our ATMs.(maximum Rs 50000 per day)
 Aadhar Seeding facility enabled in our ATMs for both our customers and other bank
customers with debit cards.
 Ordering cheque books.
 Complaint Registration through ATM
Card to Card Funds Transfer
 Transfer funds from any bank to any bank using Indian Bank ATM
 Insert Card and enter PIN
 Select “ Card to Card Funds Transfer “
 Enter Beneficiary Card number
 Re-enter Beneficiary Card number
 Enter the amount to be transferred from the card to the Beneficiary’s account
 Remitter account will be debited and Beneficiary account will be credited
 A message “Fund transfer successful” will be displayed on the screen
 You will receive a receipt for the fund transfer.

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Digi Challan
 Cash Deposits made Simple
 No need to fill deposit challan
 Just open IB Customer App and Select Digi Challan menu
 Fill the account and amount details
 On submission , reference number will be generated sent to registered mobile via SMS
 Approach the nearest Indian Bank branch with reference number and deposit cash
Customized Design Debit Card
 Customers can get their personalized debit card with photo of their choice
 Customers can apply using the link http://apps.indianbank.in/imagecard/
IB Customer App
 Request Loan
 Jewel loan Appointment
 Digital Challan
 Credit Card Statement
 Feedback on branch cleanliness
 Secure OTP & Product related information
IB Staff App
 Lead Generation by our staff members
 Access of staff portal
 Ind knowledge for knowledge enhancement
 Tagging of properties for NPA follow-up and sanction of Loans
RuPay Card
o “RuPay” is the coinage of two terms Rupee and Payment
o Indigenous Card - Introduced by NPCI
o Seventh Card Payment network in the world
o Lower cost of clearing and settlement tractions
o Personal Accident Insurance cover upto Rs.1 lakh to the RuPay card holders
o Only domestic transactions are permitted in these cards
o Can be used in 1.50 lakhs ATMs, 8.75 lakhs Point of Sales (POS) terminals and 10,000 e-
commerce websites of India
o Per day Cash withdrawal Limit is Rs.50,000/-
o Acceptable though out the Country.
o All renewal Cards are being issued as “RuPay” cards only
o POS limit Rs 1.00 lakh
EMV Chip Based Master Cards:
 EMV Chip Card and PIN are issued to customers who have evidenced at least one
purchase using their debit/credit card in a foreign location
 Per day limit – ATM- Rs.50, 000/- , POS – Rs.1.00 lacs. Total Limit Rs.1.50 lacs per
day.
NFC (Near Field Communication) Cards
 Debit Cards with flash and pay (swiping not required) facility
 Cards with Magnetic Strip, EMV Chip and NFC Chip
 Tap and pay in contactless terminals upto Rs 2000 per occasion and Rs 5000 per day.
Cash Recycler – Bunch Note Acceptor (BNAs)
 Accepts Cash 24 x 7 up to 200 pieces at a time – Denomination of 2000, 500, 100, 50 –
without Challan
 Can deposit with or without Card by any one
 Maximum cash remittance Rs.49900/- where PAN is not available in the beneficiary
account
194
  Can Pay money like ATM with Card Authentication
 Recycle the Cash Deposited for Cash Payment
 Bunch note accepter machine is an ATM that accepts the genuine cash up to 200 notes
per transaction
 Receipt is also given to the customer immediately and the account gets credited
immediately.
 Cash remitted at random gets sorted denomination wise automatically
Indian Bank Credit Card
 VISA cards available in three variants : Gold, Classic and Bharat cards
 Gold Card:- Indian Nationals and NRIs in the age group of 18-80 years.
Bharat card :- Indian Nationals in the age group of 25-60 years.
 Gold and Classic cards are Global cards and Bharat cards are domestic cards.
 Limit:- Gold card : Rs.20000 to Rs.99,999 lakhs. Bharat Cards : Rs.10000 to Rs.20000.
 Upto 4 add on cards can be issued for Gold/Classic cards.
 Insurance cover on death due to accident is available..
 No Joining / annual membership fee.
 Card holder can avail reimbursement of loyalty points (Rs.1/- for every Rs.200/= spent.)
 Interest free credit period for purchases : Minimum - 15 days and Maximum - upto 45
days.
 Accepted at over 30 million merchants establishments across the world
 Accepted at over 150,000 VISA Merchants establishments in India
 Pay just 5% of total monthly outstanding - revolve the balance
 Cash Withdrawals up to 40% of stipulated credit limit
 Interest free credit period up to 45 days
 ONLINE SHOPPING ON E-COMMERCE SITES AND APPS
 For every Rs 100 spent, Rs 0.50 is awarded to the card members account.
 Worldwide Acceptance
 Free Insurance coverage
Credit Cards:
Application is now made online .Branches can make online application for Credit Card through
Inhouse Applications in Help Desk
Powers to sanction Credit Cards is now decentralized to Zonal Offices (Adv 223/ 2016-17 dated
18-01-2017)
Platinum Credit Cards
 Higher Credit limit Lower Rate of Interest
 Free Airport Lounge Access –twice a quarter
 Attractive discounts on merchandise
 Credit Limit Rs 1.00 lakh to Rs 2,99,999
 Minimum amount payable monthly -5%
 Rate of interest on balance outstanding 1.66% per month
 EMI facility at 1.40% per month
e-Purse
 E-purse is a virtual account linked to customer’s regular account.
 Separate ATM card will be issued for each e-Purse virtual account
 Maximum of 3 e-purse accounts can be opened
 e-purse accounts can be opened through Net Banking
 Transfer of funds from Main account to Virtual Account and vice versa can be done. 24 X 7
transfer facility using Net Banking
 Drawings in e-purse a/cs are restricted up to balance in Virtual Account.
 Risk exposure is restricted to Balance in the Virtual Account
 Helpful for controlling the Debit Card without Smart Phone

195
  e-Purse accounts can be opened with Nick Name and the e–Purse Card can be given to kith
& kin
 Very good tool for Expenditure Budgeting
 Balance in e-Purse account earns interest at SB rate
How to Enroll
 Login to your Net banking Account, Select e-Purse menu, Open Account
 Enter Name, Category, Transaction Password and Submit
 OTP will be sent to Mobile, Enter OTP, Account will be opened
 Account details can be viewed in E-Purse Summary
 Funds can be transferred to & from any time
 Collect e-Purse debit card from Branch
IB Smart Remote
 Mobile Application available in Android, Windows & iOS. Just download the App.
 Control the operations in Debit Card as :
o Lock & Unlock the Debit Card & Credit Card
o Set Limit for both Cash Transaction & POS transaction, Increase / Decrease the
limit
o Enquire Balance in the Linked accounts
o Change PIN
Just Dial for Balance – Missed Call
 Just give Missed Call to 092895 92895 from Registered mobile number of the Customer
 Balance in their SB / CA will be sent back by SMS
 Facility is available 3 times a day
Low Cost Mobile Banking Solution (USSD) *99#
 Works in any Mobile – No Need to have Smart Phone
 Works without Internet connectivity
 Should have account with mobile banking facility
 Just Dial *99# to connect to Mobile application
 Enables Balance enquiry, Statement Print, Fund Transfer within the Bank & to other
Banks
 Enables 24 x 7 IMPS Facility
Immediate Payment Service (IMPS) using SMS
 This works 24 x 7. Money will be transferred instantly
 This service can be availed without a smart phone and Net
 Mobile Banking facility should be activated for the account
 Funds can be transferred using by simple SMS to 09444394443 as per the given format
 Mobile Money Identification code should be obtained by sending SMS to above number,
before effecting transfer of funds.
 SMS format : IMPS <mobile no. of beneficiary> <MMID of beneficiary> <Amount>
<mobile banking password> <MMID of the account holder>
 Up to Rs.50,000/- can be transferred instantly
 It is free of cost, but customer to pay SMS charges

196
  For getting MMID send SMS to 9444394443 –Format MMID Your Account number –from
the registered mobile number or use MMID menu available in net banking. For Indian
Bank Customers will be 9019XXX (where X stands for the last 3 digits of the account no)
Self Service Cheque Acceptor Kiosks
 Customer / their agent can deposit any number of Cheques 24 x 7 without Challan
 Acknowledgement with Scanned image will be provided to customer
 Scanned Image will go directly in CTS clearing and hence will be cleared quickly
 No worry about Cheque lost in transit
Online opening of SB Account:
o The online opening of Savings Bank account is a three step procedure offering facility to open
normal accounts and accounts of Pensioners and involves
 Submitting customer related information including KYC details online
 Visiting the branch with documents and
 Expeditious opening of account.
o Customer can choose – Preferred Branch, Type of Account, Nomination, Channel requirement
viz., ATM card, Internet banking, Mobile banking and SMS alerts.
o For Joint account and for account of Minor to be operated by Guardian, the applicant would
be required to produce two TRNs for both the parties
o Copy of acceptable KYC documents for address/identity proof and photograph to be attached
to the application form and submitted to the branch
o Type of a/c - SB Regular, SB Pensioner - with or without cheque book facility can be opened.
Our Bank is now marching towards digital banking which will enhance the Customer Comforts. In
order to achieve our goal of 100% Digital Bank, our Bank will be launching at least one tech
product every month. The following products were launched on 01/04/2016.
1. Ind MobiEasy
It is a Mobile Application which will work on Android Phones and is available in Google Play Stores
for download.
We are having many products like SMS Banking, USSD Banking, Just Dial for Balance etc.
Wherein customers have to remember the Key Words / Phone Numbers.
Ind MobiEasy will make the operations Easy on their Mobile phones by way of auto generation of
the message for Specified Mobile / auto dialing / auto population of options / Redirecting to
related pages in Web Site etc. With Minimum Customer Specific User Input.
2. Ind Product Seeker
We are offering Various Deposit / Loan products and provide details in our Web Site.
Ind Product Seeker give
(1) Quick link to the customer for searching the required product &
(2) Send SMS to the Bank showing his interest in the Product just by giving pin code of his
location. This will initiate acknowledgement SMS to the customer & message to the
Manager of the nearest branch to approach the customer & get business.
This is integrated with Ind MobiEasy.
3. Ind Easy Lock
Strengthening Security of Customer's Money is our Top Priority.
With Ind Easy Lock it is very Easy to lock Net / Mobile just by sending SMS. Unlock will be done
in Net / Mobile Banking.

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Credit Card can also be locked using SMS. It will be extended to Debit Card also. This is also
integrated with Ind MobiEasy.
Corporate / Institutional Products
IB Collect
 Facilitates collection of funds from multiple persons spread across the country
 Real time integration of Bank & Customer website
 Facility for capturing Remitter Information / Amount Break up
 Facilitates Easy Reconciliation
 Facility for multiple payment options – Our Branch Counters & Any Bank’s Net Banking /
Debit Card / Credit Card
 Real time Payment Response for both Online & offline collection facilitating Corporate /
Institution to act on it
 Customised MIS report on captured information
 Ideal for Educational Institutions, Recruitment Agencies, Chit Collections, Online
Shopping, Temple Donations, Agency / Dealer collections
IB V-Collect
 Facilitates collection of funds from multiple persons spread across the country through
NEFT
 Facility for capturing Remitter Information
 Facilitates Easy Reconciliation
 No Need for Website / Database for Customers – No integration
 Remittance to Virtual Account (Company Code allotted by Bank + Remitter Unique ID)
 Instant Credit for Real account of our customer for remittance received with Virtual
Account number
 Remitter Unique ID can be seen through Corporate Net Banking instantaneously
 Customized MIS on remitter information
 Ideal for Educational Institutions, Recruitment Agencies, Chit Collections, Online
Shopping, Temple Donations, Agency / Dealer collections
IB Remit
 Facilitates remittance of funds to multiple persons having account with multiple Banks
 Facility for providing MIS on Status of remittance (Successful / Returned)
 Facility for providing Reason for Return
 Remittance File given by customer is given back with Status and Return Reason (if
returned)
 Facilitates Easy Reconciliation
Ideal for disbursement of Salary, Wages, Pension, Scholarships, Subsidies, Subvention,
Incentives etc.
IB Fund Manager
 Ideal for Government organizations who are operating at various levels (Country / State /
District / Block / Panchayath) & provide budget allocations to various levels.
 Funds will be kept in Centralized account (Parent Account) of the Top Level
 Zero Balance account (child Account) will be provided to Other Levels

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  Cheque book will be issued to Other Level accounts
 Based on Budget allocation to each level (account) limit & period for withdrawal will be set
 As and when cheque is presented in Child Account, money will be pulled from parent
account
 Limit will be reduced after every withdrawal
 Control is available to validate withdrawal limit and period
 Limit can be modified / cancelled at the request of the Top Level
 Top Level will have full control over the Funds
IB Fund Monitor
 Ideal for Government organizations who are operating at various levels (Country / State /
District / Block / Panchayath) & would like to monitor utilization of funds at various levels
from Top Level.
 Funds will be Transferred from Centralized account (Parent Account) of the Top Level to
the Accounts (child Account) belonging to Other Levels. Daily report on Balance &
Transactions in the Child Accounts will be provided to Top Level . Top Level will have full
monitoring over the Funds at other Levels
TECH PRODUCTS:

 Our Bank has received Frontier’s Finnoviti Award for the Best Technology Innovation – “e-
Purse”
 Indian Bank bagged “Skoch Technology Innovation Award” for “IB Smart Remote” Mobile
Application.
 The user-id for the first log-in for internet banking is CIF No.
 Expiry period of password in Internet banking is 180 days
 How many digits in One Time Password (OTP) of internet banking : 6
 Maximum amount of Term deposit except RD/VRD can be opened through e-TDA option in
internet banking is 10 lakhs
 Maximum number of e-Purse account can be opened for one CIF in Internet Banking: 3
 What is MMID : Mobile Money Identification Number
 What is the national toll free number for hot listing of ATM card: 1800 425 4422
 TMD in our Bank renamed as Information Technology Dept.,
 Digital Banking Division newly formed in our Bank cater to the need of business
operations of all Technology related products
e- FILING OF TAX RETURNS

 Anybody can now file tax return by login to Indian Bank net banking
e-LOUNGE

 It is an unmanned Kiosk where the customer can have all major banking operations 24*7
on all days including holidays.
 There is a BNA to take care of customer’s cash receipts and payments.
 There is a secured pass book printer.
 And have also a cheque deposit kiosk that provides an acknowledgement along with
scanned image of the cheque.

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NEW TECHNOLOGY PRODUCTS FOR CORPORATE CUSTOMERS
I B V-Collect
 Those of our customers who receive thousands of credits from all over India like big
corporates, Institutions, colleges and temples usually find it very difficult to reconcile the
credit entries owing to sheer volume and lack of remitter information.
 Through IB collect besides, Real time Payment response will be provided to Customer's
site & their account will be credited instantaneously.
 Report containing Remitter Info will be provided from the Bank’s end.
 Payment Options available are Over the counter (OTC),Indian Bank Net Banking, Credit
Card and Debit Card.
 When Remittance is made by NET Banking, Virtual Company Code will be provided to
them & their corresponding original account will be mapped in CBS.
 Institution / Corporates will inform their remitters to send remittance to the Virtual
Account Number and corresponding credit is received in the original account in real time.
 Remitter ID will be available in Statement of Accounts.
 Report with remitter ID will also be provided to the customer at EOD.
I B Remit
 We have customers who have to make payments to multiple accounts in different banks on
a regular basis like salary, scholarships, pension, government payments like subsidies etc.
 IB remit handles these ,both Aadhaar Based Credits & Account based Credits ( Our Bank
/ Other Bank Accounts).
 Credit Status / Return Status (with return reason) is provided in the same file in which
data is given by the customer
MCA PAYMENT
Eligibility: On Line – Customers having net banking facility with our Bank
Off Line – Corporates and other individuals who have to pay charges, fees to
Registrar of Companies (ROC) for Ministry of Corporate Affairs
 Payments for MCA can be made online through internet banking service
 Visit website http://www.mca.gov.in or https://www.indianbank.net.in
 The user has to choose Indian Bank in the MCA website and he can be pay by both Offline
and Online.
New facilities introduced:
INDIAN BANK WEBSITE
 Statement of account is made available by email to the registered mail id. Apply through
the link provided in the home page of our website www.indianbank.in
 Customer can design his own customized debit card with pictures of his choice ,through
Customized Design Debit Cards available in Techno products in www.indianbank.in
 Registering online for Locker facility .E-Locker
PREPAID CARDS-Indian Bank Prepaid Card
 No Balance Required
 Rs 50000 daily cash withdrawal limits in ATMs and Rs 50000 daily in POS
Digital Carnivals:
 Digital Carnivals – To create awareness among the customers on Digital Products .
 In this mission Branches are divided into clusters by conducting campaigns with
minimum of 5 clusters per week in each zone.
 Campaigns targeted in all public places like markets, institutions, beaches,
housing societies, etc.
 To achieve the target set by GOI on Merchant On-boarding on Digital platforms like
BHIM Aadhaar Pay, Bharat QR, BHIM App & PoS.

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Fundamentals of Computer, CBS General
1. CD ROM- . Secondary storage device
2.. Software - A set of programs associated with the operation of the computer is called
3 . Operating systems are. Windows XP, Windows 7, Windows 8.1, Linux
4. URL- Uniform Resource Locator
5. A network of network is called as Internet
6. Interconnection of computers within the same building is called Local Area Network (LAN)
7. GUI is Graphical User Interface
8. Binary System is a numbering system with only 2 digits is binary system. The digits used in
the binary system are 0 and 1.
1 Kilobyte = 1024 bytes
1 Mega Byte = 1024 Kilo Bytes
1 Giga Byte = 1024 Mega Bytes
1 Tera Byte = 1024 Giga Bytes
9. MODEM is the abbreviation of Modulator – Demodulator (it modulates and demodulates data
signals).
10 Router is a device which is used for routing data packets. It stores and forwards data packets
between LAN and WAN
11. PING is an abbreviation for Packet Internet Groper, which indicates whether a particular
device is accessible, or not in a network.
12. IP Address is Every machine in the computer network has an address called IP ( Internet
Protocol) Address which identifies the machine in the network and it has format like
10.29.20.113
13. ISDN - Integrated Service Digital Network
14. Gateways are devices which are used to interconnect two dissimilar networking computer
systems
15. VSAT refer to - VSAT is a satellite used by Indian bank for communication purpose
16. The USERS in BANCS are differentiated by USER TYPE and CAPABILITY LEVELS
17. User type refers to the function to be performed by the User
18. Capability level refers to the power that can be exercised.
19. VPIS- Value Paper Inventory System
20. GLIF (General Ledger Interface File) is an interface between BANCS and Finance1.
21. GLIF difference is NEGATIVE, it indicates that some debit entries have failed and if it is
POSITIVE that some credit entries have failed.
22. The deposit is automatically rolled over for the same period of deposit on the due date.
23.. The system deduct TDS in a deposit account , When the total interest paid to customer under
the same CIF in a bank per year exceeds Rs.10000
24. RD account on maturity - It Will be rolled over as (ODD RD) a current account.
25. There is no TDS on SB.
26. CBS system allows payment of Back date interest in deposits, Up to a maximum of 14 days
interest .
27. IFSC Code - Indian Financial System Code (A code no with 11 Characters for RTGS/NEFT
participating Bank branches given by RBI)..

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28. Cash handling charges is applicable to cash remittance in current account/OCC/OD .Upto 10
sections irrespective of the denominations is free to the customer. From 11 th section onwards in
denomination of Rs 1000 or Rs.500 ,Rs15 per section and in denomination of Rs.100 and below
Rs.20 per section (Charges inclusive of taxes ) (Circular Genl 114/2010-11 dt 29.03.2011 ). Cash
handling charges will have to be recovered separately by the branches through CBS menu
New Capability levels (Circular No: HRM -11/2012-13 DT 30.04.2012 )

New Post Name Financial powers

Capability
level Cash Cash Clearing Transfer
Receipt Payment

1 Teller NIL NIL NIL NIL

3 SWO - A 15000 10000 15000 15000

5 SWO - B 25000 20000 25000 25000

7 Head 25000 20000 50000 50000

Cashier- II

8 SPL. 35000 35000 150000 150000

.Assistant

29. The per occasion cash withdrawal is Rs 50000/- for CA/CC/OD and SB at the host branch,
without restricting the no. of times or the aggregate amount that can be withdrawn in a host
branch per day
30. Queue will be generated once a transaction of more than Rs.2 lacs is entered by any user and
all transactions of more than Rs.2 lacs should be entered through batch mode only. Such
transactions will generate a queue to be passed by another officer irrespective of the capability
level of the maker.
31. Phishing is a form of Cyber Attack in which scammers, attackers make internet users divulge
sensitive information about their bank accounts and personal details using the E-mail ids
32. ADEPT- Automated Data Extraction Project related to data cleaning. There are 2 types are
error lists – one Customers error list and another Accounts error list.
33. Ransomware is a sub set of malware which attacks the data of victim’s computer allow to lock
by encryption for monetary demand purpose.
Transactions restricted to Home branch in CBS:
 Closure of Deposit accounts
 Addition/Deletion of names in Deposit accounts.
 Change of address.
 Change in Mode of operation
 Noting / Changing of Nomination
 Change of ownership of accounts.
 Modification of signature.
 Issue of Cheque books.
 Revocation of Stop Payment Instructions.
 Modification of SI.
 Form 15G/15H

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 Power of Attorney / Mandate
 Settlement of death claims
 Discharge / Release of securities.
 Lifting of Lien / Hold in a deposit account.
 Disbursal of Loan / Release of additional facility / allowing excess in loan accounts.
 Closure of Guarantee account

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 Human Resources Management
The Group Personal Accident Insurance Policy covering all staff members under staff
welfare scheme with The Oriental Insurance Company Limited has been renewed for a
further period of 1 year from 02.08.2017. This policy provides round the clock personal
accident cover with the sum insured at 48 times of salary (Basic + DA).
Lodgement of Claim in case of Non-Fatal accidents
Intimation to the Insurance Company by the Branch/Office within 7 days under copy to
Corporate Office: HRM Welfare Section and concerned Zonal Office.
Claim application should be submitted within one month of accident directly to the
Insurance Company with copy marked to Zonal Office / CO:HRM
Lodgement of Claim in case of Fatal-Accidents (Death)
Intimation to the Insurance Company by the Branch/office within 24 Hrs under copy to
Corporate Office: HRM Welfare Section and concerned Zonal Office.
Claim application should be submitted within one month of accident to the Insurance
Company and a copy shall be marked to CO: HRM Welfare Section and respective Zonal
Offices.
Intimation about admission to Insurance company by Branch / Office within – 24 hours
under copy to CO: HRM/GPAP Desk and concerned ZO.
Intimation to the Insurance co by office under copy to CO: HRM GPAP Desk and
concerned Zonal Office within - 14 days.
Claim application to be submitted through CO: HRM GPAP section under copy to Zonal
Office within – 1 month of accident
Round the clock insurance available under Group Personal Accident Policy of UIIC to
non-fatal accidents depending on the period of leave is Rs.1500/- per week.
1. Group Savings Linked Insurance scheme revised :

Category Coverage (in lacs) Premium

1 6.00 612
OFFICERS
2 8.00 816

3 10.00 1020

1 3.00 306
CLERKS & PART TIME
2 4.50 459
CLERKS
3 6.00 612

SUB STAFF & PART TIME 1 1.50 153

SWEEPERS
2 3.00 306

The monthly premium paid by the GSLI member will be eligible to be treated entirely as
insurance premium and it will be eligible for tax relief under Sec 80 C of Income Tax Act.
The proceeds of the policy are exempted from tax.

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4 Preferential rate of Interest to staff : Staff members are eligible for 1% additional rate of
interest for the Deposits. Staff members who resign before completing 20 years of actual
service, staff who are retired compulsorily or dismissed are not eligible for preferential
staff rate of Interest.
5. To get the staff rate of interest staff member can hold a deposit either singly in his
name or jointly with any other member of his family with his name as the first depositor
subject to submission of a declaration that the money belongs to him.
6. In case of rent on lockers 25% of concession for any one locker irrespective of the size
for staff members.
7. Staff concession of 100% given :
a) Commission of collection
b) Folio charges
c) Standing Instruction charges
d) Stop payment charges
e) Check return charges irrespective of reasons
f) Processing and administration charges for credit proposals
g) Minimum balance charges for SB and CA
h) DD/BPO cancellation charges
i) Duplicate Pass book and statement charges.
However out of pocket expenses like postages and other bank charges etc., should be
recovered in full from the staff.
8. Reimbursement of fees to staff :
All fees are payable as reimbursement on successful completion of the course

Certified Credit Officer

Course registration cum Class time learning fee
by IIBF online fees – Rs.6742/- – Rs.15000/- + taxes

Currency DerivativesCourse fee – Rs.1000/- Cash award –

Certificate Rs.1000/-
Examination by NISM

CISA – Purchase of
Exam fee – Actuals or Annual Membership fee
Annual certification fee
books – Actuals or US$120 –
US$325 whichever is
Upto Rs.5000/- less whichever is less Actuals or US$40
Whichever is less

CISP Exam fee – Actuals or Annual certification fee

–
US$499 whichever is
less Actuals or US$85
Whichever is less

 Reimbursement of expenses incurred by staff members who have successfully

completed diploma / certificate examinations conducted by IIBF:
 Applicable Examination Fees

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  Cost of books / study material up to a maximum of Rs.2500/- or actual cost of books,
whichever is less, on production of bills and
 An incentive amount of Rs.1000/-
 On successful completion of 22 listed courses offered by IIBF, staff members to claim
reimbursement / incentive from CO:HRM by submitting proof of expenses and copy of
completion certificate duly verified and recommended by respective BMs / Dept. Head.
Incentives to officers for learning Local language, who do not have the language as their
native language and are not conversant and who do not belong to the place: Certificate /
short term courses in local language – duration 6 / 12 months from approved reputed
institutions – Reimbursement of Tuition / examination fee + cost of books subject to a
maximum of Rs.1000/-; Incentive of Rs.5000/- on successful completion.
9. SAMADHAN : Through SAMADHAN staff members can address issues on their work
directly to our CMD (except for transfer requests and issues of routine nature) by e-mail
to cmdsec@indianbank.in. or through bank’s intranet.
10. Additional Welfare measures to women employees of our Bank : Reimbursement of
actual expenses in respect of crèche for infants / babies of women employees up to a
maximum of Rs 250/- per month up to a age of 8 years of the child subject to a
maximum of 2 children during the services
11. Incentives to Lady Branch Managers;
 Monthly dress maintenance allowance of Rs 500/-
 Monthly grooming allowance of Rs 500/-
 Subsidy of 50% concession in interest on their vehicle loan during BM tenure
 Residential leased accommodation at their place of choice
 Joining time extension up to one year
12.The facility of encashment of PL while availing of LFC is available to award staff
members provided he/she shall proceed on leave for a minimum period of 1 day.
13. Every staff member irrespective of cadre must avail leave for 7 consecutive days in
a calendar year (mandatory leave), except administrative office staff members.
14. Categorisation of Branches ; Business criteria (av. aggregate deposits and
advances during the last 2 years )

SCALE BUSINESS

I – Small Below Rs 5 Crores

II – Medium Rs 5 to 25 Crores

III – Large Rs.25 Crore and above but below Rs.100 Crore with
minimum advance level of Rs.10 Crores (excluding Jewel
Loans)

IV – Very large Rs.100 Crore and above but below Rs.250 Crore with
minimum advance level of Rs. 35 Crores.(excluding Jewel
Loans)

V – Exceptionally Large Rs.250 Crore and above with minimum advance level of
Rs. 60 Crores (excluding Jewel Loans).

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  15. All staff members including part time employees are eligible for Identity Cards.
The cards shall be in four different colours.

Card Colour

Executives Golden Yellow

Officers Blue

Clerks Pink

Substaff Green

16. Under the existing Computer Loan Scheme , staff members can also buy even a
Laptop.
17. According to Bonus Act if an employee’s monthly salary is not exceeding Rs.10,000
he may be paid bonus at the rate of 20% subject to maximum of Rs.8,400 per annum.
18 All staff members (officers and clerks) have been allotted user ids (SR No.) and
password 'image' for accessing the e-learning website. The e-learning website provides
exhaustive topics in Banking, General Banking, AML, Asset Liability Management,
Credit, Foreign Exchange, Risk Management, Treasury Management, Derivatives,
financial Mathematics and lot more. All staff members are encouraged to login to this
website study the lessons and improve their knowledge. A link is provided in the help
desk also.
19.It is mandatory for all Bank employees to obtain PAN for himself/herself and quote
the same in all the TDS returns. Non-compliance will invite penalty of Rs 10000 as per
Sec 272 B of IT Act.
20. Reimbursement of local conveyance expense while on outstation duty by officers In
metros –Rs.60/- ; In other centre – Rs.40/-
21. Reimbursement of conveyance expenses on declaration basis stands revised as
follows:
Metro - Rs 1000 per month: Urban/Semi Urban- Rs 875 per month : Rural Rs 750 per
month
A separate screen is provided in HRM Online Portal for this purpose. The Screen will
display the list of Officers / Award Staff drawing salary from the branch / office. An
Officer / Clerk of the branch / office shall enter against each employee the number of
eligible days for reimbursement of canteen subsidy. The Branch Manager / Assistant
Branch Manager shall approve the entries and also certify online that correct amount of
subsidy has been claimed. The claim for canteen subsidy for every month has to be
entered as above between 1st and 5th of the following month. CO:HRM Department shall
process the entries and credit the canteen subsidy to the SB account of the Subsidy
Administrative committee.

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Staff Welfare Schemes :
Staff Housing Loan (SHL) Scheme (2017)
Limit

Permanent Part-time employees

Exit Age: Increased from 70 years to 75 years.

Rate of Interest - 8% p.a. (simple).
Husband and wife working in our Bank are permitted to avail the facility either
individually for acquiring different properties or together for acquiring
property/properties subject to total limit (individual or combined as the case may be) and
extant eligibility criteria.
EDUCATIONAL LOAN TO STAFF AND WARDS OF STAFF
The rate of interest in the case of Education Loan availed by staff and wards of staff has
been set at 1 year MCLR with yearly reset.
Medical Insurance Scheme:
A new Medical Insurance Scheme for officers and award staff has been implemented with
effect from 01.10.2015 for reimbursement of medical expenses in lieu of the
hospitalization scheme. In case of retired staff, the scheme is effective from 01.11.2015
subject to payment of stipulated premium by them.
The insurer for the scheme is M/s United India Insurance Company Limited and the Third
Party Administrator (TPA) allotted to our Bank is M/s Paramount Health Services (TPA) Pvt
Ltd.
The salient features of the scheme are as follows:
1. The Sum Insured for Hospitalization and Domiciliary Treatment coverage per
annum for Officers is Rs.400000/- and for Award staff is Rs.300000/-
2. All new Officers / employees shall be covered from the date of joining as per their
appointment letter.

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3. The scheme covers hospitalization as well as domiciliary treatment.
4. The scheme has built in facility of cashless treatment in network hospitals enlisted by
the TPA.
5. The scheme will also cover the existing retired officers / employees and spouse subject
to payment of stipulated premium by them.
Under the Scheme, for hospitalization of self or dependent family members, employees (in
case of retirees, retiree or his / her spouse) can avail cashless facility in any network
Hospital or claim reimbursement of hospitalization expenditure incurred by submitting
the required medical bills and documents.
Procedure to avail cashless facility: A list of network hospitals where cashless
treatment can be availed is hosted in HRM online site. The list is also available in the
website of the TPA, www.paramounttpa.com/providernetwork/providernetwork.aspx.
In case of an emergency, the concerned staff has to arrange for the Admission
Request Note to be sent by the Network Hospital to TPA within 24 hours of
admission. The Admission Request Note is available in the TPA counter ( Insurance Help
desk) of the network hospital.
In case of a planned hospitalization, the staff has to arrange for the Admission Request
Note (Pre-Authorisation Form) to be sent by the Network Hospital to TPA seven days in
advance.
The Admission Request Note is to be filled in by the treating Doctor with his signature
and stamped by the Hospital.
It is mandatory for the staff to mention the PHS ID number which will be available
in the e-card / ID card provided by the TPA , SR No (employee id) , name of the
Bank and branch in the Claim Form for proper identification / verification and
further processing of the claim.
The staff should ensure that all the required details are furnished in the Admission
Request Note, sign it and submit the completed admission request note to the TPA desk
(Insurance Help Desk) of the Hospital . The TPA desk will in turn send the request form
to M/s Paramount Health Services for approval.
On receipt of the Request Note by the TPA, the claim will be registered and a unique
claim number (FIR / CCN) will be generated. This number should be quoted in all
correspondence relating to that particular hospitalization.
The TPA will verify the claim and if admissible, an Authorisation Letter will be sent (faxed
/ mailed ) to Hospital and a copy will be mailed to the staff, if his e-mail id is available.
An SMS alert regarding the authorization will be sent to the mobile number of the staff
registered with the TPA.
Staff should submit the claim for reimbursement as per format in Annexure I
within 30 days from Date of Discharge to the respective Zonal Offices. Similarly, in
the case of retired staff the claim should be submitted to the respective Zonal office or
Corporate office directly. A representative of the TPA will collect the claim forms received
at Zonal Offices for processing at their end.
Claim forms can be downloaded from CBS Helpdesk - HRM Online Site or from the
Internet at the website www.paramounttpa.com.
Submission of Life Certificate: (in the month of November)
As directed by the Standing Committee on Customer Service, Branches are permitted to
obtain the Life Certificates submitted by the pensioners of other branches also. CO: TMD
has developed the menu as given below to enter the Life Certificate details in CPPS

209
master.
All Branch Managers to issue a duly signed acknowledgement with branch seal in the
prescribed format to the pensioners on receipt of the life certificate from them in physical
form.
Staff pensioner – Life certificate every year; Non employment certificate – For the first
year, as per pension regulations
Staff family pensioner - Life certificate and non-marriage certificate every year Non
employment certificate from family pensioner (other than spouse)
Recipients of Ex-gratia relating to surviving pre-86 retiree & spouse of deceased – Life
certificate
Reimbursement of fuel expenses to award staff employees – Amount Rs.375/- p.m.
Reimbursement of outfit and dress maintenance expenses - Amount Rs.375/- p.m.
Claim for reimbursement to be submitted before 10th of the succeeding month.
High risk medical check up for officers from Scale IV and above with their spouse:
Medical check-up for all staff members above the age of 40 years and their spouse for a
total amount of Rs.5000/ (Staff – Rs.2500/-; Spouse – Rs.2500/-)
Annual Health Check Up for Ex-Staff members retired under Superannuation – (w.e.f.
1.1.2011 ) – Rs.3500/- for medical check up and lab tests.
Provision for free eye check up and purchase of spectacles: For eye-check up and
purchase of spectacles staff members who are above 40 years of age are allowed
reimbursement of Rs 3000/- towards reimbursement for the consultations and purchase
of spectacles, per occasion thrice in their career with a gap of 4 years between the two.
Canteen subsidy – Rs.15/- per day for all employees on their days of working
Rent for Holiday Homes, where available – Rent payable by staff @Rs10/- per room per
day
Purchase of Raincoat by Branches/Offices Rs.800 once in 3 years.
Financial relief to family of staff dying in harness:
Rs.99000/- for who have joined on or before 30 6 2013; R2.100000/- for others
Premium paid for Group Gratuity Scheme of LIC of India – Under this scheme,
dependants of staff members dying in harness (who have joined the Bank before 01 07
13.
Assistance to Physically challenged employees:
Accessories to differently abled employees – At the time of joining the Bank, an amount of
Rs.5000/- will be credited to all differently abled employees towards purchase of
accessories. It has been decided to reimburse an amount of Rs.1,000/- per annum to
the Visually Impaired Employees towards Accessories etc. Visually Impaired Employees
may prefer claims, to the Bank, through their Zonal office, once in a year. It has been
decided to increase the quantum of conveyance allowance payable to the eligible Blind
and orthopedically handicapped employees to 5% of Basic Pay subject to a maximum of
Rs.400/- p.m. from Rs.200/- p.m. being paid at present.
Inspectors of Branches: Duty leave – for performing outstation duty @ 2 days for every
30 days subject to a maximum of 8 days p.m.
Cell phone allowance – Rs.300/ p.m. on declaration basis
Cost of brief case reimbursement – Rs.2000/- once in 3 years
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Staff welfare scheme for benefit of differently abled children of staff members:
For purchase of accessories to differently abled children of staff like caliper
shoes/crutches/below knee limb/wheel chair/tricycle/hearing aid – once in their career
maximum – Rs.5000/- Bill to be supported by Doctor certifying physical challenge &
need for the accessory to be produced.
Subsistence allowance for staff members who are on leave on loss of pay due to
prolonged hospitalization: Staff Members who are on leave on loss of pay due to
prolonged hospitalisation are paid a Subsistence allowance of 75% of the Gross pay or
Rs.10,000 w.e.f.01.12.2010 whichever is less for a period of 6 months in one occasion
and 3 times in the entire service with the maximum period of 18 months.
Financial relief to the family of staff members dying in harness: To provide immediate
financial relief to the family of a deceased staff member, an amount of Rs.50000/- is
paid to the family and Rs.10,000/- within the total amount is paid on the funeral day to
meet the immediate funeral expenses.
Relief to the dependants of part time employees is in proportion to the scale wages drawn
by them.
Memento to Retired Staff Staff members retiring on Superannuation are being
presented a ‘Memento’ in the form of an Article worth Rs.10000/- as per the choice of
the retiree and present the same to the retiring staff member.
Grant of medical aid to retired staff members who retired on superannuation. As per the
scheme, Staff Members who retire on superannuation / medical grounds are provided
with a Medical Aid of Rs.4000/- per annum on a declaration basis which is made
available to the retirees from the subsequent year of retirement. This facility has to be
availed in the current year itself and cannot be carried over to subsequent year/s.
Reimbursement of Health Insurance Policy premium to retired staff members – For a
maximum of premium payable towards policy of Rs.2 lakhs for Arogya Raksha scheme
Grant of scholarship for education to the wards of staff members: Considering the
average age of our staff members and the changes in the overall education scenario, the
following modifications are made in the scheme. The number of Scholarships for
professional courses has now been increased to 400 from the existing level of 350.
Further, to encourage the wards to take up higher education, 100 number of
scholarships are introduced for Post Graduate courses for 100 wards is given at
Rs.4500/-p.a from 2010-11 onwards. All other conditions remain the same.
The scheme for grant of Scholarship to dependents of Staff Members is available to all
the Award Staff and Officers up to Scale IV. The other existing guidelines and format of
application remain unchanged. The last date for receipt of the applications is 15th
September of every year.
"Retired employee card" to retired employees will be issued to all staff members
retiring on superannuation on production of details viz. name, SR No., Branch last
worked, and production of two copies of passport size photographs .
Our Bank has decided to issue “Pensioner’s Card” to all those staff members who had
retired under VRS and are presently drawing pension from the Bank w.e.f.16.03.2015.
Provision of Grant for Educational Books and Uniforms to dependent children of
staff: (Selection based on percentage of marks)
Scholarship is available for Award staff & Officers upto Scale IV whose wards are
studying Std. IX to Post graduate. Maximum no. of children of employee not to exceed 3;
SC/ST/Sub staff – 50%; Others – 60%

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Books and uniform – All staff whose wards are studying from Std. I to graduation; Sub
staff – 50%; Others – 60%
Policy on sexual harassment of Women at workplace:
Committee constituted at CO and ZO – Internal Complaints committee
An aggrieved woman may make in writing a complaint of sexual harassment at workplace
generally within a period of 3 months from the date of incident
The Bank shall act upon the recommendation within sixty days of its receipt.
An aggrieved woman may prefer an appeal to Court / Tribunal for non-implementation of
recommendations within 90 days from the date of receipt of such recommendations

Reimbursement of medical bills for the treatment for certain major specified ailments.
Central Welfare Committee has approved enhancement of the ceiling in respect of certain
major specified ailments. The difference between the amount reimbursed under
BPS/IBOSR and the ceiling permitted under Staff welfare scheme, excluding non
permissible items, subject to 100% for self and 75% for the dependants are to be
reimbursed from the staff welfare fund. Details of the diseases and the latest ceiling fixed
are given in HO/HRM circular 123/2010-11 dated 20.10.2010.
Permission to travel by Taxi during LFC : BMs being the sanctioning authorities are now
empowered to sanction travel by Taxi during LFC.
Leave fare concession – Travel by Air under LFC – Apply for and get the sanction well in
advance (atleast 1 month)
Bank to reimburse only Easy fare / Check fare and not Economy class fare
PF Loan and refundable withdrawal against PF : After the introduction of SAP by our
HRM dept PF Loan./RWPF have been made very simple. Branches have to submit the
application to our HO/HRM dept and their SB a/c is directly credited after adjusting the
old loan account if any. Interest calculation everything is done by the system. In case of
any dispute in interest the one calculated by the system is final.
SCHEME FOR PERFORMANCE LINKED INCENTIVE FOR EMPLOYEES:
Objectives of the Scheme :
n and team

performance of employees by linking their performance to the payment under the scheme

Highlights of the scheme:

The total amount to be paid as Incentive shall not exceed 2% of the Bank’s profit after
tax. Out of this 50 % for officers in Branches, 20% for officers in Zonal Offices, 15% for
officers working under corporate office and 15% for Award staff working in the Bank shall
be earmarked.
Coverage:
All Employees (subject to exclusions enumerated below) viz Officers from Scale I to VII,
Clerks, Sub staffs and PPTS who are on the regular rolls for the financial year i.e. as on
31st March shall be eligible.
Exclusions: Officers who have continuously worked for the past three financial years or
more in Corporate Office, Offices coming under the control of Corporate Office, Service
branches and Zonal Offices and rated as below Outstanding (i.e. less than 90% in APAR)

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in any or all of the past 3 years including the financial year for which incentive is
calculated, shall not be eligible.
Officers who have continuously worked for the past three financial years or more in
branches and rated as below very good (i.e. less than 75% in APAR) in any or all of the
past 3 years including the financial year for which incentive is calculated, shall not be
eligible.
Officers who have worked during the past three financial years partly in branches and
partly in Corporate Office, Offices coming under the control of Corporate Office, Service
branches and Zonal Offices and have been rated as below very good (i.e. less than 75% in
APAR) during the period they worked at branches and / or have been rated as below
Outstanding (i.e. less than 90% in APAR) during the period they worked at Corporate
Office, Offices coming under the control of Corporate Office, Service branches and Zonal
Offices in any or all of the past 3 years including the financial year for which incentive is
calculated, shall not be eligible. (In all the cases mentioned above, if the service of the
officer in the bank is less than 3 years, then APAR rating shall be considered for the
available number of years.)
Newly opened branches during t
on contract basis (if any)
Employee on deputation to outside organizations.
Employees who have served less than 6 months in the Bank/particular branch during
the financial year.
The employees who got separated through any mode other than Superannuation will not
be entitled for Incentive. Employees leaving the Bank due to Superannuation on 31st
March of the year will be paid incentive if eligible along with all other employees at the
time of release of incentive for that year as per the provisions of the Scheme. Those who
retire with less than a year’s service during the year are not eligible for payment of
incentive.
Employees who have been imposed with more than 2 Major punishments / penalties
during their career or the employee is dismissed / removed / terminated from the
services of the Bank as a measure of disciplinary action; he/she will not be eligible for
incentive.
Employees who are under suspension, in the Rigour period of punishment during the
relevant year.
Employees against whom Disciplinary Proceedings have been initiated under Major /

sabbatical, unauthorized absence and loss of pay.

Criteria for payment of Incentive:
Criteria for payment of incentive are based on for
1. Officers
(a) Branches
Branch performance, Zonal performance and individual APAR marks.
(b) Zonal Offices
Zonal performance, Bank performance and individual APAR marks
(c) Corporate Office and Offices coming under the control of Corporate Office and Service
branches.
(i) Business Units : Performance against business targets in respect of business units /
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against parameters as per MOU, Bank’s performance and individual APAR marks.
(ii) Non-Business Units: Performance against parameters approved by Executive
Director, Bank’s performance and individual APAR marks.
2. Award Staff
(a) Branches: Branch Performance and Zonal Performance
(b) Zonal Offices: Zonal performance and Bank’s performance
(c) Corporate Office and Offices coming under the control of Corporate Office and Service
branches:
Business / Non-Business Unit’s performance and Bank’s performance
Evaluation of Performance (for Branch)
I. The Branches shall be rated based on their weekly average performance against
targets assigned in the following parameters:
In evaluating the Branch Performance, weightage for various important parameters is as
follows:
CASA – 15%; Retail credit – 20%; Total Advances – 10%
NPA level – 15%; Operating Profit – 20%; Non interest income – 10%; MDL Sanction –
10%
Bonus Marks: There shall be a Bonus marks of 5, if target for recovery in AUC/written off
accounts is achieved
Other Conditions
1. Branch should get minimum of 90 marks
2. The CD ratio for the Branch should not be less than or equal to 25% as at 31st March
of the year for which the incentive is payable
3. No Parameter as defined above should be negative
4. RBIA rating should not have deteriorated during the Financial year
5. In respect of Ind Verticals, only relevant parameters shall be considered and the
denominator shall be reduced to that extent. 6. If any of the above parameters is not
applicable to any branch, then relevant parameters only shall be considered and the
denominator shall be reduced to that extent.
A Committee of General Managers shall scrutinize the recommendations submitted by
Branch Managers, Zonal Managers and Department Heads and approve the names of
award staff for consideration for payment of incentive. The three member Committee of
General Managers shall consist of
General Manager (HRM/HRD) 2. General Mamager (P&D) and 3. General Manager (IRV).
Amount of Incentive: For officers

Designation Base Incentive Incentive Payable

Branch Manager 20% of Annual Basic Pay Base Incentive X

(Marks**/100)
Assistant Branch Manger 20% of Annual Basic Pay

Officers (Other than BM 15% of Annual Basic Pay

/ABM)

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*The Incentive payable is subject to maximum of Base Incentive **Average marks scored
under Individual officer Assessment, i.e. average of APAR, Branch performance and zone
performance.
Likewise different weightage and different base incentives are given for officers working in
other places
For Award Staff: Base Incentive Incentive payable* (The Incentive payable is subject to
maximum of Base Incentive)
Amount - 10% of Annual Basic Pay Base Incentive X (Marks**/100) (Marks as assessed
for officers other than APAR Marks)
Furniture Policy – 2016
Monetary ceiling for Scale I Officer – Rs.90000/-; Monetary ceiling for Scale II Officer –
Rs.100000/-
Monetary ceiling for Scale III Officer – Rs.110000/-; Monetary ceiling for Scale IV Officer –
Rs.120000/-
Amount to be paid every month towards rent – 0.25% of the pay in the first stage of the
scale of pay
Inverter battery may be replaced after 30 months (if necessary) from the date of purchase
on a cost ceiling of Rs.15000/- or replacement cost whichever is lower, under buyback
system of the existing Battery/batteries. The said limit of one battery will be applicable
for officers upto Scale IV. Officers in Scale V and above shall be eligible to avail the limit
of two batteries i.e. Rs.30000/- only/-. Batteries should have a warranty of 30 months;
Overdraft facility to staff members:
Under the scheme of “Grant of Overdraft Facility to staff members, Quantum of loan to
Officers – Rs.10 lakhs; Clerks – Rs.5 lakhs; Substaff – Rs.2 lakhs
Interest is to be serviced as and when applicable; Account to be regular at all times;
Outstanding will be recovered in full with interest from terminal benefits
Duration of training for Probationary Officers (POs) in Phase I / II / III of probation (in
months) – 3 + 3 + 18
Capability level – 5, 8, 9 respectively

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 Risk Management
Risk is an unexpected event. Risk is that force or cause which adversely affects the existence, stability and
growth of a system or process resulting in loss or failure or abrupt deviation from its set objectives. Such
causes or risk factors may either be known or uncertain. Risk management is having wholesome knowledge,
outlook, awareness and attempt to address the issue of risk management, in order to manage / mitigate the
risk of any category
Basel – I:
Banks are at the epicenter of financial crisis that precipitated global economic crisis. In order to provide
stability to the international banking system Central Bank Governors of G -10 countries constituted the Basel
Committee on Banking Supervision (BCBS) in 1974 to provide a forum for regular co-operation on banking
supervisory matters. The objective of constituting the BCBS was to enhance the understanding of key
supervisory issues and quality improvement of banking supervision worldwide. In 1988, the Basel
Committee on Banking Supervision published a set of minimal capital requirements for banks that mainly
focused on credit risk. It was enforced in 1992 as the Basel I accord. Basel committee recommended 8% of
risk weighted assets, simply known as CAR (Capital adequacy ratio). In India it was implemented on the
recommendations of Narasimhan Committee, effective from March 1993 and based upon second report of
1998, CAR of 9% was stipulated by Reserve Bank of India in India. Risk weights for investments in govt
securities, govt guaranteed advances, FX open position, provision for standard assets, change in classification
norms etc. were also implemented from 1998.
Basel – II:
The second of the Basel accords, published in 2004, was designed to create an international standard on
Banks’ capital requirements. This committee is best known for its International Standards on capital
adequacy and primarily addresses the principles of banking supervision and the agreement on cross-
border banking supervision. Basel-II came into force in India from 31.03.2008 for the banks having
international presence and foreign banks operating in India and for other banks from 31.03.2009. It is
applicable for all commercial banks, excluding local area banks and RRBs.
Three pillar approach:
The three parts or areas covered under Basel – II new capital adequacy framework (NCAF) are
Pillar I:minimum capital requirement,
Pillar II: supervisory review of capital adequacy
Pillar III: Market Discipline.
The minimum capital required is 9% of credit risk, market risk and operational risk. It talks about three
approaches for credit risk viz., standardized, foundation internal rating based and advanced internal rating
based. RBI has directed use of standardized approach by Indian Banks. For market risk initially, Banks will
follow Standardised Duration approach and move gradually to Internal Measurement Approach. For
operational risk the Basic Indicator Approach is used over the Standardised Approach and Advanced
Measurement Approach.
Basel – III:
In spite of the preventive safeguards of Basel I & II, the world banking system went into a tailspin during the
early 2008 ushering in a financial crisis that shook the world economy. This has raised a serious issue of
moral hazard. Since then the BCBS had begun an international consultative process among banking
regulators to examine the issue and to work out a new international regulatory architecture that may
stand better chance of averting recurrence of another banking crisis and broadened framework of tighter
standards to restrict the banks from indulging in unhealthy and imprudent practices which could have great

216
cascading effects on the economies around. With the solemn aim never to see the repeat of the 2008 Crisis,
the BCBS, through Basel III, put forward norms aimed at strengthening both sides of balance sheets of banks
viz. enhancing the quantum of common equity, improving the quality of capital base, creation of capital buffers
to absorb shocks, improving liquidity of assets, optimizing the leverage through Leverage Ratio, creating more
space for banking supervision by regulators under Pillar II and bringing further transparency and market
discipline under Pillar III. Needless to stress, banks whose balance sheets can absorb the losses with
resilience, will stand in the face of a financial Tsunami.
The Basel committee finalized the Basel III guidelines in December 2010, following which Reserve Bank of
India issued guidelines on the implementation of BASEL III Capital Regulations on May 2, 2012.
Implementation of these guidelines will commence on April 1, 2013 and the process will be completed by
March 31, 2019. The Basel III guidelines improve the ability of banks to withstand periods of economic and
financial stress by implementing more stringent capital and liquidity requirements.
Features of Basel III Accord
 Capital requirements - As per Basel III norms, the key capital ratio has been raised to 9% of risky
assets,
 Tier 1 Capital requirements: Under the new rules, the mandatory reserve (known as Tier 1 capital)
will be raised from 4% to 7% by 2019.

 Introduction of a Capital Conservation Buffer. The Capital Conservation Buffer is an additional reserve
buffer of 2.5% of Risk weighted Assets, to "withstand future periods of stress", bringing the total Tier 1
Capital reserves required to 7%. This buffer is introduced to meet one of the four key objectives identified
by the Committee in December 2009 Consultative Document “Strengthening the resilience of the banking
sector”; conserve enough capital to build buffers at individual banks and the entire banking sector which
can then be used in times of stress. This is introduced in a phased manner - Capital Conservation Buffer
before 2016 = 0%; 1st January 2016 = 0.625%; 1st January 2017 = 1.25%; 1st January 2018 = 1.875%:
1st January 2019 = 2.5%. The purpose of the conservation buffer is to ensure that Banks maintain a buffer
of capital that can be used to absorb losses during periods of financial and economic stress. While banks
are allowed to draw on the buffer during such periods of stress, the closer their regulatory capital ratios
approach the minimum requirement, the greater the constraints on earnings distributions.

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 Introduction of Countercyclical Buffer. According to the new rules, local regulators are not only
responsible for controlling Banks’ compliance with the Basel requirements but also for regulating credit
volume in their national economies. If credit is expanding faster than GDP, Bank regulators can increase
their capital requirements with the help of the Countercyclical Buffer, varying between 0% - 2.5% of risk
weighted assets .It can thus, preserve national economies from excess credit growth.
 Liquidity Risk Measurement. Basel III introduces a new instrument for liquidity risk measurement –
Liquidity Coverage Ratio (LCR). It is designed to ensure that a bank maintains an adequate level of
unencumbered, high-quality assets that can be converted into cash to meet its liquidity needs for a 30-day
time horizon under an acute liquidity stress scenario specified by supervisors. The standard requires that
the ratio be no lower than 100%. To ensure that investment banking inventories, off balance sheet
exposures, securitization pipelines and other assets and activities are funded with at least a minimum
amount of stable liabilities in relation to their liquidity risk profiles the new Accord introduces Net Funding
Stability Ratio (NFSR). It is defined as the ratio, for a bank, of its “available amount of stable funding”
divided by its “required amount of stable funding”. The standard requires that the ratio be no lower than
100%.
 RBI has told banks to maintain 60% liquidity coverage ratio from January 2015 and raise the level to 100%
over the next four years. 'Liquidity coverage ratio' is a concept aimed at ensuring availability of short-term
liquidity with Banks and Financial Institutions. According to this, Financial Institutions should have 100%
back-up of assets to ride out short-term liquidity disruptions. Banks are, therefore, required to hold an
amount of highly liquid assets such as cash or treasury bills, equal to or greater than their net cash over a
30-day period. RBI is a member of the BASEL Committee and has asked banks to maintain 60% liquidity
ratio for the entire 2015, raise it to 70% from January 2016 and then to 80% from January 2017, before
raising it to 90% from January 2018 and to 100% from January 2019.
National Stable Funding Ratio (NSFR):
 The NSFR is defined as the amount of available stable funding relative to the amount of required
stable funding. This ratio should be equal to at least 100% on an on-going basis. “Available stable funding”
is defined as the portion of capital and liabilities expected to be reliable over the time horizon considered
by the NSFR, which extends to one year. The amount of such stable funding required of a specific
institution is a function of the liquidity characteristics and residual maturities of the various assets held by
that institution as well as those of its off-balance sheet (OBS) exposures.

 RBI has proposed that Banks maintain minimum 100% Net Stable Funding Ratio under Basel-III
guidelines to have access to stable sources of funding on a continued basis. Banks will have to maintain a
Net Stable Funding Ratio (NSFR) from January 2018. Banks are required to meet the NSFR requirement
on an ongoing basis and should have the required systems in place for such calculation and monitoring.
The NSFR as at the end of each quarter, starting from December 2017 should be reported to RBI within 15
days from the end of the quarter.
 Mid-sized banks will now be rushing to mobilize more retail deposits and increase liquidity to meet the
Liquidity Coverage Ratio (LCR) requirement prescribed by RBI. The main objective of LCR is to promote
short-term resilience of a bank's liquidity risk profile by ensuring that it has sufficient high-quality liquid
assets to survive a significant stress scenario lasting 30 days. Obviously, the implementation will be a
challenge. All Banks will have to structurally increase their liquidity base, both on the asset and liability
side. In the short term, Banks will maximize their SLR (Statutory Liquidity Ratio) in the held-to-maturity
portfolio as it is a price protection against higher interest rates.

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 Enhancement in loss absorption capacity of capital of internationally active banks - A “write off
clause” is proposed to be introduced in all non-common Tier I and Tier II instruments issued by
internationally active banks. The main purpose of the contingent capital clause is to ensure that holders of
capital bear the loss in a stress scenario before public money is infused and are not its (public funds)
beneficiaries and to reduce the possibility of public support for a bank under stress.
Indian Bank’s CRAR
CRAR
Particulars
31/03/2016 31/03/2017 30/09/2017
CET 1 11.68% Rs. 15532 11.82% Rs. 15536 11.30 %
Tier I 12.08% Rs. 16032 12.20% Rs. 16036 11.66 %
Tier II 01.12% Rs. 1898 1.44% Rs. 2059 1.50 %
Total CRAR 13.20% Rs. 17930 13.64% Rs. 18095 13.16%
Risk Weighted assets Rs. 131436 Rs. 137511
Stock Audit:
Threshold limits
Individual – Rs. 1 Crore
Pvt Ltd Co. - Rs. 2 Crore and above
Public Ltd Co – Rs. 5 Crore and above
Public Sector undertakings – Exempted
NPA a/cs – WC of Rs. 1 Crore and above
Contractors – Rs. 5 Crore and above
Consortuium / Multiple Banking – Leader
AA & above, rating < 12 months – once in 2 years, gap should not > 27 months
Credit Audit
Standard borrowal a/cs with
Rating of BBB – Rs. 5 Cr
Below BBB – Rs.1 Cr

Legal Audit

For all loans of Rs. 1 Cr & above, where mortgage of property offered as security at the time of sanction
For limits of Rs. 5 Crore and above – once in 3 years
Pre-release Audit
Pre-release Audit >= Rs. 50 Lakhs
Wherever concurrent auditor certifies compliance, pre-release audit need not be conducted
Valuation
• 2 valuations are to be obtained in case of PSLPs of more than Rs.1cr and incase of all other loans
Rs. 5 crs including SLP-MSME
• Average of 2 valuations to be taken. If variation > 15 % get 3 rd Valuation
• Revaluation has to be done once in 3 years in case of Home loan > Rs.1.00 crores and above for
standard accounts & all SMA/NPA Home Loans
Forensic Audit
Forensic Audit is an examination and evaluation of a firm’s or individual’s financial information for using as an
evidence in a court. A forensic audit can be conducted in order to prosecute a party for fraud, embezzlement or
219
other financial claims. In addition, an audit may be conducted to determine negligence or even to determine
how much spousal or child support an individual has to pay. Forensic Auditing is a specialization within the
field of auditing. Therefore, Forensic Auditing can be defined as the application of auditing skills to situations
that have legal consequences. Forensic auditors often provide expert testimony during trial proceedings in the
courts. Forensic auditing also refers to investigation of a fraud or presumptive fraud with a view to gathering
evidence that could be presented in the court of law. Most large audit and accounting firms have a forensic
department. Forensic Auditing can be used either by a corporate management or by statutory or other auditors
to carry out general reviews of activities to highlight risks arising either out of fraud or from any other source
with the purpose of initiating focused reviews of particular areas, targeting specific threats to the organization.
The objective of the forensic audit is to find whether or not a fraud has taken place in the financial affairs of an
organization. It involves examination of voluminous records and witnesses as permitted by law. Proper
documentation is vital in substantiating the findings. The outcome shall focus on the following in case of frauds:
 Proving the loss and the quantum of loss
 Proving the responsibility for the loss
 Proving the method / motive
 Establishing guilt of person / persons
 Identifying other beneficiaries
What is risk in bank?
Risk can be defined as the potential loss from a banking transaction, which a Bank can suffer due to variety of
reasons.
Can we stop the risk aspects in bank or we should stop banking?
Risk is inherent to any kind of business and so in banking business. So long as we will be doing banking
business risk is a part of it. Again, risk cannot be eradicated completely. It can be mitigated through different
tools.
Then what are the tools for the risk control?
Tools for risk control are -
1. Diversification of the business
2. Insurance and hedging
3. Fixation of exposure ceiling
4. Transfer of risk to another party at right time
5. Securitisation and reconstruction
What is risk management?
Risk management is a process through different functions such as Risk identification or naming, risk
measurement, evaluation or quantification, risk control or risk mitigation and lastly monitoring and reviewing of
risk.
What are the different types of risk in banks?
During the process of banking business, Banks are exposed to different types of risk such as credit risk,
market risk, operational risk, liquidity risk, strategy risk, reputational risk etc.
What is the difference between interest rate risk and market risk?
Interest rate risk is a component of market risk. The other components of market risks are foreign exchange
risk, equity risk and commodity risk.
What is Basis risk?

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The interest rates on different assets or liabilities may change in different magnitude which is called basis risk.
For example in a declining interest rate scenario, the rate of interest on assets may be declining in a different
magnitude than the interest rate on the corresponding liability, which may create variation in interest income.
What are the other names of market risk and credit risk?
Market risk is also known as price risk and the other name of credit risk is default risk.
What is the objective of Credit risk policy of our bank?
Adhering to the guidelines/policies related to credit risk management, as enunciated in the Bank‘s internal
guidelines and issued by Reserve Bank of India.
To ensure that the operations are in line with the expectations of the management and the strategies of the top
management are translated into meaningful directions to the operating level.
What is the objective of operational risk policy of our bank?
The objective of operational risk management is reduction of operational losses by adopting various risk
mitigating strategies and to enhance stakeholder value by improving Bank’s competitive advantage.
What is strategy risk?
It arises on account of adverse business decision, improper implementation of decisions etc.
What is reputational risk?
It is the risk that arises from negative public opinion. It can expose an Institution to litigation, financial loss or
decline in customer.
What is operational risk?
It is the risk that arises due to failed internal processes, people or systems or from external events.
What is liquidity risk?
Risk arises when the banks are unable to generate cash to cope with the decline in deposits or increase in
assets

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 ImportantBanking/EconomicTerms

Account Agreement: The contract governing your open-end credit account, it

provides information on changes that may occur to the account.
Account History: The payment history of an account over a specific period of time,
including the number of times the account was past due or over limit.
Account Holder: Any and all persons designated and authorized to transact business
on behalf of an account. Each account holder's signature needs to be on file with the
bank. The signature authorizes that person to conduct business on behalf of the
account.
Acquiring Bank: In a merger, the bank that absorbs the bank acquired.
Accrued interest: Interest due from issue date or from the last coupon payment date to
the settlement date. Accrued interest on bonds must be added to their purchase price.
Adjustable-Rate Mortgages (ARMS): Also known as variable-rate mortgages. The
initial interest rate is usually below that of conventional fixed-rate loans. The interest
rate may change over the life of the loan as market conditions change. There is
typically a maximum (or ceiling) and a minimum (or floor) defined in the loan
agreement. If interest rates rise, so does the loan payment. If interest rates fall, the
loan payment may as well.
Arbitrage: Buying a financial instrument in one market in order to sell the same
instrument at a higher price in another market.
Adverse Action: Under the Equal Credit Opportunity Act, a creditor's refusal to grant
credit on the terms requested, termination of an existing account, or an unfavorable
change in an existing account.
Adverse Action Notice: The notice required by the Equal Credit Opportunity Act
advising a credit applicant or existing debtor of the denial of their request for credit or
advising of a change in terms considered unfavorable to the account holder.
AER: Annual earnings rate on an investment.
Affidavit: A sworn statement in writing before a proper official, such as a notary public.
Alteration: Any change involving an erasure or rewriting in the date, amount, or payee
of a check or other negotiable instrument.
Amortization: The process of reducing debt through regular installment payments of
principal and interest that will result in the payoff of a loan at its maturity.
Annual Percentage Rate (APR): The cost of credit on a yearly basis, expressed as a
percentage.
Annual Percentage Yield (APY): A percentage rate reflecting the total amount of
interest paid on a deposit account based on the interest rate and the frequency of
compounding for a 365-day year.
Annuity : A life insurance product which pays income over the course of a set period.
Deferred annuities allow assets to grow before the income is received and immediate
annuities (usually taken from a year after purchase) allow payments to start from about
a year after purchase.
APR: The annual percentage rate of interest, usually on a loan or mortgage, usually
displayed in brackets and representing the true cost of the loan or mortgage as it
shows any additional payments beyond the interest rate.
Application: Under the Equal Credit Opportunity Act (ECOA), an oral or written
request for an extension of credit that is made in accordance with the procedures
established by a creditor for the type of credit requested.
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Appraisal: The act of evaluating and setting the value of a specific piece of personal or
real property.
Ask Price: The lowest price at which a dealer is willing to sell a given security.
Asset-Backed Securities (ABS): A type of security that is backed by a pool of bank
loans, leases, and other assets. Most ABS are backed by auto loans and credit cards –
these issues are very similar to mortgage-backed securities.
At-the-money: The exercise price of a derivative that is closest to the market price of
the underlying instrument.
Automatic Bill Payment: A checkless system for paying recurring bills with one
authorization statement to a financial institution. For example, the customer would only
have to provide one authorization form/letter/document to pay the cable bill each
month. The necessary debits and credits are made through an Automated Clearing
House (ACH).
Availability Date: Bank's policy as to when funds deposited into an account will be
available for withdrawal.
Availability Policy: Bank's policy as to when funds deposited into an account will be
available for withdrawal.
Balance of trade: The difference in value between a country’s imports and exports, over a
period of time.
Brick & Mortar Banking: Brick and Mortar Banking refers to traditional system of
banking done only in a fixed branch premises made of brick and mortar. Now there are
banking channels like ATM, Internet Banking, tele banking etc.
Business of Banking : Accepting deposits, borrowing money, lending money,
investing, dealing in bills, dealing in Foreign Exchange, Hiring Lockers, Opening Safe
Custody Accounts, Issuing Letters of Credit, Travelers’ Cheques, doing Mutual Fund
business, Insurance Business, acting as Trustee or doing any other business which
Central Government may notify in the official Gazette.
Basis Point: One hundredth of 1%. A measure normally used in the statement of
interest rate e.g., a change from 5.75% to 5.81% is a change of 6 basis points. Bear
Markets: Unfavorable markets associated with falling prices and investor pessimism.
Bid-ask Spread: The difference between a dealers’s bid and ask price.
Bid Price: The highest price offered by a dealer to purchase a given security.
Blue Chips: Blue chips are unsurpassed in quality and have a long and stable record
of earnings and dividends. They are issued by large and well-established firms that
have impeccable financial credentials.
Bond: Publicly traded long-term debt securities, issued by corporations and
governments, whereby the issuer agrees to pay a fixed amount of interest over a
specified period of time and to repay a fixed amount of principal at maturity.
Book Value: The amount of stockholders’ equity in a firm equals the amount of the
firm’s assets minus the firm’s liabilities and preferred stock.
Bretton woods Agreement: An agreement (reached in Bretton Woods, New Hampshire in
1944) on the basis of which the structure of the international monetary system was designed
after the 2nd world war and set up the IMF and the World Bank. It was agreed that the
exchange rates of IMF members would be pegged to the US Dollar, with a maximum variation
of 1% either side of the agreed rate.
Broker: Individuals licensed by stock exchanges to enable investors to buy and sell
securities.
Brokerage Fee: The commission charged by a broker.
Bull Markets: Favorable markets associated with rising prices and investor optimism.

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Business cycle: The long-run pattern of economic growth and recession. A Kitchin cycle
lasted 39 months. The Juglar cycle lasts 8—9 years. The 20-year Kuznets cycle, was allegedly
driven by house-building. The Kondratieff wave lasted for 50 years.
Buyer’s market: A market in which supply is more than demand and prices are low (it is
opposite of a seller’s market).
Call Option: The right to buy the underlying securities at a specified exercise price on
or before a specified expiration date.
Callable Bonds: Bonds that give the issuer the right to redeem the bonds before their
stated maturity.
Cannibalise: A situation where companies come out with new products that compete with
their existing products. The new products may eat into (cannibalise) their existing business. In
the present day’s innovative and technology-intensive economy, cannibalising is seen as a
good strategy.
Capital flight: A situation when capital flows rapidly out of a country, as investors might have
lost confidence in its economy. This is often associated with a sharp fall in the Exchange Rate
of the abandoned country’s currency.
Capital Gain: The amount by which the proceeds from the sale of a capital asset
exceed its original purchase price.
Capital Markets: The market in which long-term securities such as stocks and bonds
are bought and sold.
Centrally planned economy: An economic system in which the production, pricing and
distribution of goods and services are determined by the government rather than market
forces. It is also referred to as a “non market economy.” Former Soviet Union, China, and most
other communist nations are examples of centrally planed economy.
Closed economy: An economy that does not take part in international trade (opposite of
OPEN CONOMY).
Closed-end (Mutual) Fund: A fund with a fixed number of shares issued, and all
trading is done between investors in the open market. The share prices are determined
by market prices instead of their net asset value.
Command economy: When a Government controls all aspects of economic activity.
Commercial Paper: Short-term and unsecured promissory notes issued by
corporations with very high credit standings.
Common Stock: Equity investment representing ownership in a corporation; each
share represents a fractional ownership interest in the firm.
Contract Note: A note which must accompany every security transaction which
contains information such as the dealer’s name (whether he is acting as principal or
agent) and the date of contract.
Contagion: The domino effect, such as, when economic problems in one country spread to
another.
Consumer Protection Act: It is implemented from 1987 to enforce consumer rights
through a simple legal procedure. Banks also are covered under the Act. A consumer
can file complaint for deficiency of service with Consumer District Forum for amounts
upto Rs.20 Lacs in District Court, and for amounts above Rs.20 Lacs to Rs.1 Crore in
State Commission and for amounts above Rs.1 Crore in National Commission.
Controlling Shareholder: Any person who is, or group of persons who together are,
entitled to exercise or control the exercise of a certain amount of shares in a company
at a level (which differs by jurisdiction) that triggers a mandatory general offer, or more
of the voting power at general meetings of the issuer, or who is or are in a position to
control the composition of a majority of the board of directors of the issuer.

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Convertible Bond: A bond with an option, allowing the bondholder to exchange the
bond for a specified number of shares of common stock in the firm. A conversion price
is the specified value of the shares for which the bond may be exchanged. The
conversion premium is the excess of the bond’s value over the conversion price.
Corporate Bond: Long-term debt issued by private corporations.
Cost-Push Inflation : A situation of general rise in prices in which costs (payment made to
factors owners) increase faster than productivity or efficiency (familiar examples, wage-push
and profit-push inflation).
Coupon: The feature on a bond that defines the amount of annual interest income.
Coupon Frequency: The number of coupon payments per year.
Coupon Rate: The annual rate of interest on the bond’s face value that a bond’s issuer
promises to pay the bondholder. It is the bond’s interest payment per dollar of par
value.
Covered Warrants: Derivative call warrants on shares which have been separately
deposited by the issuer so that they are available for delivery upon exercise.
Crony capitalism: An approach to business in which the companies give favours to their
associate companies.
Currency board: A method by which a country tries to defend its currency from speculative
attack. Such country commits itself to converting its domestic currency on demand at a fixed
exchange rate.
Currency peg: When a Government announces that the exchange rate of its currency is fixed
against another currency or currencies.
Credit Rating: An assessment of the likelihood of an individual or business being able
to meet its financial obligations. Credit ratings are provided by credit agencies or rating
agencies to verify the financial strength of the issuer for investors.
Current account: Part of a nation’s balance of payments which includes the value of all goods
and services imported and exported, as well as the payment and receipt of dividends and
interest.
Currency Board: A monetary system in which the monetary base is fully backed by
foreign reserves. Any changes in the size of the monetary base have to be fully
matched by corresponding changes in the foreign reserves.
Current Yield: A return measure that indicates the amount of current income a bond
provides relative to its market price. It is shown as: Coupon Rate divided by Price
multiplied by 100%.
Custody of Securities: Registration of securities in the name of the person to whom a
bank is accountable, or in the name of the bank’s nominee; plus deposition of
securities in a designated account with the bank’s bankers or with any other institution
providing custodial services.
Demand-Pull Inflation: A state of rising prices brought about by increase in aggregate
demand in the face of short supply.
Depression: A phase of the business cycle in which economic activity is at a low ebb and
there is unemployment/under employment of resources; prices, profits, consumption and rate
of capital investment are also at a low level.
Deregulation: The process of removing legal or quasi-legal restrictions on the competition.
Devaluation: A deliberate act of Government policy, to sharply reduce the exchange rate of
their currency to improve the export competitiveness. India had done it in the year 1991.
Derivative Call (Put) Warrants: Warrants issued by a third party which grant the
holder the right to buy (sell) the shares of a listed company at a specified price.
Derivative Instrument: Financial instrument whose value depends on the value of
another asset.
Deflation: A situation of fall in prices (negative inflation).
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Discount Bond: A bond selling below par, as interest in-lieu to the bondholders.
Disinflation: A fall in the rate of inflation. This means a slower increase in prices but not a fall
in prices.
Drag: A situation where the revenue from taxation rises as a share of GDP, in a growing
economy. It is an automatic stabiliser, which acts naturally to keep demand stable.
Earnings: The total profits of a company after taxation and interest.
Earnings per Share (EPS): The amount of annual earnings available to common
stockholders as stated on a per share basis.
Earnings Yield: The ratio of earnings to price (E/P). The reciprocal is price earnings
ratio (P/E).
E-Banking : E-Banking or electronic banking is a form of banking where funds are
transferred through exchange of electronic signals between banks and financial
institution and customers ATMs, Credit Cards, Debit Cards, International Cards,
Internet Banking and new fund transfer devices like SWIFT, RTGS belong to this
category.
EFT - (Electronic Fund Transfer): EFT is a device to facilitate automatic transmission
and processing of messages as well as funds from one bank branch to another bank
branch and even from one branch of a bank to a branch of another bank. EFT allows
transfer of funds electronically with debit and credit to relative accounts.
Economic Goods: Scarce goods which command a price. It is opposite of free goods.
Electronic Commerce (E-Commerce): E-Commerce is the paperless commerce
where the exchange of business takes place by Electronic means.
Endorsement: When a Negotiable Instrument contains, on the back of the instrument
an endorsement, signed by the holder or payee of an order instrument, transferring the
title to the other person, it is called endorsement.
Endorsement in Full: Where the name of the endorsee or transferee appears on the
instrument while making endorsement.
Equity: Ownership of the company in the form of shares of common stock.
Equity Call Warrants: Warrants issued by a company which give the holder the right
to acquire new shares in that company at a specified price and for a specified period of
time.
Ex-dividend (XD): A security which no longer carries the right to the most recently
declared dividend or the period of time between the announcement of the dividend and
the payment (usually two days before the record date). For transactions during the ex-
dividend period, the seller will receive the dividend, not the buyer. Ex-dividend status is
usually indicated in newspapers with an (x) next to the stock’s or unit trust’s name.
Face Value/ Nominal Value: The value of a financial instrument as stated on the
instrument. Interest is calculated on face/nominal value.
Fiscal neutrality: When the net effect of taxation and public spending is neutral, neither
stimulating nor dampening the demand. A balanced budget is neutral, as total tax revenue
equals total public spending
Fixed-income Securities: Investment vehicles that offer a fixed periodic return.
Fixed Rate Bonds: Bonds bearing fixed interest payments until maturity date.
Floating Rate Bonds: Bonds bearing interest payments that are tied to current interest
rates.
Factoring: Business of buying trade debts at a discount and making a profit when debt
is realized and also taking over collection of trade debts at agreed prices.
Forfeiting: In International Trade when an exporter finds it difficult to realize money
from the importer, he sells the right to receive money at a discount to a forfaiter, who

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undertakes inherent political and commercial risks to finance the exporter, of course
with assumption of a profit in the venture.
Forgery: when a material alteration is made on a document or a Negotiable Instrument
like a cheque, to change the mandate of the drawer, with intention to defraud.
Free Goods: Goods with zero market prices. It is opposite of economic goods.
Fundamental Analysis: Research to predict stock value that focuses on such
determinants as earnings and dividends prospects, expectations for future interest
rates and risk evaluation of the firm.
Future Value: The amount to which a current deposit will grow over a period of time
when it is placed in an account paying compound interest.
Future Value of an Annuity: The amount to which a stream of equal cash flows that
occur in equal intervals will grow over a period of time when it is placed in an account
paying compound interest.
Futures Contract: A commitment to deliver a certain amount of some specified item at
some specified date in the future.
Garnishee Order: When a Court directs a bank to attach the funds to the credit of
customer's account under provisions of Section 60 of the Code of Civil Procedure,
1908.
General Lien: A right of the creditors to retain possession of all goods given in security
to him by the debtor for any outstanding debt.
Gold standard: 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. Up to 1914, most
of the world’s leading currencies had their exchange rate determined by the gold standard.
After the 2nd world war, a limited form of gold standard continued but only directly applied to
the US Dollar; other major currencies had their exchange rates fixed to the Dollar under the
Bretton Woods Agreement.
Guarantee: A contract between guarantor and beneficiary to ensure performance of a
promise or discharge the liability of a third person. If promise is broken or not
performed, the guarantor pays contracted amount to the beneficiary.
Hard currency: It is a currency which is expected to retain its value, or even benefit from
appreciation (say US dollar), against softer currencies. This makes it a popular choice for
people involved in international transactions.
Hot money: The 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.
Hedge: A combination of two or more securities into a single investment position for
the purpose of reducing or eliminating risk.
Hyper Inflation: A situation in which general prices are rising sharply with no or little increases
in output, also called ‘runway’ or ‘galloping inflation’.
Identification: When a person provides a document to a bank or is being identified by
a person, who is known to the bank, it is called identification. Banks ask for
identification before paying an order cheque or a demand draft across the counter.
Indemnifier: When a person indemnifies or guarantees to make good any loss caused
to the lender from his actions or others' actions.
Indemnity: Indemnity is a bond where the indemnifier undertakes to reimburse the
beneficiary from any loss arising due to his actions or third party actions.
Index Fund: A mutual fund that holds shares in proportion to their representation in a
market index, such as the S&P 500.

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Inflation : Rise in the general or average price level of goods and services; consequently, a
decline in the value of money (typically doubling of the general price level means halving the
value of money).
Inside Information: Non-public knowledge about a company possessed by its officers,
major owners, or other individuals with privileged access to information.
Insider Trading: The illegal use of non-public information about a company to make
profitable securities transactions
Insolvent: Insolvent is a person who is unable to pay his debts as they mature, as his
liabilities are more than the assets . Civil Courts declare such persons insolvent. Banks
do not open accounts of insolvent persons as they cannot enter into contract as per
law.
Interest Warrant: When cheque is given by a company or an organization in payment
of interest on deposit , it is called interest warrant. Interest warrant has all the
characteristics of a cheque.
International Banking: involves more than two nations or countries. If an Indian Bank
has branches in different countries like State Bank of India, it is said to do International
Banking.
Intrinsic Value: The difference of the exercise price over the market price of the
underlying asset.
Investment: A vehicle for funds expected to increase its value and/or generate positive
returns.
Investment Adviser: A person who carries on a business which provides investment
advice with respect to securities and is registered with the relevant regulator as an
investment adviser.
Junk Bond: High-risk securities that have received low ratings (i.e. Standard & Poor’s
BBB rating or below; or Moody’s BBB rating or below) and as such, produce high
yields, so long as they do not go into default.
Kiosk Banking: Doing banking from a cubicle from which food, newspapers, tickets
etc. are also sold.
Lease Financing: Financing for the business of renting houses or lands for a specified
period of time and also hiring out of an asset for the duration of its economic life.
Leasing of a car or heavy machinery for a specific period at specific price is an
example.
Letter of Credit: A document issued by importers bank to its branch or agent abroad
authorizing the payment of a specified sum to a person named in Letter of Credit
(usually exporter from abroad). Letters of Credit are covered by rules framed under
Uniform Customs and Practices of Documentary Credits framed by International
Chamber of Commerce in Paris.
Limited Companies Accounts: Accounts of companies incorporated under the
Companies Act, 1956 . A company may be private or public. Liability of the
shareholders of a company is generally limited to the face value of shares held by
them.
Leverage Ratio: Financial ratios that measure the amount of debt being used to
support operations and the ability of the firm to service its debt.
Libor: The London Interbank Offered Rate (or LIBOR) is a daily reference rate based
on the interest rates at which banks offer to lend unsecured funds to other banks in the
London wholesale money market (or interbank market). The LIBOR rate is published
daily by the British Banker’s Association and will be slightly higher than the London
Interbank Bid Rate (LIBID), the rate at which banks are prepared to accept deposits.
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Limit Order: An order to buy (sell) securities which specifies the highest (lowest) price
at which the order is to be transacted.
Limited Company: The passive investors in a partnership, who supply most of the
capital and have liability limited to the amount of their capital contributions.
Liquidity: The ability to convert an investment into cash quickly and with little or no
loss in value.
Listing: Quotation of the Initial Public Offering company’s shares on the stock
exchange for public trading.
Listing Date: The date on which Initial Public Offering stocks are first traded on the
stock exchange by the public
Macroeconomics: The branch of economics that considers the relationships among broad
economic aggregates such as national income, total volumes of saving, investment,
consumption expenditure, employment, and money supply. It is also concerned with
determinants of the magnitudes of these aggregates and their rates of change over time.
Market Economy: Economic system in which the central problems of an economy (what, how
and for whom) are decided by the operation of free market forces of supply and demand.
Margin Call: A notice to a client that it must provide money to satisfy a minimum
margin requirement set by an Exchange or by a bank / broking firm.
Market Capitalization: The product of the number of the company’s outstanding
ordinary shares and the market price of each share.
Market Maker: A dealer who maintains an inventory in one or more stocks and
undertakes to make continuous two-sided quotes.
Market Order: An order to buy or an order to sell securities which is to be executed at
the prevailing market price.
Marginal Standing Facility Rate: MSF scheme has become effective from 09th May,
2011 launched by the RBI. Under this scheme, Banks will be able to borrow upto 1% of
their respective Net Demand and Time Liabilities. The rate of interest on the amount
accessed from this facility will be 100 basis points (i.e. 1%) above the repo rate. This
scheme is likely to reduce volatility in the overnight rates and improve monetary
transmission.
Mandate: Written authority issued by a customer to another person to act on his
behalf, to sign cheques or to operate a bank account.
Material Alteration: Alteration in an instrument so as to alter the character of an
instrument for example when date, amount, name of the payee are altered or making a
cheque payable to bearer from an order one or opening the crossing on a cheque.
Mixed Economy : An economy in which both the State and the private sector co-exit;
decisions on what how and for whom are made partially by the market and by the State or any
other public authority. Many consider it essentially a transitory form.
Microeconomics: The branch of economics concerned with individual decision units (firms
and households) and the way in which their decisions interact to determine relative prices of
goods and factors of production and how much of these will be bought and sold. The market is
the central concept in microeconomics.
Money Market: Market in which short-term securities are bought and sold.
Merchant Banking : When a bank provides to a customer various types of financial
services like accepting bills arising out of trade, arranging and providing underwriting,
new issues, providing advice, information or assistance on starting new business,
acquisitions, mergers and foreign exchange.
Micro Finance: Micro Finance aims at alleviation of poverty and empowerment of
weaker sections in India. In micro finance, very small amounts are given as credit to

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poor in rural, semi-urban and urban areas to enable them to raise their income levels
and improve living standards.
Money Laundering: When a customer uses banking channels to cover up his
suspicious and unlawful financial activities, it is called money laundering.
Money Market: Money market is not an organized market like Bombay Stock
Exchange but is an informal network of banks, financial institutions who deal in money
market instruments of short term like CP, CD and Treasury bills of Government.
Moratorium: R.B.I. imposes moratorium on operations of a bank; if the affairs of the
bank are not conducted as per banking norms. After moratorium R.B.I. and
Government explore the options of safeguarding the interests of depositors by way of
change in management, amalgamation or take over or by other means.
Mortgage: Transfer of an interest in specific immovable property for the purpose of
offering a security for taking a loan or advance from another. It may be existing or
future debt or performance of an agreement which may create monetary obligation for
the transferor (mortgagor).
Mutual Fund: A company that invests in and professionally manages a diversified
portfolio of securities and sells shares of the portfolio to investors.
Negotiation: In the context of banking, negotiation means an act of transferring or
assigning a money instrument from one person to another person in the course of
business.
Net Asset Value: The underlying value of a share of stock in a particular mutual fund;
also used with preferred stock.
Normal Goods: Goods, the consumption of which increases with rise in income; also called
superior goods (as against inferior goods).
Notary Public: A Lawyer who is authorized by Government to certify copies of
documents.
Normative economics: It is form of economics that tries to change the world, by suggesting
policies for increasing economic welfare. It is the opposite of positive economics, which tries to
describe the world as it is, rather than prescribe ways to make it better.
Offer for Sale: An offer to the public by, or on behalf of, the holders of securities
already in issue.
Offer for Subscription: The offer of new securities to the public by the issuer or by
someone on behalf of the issuer.
Online Banking: Banking through internet site of the bank which is made interactive.
Open economy: An economy that encourages foreign trade and has extensive financial and
non-financial contacts with the rest of the world in areas such as education, culture, and
technology.
Open-end (Mutual) Fund: There is no limit to the number of shares the fund can
issue. The fund issues new shares of stock and fills the purchase order with those new
shares. Investors buy their shares from, and sell them back to, the mutual fund itself.
The share prices are determined by their net asset value.
Open Offer: An offer to current holders of securities to subscribe for securities whether
or not in proportion to their existing holdings.
Option: A security that gives the holder the right to buy or sell a certain amount of an
underlying financial asset at a specified price for a specified period of time.
Par Bond: A bond selling at par (i.e. at its face value).
Par Value: The face value of a security.
Perpetual Bonds: Bonds which have no maturity date.

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Placing: Obtaining subscriptions for, or the sale of, primary market, where the new
securities of issuing companies are initially sold.
Planned Economy: Economic system in which basic decisions in an economy are made
according to a plan.
Personal Identification Number (PIN): Personal Identification Number is a number
which an ATM card holder has to key in before he is authorized to do any banking
transaction in a ATM .
Plastic Money: Credit Cards, Debit Cards, ATM Cards and International Cards are
considered plastic money as like money they can enable us to get goods and services.
Pledge: A bailment of goods as security for payment of a debt or performance of a
promise, e.g pledge of stock by a borrower to a banker for a credit limit. Pledge can be
made in movable goods only.
Political economy: It is an attempt to merge economic analysis with practical politics (to view
economic activity in its political context). Much of classical economics was political economy.
Political economy is increasingly being recognized as necessary for any realistic examination
of development problems.
Portfolio: A collection of investment vehicles assembled to meet one or more
investment goals.
Positive Economics : Economics which deals with ‘what is’ instead of ‘what ought to be’.
Positive statement can be verified through facts in contrast to ‘normative’ statements, which
involve value judgments. It is the opposite of Normative Economics, which suggests policies
for increasing economic welfare.
Poverty line: A level of income below which people are deemed poor. It facilitates comparison
of how many poor people are there in different countries. It is only a crude estimate, because
the line does not recognize differences in the buying power of money in different countries.
Further it does not recognize other aspects of poverty than the material or income poverty.
Preference Shares: A corporate security that pays a fixed dividend each period. It is
senior to ordinary shares but junior to bonds in its claims on corporate income and
assets in case of bankruptcy.
Premium (Warrants): The difference of the market price of a warrant over its intrinsic
value.
Premium Bond: Bond selling above par.
Present Value: The amount to which a future deposit will discount back to present
when it is depreciated in an account paying compound interest.
Present Value of an Annuity: The amount to which a stream of equal cash flows that
occur in equal intervals will discount back to present when it is depreciated in an
account paying compound interest.
Price/Earnings Ratio (P/E): The measure to determine how the market is pricing the
company’s common stock. The price/earnings (P/E) ratio relates the company’s
earnings per share (EPS) to the market price of its stock.
Prospectus: A detailed report published by the Initial Public Offering company, which
includes all terms and conditions, application procedures, IPO prices etc, for the IPO
Put Option: The right to sell the underlying securities at a specified exercise price on
of before a specified expiration date.
Provisioning: Provisioning is made for the likely loss in the profit and loss account
while finalizing accounts of banks. All banks are supposed to make assets
classification and make appropriate provisions for likely losses in their balance sheets.
Rate of Return: A percentage showing the amount of investment gain or loss against
the initial investment.

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Real Income: Purchasing power of money income; quantity of real goods and services that
money income can buy (as against money income).
Real exchange rate: An exchange rate that has been adjusted to take account of any
difference in the rate of inflation in the two countries whose currency is being exchanged.
Recession: Down swing of business activity in a trade cycle. Income prices, profits and
employment are falling during this phase of the trade cycle.
Reserve currency: A foreign currency held by a Government or Central Bank as part of a
country’s reserves. US dollar is a widely used reserve currency.
Real Interest Rate: The net interest rate over the inflation rate. The growth rate of
purchasing power derived from an investment.
Redemption Value: The value of a bond when redeemed.
Re-flation: Policies to pump up demand and thus boost the level of economic activity. Such
policies can result in higher inflation also.
Reinvestment Value: The rate at which an investor assumes interest payments made
on a bond which can be reinvested over the life of that security.
Relative Strength Index (RSI): A stock’s price that changes over a period of time
relative to that of a market index such as the Standard & Poor’s 500, usually measured
on a scale from 1 to 100, 1 being the worst and 100 being the best.
Repurchase Agreement: An arrangement in which a security is sold and later bought
back at an agreed price and time.
Resistance Level: A price at which sellers consistently outnumber buyers, preventing
further price rises.
Return: Amount of investment gain or loss.
Rescheduling of Payment: Rearranging the repayment of a debt over a longer period
than originally agreed upon due to financial difficulties of the borrower.
Restrictive Endorsement: Where endorser desires that instrument is to be paid to
particular person only, he restricts further negotiation or transfer by such words as "Pay
to Ashok only". Now Ashok cannot negotiate the instrument further.
Right of Appropriation: As per Section 59 of the Indian Contract Act, 1972 while
making the payment, a debtor has the right to direct his creditor to appropriate such
amount against discharge of some particular debt. If the debtor does not do so, the
banker can appropriate the payment to any debt of his customer.
Right of Set-Off : When a banker combines two accounts in the name of the same
customer and adjusts the debit balance in one account with the credit balance in other
account, it is called right of set-off. For example, debit balance of Rs.50,000/- in
overdraft account can be set off against credit balance of Rs.75,000/- in the Savings
Bank Account of the same customer, leaving a balance of Rs.25,000/- credit in the
savings account.
Rights Issue: An offer by way of rights to current holders of securities that allows them
to subscribe for securities in proportion to their existing holdings.
Risk-Averse, Risk-Neutral, Risk-Taking:
Risk-averse describes an investor who requires greater return in exchange for greater
risk.
Risk-neutral describes an investor who does not require greater return in exchange for
greater risk.
Risk-taking describes an investor who will accept a lower return in exchange for
greater risk.
Senior Bond: A bond that has priority over other bonds in claiming assets and
dividends.

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Settlement: Conclusion of a securities transaction when a customer pays a
broker/dealer for securities purchased or delivered, securities sold, and receive from
the broker the proceeds of a sale.
Shadow price: It is defined as the true economic price of an activity. It can be calculated for
those goods and services that do not have a market price as the price is set by Government.
Shadow pricing is often used in Cost-benefit analysis, where the whole purpose of the analysis
is to capture all the variables involved in a decision, not merely those for which market prices
exist.
Short Hedge: A transaction that protects the value of an asset held by taking a short
position in a futures contract.
Short Position: Investors sell securities in the hope that they will decrease in value
and can be bought at a later date for profit.
Short Selling: The sale of borrowed securities, their eventual repurchase by the short
seller at a lower price and their return to the lender.
Soft currency: A currency that is expected to drop in value relative to other currencies
(opposite of Hard Currency).
Special Drawing Rights (SDRs) : Supplementary reserves with IMF in the form of universally
acceptable drawing rights allocated to members as quotas, to help finance balance of payment
deficits.
Speculation: The process of buying investment vehicles in which the future value and
level of expected earnings are highly uncertain.
Stagnation: A prolonged recession, but not as severe as a depression.
Stock Splits: Wholesale changes in the number of shares. For example, a two for one
split doubles the number of shares but does not change the share capital.
Subordinated Bond: An issue that ranks after secured debt, debenture, and other
bonds, and after some general creditors in its claim on assets and earnings. Owners of
this kind of bond stand last in line among creditors, but before equity holders, when an
issuer fails financially.
Substantial Shareholder: A person acquires an interest in relevant share capital
equal to, or exceeding, 10% of the share capital.
Support Level: A price at which buyers consistently outnumber sellers, preventing
further price falls.
Tax : A compulsory payment to govt. against which there is no quid pro quo.
Progressive Tax: Graduated tax system where, those in higher income slabs pay a higher
percentage as tax. These are direct taxes such as personal tax and corporate tax.
Regressive Tax: When tax is imposed without taking into account the payment capacity of tax
payer. These are indirect taxes such as excise duty, custom duty.
Tax Avoidance: Loopholes in tax laws used by tax payers to avoid taxes. (contrasted with tax
evasion).
Tax Evasion: Illegal escape from tax payment; black market incomes result from tax evasion.
Tax Incidence: Ultimate burden of tax.
Tax Shifting: Shifting of the burden or incidence of tax.
VAT: A form of indirect sales tax paid on products and services at each stage of production or
distribution, based on the value added at that stage and included in the cost to the ultimate
customer.
Ad-Valorem Duties: The taxes fixed as a certain percentage of the price of the product.
Countervailing duties: Duties (tariffs) that are imposed by a country to counteract subsidies
provided to a foreign producer.
Customs duty: Duty on import of certain goods. Unlike tariffs, customs duties are used mainly
as a means to raise revenue for the government rather than protecting domestic producers
from foreign competition.
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Indirect tax: A tax you do not pay directly, but which is passed on to you by an increase in
your expenses. For instance, a company might have to pay a fuel tax. The company pays the
tax but can increase the cost of its products so consumers are actually paying the tax indirectly
by paying more for the merchandise.
Tax arbitrage: Creating financial instruments or transactions that allow the parties involved to
exploit loopholes in or differences between their tax exposures, so that all involved pay less
tax.
Withholding tax: A tax that is collected at source, before the taxpayer has seen the income or
capital to
which the tax applies. It is imposed on interest and dividends.
Tariff: Custom duty or tax imposed on exports or imports.
Technical Analysis: A method of evaluating securities by relying on the assumption
that market data, such as charts of price, volume, and open interest, can help predict
future (usually short-term) market trends. Contrasted with fundamental analysis which
involves the study of financial accounts and other information about the company. (It is
an attempt to predict movements in security prices from their trading volume history.)
Time Horizon: The duration of time an investment is intended for.
Trade-weighted exchange rate: A country’s exchange rate with the currencies of its trading
partners weighted by the amount of trade done by the country in each currency.
Trading Rules: Stipulation of parameters for opening and intra-day quotations,
permissible spreads according to the prices of securities available for trading and
board lot sizes for each security.
Transfer pricing: The prices assumed, for the purposes of calculating tax liability, to have
been charged by one unit of a multinational company when selling to another (foreign) unit of
the same firm.
Trust Deed: A formal document that creates a trust. It states the purpose and terms of
the name of the trustees and beneficiaries.
Underwriting : is an agreement by the underwriter to buy on a fixed date and at a
fixed rate, the unsubscribed portion of shares or debentures or other issues.
Underwriter gets commission for this agreement.
Underlying Security: The security subject to being purchased or sold upon exercise
of the option contract.
Universal Banking : When Banks and Financial Institutions are allowed to undertake
all types of activities related to banking like acceptance of deposits, granting of
advances, investment, issue of credit cards, project finance, venture capital finance,
foreign exchange business, insurance etc. it is called Universal Banking.
Virtual Banking: Virtual banking is also called internet banking, through which
financial and banking services are accessed via internet's World Wide Web. It is called
virtual banking because an internet bank has no boundaries of brick and mortar and it
exists only on the internet.
Warrant: An option for a longer period of time giving the buyer the right to buy a
number of shares of common stock in company at a specified price for a specified
period of time.
Weightless economy: An economy with higher share of services and or goods carrying
higher value (like microprocessors, fine fibre-optic cables and transistors). It is dematerialised
economy, which is deemed not only lighter but also more efficient.
Wholesale Banking: Wholesale banking is different from Retail Banking as its focus is
on providing for financial needs of industry and institutional clients.

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Window Dressing: Financial adjustments made solely for the purpose of accounting
presentation, normally at the time of auditing of company accounts.
Yield (Internal rate of Return): The compound annual rate of return earned by an
investment
Yield to Maturity: The rate of return yield by a bond held to maturity when both
compound interest payments and the investor’s capital gain or loss on the security are
taken into account.
Zero Coupon Bond: A bond with no coupon that is sold at a deep discount from par
value.

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