The Complete Banking Awareness PDF

The Complete Banking Awareness PDF
Banking Awareness - Complete Guide
S. No Table of Contents Page No
1. Structure of Banking in India 7
2. History of Banking and Amalgamation 9
3. Nationalization of Banks 13
4. Reserve Bank of India 15
1. Roles and responsibilities
2. Functions
3. Subsidiaries
5. Monetary Policy 20
1. Objectives
2. Monetary policy Instruments
i) Qualitative
ii) Quantitative
3. Acts and Sections under RBI
4. Banking Regulation Act
6. Types of Accounts 30
1. Demand Deposits
2. Term Deposits
3. Non- Resident Deposits
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4. Other Accounts
7. Types of Banking 37
8. Payments Banks and Small Finance Banks 40
9. Non-Banking Financial Companies 45
1. Features
2. Types
3. NBFC Ombudsman
10. Development Banks 48
11. Financial Institutions 53
1. SEBI
2. IFCI
3. ECGC
4. International Finance Corporation
12. All India Financial Institutions
1. NABARD
2. SIDBI
3. Exim Bank
4. NHB
5. NaBFID
13. Rupee Denomination 60
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14. Assets and Liabilities 60
15. Financial Inclusion 65
i) BSBDA
ii) Lead Bank Scheme
iii) PMJDY
iv) Business Correspondents
v) Stand up India
16. Banking Ombudsman Scheme 70
17. KYC – Know Your Customer 73
1. Documents Required
2. Types
18. Small Savings Schemes 75
1. Public Provident Fund
2. Suganya SamridhiYojana
3. Senior Citizen Savings Scheme
4. National Savings Certificate
5. Kisan Vikas Patra
19. Negotiable Instruments 82
1. Promissory Notes
2. Cheque and its Types
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3. Bill of Exchange
4. Demand Draft
20. ATM and its types 92
21. Payment and Settlements system 95
1. Objectives
2. Types
22. NPCI and its Products 98
23. Basel Norms 102
24. Credit Rating Agencies 105
1. National
2. International
25. Financial Market 110
1. Money Market
2. Capital Market
26. Risks and its Types 115
27. Types of Money 117
28. Loans 118
1. Characteristics
2. Types
3. Reverse Mortgage Scheme
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29. Non-performing Assets 121
1. Causes
2. Impact
3. Types
30. Prompt Corrective Action 123
1. Causes
2. Impact
3. Recovery
31. SARFAESI Act 125
1. Features
2. Role and Objectives
3. Debt Recovery Tribunal
32. Asset Reconstruction Company 127
33. FDI and FPI 128
34. Priority Sector Lending 129
35. Numbers and Codes used in Banking 133
36. Technologies used in Banking 139
37. Schemes 142
38. Banks Amalgamation, Headquarters and Tagline 146
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39. Committees in Banking 150
40. Banking Abbreviations 153
41. Banking Terminologies 161
The Next Version of the file will be released as on 6th October 2022
Policy rates (based on 06.09.2022):
Policy rate Current rate
Repo rate 5.40%
Reverse repo rate 3.35%
CRR 4.50%
SLR 18.00%
MSF 5.65%
Bank rate 5.65%
Small Savings Scheme
Small Savings Scheme Annual Interest Rate
1.Public Provident Fund (PPF) 7.1 %
2.National Savings Certificate (NSC) 6.8 %
3.Kisan Vikas Patra (KVP) 6.9 %(124 months maturity)
4.Sukanya Samriddhi Account 7.6 %
5.Senior Citizen Savings Scheme 7.4 %
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1. Structure of Banking in India
A bank is a financial Institution that provides banking and other financial services to their customers. A Bank
provides fundamental banking services such as accepting deposits and providing loans.
The Structure of banking system of India can be broadly divided into scheduled banks, non-scheduled banks
and development banks. Reserve Bank of India is the central bank of the country and regulates the banking
system of India.
Scheduled Banks:
Banks that are included in the second schedule of the RBI Act, 1934 are considered to be scheduled
Banks.
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Commercial Banks:
It accepts deposits, offers loans, checking account services and offers basic financial products like
certificate of deposits (CDs) and savings accounts to Individuals and small businesses.
Eg: State Bank - Public sector
ICICI Bank - Private sector
Public Sector Banks:
The majority of the stake is held by government. After the amalgamation of banks, 12 public sector
banks are there at present.
Eg: State Bank of India
Private Sector Banks:
The majority stakes are owned by private stakeholders.
Eg: HDFC Bank, ICICI Bank
Foreign Banks:
A Bank that is headquartered outside the country but runs its offices as a private entity at any other
location outside the counter is called Foreign banks.
Eg: Citi Bank
Regional Rural Banks:
Regional Rural Banks were established to ensure sufficient institutional credit for agriculture and other
rural sectors. RRBs are owned by Government of India, the state government and Sponsor Banks.
Eg: Tamilnadu Grama Bank
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Stake:
1. Central Government – 50%
2. State Government – 15%
3. Sponsor Bank – 35%
● Recommendation – Narasimhan Committee.
● First RRB in India – Prathama Bank at Moradabad, Uttar Pradesh sponsored by syndicate Bank.
● Authorised capital – Rs. 5 crores
● RRBs can issue Certificate of Deposits
Cooperative Banks:
A Cooperative Bank is a financial entity that belongs to its members, who are also the owners as well
as the customers of their bank.
Development Banks:
Development Banks provide all types of financial assistance to business units, in the form of loans,
underwriting, investment and guarantee operations and economic development.
2. History of Banking in India
● Banking system commenced in India with the foundation of Bank of Hindustan in Calcutta in 1770
which ceased to operate in 1832.
● Presidency Banks
1. Bank of Bengal –1806
2. Bank of Bombay – 1840
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3. Bank of Madras – 1843
● In the year 1921, all the presidency banks were merged to form Imperial bank of India.
● July 1, 1955 – Imperial bank of India was nationalized and renamed as State Bank of India after the
recommenced of A. D. Gorwala Committee
● Associate banks of SBI.
i) State Bank of Bikaner and Jaipur
ii) State Bank of Mysore
iii) State Bank of Hyderabad
iv) State Bank of Travancore
v) State Bank of Indore
vi) State Bank of Saurashtra
vii) State Bank of Patiala
● In 2017, five associate banks of SBI are merged with State Bank of India
1) State Bank of Bikaner and Jaipur
2) State Bank of Mysore

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3) State Bank of Travancore
4) State Bank of Hyderabad
5) State Bank of Patiala
6) BharatiyaMahila Bank
● In October 2009, State Bank of Indore is merged with State Bank of India
First in India:
● First Bank Established in India – Bank of Hindustan, 1770.
● First Commercial Bank of India – Oudh Commercial Bank.
● First Bank managed by Indians – Punjab National Bank.
● First Indian Commercial bank wholly owned and managed by Indians – Central Bank of India
(1stSwadeshi Bank).
● India’s oldest Public sector bank – Allahabad Bank.
● 1st bank to introduce cheque system – Bengal Bank.
● 1st bank to introduce savings account in India – Presidency Bank.
● Largest Commercial bank in India – State Bank of India.
Banks Merger and Amalgamation:
Merger refers to the fusion amidst two or more organizations in which the identity of one gets lost that result
in a single organization. Whereas, Amalgamation means the blend of two or more companies into one
whereby all the companies involved lose their identity. It results in the formation of a separate legal identity.
Reasons for Amalgamation:
● It helps to lower the level of competition in the market.
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● To enlarge the market further without expanding the competition.
● The bank gains more assets by the assimilating resources of both banks.
● To have access to more capital despite investing less amount.
● Once two banks unite their customer base also becomes double
Amalgamated Banks:
Anchor Bank Merged Banks Headquarters
Bank of Baroda Vijaya Bank Vadodara, Gujarat
Dena Bank
Canara Bank Syndicate Bank Bengaluru, Karnataka
Punjab National Bank United Bank of India New Delhi
Oriental Bank of
Commerce
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Indian Bank Allahabad Bank Chennai, Tamil Nadu
Union Bank of India Andhra Bank Mumbai, Maharashtra
Corporation Bank
3. Nationalization of Banks
● Prior to 1969, all the banks in India were owned by private players. By the 1960s, the Indian Banking
Industry had become an important tool to enable the development of Indian Economy.
● In 1969, 14 banks were nationalized. They are,
1) Bank of Baroda
2) Allahabad Bank
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3) Canara Bank
4) Dena Bank
5) Bank of India
6) Bank of Maharashtra
7) Central Bank of India
8) Indian Bank
9) Indian Overseas Bank
10) UCO Bank
11) Union Bank
12) Punjab National Bank
13) Syndicate Bank
14) United Bank of India
● In 1980, the government took control of 6 banks.
1) Andhra Bank
2) Corporation Bank
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3) Punjab and Sind Bank
4) Oriental Bank of India
5) New Bank of India
6) Vijaya Bank
Objectives of Nationalization of Banks:
● Encouraging new entrepreneurs
● Address the rising economic crisis that occurred in the 1960s.
● Providing sufficient credit for agriculture, small industries and exports.
● Develop the backward areas within India.
● Professionalizing the management of the banking sector.
4. Reserve Bank of India
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Reserve Bank of India is the Central Bank of India is the Central Bank of India. It is a statutory body, responsible
for the printing of currency notes and managing the supply of money in the Indian Economy.
● Establishment: April 1, 1935
● Act: RBI Act 1934
● Nationalization: Jan 1, 1949
● Recommendation: Hilton Young Commission
● Headquarters: Mumbai
● Local Offices: 1) Chennai 2) Delhi 3) Kolkata 4) Mumbai
● First Governor: Osborne Smith
● First Indian Governor: C. D. Deshmukh
Roles:
1) Development of financial Institutions
2) Development of the Banking System
3) Facilitating Economic Growth
4) Bringing Economic Stability
5) Promotion of Commercial and Cooperative Banking
6) Promotion of Industrial Finance
7) Preparing Interest rate Structure
8) Promotion of Differential rate of Interest Scheme.
Functions:
1) The issuer of the currency
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2) Banker’s bank
3) Bankers to the Government
4) Monetary Authority
5) Acts as a Clearing House
6) Regulator of Economy
7) Regulator of Foreign Exchange
8) Controls credit in the Economy
9) Regulator and Supervisor of Expense and Settlement Structures
10) Impartial practices codes for Investors
11) Monitoring Non-Bank Financial organisations
12) Providing the authorization to banks and managing new branches
13) Execution of Deposit Insurance scheme.
Subsidiaries of RBI:
● Deposit Insurance and credit Guarantee Corporation of India (DICGC)
● Bharatiya Reserve Bank Note Mudran Pvt. Ltd (BRBNMPL)
● Reserve Bank Information Technology Pvt. Ltd (ReBIT)
● Indian Financial Technology and Allied Services (IFTAS).
● Reserve Bank Innovation Hub (RBIH)
Deposit Insurance and credit Guarantee Corporation of India:
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● Establishment: 15 July, 1978
● Act: Deposit Insurance and Credit Guarantee Corporation Act, 1961
● Branches: Chennai, Nagpur, Kolkata, New Delhi.
● Max. amount insured by DICGC: Rs. 5 lakhs
● It aims to provide insurance of deposits and guarantee the credit facilities.
● It insures all bank deposits, such as savings, fixed, current, recurring etc.
● Authorized capital – 50 Crores
Bharatiya Reserve Bank Note Mudran Private Ltd. (BRBNMPL):
Establishment: Feb 3, 1995
Headquarters: Bangalore, Karnataka
● BRBNMPL has two bank note presses in Mysore and Salboni.
o It prints bank notes for the Reserve Bank of India.
o It is to address the demand of bank notes.
● BRBNMPL supplies a major portion of bank note requirement in the country.
● The remaining requirements are met through security printing and minting corporation of India Ltd
(SPMCIL)
● Under SPMCIL, Security paper mill, Hoshangabad was established.
● Mints: Mumbai, Hyderabad, Kolkata and Noida.
● Currency Note Press: Nashik
● Bank Note Press: Dewas

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Reserve Bank Information Technology Pvt. Ltd (ReBIT):
Establishment: 2016
Headquarters: Mumbai
● It has been set up for its IT and cybersecurity needs and to ensure cyber resilience of Indian banking.
● ReBITadvise, implement and manage internal or system-wide IT Projects (both existing and new) of the
Reserve Bank.
● Safeguard RBI assets by detecting and responding to cyber-threats.
Indian Financial Technology and Allied Services (IFTAS):
● It designs, deploys and provides the essential IT-related services required by the Reserve Bank of India,
banks and financial Institutions.
● Establishment: Feb 2015 by Institute for Development and Research in Banking and Technology
(IDRBT).
● It is an autonomous organization funded by the Reserve Bank of India, in pursuance of the
recommendation of the Rangarajan Committee (2009).
● It manages and operates the Financial Messaging platform that comprising of Real-Time Gross
settlement and National Electronic Funds Transfer.
● IFTAS has taken over the Indian Financial Network (INFINE) Structured Financial Messaging System and
the Indian Banking Community cloud from IDRBT.
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● RBI has adopted Minimum Reserve System for issuing/ printing the currency notes. Since 1957, it
maintains gold and foreign exchange reserves of Rs. 200Cr of which at least Rs.115Cr should be in gold
and remaining in the foreign currencies.
Reserve Bank Innovation Hub (RBIH)
Establishment: 2022
Headquarters: Bengaluru
 The Reserve Bank Innovation Hub is a wholly owned subsidiary of the Reserve Bank of India (RBI) as a
Section 8 company under Companies Act, 2013, with an initial capital contribution of Rs. 100 crores to
encourage and nurture financial innovation in a sustainable manner through an institutional set-up.
 RBIH aims to develop an environment that promotes access to financial services and products for the
country's low-income people. This is in accordance with the goal of the RBIH, which is to bring world-
class innovation to India's financial sector, as well as the underlying concept of financial inclusion.
5. Monetary Policy
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● Monetary policy refers to the actions undertaken by a nation's central bank to control money supply
and achieve sustainable Economic growth.
● The Federal Reserve uses monetary policy to manage economic growth, Cen-employment & Inflation.
Objectives
i) Controlling Inflation
ii) Managing Employment levels
iii) Maintaining long term Interest rates.
Monetary Policy Committee:
● The Monetary policy committee is responsible for fixing the benchmark interest rate in India.
● The Governor of Reserve Bank of India is the chairperson ex-officio of the committee.
Instruments of Monetary Policy:
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Quantitative Credit control:
Policy rates:
● Repo rate: It is the rate at which the central bank of the leads money to Commercial banks in the
shortfall of funds. It is used by monetary authorities to control Inflation.
● Increase in Repo rate makes borrowing from the RBI more expensive for commercial banks, thus lead
to increase in rates applicable to loans, which restricts the money supply in the economy and may
adversely affects the country's economic growth.
● The Decrease in Repo rate aim at bringing in growth and improving economic development in the
country thus stabilizing the Inflation.
Reverse Repo rate:
● It is the rate at which the RBI borrows funds from the commercial banks & the country.
● When there is a hike in Reverse repo rate, banks can earn higher interest on their excess funds
deposited with the Reserve Bank of India. This will decrease the money supply in the market. During
high levels of Inflation in the economy, the RBI increases the reverse repo.
Liquidity Adjustment Facility (LAF):
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A LAF is a tool used in monetary policy, Primarily by Reserve Bank of India that allows banks to borrow
money through repurchase agreements (repos) or to make loans to the RBI though reverse repo agreements.
In LAF, money transaction is done through Real Time Gross Settlement. So, LAF is a tool used by RBI to control
short term liquidity money supply in the market. LAF can manage inflation in the economy by increasing and
reducing the money supply.
Marginal Standing Facility (MSF):
● MSF is a window for banks to borrow money from the Reserve Bank of India is an emergency situation
when inter-bank liquidity dries up completely. This Scheme has been Introduced by RBI with the aim
of reducing volatility in the overnight lending rates in the inter-bank market and to enable smooth
monetary transmission is the financial system. It is the rate at which RBI lends funds overnight to
scheduled banks against govt. securities.
● The Reserve Bank of India recently allowed Regional Rural banks to access the liquidity Adjustment
● Facility (LAF), Marginal standing Facility (MSF) and call or notice money market aimed at facilitating
better liquidity management for these lenders.
Bank Rate:
● A Bank rate is the interest rate at which a central bank lends money to domestic banks in the form of
very short-term loans. The Bank Rate is published under Section 49 of the Reserve Bank of India Act,
1934. Lower bank rates can help to expand the economy by lowering the cost of funds for borrowers,
and higher bank rates help to reign in the economy when inflation is higher than desired.
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● It affects the customers as there will be change the interest rates of personal loans. This rate been
aligned to the MSF rate and therefore changes automatically as and when the MSF rate changes
alongside policy repo rate changes.
Reserve Ratio:
Cash Reserve Ratio: CRR is the minimum proportion/ percentage of a bank's deposits to be held in the form
of cash with the RBT. It is used to regulate the money supply, level of inflation and liquidity in the country.
The higher the CRR, the lower is the liquidity with the banks and vice versa.
Statutory Liquidity Ratio: SLR is a minimum percentage of deposits that a commercial bank has to maintain
in the form of a liquid cash, gold or other securities. If the SLR increases, it restricts the bank's lending Capacity
and helps in controlling the inflation by soaking the liquidity from the market. Banks will have less money
available to lend, and they will charge higher interest rates or loans to keep up with their profit margin.
Difference between Repo & Reverse Repo rate:
Particulars Repo rate Reverse rate
Objective To Manage short term To reduce overall supply of
deficiency of funds money in the economy
Rate of Interest Higher Lower
Interest charge Applicable Repurchase Agreement Reverse Repurchase
to Agreement
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Mechanism of operation Commercial banks get funds Commercial banks deposit
from RBI using government their excess funds with RBI
bonds as collateral and receive interest from the
deposit
Impact of Higher rate Cost of funds increases for Money supply in the
commercial banks hence loans economy decreases as
become more expensive commercial banks park more
surplus funds with RBI
Impact of Lower rate Cost of funds is lower for Money supply in the
commercial banks leading to economy increases as banks
reduced interest rates on loans. lend more and reduce their
deposits with RBI.
Difference between CRR and SLR:
Particulars CRR SLR
Economy growth The Liquidity of the country is SLR governs the credit growth of
regulated by CRR the country
Form CRR is purely a liquid or a cash SLR requirement apart from cash,
component that the banks have to other assets such as gold and
maintain with RBI government securities namely
central and state government
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securities are required to be
parked with the regulator.
Liquidity flow Through CRR, the RBI controls excess SLR requirement ensures meeting
money flow in the economy out the unexpected demand of
any depositor by selling the
bonds.
Impact CRR help Liquidity flows to regulate SLR regulates the credit growth in
liquidity. the economy.
Qualitative credit Controls
1. Marginal requirement:
The marginal requirement of a loan is the current value of security offered for a loan or the value is to
totality of the loans granted.
2. Rationing of credit:
A situation in which lenders are unwilling to advance additional funds to borrowers at the prevailing
market interest rate is now widely recognized as a problem arising because of information and control
limitations in financial markets.
3. Moral suasion:
Moral suasion is a request by the RBI to the Commercial banks to take specific measures as per the
economy's trends. RBI may direct banks not to give out certain loans.
Important Acts and Section of RBI:

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1. Reserve Bank of India Act, 1934.
2. Companies Act, 1936
3. Banking Regulation Act, 1949
4. Payment and settlement systems Act, 2007
5. Foreign Exchange Management Act, 1999
6. Negotiable Instruments Act, 1881.
Particulars FERA FEMA
Acronym Foreign Exchange Foreign Exchange
Regulation Act Management Act
Year of Enaction 1973 1999
Aim To regulate payments and This Act aims to make all the
exchange. It also intended to offenses relating to foreign
conserve foreign exchange, exchange from criminal to
better the use of the foreign civil offenses.
exchange, in order to boost
the country’s economic
development.
Number of Sections 81 49
Type of Violation Criminal Offence Civil Offence
Punishment Imprisonment Fine or Imprisonment
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Feature Emphasis on the regulation M8anages foreign
of currencies exchange, i.e. forex.
Sections of the Reserve Bank of India Act:
Section 3: Establishment and incorporation of Reserve Bank
Section 4: Capital of the RBI
Section 5: Increase & reduction of share capital.
Section 6: Establishment of offices, branches & agencies.
Section 7: Management
Section 8: Composition of the central Board and term of office directors.
Section 17: The business that RBI can transact.
Section 18: Deals with emergency loans to banks
Section 18A. Validity of loan or advance not to be questioned
Section 20: Obligation of the RBI to transact Government business.
Section 21: RBI to have the right to transact Government business in India.
Section 21 A: RBI to transact Government business of states on agreement
Section 22: Right to issue bank notes
Section 24: Denominations of notes
Section 25: Form of bank notes - The design, form the material of bank notes shall be such as may be
approved by the Central Government after consideration of the recommendations made by the Central Board.
Section 27: Re-issue of notes

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Section 26 (1): Defines Legal tender of notes.
Section 26(2): Withdrawal of legal tender of notes
Section 42: Cash reserves of scheduled banks to be kept with the Bank.
Section 45 (U): Defines repo, reverse repo, derivative, money Market instruments & securities
Section 28: Allows RBI to form rules regarding the exchange of damaged and imperfect notes.
Section 31: In India only the RBI or the central government can issue and accept promissory notes that are
payable on demand. However, cheque that are payable on demand, can be issued by anyone.
Section 38: Obligations of Government and the Bank in respect of rupee coin.
Section 39: Obligation to supply different forms of currency.
Section 40: Transactions in foreign exchange.
Section 45-IB: Maintenance of percentage of assets.
Section 45-IC: Reserve fund.
Section 45K: Power of Bank to collect information from non-banking institutions as to deposits and to give
directions.
Section 45ZB: Constitution of Monetary Policy Committee
Section 45ZM: Monetary Policy Report.
Section 46: Contribution by Central Government to the Reserve Fund.
Banking Regulation Act 1949:
Objectives of Banking Regulation Act 1949:
● To reduce unhealthy competition in the banking sector.
● To ensure new branches are licensed.

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● To safeguard the rights of shareholders and the public.
● Help banks liquidate when they are unable to operate.
● Take necessary steps to strengthen the banking sector.
● Impose restrictions on Indian Investors.
Sections of Banking Regulation Act 1949:
Section 6: Form and business is which banking companies may engage
Section 8: Prohibition of Trading section
Section 9: Disposal of non- banking assets.
Section 10B: Power of the RBI to appoint the chairman of the board of directors on a whole-time basis or a
MD of a banking Company
Section 11: Requirement as to minimum paid up capital reserves.
Section 12: Regulation of paid-up capital, subscribed capital and Authorized capital and voting rights of
shareholders.
Section 13: Restriction on, Commission, brokerage, discount, etc., on sale of shares.
Section 14: Prohibition of charge on un-paid capital
Section 17: Reserve Fund.
Section 18: Cash Reserve.
Section 20: Restrictions on loans and advances
Section 21: Power of RBI to control advances by banking companies
Section 21 A: Rates of interest charged by banking companies not to be subject to scrutiny by courts.
Section 22: Licensing of banking companies.
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Section 23: Prohibits banks from opening a new place of business (branches) in India or abroad, change of
premises other than within the same city, town or village, without prior approval of the RBI.
Section 26: Each banking to submit an annual return to the RBI in respect of all accounts in India which has
not been operated for up to 10 years.
Section 29: Accounts & balance sheet.
Section 30: Audit
Section 36 AA: Power of RBI to remove managerial & other persons from office.
Section 33: Display of audited balance sheet by companies incorporated outside India.
Section 36 AB: Power of RBI to appoint additional directors
Section 39: RBI to be official liquidator.
Section 45: Power of Reserve bank to apply to central government for suspension of business by a banking
company and to prepare scheme of reconstitution or amalgamation
Section 46: Penalties
Section 47 A: Power of RBI to impose penalties.
Section 49: Special provisions private banking companies.
Section 49 A: Restriction on acceptance of deposit withdrawal by a cheque.
Section 52: Power of RBI to make rules.
Section 56: Act to apply to co-operative societies subject to modifications.
6. Types of Accounts
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The major aspect of the banking Industry is the provision of bank accounts. There are various types of bank
accounts which can be opened in public or private sector banks.
Demand Deposits:
1. Savings Account:
A savings account is an Interest-bearing deposit held at a bank or other financial Institution. It
is especially for individuals and small businesses. Saving Account eligible for Resident Indians above 18 years
age (for 10 to 18 years age group account is allowed with some restrictions and for persons below 10 years,
minor account with guardian is to be opened). Have to maintain a minimum balance that varies from bank to
bank. Normally Rs.500/- (without cheque book).Rs.1000/- (With cheque book). PMJDY savings accounts does
not have cheque facilities and usually have a Rupay debit card facility. From 1st April 2020 the interest is
calculated on daily basis
2. Current Account:
A Current account is a business account. It is a type of deposit account maintained by Individuals
who carry out significantly higher number of transactions with banks on a regular basis. No Interest paid by
banks on these accounts on the other hand, banks charges certain service charges, certain service charges,
on such accounts.
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3. No- Frill Account:
To offer the most basic banking service to those from the low-income backgrounds. It was
formulated as means of providing Individuals from low-income backgrounds the opportunity to benefit from
the credit and savings programs offered by financial Institutions.
4. CASA (Current Account Savings Account):
It is the amount of money deposited in the current and savings Account. The ratio of deposits
in current and saving accounts to total deposit is called CASA ratio. The ratio can be calculated using the
formula,
CASA Ratio = CASA Deposits / Total Deposits
● Higher CASA Ratio → Net Interest Margin is better→ Better operating efficiency of the bank.
Time Deposit:
● A time deposit is a bank deposit that has a fixed term and interest rate. It is an investment instrument
in which a lump-sum account is deposited at an agreed rate of Interest for a fixed period of time.
● Two types of term Deposit
1. Fixed Deposit
2. Recurring Deposit
Recurring Deposit:
A Recurring deposit is a type of deposit in which are fixed Installments that have to be invested in an
at fixed intervals of time for a pre decided period. Available in flexible tenure options ranging from 6 months
to 10 years. The total amount is disbursed to the investor after the maturity, period completes, RD accounts
come with a lock-in-period of 30 days - 3 months subject to bank's discretion

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Fixed Deposit:
● Fixed deposits have fixed tenure. It is an Investment scheme that banks and NBFCs provides FD offer
greater returns on the principal invested when compared to the returns generated from a regular
savings account.
● You can earn interest on the principal sum throughout the tenure. The interest earned gets added to
the principal amount after every specific interval.
● Tenure: 7 days to 10 years
● In case of urgency, depositor can close the amount prematurely by paying penalty.
Non-Resident Deposit Accounts:
There are three types of Non-Resident Indian Accounts:
1. NRE (Non-Resident External) Account
2. NRO (Non-Resident Ordinary) Account
3. FCNR (Foreign currency Non-Resident) Account
NRE Account:
● Non - Resident External an Account can be opened and maintained by NRIs with earnings originating
from the individual's country of residence but can be held in Indian Rupee denominations. These
accounts can be in the form of savings, current recurring or fixed deposits.
● You can transfer your funds to a foreign account from an NRE account without any complications &
restrictions.
● NRE Account is primarily used for carrying out business, personal banking and making Investments in
India.
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NRO Account:
● This account can be opened with Income earned from within India and shall be held in Indian Rupee
Denominations. This account allows you to receive a funds is either Indian or foreign currency.
● Only Indian currency can be withdrawn as NRO Accounts and cannot be freely repatriated into a
foreign currency.
FCNR:
Foreign currency Non-Resident Account allows you to save money earned overseas in foreign currency
in a term deposit. As an FCNR account holder, you can maintain your deposit in various currencies including
USD, GBP, EUR, JPY, AUD, CAD, SGD, CHF and HKD.
Difference b/w NRE, NRO and FCNR Account:
Particulars NRE NRO FCNR
Who can open NRIs, PIOs, Individuals Any Individual resident NRIs, PIOs Individuals/
entities of Bangladesh, outside India/ entities of Bangladesh/
Pakistan requires prior Individual entities of Pakistan require prior
approval of RBI. Pakistan/ Bangladesh approval of RBI.
require prior approval
of RBI.
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Currency Indian Rupee Indian Rupee Any foreign permitted
currency
Nomination facility Allowed Allowed Allowed
Tax Exempted Taxable Exempted
Repatriability Repatriable Non Repatriable Repatriable
Other Accounts:
1. NOSTRO Account:
Nostro account is a bank account that a bank holds with a foreign bank in the domestic currency of
the country. It is used to facilitate the settlement of International trade & foreign exchange transactions.
Eg: SBI account with HSBC
"Your Account with us"
2. Vostro Account:
It is the account held by a foreign bank with a domestic bank in domestic currency. It is maintained in
Indian Rupee.
Eg: HSBC account with SBI

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"Our account with you"
3. Loro Account:
It is a third party Account. It is held by a third-party bank other than the account maintaining bank or
with whom the account is maintained.
4. Gilt Account:
● It means an account opened & maintained for holding Government securities, by an entity or a
person including person resident outside India with custodian permitted by the RBI to open &
maintain constituent subsidiary General Ledger Account with the public Debt office of the RBI.
● In simple words, Accounts maintained by Investors with the Primary dealers for holding their
government securities and Treasury bills in Demat form are known as Gilt Accounts.
5. Demat Account:
Demat Account is an Account used to hold shares and Securities in electronic format. The full form of
Demat Account is a Dematerialized Account. This Account eliminates the needs for physical paper certificates
to prevent loss, forgery or theft of the Certificates
6. Escrow Account:
An Escrow Account is an Account designed to hold funds temporarily in safekeeping. It provides
security against scams and frauds especially with high asset value. These accounts can hold money, securities,
funds, and other Assets.
7. Dormant Account:
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The account that has no financial activity for a long period of time (24months) is called Dormant
Account. As per RBI guidelines, if customer does not indicate transactions such as cast withdrawal, payment
by cheque, Fund transfer through Internet banking or ATM, then the account is considered to be Dormant.
8. Inactive Account:
If you have an account and have not done any transactions through it for more than 12 months, then
it will be classified as Inactive account.
7. Types of Banking
1. Branch Banking:
Branch banking involves business of banking through branches. It helps in better management,and
more risk Diversification.
2. Universal Banking:
It is a mixed of both commercial and investmentbank as well as providing other financial services
suchas Insurance. It is a system in which banks provide a wide variety of comprehensive financial services.
3. Narrow Banking:
It is a system in which a bank deposits only in government securities, such as treasury bills & bonds.
4. Para Banking:
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The services undertaken by the bank apart from its normal day to day activities like deposits, credit
cards, smart cards, mutual funds, pension funds.
5. Shadow Banking:
● The services undertaken by NBFCS/ In incorporated bodies similar to the activities undertaken
by banks.
● The risks associated with shadow banking are high
● Eg: NBFCS
6. Islamic Banking:
It is a banking system based on the principles of Islamiclaw and guided by Islamic economists.
7. Unit Banking:
In this type of Banking banks operate only from asingle branch taking case of a small community
8. Retail Banking:
Retail Banking provides credit, deposits and a way to manage money for Consumers & small
business. It is also called Consumer banking or Personal banking.
9. Whole sale Banking:
These banking services are offered to Institutionalcustomers, high net worth clients like corporates,
Commercial banks, mid-size companies etc..
10. Chain Banking:
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Chain Banking is a system under which different banks come under a common control through
Common – shareholders. It is a type of banking where a group of persons together to own & control three
or more independently chartered Banks
11. Virtual Banking:
It is the provision of accessing the banking and related services online without visiting branch.
12. Green Banking:
It is a system meant for promoting environment friendly practices & reduces carbon footprint
from banking activities.
13. Offshore Banking:
It means bank branches located outside of its home country and handling transactions made in
foreign currency.
14. Neo Banking:
Neo Banks are virtual banks operated online. It is completely Digital, Provides banking
experience through Mobile Applications
8. Payments Banks and Small Finance Banks
Small finance Banks:
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These Banks are the financial Institutions which provide financial services to the unreserved &
unbanked region of the Country.
● Recommendation: UshaThorat Committee
Objective:
1. Basic banking services
2. Access to financial services
3. To provide an alternative to some of the existing Institutions
Features:
● Accept small deposits and disburse loans.
● Minimum paid- up capital would be Rs. 200crores.
● The promoter's minimum initial contribution to the paid-up equity Capital of such small finance bank
shall at least be 40%.
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● SFBs are not allowed to lead to big businesses or Industries. The main customers of small finance banks
include micro-Industries, small & Marginal farmers, unorganized sector Entities and small business units.
Criteria for setting up small finance Banks:
● The minimum paid-up capital for small finance Banks shall be Rs.200 Crore.
● Resident Individuals / Professionals singles or jointly having at least 10 years of experience in banking
& Finance at senior level, and companies & Societies in the Private Sector, that are owned and controlled by
Residents.
● Primary urban cooperative Banks which are desirous of voluntarily converting into small finance bank.
Small Finance Banks in India:
Name of SFB Head quarters Tagline
AU Small Finance Bank Jaipur, Rajasthan ChaloAageBadhe
Capital Small Finance Bank Jalandhar, Punjab Viswas Se Vikastak
Equitas Small Finance Bank Chennai, Tamilnadu It’s Fun banking
ESAF Small Finance Bank Thrissur, Kerala Joy of Banking
FINCARE Small Finance Bank Bengaluru, Karnataka A New Era in Smart Banking
begins
Janalakshmi Small Finance Bengaluru, Karnataka LikhoApniKahaani
Bank
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North East Small Finance Guwahati, Assam Your Door step Banker
Bank
Suryoday Small Finance Navi Mumbai A Bank of smiles
Bank
Ujjivan Small Finance Bank Bengaluru, Karnataka We believe in your belief
Utkarsh Small Finance Bank Varanasi, UP AapkiUmeedKaKhata
Shivalik Small Finance Bank Saharanpur, Uttar Pradesh A Bank For Your Welfare
Unity Small Finance Bank New Delhi
Payment Banks:
● A payment Bank is operating on a smaller on restricted scale. It can accept only Demand deposits
and not time Deposits.
● Minimum paid up capital of this Bank is Rs.100 Crore and maximum balance per individual customer
is Rs. 2 Lakh
● Recommendation: Nachiket Mor Committee
● The payment Banks carry out most banking operations but cannot advance loans or issue credit cards.
● The main objective of setting up of payment Bank is to promote financial Inclusion by providing Small
account savings accounts and payment / remittance services to migrant labour workforce, low-
income households, small businesses, other unorganized sector entities & other users.
Eligibility:
● Non-bank Pre-paid payment Instrument (PPI) issues.
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● Individuals / professionals, NBFCs, Business correspondents, mobile companies, Real sector
cooperatives owned & Controlled by residents.
● Promoter group having a joint venture with existing scheduled commercial bank to set up payment
bank.
● Registered under the companies Act, 2013.
● The minimum paid-up capital for opening a payment bank is Rs.100 crore for first 5 years of
commencement, the Promoter must contribute at least 40% of the paid-up capital.
Payment Banks in India:
Name Headquarters Tagline
Airtel Payments Bank (India’s New Delhi Banking is now at your Fingertips.
1st payment bank)
Fino Payments Bank Navi Mumbai QadarAapkiMehnat Ki
India Post Payments Bank New Delhi Aapka Bank AapkeDwar
Paytm Payments Bank Noida, UP Simplifying payments for India
Jio Payments Bank Mumbai Your everyday bank for all of your
payments, banking and financial
Needs.
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NSDL Payments Bank Mumbai Technology Trust and Reach
9. Non-Banking Financial Company (NBFC)
NBFCs are financial Institutions which are into the business of granting loans and advances and investing in
financial instruments of other companies. Non-Banking Financial Company (NBFC) is a company registered
under the Companies Act, 1956
Eg: Muthoot Finance
Features:
● NBFCs allowed to accept public Fixed deposit for a minimum period of 12 months & max period of 60
months.
● They cannot offer higher Interest rates than the ceiling rate Prescribed by RBI from time to time.
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● The deposits with NBFCs are not Insured.
Services Handled:
1. Portfolio Management Service
2. Asset Management company
3. Underwriting
4. Retail Financing
5. Hire purchase Service
6. Merchant Banking
7. Foreign Exchange -related business
8. Rural Financing
Eligibility to obtain NBFC license:
● The Company has to be registered under companies Act 2013 and the company should either be a
Limited company or a private Ltd.
● CIBIL records of the company should be clean.
● The Minimum net owned funds of the company should be Rs. 2 crores.
● The Company must comply with the requirements for capital compliances & FEMA.
Types of NBFCs:
i. Asset Finance company
ii. Infrastructure finance company
iii. Investment Company
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iv. Loan company
v. Core Investment Company
vi. Micro finance company
vii. Housing Finance Company
viii. Mortgage Guarantee Company
Difference between NBFC and Bank:
Particulars NBFC Bank
Incorporated under Companies Act 1956 Banking Regulation Act 1949
Transaction Services Not provided Provided
Demand deposit Not Accepted Accepted
Payment and settlement system Not Applicable Integral part of the system
Foreign Investment Allowed up to 100% Allowed up to 74% for private
sector banks
Reserve Ratio Maintenance Not required Compulsory
Cheque Cannot Issue Can Issue
Deposit Insurance Facility Not Available Available
NBFC Banking Ombudsman:
● NBFC Banking Ombudsman is appointed to handle grievances of NBFC customers.

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● Offices: Chennai, New Delhi, Kolkata & Mumbai
Grievances for which the complaint is filed:
i. Non-payment (or) delay in the payment of Interest on deposits or the repayment of the deposits.
ii. Levying charges without proper prior notice to the customer.
iii. Failure or delay in releasing the securities/ documents in the borrower on repayment of all dues.
⮚ One can lodge their complaint by writing on a paper & sending it to the concerned office of NBFC
ombudsman and also can file your complaint by e-mail. There will no fee for filing and resolving
customer's complaints.
⮚ The NBFC Ombudsman may award compensation not exceeding rupees 1 Lakh to the complainant for
causing mental agony and harassment.
10. Development Banks
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1. Industrial Development Bank of India (IDBI)
2. Industrial finance corporation of India (IFCI)
3. Industrial Investment Bank of India (IIBI)
4. Small Industries Development Bank of India (SIDBI)
5. Industrial credit and Investment Corporation of India (ICICI)
6. Export-Import Bank of India (EXIM)
7. State Financial corporation (SFC)
8. State Industrial Development corporation (SIDCs).
Industrial Development Bank of India:
● Establishment: 1964
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● Objective: To provide financial assistance to Industrial Enterprises.
 This bank offers financial products & Services such as deposits, loans, payment services and Investment
solutions.
 It has set up a special Development Assistance Fund for assisting deserving projects which other
financial Institutions are not likely to finance.
Industrial Finance Corporation of India:
● Headquarters: New Delhi
● Objective: To provide long term finance to the manufacturing and Industrial sector of the
country.
 This corporation is authorized to issue bonds & debentures in the open market, to borrow foreign
currency from the world Bank and other organizations, accept deposits from the public and also
borrow from RBI.
 Authorized capital: Rs 20 crore
 The corporation can grant loans only to public limited companies and co-operatives but not to private
limited companies or partnership firms.
Industrial Investment Bank of India (IIBI):
● Headquarters: Kolkata
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 It offers a wide range of products & Services such as,
 Equipment finance
 Investment in capital and money market Instruments
 Equity subscription Asset credit
 Term loan assistance for project finance
Small Industries Development of India (SIDBI):
● Establishment: April 2, 1990
● Headquarters: Lucknow, Uttar Pradesh
● Aim: To aid the growth & development of Micro, Small & Medium scale Enterprises.
● Financial support to MSMEs & Provided by way of Indirect/ refinance to banks for onward lending to
MSMEs and direct finance in the areas like risk capital, Sustainable finance, receivable financing, Service
Sector financing.
● In order to increase and supply money supply to the MSME sector, it operates a refinance program
known as Institutional Finance Program. Under this Program, SIDBI extends Term Loan Assistance to
Banks, Small Finance Banks & NBFCs.
Industrial credit and Investment Corporation of India:
● Objective: To assist in the formation, development & Modernization of Business Enterprises in
private sector.
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● It provides finance in the form of long term or medium-term loans or equity participation.
Sponsoring and underwriting new issues of shares and other securities. The corporation showed
Increasing Interest in the development of new industries in backward regions.
Export Import Bank of India:
● Act: Export - Import Bank of India Act 1981
● Headquarters. Mumbai
● Objective: For coordinating the work of Institutions engaged in Financing exports & imports.
● The Bank provides financial assistance to Export-oriented Indian companies by way of term loans
is Indian rupees or foreign currencies for setting up new production facilities, expansion
modernization or upgradation of existing facilities and for acquisition of production equipment or
technology.
● Authorized capital: Rs. 20,000 crores.
State Financial Corporation (SFC):
● Establishment: 1951 under state Financial corporation Act
● Aim: To meet the need for financial Assistance of micro, Small & Medium scale Industries.
● At present, 18 state Financial corporations are there is India. The state Financial corporation of
Punjab - First Financial Corporation in the country in 1953.
● These SFCs provide loans to Individual trading Concerns, Partnership firms as well as public &Private
listed companies.
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State Industrial Development Corporation:
● Establishment: 1995 under companies Act 1956
● Aim: To develop Industrial Infrastructure such as Industrial parks and Industrial Estates and along
with Providing financial Assistance.
● At present, there are 28 SIDCs in India.
● The SIDCs undertake various promotional activities such as Conducting techno-economic surveys,
project Identification, preparation of feasibility studies etc.
11. Financial Institutions
Securities and Exchange Board of India (SEBI):
Establishment: April 12, 1992
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Objective: To protect the interest of people in the stock market and provide a healthy environment for
them.
Functions:
1. To regulate and perform functions such as check the books of accounts of stock exchanges and call
for periodical returns, approve by-laws of stock exchanges.
2. It monitors and regulates the securities market and protects the interests of the investors by enforcing
certain rules and regulations.
3. To protect the interests of investors and traders in the Indian stock market.
4. Register and regulate credit rating agency
5. Prohibit fraudulent and unfair trade practices
6. Designing guidelines and code of conduct for the proper functioning of financial intermediaries and
corporate.
Role and Responsibilities:
1. Ensure that the Indian capital market works in a systematic manner and provide investors with a
transparent environment for their investment.
2. The primary reason for setting up SEBI was to prevent malpractices in the capital market of India and
promote the development of the capital markets.
Industrial Finance Corporation of India (IFCI):
Establishment: July1, 1948
Headquarters: New Delhi
Objective: To provide medium and long-term financial assistance to large scale industrial undertakings
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Functions:
1. The main function of the IFCI is to provide medium and long-term loans and advances to industrial
and manufacturing concerns.
2. The corporation grants loans and advances to industrial concerns.
3. To underwrite the issue of stocks, shares, bonds or debentures by industrial concerns
Export Credit Guarantee Corporation of India (ECGC):
Establishment: July 30, 1957
Objective: To strengthen the export promotion by covering the risk of exporting on credit.
Wholly owned by Government of India
Functions:
1. To provide insurance to export risks and to finance exports.
2. Helps exporters by furnishing guarantees to the financial banks in order to enable them to provide
sufficient credit facilities.
3. Offers Export Credit Insurance covers to banks and financial institutions to enable exporters to obtain
better facilities from them
4. Provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the
form of equity or loan.
5. Assists exporters in recovering bad debts.
International Financial Organizations
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Institution Name Establishment Headquarter Members Functions
World Bank July 1944 Washington To provide financing, advice, and
DC research to developing nations to
International Bank aid their economic advancement.
for Reconstruction The bank predominantly acts as an
and Development 189 organization that attempts to fight
(IBRD) poverty by offering developmental
assistance to middle- and low-
International income countries.
Development
Association (IDA)
173
Asian December 19, Mandaluyon 68 Provides assistance to its
Development Bank 1966 g, Phillipines developing member countries, the
private sector, and public-private
partnerships through grants,
loans, technical assistance, and
equity investments to promote
development.
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International 1944 Washington 190 Aims to reducing global poverty,
Monetary Fund DC, United encouraging international trade,
States and promoting financial
stability and economic growth.
The IMF has three main functions:
overseeing economic
development, lending, and
capacity development.
European 1958 Luxembourg 27 By providing long-term project
investment bank funding, guarantees and advice. It
supports projects both within and
outside the EU. Its shareholders
are the Member States of the EU.
Asian January 2016 Beijing, China 103 Its mission is to improve social and
Infrastructure economic outcomes in its region,
Investment Bank Asia, and beyond.
European Bank for 1991 London, 70 Provides project financing mainly
Reconstruction United for private enterprises, usually
and Development Kingdom together with other commercial
(EBRD) lending partners, in countries that
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are committed to, and apply,
democratic principles.
Topic 12: All India Financial Institutions

There are five development finance institutions regulated by the Reserve Bank of India .They are:
1. Export - Import Bank of India (Exim Bank)
2. National Bank for Agriculture and Rural Development (NABARD)
3. Small Industries Development Bank of India (SIDBI)
4. National Housing Bank (NHB)
5. National Bank for Financing Infrastructure and Development (NaBFID)
Export-Import Bank of India (EXIM Bank):

 Exim Bank was established by the Indian government under the Export-Import Bank of India Act, 1981
as an export credit provider, replicating worldwide export credit agencies.
 Through a variety of products and services, Exim Bank serves as a growth engine for industries and
SMEs. This comprises technology imports and export product development, as well as export
production, export marketing, pre- and post-shipment logistics, and international investment.
 Headquarters: Mumbai
NABARD (National Bank for Agriculture and Rural Development)
Establishment: July 12, 1982 under the National Bank for Agriculture and Rural Development Act 1981
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Initial Capital: Rs.100 crore
Objective: For the promotion and development of agriculture, small scale industries, cottage and village
industries, handicrafts and other rural crafts and other allied economic activities in rural areas with a view to
promoting integrated rural development and securing prosperity of rural areas.
Fully owned by Government of India
Functions:
 Monitoring the flow of ground level rural credit
 Help Cooperative and Regional Rural Banks to prepare development actions plan for themselves
 Provides recommendations to Reserve Bank of India on issue of licenses to Cooperative Banks,
opening of new branches by State Cooperative Banks and Regional Rural Banks (RRBs).
 Provide financial assistance to cooperative banks for building improved management
information system, computerisation of operations and development of human resources.
 Framing Policy and guidelines for Rural Financial Institutions.
 NABARD is responsible for the development of the small industries, cottage industries, and any
other such village or rural projects.
 It partners with various organizations for many innovative projects such as SHG-Bank linking,
innovative schemes for water and soil conservation.
Small Industries Development Bank of India (SIDBI)

 The Small Industries Development Bank of India is India's apex regulatory organisation for
licencing and regulating micro, small, and medium-sized enterprise financial companies. It is
governed by the Government of India's Ministry of Finance.
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 Headquarters: Lucknow
 Founded: 2 April 1990
 SIDBI is the primary financial institution for the MSME (Micro, Small, and Medium Enterprise)
sector's promotion, development, and financing. SIDBI encourages cleaner production and
energy efficiency in addition to focusing on the development of the Micro, Small, and Medium
Enterprise sector.
National Housing Bank:
Establishment: July 9, 1988
Headquarters: New Delhi
Objective: To promote housing for all and stabilize the market for Housing finance in order to serve the
housing needs of all segments with special focus on affordable housing segments for lower and middle-class
people.
NHB is wholly owned by Government of India
Functions:
1. Regulation and Supervision of Housing Companies operating in India
2. Raising of Funds on large scale and onward refinancing to Housing Finance companies, Cooperative
Banks and other housing agencies for onward lending to Individual and Infrastructure companies in
Housing Segment.
3. Acts as a guaranteeing institute for small Housing finance companies who lack the capability to raise
funds from the market.
National Bank for Financing Infrastructure and Development (NaBFID)
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 The National Bank for Financing Infrastructure and Development (NBFID) is set up as the principal
development financial institution (DFIs) for infrastructure financing.
 The National Bank for Financing Infrastructure and Development Bill, 2021 was introduced in Lok Sabha
on March 22, 2021.
 NBFID's functions include: (i) extending loans and advances for infrastructure projects, (ii) taking over
or refinancing such existing loans, (iii) attracting private sector and institutional investment for
infrastructure projects, (iv) organising and facilitating foreign participation in infrastructure projects, (v)
facilitating negotiations with various government authorities for dispute resolution in the field of
infrastructure financing, and (vi) facilitating negotiations with various government authorities for
dispute resolution in the field of infrastructure financing.
13. Rupee Denominations
Denomination Dimension Colour Reverse Design
2000 66*166 mm Magenta Mangalyaan
500 66*150 mm Stone Grey Red Fort
200 66*146 mm Bright Yellow SanchiStupa
100 66*142 mm Lavender Rani kivav ( Quuen’sstepwell)
50 66*135 mm Flourescent Blue Hampi with chariot
20 63*129 mm Greenish yellow Ellora Caves
10 63*123 mm Chocolate Brown Konark and the Sun Temple
14. Assets and Liabilities
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Assets:
An asset is something of value that is owned and can be used to produce something. The assets are items
that the bank owns. This includes loans, securities, and reserves.
Types of Assets:
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Tangible Assets: Tangible Assets are in Physical form which includes cash, inventory, vehicles, equipment,
buildings and investments.
Intangible Assets: Intangible Assets are not in Physical nature includes patents, copyright, franchises, goodwill,
trademarks, and trade names, as well as software. It is very difficult to evaluate.
Current Assets: Current assets are all the assets of a company that are expected to be sold or used as a result
of standard business operations over the next year. Current assets include cash, cash equivalents, accounts
receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets.
Fixed Assets: Fixed assets are long-term assets that a company has purchased and is using for the production
of its goods and services. Fixed assets can include buildings, computer equipment, software, furniture, land,
machinery, and vehicles.
Operating assets: Operating assets are assets that are required in the daily operation of a business. In other
words, operating assets are used to generate revenue from a company’s core business activities.
Non-operating assets: Non-operating assets are assets that are not required for daily business operations but
can still generate revenue.
Liabilities:
Liabilities are items that the bank owes to someone else, including deposits and bank borrowing from other
institutions. Liabilities are what the bank owes to others. Specifically, the bank owes any deposits made in
the bank to those who have made them.
Types of Liabilities:
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Current Liabilities: Current liabilities are a company's short-term financial obligations that are due within one
year or within a normal operating cycle. Examples are accounts payable, short-term debt, dividends, and
notes payable as well as income taxes owed.
Working capital = Current assets – Current liabilities
Non- Current Liabilities: Non-current liabilities (long-term liabilities) are liabilities that are due after a year or
more. Examples of noncurrent liabilities include long-term loans and lease obligations, bonds payable and
deferred revenue.
Contingent Liabilities: Contingent liabilities are liabilities that may or may not arise, depending on a certain
event. Potential lawsuits, product warranties, and pending investigation are some examples of contingent
liability.
Some of the differences between Assets and Liabilities:
Particulars Assets Liabilities
Definition Assets are resources Liabilities are your
(tangible and intangible) business' debts or
that your business owns, obligations which you
and that can provide you need to fulfil in the
with future economic future. This is the money
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benefit. They add value to you need to repay, the
your business, they can goods you need to
help you meet your provide or the services
commitments and you need to perform.
increase your equity. These responsibilities
arise out of past
transactions and need to
be settled through the
company's assets.
Definition in Simple Assets means any Liability means any debt
words property owned by a which a company owes
company that has to a person or an
monetary value is known organization
as an asset.
Depreciation From time to time Not Depreciated
Examples Accounts Receivable, Accounts Payable, Bank
Machinery, Cash, Overdraft, Outstanding
Furniture Expenses
Classification Fixed Assets, Current Long term Liabilities,
Assets, Liquid Assets, Fixed Liabilities,
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Wasting Assets, Intangible Contingent Liabilities
Assets, Fictitious Assets and Current Liabilities
Calculation Capital + Liabilities Assets- Capital
Financial Accounting Assets get debited if there Liabilities tend to get
is an increase credited if there is an
increase in their amount.
Business aspect Assets are considered as Liabilities, give rise to an
good from a business outflow of cash over the
point of view since it coming years, due to
generates an inflow of which it is considered
cash over the coming bad from a business
years point of view.
Balance Sheet While making the balance Once all the assets are
sheet, all the assets are computed, the liabilities
placed first are placed.
15. Financial Inclusion
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● Financial Inclusion means providing financial services for poor and low-income individuals at affordable
cost. It aims at addressing & bringing solutions to the issues that exclude people from participating in
the financial sector.
● The Government of India has been introduced several financial Inclusion schemes. They are
i. Basic savings Bank Deposit Account (BSBDA)
ii. Lead Bank scheme
iii. PradhanMantri Jan DhanYojana (PMJDY)
iv. Business correspondents
v. Stand up India scheme
Basic Savings Bank Deposit Account (BSBDA):
● It is a Zero Balance Savings Account that takes care of your simple banking needs with Free ATM card,
cheque book and monthly Statement
● Establishment: August 2012
● This account shall not have the requirement of minimum balance.
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● No charges will be levied for non-operation/ activation of inoperative Basic saving Bank Deposit
Account.
Features:
1. Account can be opened by any Individuals who can open regular savings Account.
2. The customer should have a complete KYC.
3. The Interest rates offered by it are same as savings bank account.
4. The customer cannot have any other saving bank account if they has a BSBDA in a bank.
5. The Individual is eligible to have only one Basic saving Bank account in one bank.
6. If the customer already has a savings bank account, that have to be closed within 30 days of opening
BSBD Account.
Conditions:
1) Maximum balance in the account should not exceed Rs. 50000 rupees at any time
2) Total credit in BSBD account should not exceed Rs.1 lakh in a year.
3) Total cash withdrawals and transfers shall not exceed Rs.10,000 in a month.
4) Small accounts are valid for 12 months initially which may be extended by another 12 months if the
person provides proof of OVDs
5) Remittances from abroad cannot be credited to small accounts without completing KYC formalities.
Services offered: Deposit, cash withdrawal, credit of money through electronic payment channels, deposit /
collection of cheques
Lead Bank scheme:
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● Objective: To promote the role of banks in the overall development of the rural sector.
● Recommendation: Prof. D. R. Gadgil Study group and Banker's committees.
● In 2009, the High-level committee that reviewed the scheme was headed by UshaThorat, to suggest
reforms in the Lead Bank scheme. Enhance the business correspondent model, making banking
services in all villages having a population of above 2000 & relaxation in KYC norms for small value
Accounts.
● The lead Bank is expected to assume a leadership role for coordinating the efforts of the credit
Institutions and the government.
● The Lead Bank scheme aims to enhance the flow of bank finance to the priority sector and other
sectors.
● The Lead Banks are advised to focus attention on the need for achieving 100% financial Inclusion
through penetration of banking services in the rural sector.
Pradhan Mantri Jan DhanYojana:
● Establishment: August 28, 2014
● Objective: To provide easy access to financial services such as Remittance, credit, Insurance,
Pension, savings & Deposits Accounts to poor and needy section of our society.
Features:
1) Zero Balance Account can be opened by Individuals.
2) Overdraft Facility is available.
3) Transfer of money is Simple
4) The overdraft facility of Rs.10,000 is available is available

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5) The amount Deposited earns Interest Rate
6) Accidental Insurance cover – Rs.2 lakh.
Eligibility:
● Must be a citizen of India Should be at least 10 years of age You should not have bank account.
Benefits:
● You will be eligible for Direct Benefit Transfer as well as other welfare schemes by the government.
Interest earned for the Deposited amount.
● Free Insurance cover to cover the financial risks associated with Accidental death or disablement.
● Over Draft allows you to access to funds in financial emergencies.
● Account holders can check their balance using the mobile banking facility.
Business correspondents:
● Objective: To aid the process of financial Inclusion and take banking to the remote areas of the country.
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● Business correspondents are retail agents engaged by banks for providing banking services at locations
other than a bank branch.
Role of BCs:
● Responsible for Disbursing small loans like agricultural loan set.
● Handling Receipt & delivery of small value remittances & other payment Instruments.
● Creating awareness about savings & other bank products.
● KYC will be completed by BC.
● Opening of no frill Accounts and other products.
● Cross selling of financial products like Insurance / mutual fund Products etc.
● Filling of applications / account opening forms including nomination clause and submission to the
Bank.
Stand-up India:
● Establishment: April 15, 2016.
● Objective: To support entrepreneurship among women and SC&ST Communities who are looking to
obtain a loan to launch their own business venture.
● This scheme provides bank loans within the range of Rs. 10 lakhs up to Rs. 1 crore to at least one SC/ST
& one Women borrower from every bank branch to set up a greenfield enterprise which may involve
services, manufacturing or trade.
Eligibility:
● SC/ST and women entrepreneurs above 18 years of age.
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● In case of non - Individual enterprises, 51% of the shareholding and controlling stake should be held
by either SC/ST and/or women Entrepreneur.
● Borrower should not be in default to any bank/ financial Institution.
● Loans under the scheme is available only for green field Project
16. Banking Ombudsman Scheme
Establishment: 2006 under Section 35 A of the Banking Regulation Act, 1949
Established by: RBI
Tenure: 3 years
Banks covered:All commercial banks (scheduled and non-scheduled, public and private), Regional rural banks,
scheduled primary co-operative banks
Objective:Its main objective is enabling resolution of complaints relating to certain services rendered
by banks and to facilitate the satisfaction or settlement of such complaints.
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Who appoints:The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress
customer complaints against deficiency in certain banking services covered under the grounds of complaint
specified under Clause 8 of the Banking Ombudsman Scheme 2006
Role:
1. The Ombudsman investigates complaints against public bodies and, where appropriate, recommends
redress.
2. The Banking Ombudsman can receive and consider any complaint relating to number of deficiencies
related to banking operations including internet banking.
3. The Reserve Bank extended the scope of Banking Ombudsman Scheme under which banks could be
penalised for mis-selling third-party products like insurance and mutual funds via mobile or electronic
banking.
Power and Functions:
To receive complaints relating to the provision of banking services to consider such complaints and facilitate
their satisfaction or settlement by agreement, by making a recommendation, or award in accordance with this
scheme.
1. An important function of Ombudsman is to protect the rights and freedoms of citizens and needless.
2. The ombudsman shall have the power to supervise the general civil administration. On this point the
duty of ombudsman is closely connected with the public administration.
3. They investigate complaints that haven't been solved by the organisation complained against.
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4. Ombudsmen investigate complaints when something has been handled badly or unfairly, making
someone suffer as a result. This is sometimes called maladministration.
Types of Complaints redressed:
1. Non-payment or delay in payment of inward remittances or non-payment of the same can also be
raised with the banking ombudsman.
2. Delay in issue of drafts, pay orders or bankers’ cheques, and/or failure to issue such drafts and cheques.
3. Inordinate delay in the payment, or non-payment, delay in collection of cheques, drafts, bills etc.
4. Bank refuses to open your account without giving valid reasons.
5. Your loan application is accepted, but money is not released in time.
6. Cases where the bank has failed or delayed in providing banking facilities, other than loans, promised
by the bank in writing or by a direct agent.
7. The bank levying charges without adequate prior notice to the customer.
8. Customers can take cases up to the banking ombudsman in case of non-adherence to the instructions
of the Reserve Bank on ATM or debit card, prepaid card, and credit cards.
● A customer can file a complaint before the Banking Ombudsman if the bank doesn’t gives a reply to
the customer within a period of one month or the bank rejects the complaint, or if the complainant is
not satisfied with the reply by the bank.
Ombudsman Scheme Maximum Compensation for Banks: Rs.20 lakh
Ombudsman Scheme Maximum Compensation for NBFCs: Rs.10 Lakh
17. Know Your Customer
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KYC means Know Your Customer and sometimes Know Your Client. KYC or KYC check is the mandatory
process of identifying and verifying the client's identity when opening an account and periodically over time.
In other words, banks must make sure that their clients are genuinely who they claim to be.
It is a mandatory verification procedure carried out by any banks, financial institutions, and other Indian
organisations with the goal of minimizing illegal activities like money laundering.
Opening bank account, mutual fund account, bank locker, online investing in the mutual fund or gold your
KYC should be updated with bank.
Establishment: 2002
Documents required for KYC:
● Photo Identity Proof
● Address Proof
"Officially valid document" (OVD) for KYC includes the
a) Passport
b) Driving license
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c) Permanent Account Number (PAN) Card
d) Voter`s Identity Card issued by the Election Commission of India
e) Job card issued by NREGA duly signed by an officer of the State Government.
f) Letter issued by the Unique Identification Authority of India containing details of name, address and Aadhaar
number
Types of KYC Verification:
Aadhar Based KYC:Aadhar based KYC is a verification process that can be carried out online, making it highly
convenient for those with an internet connection. With Aadhar based KYC the opportunity to do so is only up
to Rs.50,000 a year.
In- Person Verification KYC: If one wishes to invest more in mutual funds per year, they will be required to
carry out an in-person verification KYC.
18. Small Savings Scheme
Public Provident Fund:
Establishment: 1968
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Objective: The main objective of PPF scheme is to help individuals make small savings and provide returns on
the savings. The PPF scheme offers an attractive rate of interest and no tax is required to be paid on the
returns that are generated from the interest rates.
Tenure: 15 Years
Interest rate: 7.1%
Eligibility:
1. Only Indian Citizens
2. Minimum- Rs.500
Maximum- Rs.1.5 lakh per annum
3. No Age Limit
The following documents have to be produced at the time of activation of a public provident fund account –
a. KYC documents verifying the identity of an individual, such as Aadhaar, Voter ID, Driver’s License, etc.
b. PAN card.
c. Residential address proof.
d. Form for nominee declaration.
e. Passport sized photograph.
Benefits:
1. Good returns
2. Risk free and Guaranteed returns
3. Flexibility of Tenure
4. Liquidity with Partial Withdrawal and Loan Facilities
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Sukanya Samriddhi Yojana:
Establishment: 2015
Objective: To ensure the financial independence of women by encouraging them to invest in a savings scheme
that would enable them to fulfill their long-term life goals and dreams like higher education, marriage, etc.
and ensure financial stability.
Tenure: 21 years of age of a girl child or upon her marriage attaining the age of majority (18 years). However,
contributions only need to be made for 15 years.
Interest Rate: 7.6%
Eligibility:
1. It can be opened in the name of a girl child, by her parents or legal guardians, any time before the girl child
attains 10 years of age.
Only one account per girl child is allowed.
Benefits:
1. Highest Interest Rate among all Small Savings Schemes offered by Government of India
2. Tax benefits are extended to the maturity amount too
3. Lock in Period is one of the best features of this scheme.
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4. Guaranteed Maturity Benefits
5. A minimum of Rs 250 and a maximum of Rs 1.5 lakh can be deposited during the ongoing financial
year.
Senior Citizens Savings Scheme:
Establishment: 2004
Objective: The main objective of the SCSS is to provide an assured return (paid every quarter) to senior
citizens, and in doing so to create a guaranteed regular income flow.
Tenure: 5 years
Interest rate: 7.4%
Eligibility:
1. Available to any resident individual aged 60 years and above.
2. Individuals who have attained 55 years but are less than sixty years old are also eligible to apply for
the senior citizens savings scheme provided they have retired under applicable superannuation or VRS
rules.
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3. The scheme is also available for the retired defense personnel irrespective of above-mentioned age
limits subject to fulfillment of other terms & conditions.
Benefits:
● The investment done under this scheme is tax-deductible under Section 80C, of the Income Tax Act,
1961 up to Rs. 1.5 lakh per annum.
● Flexibility in Investment amount – One can invest any amount in multiples of Rs. 1,000 up to the
maximum cap of Rs. 15 lakhs. However, only one-time lump sum investments are allowed
● The account comes with an initial maturity term of 5 years however this can be further extended to
another 3 years. This encourages senior citizens to have this saving scheme as a medium or a long
term investment .
National Savings Certificate:
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Objective: The primary intention of the scheme is to provide the people with an opportunity to open
a savings investment in a manner which is simple. The National Savings Certificate investment scheme can be
opened by an individual at any post office in the country.
Tenure: Certificates under VIII issue mature in 5 years while the certificates under IX issue mature in 10 years.
Interest Rate: 6.8%
Eligibility:
1. All resident Indians are eligible to invest in NSCs.
2. Non-resident Indians cannot purchase new NSCs. However, in case of resident subscribers of
NSC becoming NRI prior to maturity of certificates, such NSCs can be held till maturity.
3. Trusts and Hindu Undivided Family (HUFs) cannot make NSC investments
Benefits:
● Risk Free
● Higher rate of returns
● NSC investments can also be transferred to another family member (nominated by the investor) in
case of the investor’s demise
● Flexible Investment amount
KisanVikasPatra:
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Establishment: 1988
Objective: To encourage long-term financial discipline in people.
Tenure: 124 months
Rate of Interest: 6.9%
Eligibility:
1. Any Indian citizen above the age of 18 years
2. You can also buy one for a minor or jointly with another adult
Benefits:
1. Guaranteed Returns
2. Though the account matures after 124 months, the lock-in period is 30 months.
3. KVP is available in denominations of Rs. 1000, Rs. 5000, Rs. 10,000 and also Rs. 50,000 for investment.
There is no maximum limit.
19. Negotiable Instruments
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A negotiable instrument is a document that guarantees payment of a specific amount of money to a specified
person (the payee). It is a mode of transferring a debt from one person to another. The Negotiable
Instruments are enacted under Negotiable Instruments Act 1881.
Features:
● A negotiable instrument is freely transferable.
● A negotiable instrument must be in writing. This includes handwriting, typing, computer print out
and engraving, etc.
● The time of payment must be certain
● The payee must be a certain person
● A negotiable instrument must bear the signature of its maker. Without the signature of the drawer
or the maker, the instrument shall not be a valid one.
● These instruments can be transferred indefinitely till they are at maturity.
● These instruments are in writing and signed by the parties, they are used as evidence of the fact of
indebtness because they have special rules of evidence.
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● These instruments relate to payment of certain money in legal tender, they are considered as
substitutes for money and are accepted in exchange off goods because cash can be obtained at
any moment by paying a small commission.
Types of Negotiable Instruments:
According to Section 13 of the Negotiable Instruments Act, "A negotiable instrument means a promissory
note, bill of exchange or cheque payable either to order or to bearer.
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Some of the important sections of the Act:
● Section 4 - Promissory note
● Section 5 - Bill of exchange
● Section 6 – Cheque
● Section 15 – Endorsement
Promissory Notes:
According to Section 4 of the Act defines, “A promissory note is an instrument in writing (note being a
bank-note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a
certain sum of money to or to the order of a certain person, or to the bearer of the instruments.”
Elements of Promissory Notes:
● The Promissory note must be in writing
● It must contain a promise/undertaking to pay certain sum of money
● The promise must be unconditional and certain
● It must be duly signed and delivered by the maker
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● The parties must be certain
● It must be stamped according to the provisions of the stamp Act, 1940.
Parties of Promissory Notes:
● Drawer: the person who makes a promissory note. He is also called the promisor, the maker, the payor,
the debtor.
● Drawee: the person in whose favor the promissory note is drawn and who is meant to receive the payment.
He is also called the promisee, the payee, the creditor.
● Bearer: the person who holds a promissory note. He is also called the holder. The bearer and the payee is
usually the same person, but they can be different.
● Endorser: the person who endorses a promissory note.
● Endorsee: the person in whose favor the promissory note is endorsed and who receives it after
endorsement. He becomes the new bearer and payee after endorsement.
Bill of Exchange:
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Section 5 in The Negotiable Instruments Act, 1881 defines “Bill of exchange”. A “bill of 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.
Requirements of Bill of Exchange:
1. The instrument must be in writing.
2. The instrument must be signed by the drawer.
3. The instrument must contain an order to pay, which is express and unconditional.
4. The drawer, drawee and the payee must be certain and definite individuals.
5. The amount of money to be paid must be certain.
6. The payment must be in the legal tender currency of India.
7. The money must be payable to a definite person or according to his order.
Elements of Bill of Exchange:
Drawer: The maker of a bill of exchange is called the Drawer.
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Drawee: The person who is directed to pay is called the Drawee.
Payee: The person who will receive the money is called the Payee.
Holder: When the payee has custody of the bill, he is called the Holder.
Acceptor: The drawee signifies his acceptance by signing on the bill. After such signature the drawee becomes
the Acceptor.
Endorser: If the bill holder endorses it to another person, then he will be called an endorser
Endorsee: This is the person to whom the Bill of Exchange has been endorsed.
Cheque:
According to Section 6, of the Negotiable Instruments Act, 1881, the term cheque is defined as “a bill of
exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.”
Features of Cheque:
1. Must be in Writing
2. Must be Unconditional
3. Must be Drawn on a Specified Banker
4. In a valid cheque, it must signs by the drawer with date otherwise it would not be a valid cheque.
5. It is one of the essential requirements of the Cheque that it must be payable in money and
money only.
Parties of a cheque:
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● Drawer and Drawee: The maker of a cheque calls the ‘Drawer’, the person thereby directed to pay
calls ‘Drawee’
● Payee: The person named in the instruments, to whom or to whose order the money is by the
instrument directly to pays, and calls the “Payee.”
● Holder: The person entitled in his name to the possession of the cheque and to receive or recover the
amount due to calls the “Holder of the cheque.”
● Endorser: The maker or the holder of the cheque signs his name (endorse) on the back of the cheque
for negotiable and he says to be the ‘Endorser.’
● Endorsee: The endorser who signs his name and directs to pay the amount mentioned in the cheque
to, or the order of, a specified person, and the person so specified calls the “Endorsee” of the cheque.
Types of Cheque:
Open Cheque: An Open Cheque or An uncrossed Cheque is a cheque that has not been crossed with two
parallel lines on the top left corner. Such cheque can be encashed at any bank. It can also be transferred to
the bank account of the person who presented the cheque.
Crossed Cheque: It is the kind of cheque where two parallel transverse lines are drawn across the top left,
with or without the words: ‘& Co., Not Negotiable, A/c Payee. It cannot be encashed at any bank and can be
credited only to the account of the Payee.
Order Cheque: Order cheque is cheque which you give to a party and order the bank to pay the ordered
amount. The person collecting the cheque has to give an identity proof to encash the cheque.The payee can
transfer an order cheque to someone else by signing his or her name on the back of it.
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Bearer Cheque: A bearer cheque is one that does not has the word 'Bearer' on the cheque cancelled. The
cheque sometimes can be made payable to Cash or bearer or made payable to a specific name. This cheque
is payable by the drawee bank over the counter to the Bearer or presenter of the cheque. A bearer cheque
can be transferred by mere delivery and requires no endorsement.
Anti Dated Cheque: Ante-dated Cheque When you write a date on a cheque that is older than the date on
which it is delivered to the bank, a cheque is considered an Ante dated cheque.
Post Dated Cheque: Postdated cheque is a form of cheque drawn with a future date written on it.
Stale Cheque: Stale cheque is outdated cheque issued to the bank after the date of payment (after three
months) has expired.
Mutilated Cheque: If a cheque is torn into two or more pieces then it is called a Mutilated Cheque.
Travellers Cheque: A traveller’s cheque is a medium of exchange that can be used in place of hard currency.
Crossing of a cheque:
According to Section 123 of the Negotiable Instruments Act, 1881 regarding Crossing of Cheque, the guidance
declared defines that the amount defined in the cheque will be transferred directly into the account of the
cheque holder and will not be directly delivered as cash to the owner over the bank counter.
Types:
General Crossing: when two transverse parallel lines are drawn at the corner of the cheque
Special Crossing: If two parallel lines are drawn across the cheque with the name of the bank, the lines are
called special/restrictive crossing.
Restrictive Crossing: crossing of a cheque through two parallel lines on the left corner of a cheque. The words
A/c payee are inserted inside the parallel lines.

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Endorsement: The act of a person who is holder of a negotiable instrument in signing his or her name on the
back of that instrument, thereby transferring title or ownership.
Difference Between Bill of Exchange and Cheque:
Particulars Bill of Exchange Cheque
Drawn by May be drawn on anyone, Always drawn on a banker
including a banker
Existence Section 5 of Negotiable Section 6 of Negotiable
Instruments Act 1881 Instruments Act 1881
Notice of Dishonour Notice of Dishonouring is Not necessary
necessary
Stamping Needed Not needed
Grace Days Entitled 3 days of Grace Not entitled to days of grace
Demand The amount may be The amount is always
payable on demand or after payable on demand
a specified Time.
Validity No Validity for Payment 3 Months
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Crossing Crossing of the bill of A cheque can be crossed
exchange is not possible.
Demand Draft:
A Demand Draft is a Negotiable Instrument to transfer funds from one bank to another. The DD is issued by
the bank to the drawer, directing another bank or the own bank branch to pay a specific amount of money
to the payee.
Features of DD:
1. It is issued by one bank to another bank
2. It is only payable to the payee written on the demand draft and it is payable on demand.
3. The Purchaser of the DD need not be a Customer of the bank
4. DD cannot be stopped except by court order. Amount is refunded if DD is not delivered.
5. It is an Unconditional order of payment
Difference between Cheque and DD:
Particulars Cheque Demand Draft
Bank fee No Charge Levies Charges
Parties Involved Three Parties: Drawee, Two Parties: Drawer and
Drawer and Payee Payee
Issued by Customer of the bank Bank
Order of Payment Account holder to the bank One bank to another bank
Dishonouring Yes No
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Payment Mode Can be stopped Cannot be stopped
Signature Necessary Contains seal and signature
of authorized officer and
the rubber stamp of the
bank
20. ATM and its Types
ATM stands for Automated Teller Machine. An ATM is an electronic banking machine that allows customers
to withdraw money with an ATM card and perform other banking transactions without the aid of banking
staff.
Features:
1. Transfer of Funds
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2. Balance Enquiry
3. Easy Cash Withdrawal
4. Unlock or Change Pin
5. Cash Deposit
6. Recharge of Mobile
Advantages:
1. Offer Financial Inclusion
2. Offers wide range of services
3. Hard cash anywhere at anytime
4. Continue to operate when businesses close due to natural disasters, health crisis or economic
depression
5. Round the clock services
6. Access to bank from any part of the world
Disadvantages:
1. Limitation of Cash Withdrawals
2. Possibility of Misusing the ATM card if misplaced, lost or stolen
3. Hacking is possible
4. Lack of Personal Service
5. Banks have limited ATMs in Rural Areas
6. If you get a problem with your bank card, or forget your pin, you can’t withdraw your money
Types of ATM:
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On-site ATM: The ATM are set up in the premises of the bank so that both the physical branch and ATM can
be used.
Off-site ATM: ATMs are located in various places except the bank premises
White Label ATM: ATMs are owned and operated by non-bank entities but they are not doing 'outsourcing-
contract' from a particular bank.Tata Communications Payment Solutions Limited (TCPSL) was the first
company authorized by the Reserve Bank of India (RBI) to open White Label ATMs in the country.
Brown Label ATM: Hardware and lease of the ATM Machine is owned by a service provider but Cash
Management is handled by the respective Banks
Yellow Label ATM: ATMs provided for online purpose
Pink Label ATM: ATMs provided for Women
Green Label ATM: ATM for Agricultural Transaction
Orange Label ATM: ATM for Share Transactions
Worksite ATM:ATM located within the premises of an organisation and generally meant only for the
employees of the organization.
Mobile ATM: ATM moves in various areas for the customers. Mobile ATM is a concept of ATM–on–wheels.
These ATMs are available in areas that have a big footfall or have a good automobile traffic.
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21. Payments and Settlement System in India
Payment and Settlement Systems constitute a major aspect of a country’s financial and economic structure.
A payment system is a system which enables payment between two entities i.e. a payer and payee and
constitutes clearing, settlement or payment service.
Payments and Settlement Act System 2007 was set up by the Reserve Bank of India on 20 th December, 2007
and came into force from 12th August 2008.
Objectives:
1. Provides for the regulation and supervision of payment systems in India
2. To designate the RBI as authority for purposes related to payment systems in India
3. The Act also provides the legal basis for netting and settlement facility.
Under the Payment and Settlement System Act 2007, two regulations have been made by RBI
1. Board for Regulation and Supervision of Payments and Settlements Systems Regulation, 2008
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2. Payments and Settlement Systems Regulations, 2008.
Types of Payment and Settlement Systems:
1. National Electronic Fund Transfer (NEFT): It is an online payment system for transferring funds from
one bank to another. Started in November 2005 established and maintained by Institute for
Development and Research in Banking and Technology. NEFT is a 24*7 facility. There is no maximum
amount assigned by the Reserve Bank of India (RBI) for NEFT Transactions.
 NEFT fund transfer starting from Re.1. On the other hand, RBI has not set any maximum limit
for the same. When it comes to cash transactions, you can transfer up to Rs.50,000 per
transaction.
 Nepal is the only country that you can transfer money through NEFT outside india. And the limit
is now set up to Rs.2 Lakh as per RBI.
2. Immediate Payment Services (IMPS): It is an electronic fund transfer mechanism of the Indian banking
system. It lets you transfer funds to a payee’s bank account instantly. This service is available for the
customers 24*7. Launched on November 2010.
IMPS per transaction limit increased to Rs.5 Lakh from Rs.2 Lakh
3. Real Time Gross Settlement ( RTGS): RTGS is a funds transfer system where money is moved from one
bank to another in ‘real-time’, and on gross basis. It is not subjected to waiting period. It was introduced
by RBI in 2004. The system is available on all days on 24x7x365 basis. The RTGS system is primarily
meant for large value transactions. The minimum amount to be remitted through RTGS is Rs.2,00,000/-
with no upper or maximum ceiling.
Processing Fees:
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a) Inward transactions – Free, no charge to be levied.
b) Outward transactions – Rs. 2,00,000/- to 5,00,000/- : not exceeding Rs. 24.50/-; (exclusive of tax, if
any)
Above Rs.5,00,000/- : not exceeding Rs.49.50/-. (exclusive of tax, if any)
4. Mobile Banking System: Mobile banking system is carried out in Banks and financial Institutions to
conduct financial transactions using Mobile device.
5. Automated Teller Machine (ATM): ATM stands for Automated Teller Machine. An ATM is an electronic
banking machine that allows customers to withdraw money with an ATM card and perform other
banking transactions without the aid of banking staff.
6. Credit cards and Debit Cards: A credit card is a transactional card that enables the holder to make
purchases of goods and services or withdraw advance cash on credit. A debit card is defined as
a payment card that draws money directly from your checking account. It allows people to make secure
payments online and in person.
7. Indo- Nepal Remittance Facility Scheme: Indo-Nepal Remittance Facility is a cross-border
remittance scheme to transfer funds from India to Nepal through NEFT.
8. Electronic Clearing Service Credit: ECS Credit enables payment of amounts towards distribution of
dividend, interest, salary, pension, etc., of the user institution.
Electronic Clearing Service Debit:It is used for raising debits to a large number of accounts (for instance,
consumers of utility services( telephone bills, electricity/ water bills etc.) , borrowers, investors in mutual funds
etc.) maintained with bank branches at various locations within the jurisdiction of a ECS Centre for single credit
to the bank account of the user institution.
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22. NPCI and its Products
NPCI is an acronym for National Payments Corporation of India. NPCI is an Umbrella Organization for
operating retail Payments and settlement systems in India. It is established in the year 2008 under section
8 of Companies Act 2003 and initiated by Reserve Bank of India and Indian Banks Association.
Aim: The main aim of NPCI is to increase fund transfer options and to evolve as the best payment network.
Promoter Banks: NPCI has ten core promoter banks—State Bank of India, Punjab National Bank, Bank of Baroda,
Canara Bank, Bank of India, Union Bank of India, HDFC Bank, Citibank, HSBC, and ICICI Bank.
Roles and Responsibilities:
1. Owns and operates Unified Payment Interface (UPI)
2. Provides safe and secure payment through UPI
3. NPCI approves the participation of Issuer Banks, PSP Banks, Third Party Application Providers (TPAP)
and Prepaid Payment Instrument issuers (PPIs) in UPI.
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4. NPCI includes transaction processing and settlement, dispute management and clearing cutoffs for
settlement.
Subsidiary: NPCI sets up its subsidiary firm – NPCI Bharat BillPay Ltd
National Payments Corporation of India (NPCI) has announced the formation of its wholly-owned
subsidiary firm - NPCI Bharat BillPay Ltd. (NBBL). The new entity came into effect from April 1, 2021. The
brand under the new entity - Bharat BillPay - offers various recurring payment services to customers,
including bill payments for electricity,telecom, DTH, Gas, Education fees, water and municipal taxes, NETC
FASTag recharge, Loan repayments, Insurance, Cable, Housing Society, Subscription Fees, Hospital, Credit
card, Clubsand association, etc.
Products of NPCI:
1. National Financial Switch: It is the largest interconnected network of Automated Teller Machines in
India. NFS enabled the interconnectivity between the bank’s switches such that the transactions made
at any ATM could be routed to the connected banks. This NFS is developed by Institute of Development
and Research in Banking Technology (IDRBT). It is run by National Payments Corporation of India
(NPCI).
2. AePS: AePS is the acronym for Aadhar Enabled Payment System. AEPS allows financial inclusion
transaction at MicroATM through the Business Correspondents of any bank using the
Aadharaunthentication. This system empowers all sections of the society by making financial and
banking services available to all through Aadhar.
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3. UPI: UPI is an acronym of Unified Payments Interface. UPI is a real time instant money transfer between
the banks. This interface is regulated by RBI and works by transferring funds banks on a mobile
platform. Introduced in 2016. It is a single window system developed by NPCI.
4. IMPS: It is an electronic fund transfer mechanism of the Indian banking system. It lets you transfer funds
to a payee’s bank account instantly. This service is available for the customers 24*7. Launched on
November 2010. IMPS per transaction limit increased to Rs.5 Lakh from Rs.2 Lakh
5. NACH: NACH stands for National Automated Clearing House. It is a web based payment solution which
helps the financial institutions to handle bulk transactions. The solution will facilitate all kind of
interbank, electronic transfers for bulk volume payments in easy ways.
6. APBS: APBS is an acronym for Aadhar Payment Bridge System.It transfers benefits and subsidies in a
seamless & timely manner and directly into the Aadhar Enabled Bank Account. It Eliminates Inordinate
delays, multiple work and paper work involved.
7. BBPS: BBPS stands for Bharat Bill Payment System. It is established in 2013 and owned by NPCI. It is a
platform for bill payments and the service is carried through online and through a network of agent.
This system will encourage cashless transactions.
8. *99# USSD: Using this service customers can dial *99# to access financial services. This system is an
Unstructured Supplementary Service Data (USSD) based mobile banking service which enables many
financial services such as sending and Receiving funds offline, Balance enquiry etc.
9. Rupay: It is a financial payment service launched by National Payments Corporation of India in 2012.
RuPay Cards will address the needs of Indian consumers, merchants and banks. The benefits of RuPay
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debit card are the flexibility of the product platform, high levels of acceptance and the strength of the
RuPay brand-all of which will contribute to an increased product experience.
10. National Common Mobility Card - Rupay Contactless:Rupay Contactless is a contactless payment
technology that allows cardholders to wave their card in front of contactless payment terminals without
the need to physically swipe or insert the card into a point-of-sale device
11. BHIM: BHIM is launched by National Payments Corporation of India (NPCI) in 2016. It allows
customers to transfer or receive money easily through Unified Payment Interface (UPI). The BHIM
app replace the existing mobile wallets and it is a reliable option for inter-bank transactions unlike
other e-wallets. Currently it is available in 20 languages, i.e., Hindi, English, Tamil, Telugu, Malayalam,
Bengali, Odia, Kannada, Punjabi, Assamese, Urdu, Marathi, Gujarati, Haryanvi, Bhojpuri Konkani,
Marwari, Manipuri, Khasi and Mizo. The Unified Payments Interface (UPI) has achieved recognition in
Singapore (March 2020), Bhutan (July 2021), and recently with partners in the UAE and Nepal
(February, 2022), according to the Ministry of Finance
12. Bharat QR: It is developed by NPCI, Mastercard, and Visa, is an integrated payment system in IndiaThe
money transferred through BharatQR is received directly in the user's linked bank account. It provides
a common interface between RuPay, Mastercard, Visa, American Express as opposed to other such
systems used by startups and is interoperable with all the banks
13. BHIM Aadhaar Pay:BHIM Aadhaar pay is an Aadhaar based payments interface which allows real time
payments to Merchants using Aadhaar number of Customer & authenticating them through their
biometrics
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14. Cheque Truncation System :CTS is based on a cheque truncation or online image-based cheque
clearing system where cheque images and magnetic ink character recognition (MICR) data are
captured at the collecting bank branch and transmitted electronically
15. National Electronic Toll Collection: FASTag is a device that employs Radio Frequency Identification
(RFID) technology for making toll payments directly while the vehicle is in motion. FASTag (RFID Tag)
is affixed on the windscreen of the vehicle and enables a customer to make the toll payments directly
from the account which is linked to FASTag.
16. e-RUPI :
It is basically a cashless and contactless tool that can be used for digital payments. It can be used as
an e-voucher that is based on a QR code or a SMS string. The contact-less payment is directly reached
to the beneficiary.
It is a prepaid service, which means the user should have the amount available in their account. This is
a one-time payment mechanism as it requires the beneficiary to redeem the voucher in order to receive
the cash. The voucher can be redeemed without a card or any digital payment apps or internet banking.
The maximum limit for each e-RUPI voucher has currently been set at INR 1 Lakh. Further, for Covid-
19 and related healthcare services, up to 10 e-RUPI vouchers can be issued on a single mobile number.
23. Basel Norms
Basel norms is an international banking system issued by the Basel Committee on Banking Supervision (BCBS).
The Basel norms aim is to coordinate banking regulations across the globe, with the goal of strengthening
the international banking system.
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Basel Accord:The Basel Accords are a collection of banking regulation recommendations that the Basel
Committee on Banking Supervision (BCBS) created. The Basel Accords primarily focuses on prudential norms
for bank capital under the aegis of which banks are required to make sure adequate capital to cover losses
on account of serious risks in their business.
The BASEL norms have three aims: Make the banking sector strong enough to withstand economic and
financial stress; reduce risk in the system, and improve transparency in banks.
Basel Committee on Banking Supervision (BCBS) has issued three set of regulations :
1. Basel I
2. Basel II
3. Basel III
Basel I:
Introduced in: 1988
Focus: Credit Risk
India Adopted Basel I Guidelines in 1999.

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● All banks are required to maintain Capital Adequacy Ratio of 8 %
● Defines capital and structure of risk weights for banks
Basel II:
Issued: 2004
● Under Basel II operational risk is segregated from credit risk and recognised as a distinct major risk in
the Basel Accords and their Implications on Banking Business.
● The purpose of Basel Accord II is to ensure that banks have adequate capital to guard against financial
and operational risks in their business.
● It is based on three parameters
Capital Adequacy Requirements: Capital Adequacy ratio of 8% should be maintained
Supervisory Review: Banks need to develop and use better management techniques in Monitoring.
Banks need to manage all the three types of risks such as Credit, Market and operational risks faced
by them.
Market Discipline: Banks need to disclose their CAR and Risk Exposure and increased disclosure
requirements.
 India Follows Basel II Guidelines at present
Basel III:
Issued: 2010
After the 2008 financial crisis, there was a need to update the BASEL norms to reduce the risk in the banking
system further.
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The guidelines aim to promote a more resilient banking system by focusing on four vital banking parameters
viz. capital, leverage, funding and liquidity.
● Better Capital Quality: One among the key elements of Basel III is that the introduction of much stricter
definition of capital. Better quality capital means the upper loss absorbing capacity. This successively will
mean that banks are going to be stronger, allowing them to higher withstand periods of stress.
● Leverage Ratio: A leverage ratio is that the relative amount of capital to total assets (not risk-weighted). This
aims to place a cap on swelling of leverage within the banking sector on a world basis. 3% leverage ratio of
Tier 1 are tested before a compulsory leverage ratio is introduced in January 2018.
● Liquidity Requirements: Basel III introduced the usage of two liquidity ratios – the Liquidity Coverage Ratio and
also the Net Stable Funding Ratio. The Liquidity Coverage Ratio requires banks to carry sufficient highly quick
assets that may withstand a 30-day stressed funding scenario as specified by the supervisors.
Basel III capital requirements focus on reducing counterparty risk, which depends on whether the bank trades
through a dealer or a central clearing counterparty (CCP). If a bank enters into a derivative trade with a dealer,
Basel III creates a liability and requires a high capital charge for that trade.
24. Credit Rating Agencies
National Credit Rating Agencies:
Agency Name Headquarte Establishme Functions Share Holder
rs nt
Credit Rating Mumbai 1987 The Standard &
Information main function of CRIS Poor’s
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Services of India IL is to establish the
Limited (CRISIL)- creditworthiness of
Oldest Credit companies based on
Rating Agency in the business
India strengths, the board,
the market share, and
reputation of the
company and so
on. CRISIL rates
organization like
public limited
companies, banks and
financial
organizations and not
individuals
India Ratings and Mumbai 1995 provides accurate and Fitch
Research Private timely credit opinions
Limited on the country’s credit
market
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Investment Gurugram, 1991 The organisation is Moody’s
Information and Haryana known for assigning
Credit Rating corporate
Agency (ICRA) governance rating,
performance rating,
mutual funds ranking
Credit Analysis Mumbai 1993 The agency provides
and Research credit rating that
Limited (CARE) helps corporates to
raise funds for their
investment
requirements.
Investors can make
decisions based on
credit risk and risk-
return expectations.
SMERA Ratings Mumbai 2005 Analyses and
establishes the
credibility of existing
micro, small, and
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medium enterprises
(MSMEs). MSMEs can
improve, grow, and
avail cheaper/faster
loans.
CIBIL Mumbai 2000 To provide a credit TransUnion
report and credit
score for individuals
as well as credit report
and credit rank for
companies, which are
often the decisive
factors in getting new
credit applications
approved
ONICRA Gurgaon, 1993 ONICRA credit
Haryana assessment and
scoring services for
both individuals and
businesses and is also
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a reliable employee
background
screening
company. ONICRA al
so offers risk
assessment reports
and analytical
solutions for
individuals, MSME's as
well as for well-
established corporate
organizations.
International Credit Rating Agencies:
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Agency Name Headquarters Establishment Functions
Moody’s New York, United 1909 ● Moody's Investors Service
States provides investors with
credit ratings, risk analysis,
and research for stocks,
bonds, and government
entities.
Fitch New York, United 1914 Fitch offers sovereign
States and London , credit ratings that describe
UK each nation's ability to
meet its debt obligations
Standard & Poor’s- New York, United 1860 Publishes financial
largest of the Big States research and analysis on
Three credit-rating stocks, bonds, and
agencies commodities.
CAMELS Ratings: CAMELS acronym stands for "Capital adequacy, Asset quality, Management, Earnings,
Liquidity, and Sensitivity. It is one among the rating agency originally developed in the US. It is used by
regulatory banking authorities to rate financial institutions, according to the six factors represented by its
acronym.
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25. Financial Market
Financial market could be a platform where buyers and sellers are involved in sale and buy of
monetary products like shares, mutual funds, bonds so on.
Functions:
1. It is a platform that facilitates traders to buy and sell financial instruments and securities .
2. Financial markets create liquidity that allows businesses to grow and entrepreneurs to raise money for
their ventures.
3. Mobilizing Funds
Types of Financial Market:
Types of Financial Market
Capital Market Financial Market
CapitalMarket:
Capital market could be a place where buyers and sellers like trade (buying/selling) of economic securities
like bonds, stocks, etc. The trading is undertaken by participants like individuals and institutions. Capital
market trades mostly in long-term securities.
Functions:
1. The Capital Markets help to accelerate the process of economic growth
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2. Facilitates the movement of capital to be used more profitability and productively to boost the national
income
3. Minimization of transaction and information cost
4. Quick valuations of financial instruments
5. Encourages a massive range of ownership of productive assets
There are two types of Capital Market:
1. Primary Market
2. Secondary Market
Primary Market: A primary market is one during which a company issues new securities in exchange for cash
from an investor (buyer).It deals with trade of new issues of stocks and other securities sold to the investors.
The primary market mainly deals with new securities that are issued within the stock market for the first time.
Thus it is also referred to as the new issue market. The main objective is capital formation for government,
institutions, companies, etc. also referred to as Initial Public Offer (IPO).
Secondary Market: Secondary market is a form of capital market where stocks and securities which have been
previously issued are bought and sold. Secondary markets give investors the means to resell/ trade existing
securities. It is called as stock exchange or stock market.
Capital Market Instruments:
1. Securities: A security is a tradable financial asset.
2. Equity Shares: It is an instrument, a contract, which guarantees a residual interest in the assets of an
enterprise after deducting all its liabilities- including dividends on preference shares.
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3. Debentures: A debenture is a contract between the investor and also the company, where a charge
over the company's assets is granted to the lenders by providing them.
4. Bonds: Bonds are units of corporate debt issued by companies and securitized as tradeable assets.
A bond is referred to as a fixed income instrument since bonds traditionally paid a fixed interest rate
(coupon) to debt holders.
5. Preference Shares: Preference shares also commonly known as preferred stock, is a special type of
share where dividends are paid to shareholders prior to the issuance of common stock dividends.
Money Market:
Money Market is a trading in a very short term debt investments upto 1 year. They invest in various money
market instruments and endeavor to offer good returns.
Features:
1. Maintains high Liquidity in Market
2. Provides Funds for short term
3. No fixed geographical Location
Types of Money Market Instruments:
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1. Treasury Bills: Treasury Bills or T-Bills are short term debt instruments. Treasury bills are zero coupon
securities and no interest. They are the safest short term fixed income investments as they are backed
by the Government of India.
Tenure- 91 days, 182 days and 364 days
Denomination- Rs.25000 and its multiples
Issued by: Government of India
2. Certificate of Deposits: Certificate of Deposit or CD is a fixed-income financial instrument governed
under the Reserve Bank and India (RBI) issued in a dematerialized form.
Introduced in- 1989
Tenure- 7 days to 1 year
Denomination: Rs.5 lakh and its multiples
Issued by: All-India Financial Institution or Scheduled Commercial Bank.
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3. Commercial Papers: Commercial Paper is a short term debt instrument issued to meet short-term
financial obligations, such as funding for a new project. It is an unsecured money market instrument
issued in the form of a promissory note.
Introduced in – 1990
Tenure-15 days to 1 year
Denomination- Rs.5 lakh and its multiples
Issued by- Primary Dealers (PDs) and the All-India Financial Institutions (FIs)
4. Promissory Notes: It is a financial instrument with a written promise by one party, to pay to another
party, a definite sum of money by demand or at a specified future date, although it falls in due for
payment after 90 days within three days of grace.
5. Call Money and Notice Money: When a loan is lent for a single day then it’s called “Call Money”. If it’s
lent for as many as 15 days then it’s called “Notice Money”.
6. Bankers Acceptance: A financial instrument produced by an individual or a corporation, in the name
of the bank is known as Banker’s Acceptance.
Tenure: 30 days to 180 days
Issued by: Bank
7. Repurchase Agreement: Repurchase agreements (also commonly referred to as repo agreements) are
short-term secured loans frequently obtained by dealers (borrowers) to fund their securities portfolios,
and by institutional investors (lenders) such as money market funds and securities lending firms, as
sources of collateralised investment.
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8. Cash Management Bills: These bills are issued by central government to meet their financial needs. The
bills are issued by RBI on behalf of the government.
Tenure: Less than 91 days.
26. Risks and its Types
Risks defined as the possibility of losing the original investment. It is defined as the chance that an outcome
or investments actual gains will differ from an unexpected outcomes.
Types of Risks in Banking Sector:
1. Credit Risk: Credit Risk means the borrower fails to repay the debts. This is caused due to the lender
many not receive the owned principal and interest which in turn results in interruption of cash flows
and increased costs for collection.
2. Market Risk: Market risk is the risk of losses on financial investments caused by adverse price
movements. Examples of market risk are: changes in equity prices or commodity prices, interest rate
moves or foreign exchange fluctuations.
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3. Systemic Risk: Systemic risk refers to the risk of a breakdown of an entire system rather than simply the
failure of individual parts.
4. Operational Risk: Operational risk in banking is the risk of loss that stems from inadequate or failed
internal systems, internal controls, procedures, or policies due to employee errors, breaches, fraud, or
any external event that disrupts a financial institution’s processes.
5. Reputational Risk: Reputation risk is the risk arising from adverse perception of an institution by its
stakeholders.
6. Liquidity Risk: Liquidity risk is the risk that a company or individual will not be able to meet short-term
financial obligations due to the inability to convert assets into cash without incurring a loss. This most
often occurs when assets (such as securities) cannot be sold for a reasonable price due to a lack of
buyers, large price movements, or widening bid-ask spreads.
7. Default Risk: Default risk refers to the risk of default on payment obligations, such as loans, and other
financial transactions.
8. Moral Hazard: Moral Hazard is the concept that individuals have incentives to alter their behaviour
when their risk or bad-decision making is borne by others.
27. Types of Money
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There are four types of Money.
1. Commodity Money
2. Fiat Money
3. Reserve Money
4. Fiduciary Money
Commodity Money: Commodity money is a good whose value serves as the value of money. Gold coins are
an example of commodity money. Commodity money facilitates this process because it acts as a generally
accepted medium of exchange.
Fiat Money: A fiat money is a type of currency that is declared legal tender by a government but has no
intrinsic or fixed value. Fiat currency is a national currency usually issued by a country's government or central
bank. Well-known examples of fiat currencies include the pound sterling, the euro and the US dollar.
Reserve Money: Reserve Money is Currency in Circulation plus Deposits of Commercial Banks with RBI. It is
the base level for the money supply or the high-powered component of the money supply.
Fiduciary Money: Fiduciary money is a type of currency that does not have coverage in material properties
(to which we can include noble gold, among them gold, among others). Fiduciary money is accepted on the
basis of the trust its issuer (the bank).
27. Loans and its Types
A Loan is a sum of money that an individual or company borrows from a lender. A loan is when you receive
money from a friend, bank or financial institution in exchange for future repayment of the principal and
interest. A loan is essentially an amount borrowed for a fixed period.
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Characteristics of Loan:
1. It is a short term source of finance
2. Time to maturity describes the length of the loan contract.
3. Payments may be required at the end of the contract or at set intervals, usually on a monthly or semi-
annual basis
4. Interest is the cost of borrowing money
5. Assets pledged as security against loan loss are known as collateral.
Ways and Means Advances: The Reserve Bank of India (RBI) gives temporary loan facilities to the central and
state governments. This loan facility is called Ways and Means Advances.
Types of Loan:
Secured Loan:
When the borrower pledges some asset as collateral for the loan which then becomes a secured debt is called
secured Loan.
Examples:
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1. Car loan
2. Vehicle Loans
3. Gold Loan
4. Home Loan
5. Loan against Property
Unsecured Loan:
Unsecured Loan means the loan is approved without producing Collateral. The Unsecured Loan is a reverse
of Secured Loans.
Examples:
1. Credit Cards
2. Student Loans
3. Personal Loan
4. Unsecured Bonds
5. Bank Overdrafts
Term Loans:
A Term loan is one of the type of loan with fixed duration for repayment. A borrower can opt for a fixed or
floating rate of interest for repayment of the advance.
Types:
1. Short term
2. Medium term
3. Long term
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Revolving Loan:
Once the outstanding amount is paid off, the borrower can use it over and over again which is called as
Revolving Loan.
Example: Credit cards
Soft Loans:
A soft loan is a type of loan which bears no interest or with lower rate of interest. This type is also called
Concessional Loan. These Loans have extended grace period or interest holidays for repayment.
Hard Loan:
Hard Loan is a unique type of loan in which funds are secured by real property instead of the borrower's
creditworthiness. It is a risky asset based loans.
Reverse Mortgage Scheme:
A reverse mortgage loan, like a traditional mortgage, allows homeowners to borrow money using their home
as security for the loan. This type of loan is especially for senior ages of 62 and older. This is opposite to Plain
Home Loan.
Introduced in: 2008 by Government of India
The loan under reverse mortgage shall not be granted for a period exceeding twenty years from the date of
signing the agreement by the reverse mortgagor and the approved lending institution. Reverse mortgage
loans typically must be repaid either when you move out of the home or when you die.
29. Non-Performing Assets (NPA)
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A Non- Performing Assets refers to the arrear in repayment of a loan or advances overdue for a period of 90
days. A 'non-performing asset' (NPA) was defined as a credit facility in respect of which the interest and/ or
installment of principal has remained 'past due' for a specified period of time.
Causes of NPA:
1. Business Management problems
2. Internal bank Management
3. Credit Policy
4. Lack of adequate resources
Impact of NPA:
1. Reduces the Profit of the bank but also increases the loss.
2. Higher interest rates by the banks to maintain the profit margin
3. High Non Performing Assets reduces the confidence level of the investor which significantly impact the
Share price of the Bank in this situation, banks stop payout of dividend to the shareholders, which was
not in the interest of the investor.
4. Higher NPA affects the whole economy structure
Types of NPA:
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Standard Assets: They are NPAs that have been past due for anywhere from 90 days to 12 months.
Sub- Standard Assets: If a NPA remains for a period less than or equal to 12 months is considered to be Sub-
Standard Assets.
Doubtful Assets: If a NPA remained for more than 12 months is called Doubtful Assets.
Loss Assets: A lost asset is the one which remains as NPA for a period of more than 36 months.
Willful Defaulters: Willful defaulters are the borrowers who are unwilling to repay their debt obligations,
despite having the capacity to pay.
30. Prompt Corrective Action
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Introduced in:2002 by Reserve Bank of India
Its main ATM is to check the problem of Non- Performing Assets in the Indian banking sector. When the
NPAs of the banks soared beyond the regulatory tolerance levels, then the banks are under PCA framework.
Causes of PCA:
1. Capital Adequacy Ratio (CAR)
2. Asset quality
3. Profitability
4. Total debt level or leverage, which measures the financial risk of the bank
Impact of PCA:
1. Impacts the Rating of the Banks
2. It can Accelerate the loss of Market share
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3. Hindrance to Economic Growth
PCA Restrictions:
1. Banks should not expend their Branches
2. Banks are not allowed to renew or access costly deposits
3. Banks Should not Grant Loans
4. Banks are not allowed to enter into a new business
5. Should not Hike Salary of the Employees
6. Impose restrictions on the bank on borrowings from interbank market.
Recovery of NPA/ PCA:
1. Loan Restructuring Schemes
2. Amendment of Banking Law to give RBI more powers
3. Enabling foreign portfolio investors (FPIs) and alternative investment funds (AIFs) to purchase NPAs.
4. Carrying out One Time Settlement (OTS) to recover Bad Loans
31. SARFAESI Act
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Under the SARFAESI Act, banks and other financial institutions, within the capacity of secured creditors are
allowed to auction residential or commercial properties of borrowers to recover loans, without approaching
the courts. SARFAESI Act is applicable only for secured loans where bank can enforce the underlying security
Enacted on : 2002
Features:
1. Asset Reconstruction
2. Funding of Securitisation
3. Enforcing Interest
Objectives:
1. Efficient or rapid recovery of non-performing assets (NPAs) of the banks and FIs.
2. Allows banks and financial institutions to auction properties (say, commercial/residential) when
borrower fail to repay their loans.
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3. It allows banks and other financial institution to auction residential or commercial properties (of
Defaulter) to recover loans.
Role of SARFAESI ACT 2002:
1. Facilitating the reconstruction of Financial assets which are acquired while exercising powers of
enforcement of securities or change of management or other powers which are proposed to be
conferred on the banks and other financial Institutions.
2. Entrusting the Asset Reconstruction Companies to raise funds by issue of security receipts to qualified
buyers.
3. Facilitating Securitization of financial assets of banks and financial institutions with or without the
benefit of underlying securities.
Debt Recovery Tribunal:
Recommendation: Narasimhan committee
Debt Recovery Tribunal were established to recover debts in banks and other financial institutions with the
customers. DRTs were set up after the passing of Recovery of Debts due to Banks and Financial Institutions
Act (RDBBFI), 1993. Section 3 of the RDDBFI Act empowers the Central government to establish DRTs. DRTs
can now take cases from banks for disputed loans above Rs.20 Lakhs.
When an application is made under the normal application route, then the time frame to complete the case
is 180 days. However, if the application is made to the DRT under the SARFAESI Act, then the cases are needed
to be disposed off within 60 days to 4 months.
32. Asset Reconstruction Company
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Asset Reconstruction Company is a financial Institution that buys bad loans from the banks or other financial
institutions. These companies take special measures to recover the money owed. If they are ready to recover
the money, it will be profit and if not they may lose.
Incorporated under: Companies Act and registered with Reserve Bank of India under section 3 of The
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
Role:
1. Change or takeover the management of the business of the borrower
2. Lease or sale of the business
3. Converting debt portion into shares
4. Rescheduling the payment of debts by offering alternative schemes or arrangements for the payment
Advantages:
1. To restore depositor and investor confidence by ensuring the lenders financial health.
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2. Banks use this method to hive off the bad loans from their balance sheet.
3. ARCs are meant to maximise recovery value while minimizing costs.
33. FDI and FPI
Particulars FDI FPI
Acronym Foreign Direct Investment Foreign Portfolio Investment
Definition Foreign direct investment (FDI) is Foreign portfolio investment (FPI)
when a company takes is a common way to invest in
controlling ownership in a overseas economies. It includes
business entity in another securities and financial assets held
country. by investors in another country.
Term Long term Short term
Investment Physical Assets or real investment Financial Assets not the property
or a direct stake in a company or
monetary investment
Risks Stable Volatile
Degree of Control Higher Degree of Control Low Degree of Control
comparing to FDI
Investors type Active Investors Passive investors as they are not
involved in the day-to-day
functioning and operation as well
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as strategic planning required by
any domestic companies.
Liquidity Low High
Selling Difficult Easy
34. Priority Sector Lending
Priority Sector Lending is issued by the Reserve Bank of India (RBI) for providing a specified portion of the
bank lending to few sectors like Agriculture and Allied Sectors, MSMEs, Social Infrastructure, Students for
Education etc..
Sectors:
1. Agriculture
2. Micro, small and medium Enterprises
3. Education
4. Housing
5. Social infrastructure
6. Renewable Energy
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7. Export Credit
Agriculture(18% of ANBC)
● Within the 40% priority sector lending 18%allocated to the agriculture.
● Where as 8% sub-target is kept for small and marginal farmers.
● Marginal Farmer - have land upto 2.5 acres
● Small Farmer - have land upto 2.5 to 5 acres
MSME(7.5% of ANBC)
Within the 40% priority sector lending 7.5%allocated Micro Small Medium Enterprises.
Classification of MSMEs
Type of Activity Investment Turn Over
Micro Upto 1 crore Below 5 crore
Small Upto 10 crore Below 50 crore
Medium Upto 50 crore Below 250 crore
Export Credit (2% of ANBC)
● The existing guidelines for domestic scheduled commercial banks to classify 'Incremental export credit
over corresponding date of the preceding year, upto 2% of ANBC or Credit Equivalent Amount of Off-
Balance Sheet Exposure, whichever is higher'
● RBI Enhances Limit For Classification Of Export Credit Under Priority Sector Lending To Rs.40Crore
From Rs.25Crore(Sep 2019)
Education
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Under Priority Sector Lending (PSL), the loans and advances granted to only individuals for educational
purposes up to Rs.10 lakh for studies in India and Rs. 20 lakh for studies abroad.
Housing
● Reserve Bank of India has notified them to enhance housing loan limits to individuals up to Rs 35 lakh
in metropolitan centers (which would have a population of over 10 lakhs) and Rs.25 lakh in other
centers, under Priority sector Lending (PSL).
● The total cost of the dwelling unit in the metropolitan center should not exceed Rs.45 lakh and at other
centers should not go beyond Rs.30 lakh for them to be eligible for classification under PSL.
Social Infrastructure
Bank loans up to a limit of Rs. 5 crore per borrower for building social infrastructure like schools, health care
centres, drinking water facilities in Tier II to Tier VI centres.
Renewable Energy
Bank loans up to a limit of Rs.15crore per borrower for building renewable energy projects like solar based
power generation, wind mills etc.
Others
Weaker section (10% of ANBC)
● There is no change in the target of 10 percent of ANBC or Credit Equivalent Amount
● Off-Balance Sheet Exposure, whichever is higher, for Weaker Sections.
● Small and Marginal Farmers.
● Artisans, village and cottage industries, where individual credit limits do not exceed Rs.1 lakh.
● Beneficiaries of Differential Rate of Interest (DRI) scheme.
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● Individual women beneficiaries up to Rs. 1 lakh per borrower.
● Persons with disabilities.
● Minority communities may be notified by the Government of India from time to time.
● Self Help Groups (SHGs)
35. Numbers and Codes used in Banking
Number/Code Number of Digits Functions/ Services
IFSC- Indian Financial 11- Alpha Numeric digit Fund-raising services for
System Code code individuals, corporations
First 4 digits of the IFSC- and governments. Deal with
bank , flows of finance, financial
last 6 characters- branch. products and services across
5th character is zero. borders.This code is used to
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initiate a NEFT, RTGS, or
IMPS transfer.
MICR- Magnetic Ink 9 This enables identification of
Character Recognition First 3 digits- city (City the cheques and which in
Code). turns means faster
Next 3 digits- Bank (Bank processing.
Code).
Last 3 digits- Branch
(Branch Code).
They are aligned with the
PIN code we use for
postal addresses in India.
USSD- Unstructured *99# code Used for fund transfers,
Supplementary Service checking account balance,
Data (USSD) generating bank statement,
among other uses
LEI- Legal Entity Identifier 20 digit Alpha Numeric It is a reference code — like
Code a bar code — used across
markets and jurisdictions to
uniquely identify a legally
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distinct entity that engages
in a financial transaction.
SWIFT- Society for 8 to 11 Alphabetic Code SWIFT Code is used for
Worldwide Interbank First 4 digits- Bank Name Overseas Fund Transfer for
Financial Next 2 digits- Country the particular bank. SWIFT is
Telecommunications Name a vast messaging
Next 2 alphabets- network used by banks and
Location Code other financial institutions to
Last 3 digits- Branch code quickly, accurately, and
securely send and receive
information, such as money
transfer instructions.
MMID- Mobile Money 7 digit code Whenever a user makes an
Identifier First 4 digits- Bank attempt to send or receive
Last 3 digits- Account of money using IMPS method
the user of payments using the
mobile number, this code is
brought into use. Any given
bank account can be linked
to a single MMID Code.
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Although a number of
MMID Codes can be linked
to a single mobile number
but a given code will trace
back to a single mobile
number and bank account
number.
PAN- Permanent Account 10- Alpha Numeric code To prevent tax evasion by
Number First 5 characters- Letters individuals and entities as it
in Upper Case links all financial transactions
Next 4- Numerals made by a particular
10th Character- Letter individual or entity.
4th Character- Type of
Holder of the card
AADHAR 12- Numeric code Single source offline/online
identity verification across
the country for the
residents. It is a centralized
and Unique Identification
Number of all the citizens
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TAN-Tax Deduction 10- Alpha Numeric code To be obtained by all
Account Number or Tax First 4 characters- persons who are responsible
Collection Alphabets- represents for deducting or collecting
Account Number City or state tax.
4th Character- Name of
the deductor
Next 5- Numerals
Last letter- Alphabet
UAN- Universal Account 12 digit code It is provided to each
Number member of the Employees'
Provided Fund Organisation
(EPFO) through which he
can manage their PF
accounts. It helps the person
to get all Provided Fund (PF)
information in one place
irrespective of the
organization he works for
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PRAN- Permanent 12 digit code It is a unique and
Retirement Account portable number provided
Number to each subscriber under
NPS and remains with him
throughout
BSR- Basic Statistical 7 digit code These Codes are used
Returns mainly when filing Tax
Deduction at Source (TDS)
and Tax Collected at Source
(TCS) returns. This code help
banks to keep a clear record
of every online payment
done towards tax, which is
all made available to the
Income Tax Department by
the banks.
ISIN- International 12- Alpha Numeric digit This code is used to Identify
Securities Identification code Securities. It is
Number often needed for companies
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seeking to raise capital,
whether debt or equity.
 The Reserve Bank of India (RBI) made Legal Entity Identifier (LEI) mandatory for cross-border
transactions for capital or current account transactions of Rs 50 crore and above, from 1 October 2022.
36. Technologies in Banking
PoS Terminals:
A point of sale terminal (POS terminal) is an electronic device used to process card payments at retail
locations.
Developed by: National Cash Register
Features:
1. Billing and Order Processing
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2. Reads the information of a customer's credit or debit card
3. Processing card payments at retail locations
4. Quick Payments
5. Ringing up items by department
6. Tracking sales
7. Adding taxes
8. Creating receipts
9. Inventory and stock management
Block Chain Technology:
Blockchain technology is an open, distributed ledger that records transactions between two parties efficiently
and permanently. A blockchain consists of individual blocks of data that involve a series of related
transactions, linked together in a specific order.
Features:
1. Increases the Processing Speed of Transactions
2. Eliminates the need of intermediaries to authorize financial transactions between customers.
3. Cheaper and Easiest way to exchange currency at lower rates
4. Monitor Supply Chains
5. Transaction is secure and reliable
Artificial Intelligence:
Artificial Intelligence is the future of banking as it brings the power of advanced data analytics to combat
fraudulent transactions and improve compliance.
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Features:
1. To Assess Financial Risks
2. Detect and Prevent from Anti Money Laundering and Perform KYC Regulatory checks
3. Identifying Fraudulent activities carried out in Payments
4. Creating Operational Efficiencies
5. Predictive Data Analysis to offer best services
6. Realistic Interactive Interfaces
7. Enhanced Customer Experience
8. Prediction of Future Outcomes and trends
9. To manage huge volumes of data at record speed to derive valuable insights from it.
Cloud Computing:
Cloud computing services allow banks to utilize resources in a highly flexible and efficient manner with the
help of data analytics, data storage, and batch processing.
Features:
1. Cloud computing creates an opportunity for bankers to connect with their users directly.
2. With the help of the internet, many services like storing, managing and accessing the information have
become easier for both the bankers and the consumers.
3. It is an easy technique to deploy and integrate with all the services of the bank system which decreases
the time and effort of the user.
4. Digital services maintain customer relations anywhere and anytime through cloud computing.
37. Schemes
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PradhanMantri Jan DhanYojana:
Establishment: August 28, 2014
Objective: To provide easy access to financial services such as Remittance, credit, Insurance, Pension, savings
& Deposits Accounts to poor and needy section of our society.
Features:
● Zero Balance Account can be opened by Individuals.
● Overdraft Facility is available.
● Transfer of money is Simple
● The overdraft facility of Rs.10,000 is available is available
● The amount Deposited earns Interest Rate
● Accidental Insurance cover – Rs.2 lakh.
Eligibility:
● Must be a citizen of India Should be at least 10 years of age You should not have bank account.
Benefits:
● You will be eligible for Direct Benefit Transfer as well as other welfare schemes by the government.
Interest earned for the Deposited amount.
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● Free Insurance cover to cover the financial risks associated with Accidental death or disablement.
● Over Draft allows you to access to funds in financial emergencies.
● Account holders can check their balance using the mobile banking facility.
Pradhan Mantri Surakhsha Bima Yojana (PMSBY):
Establishment: May 9, 2015
Objective: Pradhan Mantri Suraksha Bima Yojana is a government-backed accident insurance scheme in India
Premium: Rs. 20 per annum
Features:
1. After the insured's untimely death in an accident, the policy's beneficiaries will get the death benefit.
2. The amount of the health insurance premium is automatically deducted from the associated savings
account.
3. Applicants can opt for a long-term coverage or an annually renewable plan, depending on their needs.
4. The exit and re-entry procedures are straightforward.
5. It comes with a number of tax advantages.
Eligibility:
1. This health insurance policy provides accidental insurance coverage at a low cost.
2. If the insured dies in an accident, the policy gives financial assistance to his or her dependents.
3. The insured no longer has to worry about missing premium payment deadlines with the auto-debit
option.
4. The policy provides secure processing as well as ongoing coverage.
5. The insured has the option of continuing or terminating the plan as they see fit.
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Coverage: Rs. 2 lakhs for Permanent total disability and Rs. 1 lakh for Permanent Partial Disability
Pradhan Mantri Jeevan Jyoti Yojana (PMJJBY):
Establishment: 2015
Objective: Life insurance plan specially designed for underprivileged families in India
Premium: Rs. 436 annually
Features:
1. Simple Renewal
It gives one year of life insurance and can be renewed every year.
2. More comprehensive insurance coverage
PMJJBY provides life insurance coverage of Rs. 2 lakh for a yearly payment of Rs. 436.
3. There Are No Maturity Benefits
Because it is a term insurance plan, the policy solely covers life risks and no maturity benefits can be collected.
4. Only a savings account is required.
To purchase this plan, the policyholder must have a savings bank account, and it can be purchased at any
partnered banks in India that have tie-ups with LIC and other private insurance providers.
5. No-hassle procedures
The coverage for life insurance begins 45 days following the date of enrolment. However, in the event of
death as a result of an accident, the total assured amount will be paid. Even if a policyholder leaves the scheme
for whatever reason, he or she can simply rejoin it.
Eligibility
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 The PMJJBY is available to people in the age group of 18 to 50 years having a bank account who give
their consent to join / enable auto-debit.
 Aadhar would be the primary KYC for the bank account.
PradhanMantri Mudra Yojana (PMMY):
Establishment: April 8, 2015 under the Companies Act 2013.
Objective: To encourage entrepreneurs and small business units to expand their capabilities and operations,
to reduce over indebtedness and to provide formal system of credit (finance).
Loan Limit: Loans up to 10 lakh to the non-corporate, non-farm small/micro enterprises.
Provider: Commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs.
Eligibility:
1. Should be a citizen of India
2. Age limit: 18 years to 65 years
3. Requirement of credit must be upto Rs. 10 Lakh.
4. The loans are basically for people having a business plan in a Non-Farming Sector with Income
generating activities like the following:
● Manufacturing
● Processing
● Trade
● Service Sector
Products:
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1. Shishu: Covering Loans up to Rs.50,000
2. Kishore: Covering Loans above Rs.50,000 to Rs.5 lakh
3. Tarun: Covering Loans above Rs.5 lakh to Rs.10 lakh
Kisan Credit Card Scheme:
Introduced in: 1998
Recommendation: R V Gupta Committee
Objective: This scheme is introduced especially to provide financial support for farmers. Its main objective is
to meet the comprehensive credit requirements of the agriculture sector and for fisheries and animal
husbandry by giving financial support to farmers.
Participating Organisations: All commercial banks, Regional Rural Banks, and state co-operative banks.
Eligibility:
● Farmers-Individuals/Joint borrowers who are owner-cultivators.
● Self Help Groups or Joint Liability Groups of farmers which include tenant farmers, share croppers etc.
● Tenant farmers, Share Croppers and Oral lessees etc.
Benefits:
1. To meet the short term credit requirements for cultivation of crops.
2. Providing insurance coverage
3. Providing working capital for activities allied to agriculture such as dairy animals, inland fishery etc
4. Offering protection against loss of crops due to pest attacks, natural calamities, etc.
Pradhan Mantri KisanSammannNidhi (PM KISAN)
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Establishment: 2019
Aim: To supplement the financial needs of the small and marginal farmers in procuring various farm inputs to
ensure proper crop health and appropriate yields, commensurate with the anticipated farm income at the
end of the each crop cycle
Income Support: Income support of Rs.6000 per annum is provided to all eligible farmer families across the
country in three equal installments of Rs.2000 each every four months
Eligibility: Small and marginal farmer families having combined land holding/ownership of upto 2 hectares.
Gold Monetization Scheme:
Establishment: 2015
Aim: To mobilize gold held by households and institutions in the country and put them to productive use.
The scheme aims to bring down the import of gold in the long term.
Eligibility:
1. The minimum amount of gold which will be accepted as a deposit is 30 grams of 995 fineness
2. Resident Indians -Individuals, HUFs, Proprietorship & Partnership firms
Features & Benefits:
1. Mobilise Idle Gold
2. Earn Interest
3. This scheme Provides Short term(1-3yrs) , Medium deposits (5-7yrs) and long term (12-15yrs) with no
Maximum investment limit
4. This scheme allows Premature Withdrawal Facility after a minimum lock-in period
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Sovereign Gold Bond Scheme
Introduced in: November 2015
Objective: To reduce the hassles involved with gold investments, as bullions and other physical forms of
investments required proper and secure storage.
Issued by: Reserve Bank of India
Limit- 1 gram to 4 kgs.
For entities such as trusts and universities, 20 kgs of gold are permissible.
Maturity Period: 8 years . Can Exit the bond from the Fifth year
Benefits:
1. To get a lower price than physical gold when applied online.
2. Fixed interest rate on these gold bonds.
3. Gold bonds have no holding or storage cost.
38. Banks, Headquarters and Tagline
Bank Name Headquarters Taglines
State Bank of India Mumbai, Maharashtra With You all the way, Pure
Banking Nothing Else, The
Nation Bank on Us, The Banker
to Every Indian, A Bank of the
Common Man
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Punjab National Bank ( Anchor New Delhi The Name You Can Bank upon
Bank) + Oriental Bank of
Commerce+ United Bank of India
Canara Bank ( Anchor Bank) + Bengaluru, Karnataka Together we can
Syndicate Bank
Indian Bank ( Anchor Bank) + Chennai, Tamil nadu Your Own Bank
Allahabad Bank
Union Bank of India ( Anchor Mumbai Good People to Bank with
Bank) + Andhra Bank+
Corporation Bank
Bank of Baroda+ Dena Bank+ Vadodara, Gujarat India’s International Bank
Vijaya Bank
UCO Bank Kolkata, West Bengal Honours your Trust
Indian Overseas Bank Chennai, Tamil nadu Good People to Grow with
Bank of India Mumbai Relationship Beyond Banking
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Bank of Maharashtra Pune One Family One Bank
Punjab & Sind Bank New Delhi Where Service is a way of Life
Central Bank of India Mumbai Central to you since 1911
Private Sector Bank
Bank Name Headquarters Tagline
Axis Bank Mumbai Badhtika Nam Zindagi
ICICI Bank Mumbai Hum Haina., KhayalAapka
HDFC Bank Mumbai We Understand Your world
Bandhan Bank Kolkatta AapkaBhala, SabiBhalai
KarurVysya Bank Karur, Tamilnadu Smart way to Bank
Tamilnadu Mercantile Bank Thoothukudi, Tamilnadu Be a Step Ahead of Life
South Indian Bank Thrissur, Kerala Experience Next Generation
Banking
Karnataka Bank Mangaluru Your family bank across India
IndusInd Bank Pune We Make You feel Richer
Kotak Mahindra Bank Mumbai Let’s make money simple
Lakshmi Vilas Bank Chennai, Tamil Nadu The Changing face of Prosperity
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IDFC Bank Mumbai Banking Hatke
RBL Bank Mumbai Apnoka Bank
Yes Bank Mumbai Experience our Expertise
Small Finance Banks
Bank Headquarters Tagline
AU Small Finance Bank Jaipur, Rajasthan ChaloAageBadhe
Capital Small Finance Bank Jalandhar, Punjab Vishwas se Vikastak
Equitas Small Finance Bank Chennai It’s Fun Banking
ESAF Small Finance Bank Thrissur, Kerala Joy of Banking
Fincare Small Finance Bank Bengaluru Banking On More
Jana Small Finance Bank Bengaluru PaiseKe Kadar
Suryoday Small Finance Bank Navi Mumbai A Bank of Smiles
Ujjivan Small Finance Bank Bengaluru Bharosa, Aakebharose par
Utkarsh Small Finance Bank Varanasi ApkiUmeedkaKhata
North East Small Finance Guwahati Your Door Step Banker
Bank
Shivalik Small Finance Bank Saharanpur, Uttar Pradesh A Bank For Your Welfare
Limited
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Payment Banks
Bank Headquarters Tagline
Airtel Payment Bank New Delhi -
Fino Payments Bank Mumbai QadarApkimehnatki
Paytm Payments Bank Noida -
Jio Payments Bank Mumbai -
NSDL Payments Bank Mumbai Technology Trust and
Reach
India Post Payments Bank New Delhi Aapke Bank AapkeDwar
39. Committees related to Banking
Name of the committee Focus
Basel Committee Banking Supervision
BimalJalan Committee To Scrutinize application for new bank
license
A C Shah NBFC
Athreya Committee Restructuring of IDBI
R V Gupta Kisan Credit Card
Bhandari Committee Reconstruction of RRBs
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B Mahapatra To review the existing prudential guidelines
on restructuring of advances by
banks/financial institutions
Janakiraman To investigate the security transactions of
the bank
M Narasimham committee Banking Sector Reforms
NachiketMor comprehensive financial services for small
businesses and low income households
R V Gupta Committee Small Savings
RS Gujral Committee Suggest measures to boost MSME exports.
S P Talwar Committee Restructuring Of Weak Public Sector Bank
Suma Verma Committee To update, and revise the Banking
Ombudsman Scheme, 2006
UK Sharma Committee NABARD‘s Role In RRB
Urjit Patel Committee To examine the current monetary policy
framework
Vaghul Committee Money Market In India
P Selvam Committee Non- Performing Assets of Banks
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Dave Committee To review the enforcement mechanism of
SEBI, particularly the recovery mechanism
under securities laws.
Deepak Mohanty Committee Management of Data and information in the
RBI
Gadgil Committee Lead Bank Scheme
Goiporia committee To improve customer service of banks
K V Kamath Restructuring of loans
V S Vyas Rural Credit
Y V Reddy To examine the analytical aspects of the
monetary survey
H R Khan Committee For reviewing the current Securities and
Exchange Board of India (Foreign Portfolio
Investors) Regulations, 2014 and
recommending any amendments that may
be required for rationalising and simplifying
the SEBI FPI regulations.
Vijay Kelkar Committee To study and evaluate the extant public-
private partnership (PPP) model in India
Raghuram Rajan committee Financial Sector Reforms
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Rattan P Watal Committee Committee on Digital Payments
A Ghosh Committee High Level Committee on Frauds and
Malpractices in Banks
40. Banking Abbreviations
Acronym Abbreviation
ADR American Depository Receipt
AEPS Aadhar Enabled Payment System
AFS Annual Financial Statement
ALM Asset Liability Management
AMFI Association of Mutual Funds in India
ANBC Adjusted Net Bank Credit
APBS Aadhar Payment Bridge System
ARC Asset Reconstruction Companies
ASBA Application Supported by Blocked Amount
ATM Automated Teller Machine
BBPS Bharat Bill Payment System
BCBS Basel Committee on Banking Supervision
BCSBI Banking Codes and Standards Board of India
BHIM Bharat Interface for Money
BIS Bank of International Settlements
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BOP Balance of Payments
BPLR Benchmark Prime Lending Rate
BRBNM PL Bharatiya Reserve Bank Note Mudran Private Limited
BSBDA Basic Savings Bank Deposit Account
CAGR Compound Annual Growth Rate
CAR Capital Adequacy Ratio
CARE Credit Analysis and Research Ltd
CASA Current Account Saving Account
CBLO Collateralized Bank Lending Obligations
CBS Core Banking Solutions
CCEA Cabinet Committee on Economic Affairs
CDR Corporate Debt Restructuring
CDS Credit Default Swap
CEPA Comprehensive Economic partnership Agreement
CIBIL Credit Information Bureau of India Ltd
CIDR Central Identities Data Repository
CII Confederation of Indian Industries
CPI Consumer Price Index
CRAR Capital to Risk- Weighted Assets Ratio
CRILC Central Repository of Information on Large Credits
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CRISIL Credit Rating Information Services of India Ltd
CRR Cash Reserve Ratio
CSR Corporate Social Responsibility
CTS Cheque Truncation System
CVV Card Verification Value
DEAF Depositor Education and Awareness Fund
DICGC Deposit Insurance and Credit Guarantee Corporation of India
DPG Deferred Payment Guarantee
DRAT Debt Recovery Appellate Tribunal
DRI Differential Rate of Interest
DRI Differential Rate of Interest
DTAA Double Taxation Avoidance Agreement
ECB External Commercial Borrowings
ECGC Export Credit Guarantee Corporation
ECR Export Credit Refinance
ECS Electronic Clearing System
EEFC Exchange Earners Foreign Currency
EFTPOS Electronic Funds Transfer at Point of Sale
ELSS Equity Linked Savings Scheme
EMI Equated Monthly Installment
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EPOS Electronic Point of Sale
EPS Earnings Per Share
ETF Exchange Traded Fund
FCA Foreign Currency Assets
FCCB Foreign Currency Convertible Bond
FCNRA Foreign Currency Non Resident Account
FCNRD Foreign Currency Non-Repatriable Deposit
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act
FERA Foreign Exchange Regulation Act
FICCI Federation of Indian Chambers of Commerce and Industry
FII Foreign Institutional Investor
FIMMDA Fixed Income Money Markets and Derivatives Association
FINO Financial Inclusion Network Operation
FIPB Foreign Investment Promotion Board
FPI Foreign Portfolio Investment
FPO Follow on Public Offer
FRA Forward Rate Agreement
FRBM Fiscal Responsibility Budget Management Act
GAAR General Anti Avoidance Rule
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GFD Gross Fiscal Deficit
GMS Gold Monetization Scheme
IBA Indian Banks Association
IBRD International Bank for Reconstruction and Development
ICRA Indian Credit Rating Agency
ICRA Investment Information and Credit Rating Agency of India Limited
IDRBT Institute for Development and Research of Banking
IFSC Indian Financial System Code
IMPS Immediate Mobile Payment Service
IMT Instant Money Transfer
INFINET Indian Financial Network
IPO Initial Public Offering
KCC Kisan Credit Card
KVP KisanVikasPatra
KYC Know Your Customer
LAF Liquidity Adjustment Facility
LCR Liquidity Coverage Ratio
LIBOR London Interbank Offered Rate
LRS Liberalised Remittance Scheme
MCLR Marginal Cost of Lending Rate
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MFI Micro Finance Institutions
MIBOR Mumbai Interbank Offered Rate
MICR Magnetic Ink Character Recognition
MSF Marginal Standing Facility
MSS Market Stabilisation Scheme
MUDRA Micro Units Development and Refinance Agency
NABARD National Bank for Agriculture and Rural Development
NACH National Automated Clearing House
NBFC Non-Banking Finance Companies
NDS Negotiated Dealing System
NDTL Net Demand Time Liabilities
NEFT National Electronic Funds Transfer
NFA No Frills Account
NFS National Financial Switch
NPA Non -Performing Assets
NPCI National Payments Corporation of India
NPS National Pension Scheme
NPV Net Present Value
NRE Non Resident External Account
NRO Non Resident Ordinary Account
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OLTAS Online Tax Accounting System
OMO Open Market Operations
OTCEI Over the Counter Exchange of India
P- Notes Participatory Notes
P2P Peer to Peer
PACS Primary Agricultural Credit Societies
PCA Prompt Corrective Action
PCR Public Credit Registry
PFRDA Pension Fund Regulatory Development Authority
PGS Payment Gateway System
PIN Personal Identification Number
PIO Persons of Indian Origin
PPF Public Provident Fund
PPIs Prepaid Payment Instruments
PPP Public Private Partnership
PPP Purchasing Power Parity
RDDBFI Recovery of Debt due to Banks and Financial Institutions
RIDF Rural Infrastructure Development Fund
RLA Recoveries of Loans & Advances
ROI Return on Investment
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RTGS Real Time Gross Settlement
RWA Risk Weighted Assets
Securitisation and Reconstruction of Financial Assets and Enforcement
SARFAESI of Security Interest Act
SDR Special Drawing Rights
SFMS Structured Financial Messaging Services
SGB Sovereign Gold Bond
SHG Self Help Group
SIFI Systematically Important Financial Intermediaries
SIP Systematic Investment Plans
SLR Statuatory Liquidity Ratio
SMERA SME Rating Agency of India Limited
SMILE SIDBI Make in India Loan for small Enterprises
SPNS Shared Payment Network System
STRIPS Separate Trading of Registered Interest and Principal of Securities
SWIFT Society for Worldwide Interbank Financial Telecommunication
TDS Tax Deducted at Source
TIN Tax Identification Network
UIDAI Unique Identification Authority of India
UPI Unified Payments Interface
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UPIN Unique Property Identification Number
USSD Unstructured Supplementary Services Date
UTI Unit Trust of India
VPA Virtual Payment Address
WCTL Working Capital Term Loan
WMA Ways and Means Advances
WPI Wholesale Price Index
YTM Yield To Maturity
41. Banking Terminologies
Terms Definition
Asset-Liability It is the management of structure of Balance Sheet (Liabilities or
Management Assets) to maximize net earnings from internet within overall risk-
preference (Present and Future) of the bank.
Averaging It is a strategy of gradually buying more and more securities in a
declining market or selling in a rising market in order to level
out/rationalize the purchase or sale price.
Amortization An accounting procedure that gradually reduces the cost vale of
a limited life or intangible asset through periodical charges to
income.
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Arbitrage It denotes the simultaneous purchase or sale of the same or
equivalent securities in order to profit from price variation.
Asset Securitisation Asset Securitisation is the process through which the future
receivables (say rent) of an organisation are converted into debt
instruments and then sold.
Asset Reconstruction An ARC is a company registered under Companies Act 1956 to
Companies engages itself in the activity of financial asset reconstruction (such
as securitisation, takeover of management, sale of assets charged).
Anti-Dated Cheque A Cheque bearing a date prior to actual date of signing the
cheque or opening of an account is called the Anti-Dated Cheque.
Ambiguous A situation where the instrument is drawn in such a manner that it
Instrument can be constructed both as a promissory note or bill or exchange,
it is called Ambiguous.
Accepting House An Accepting House is a banking or finance organization that
specializes in the service of acceptance and guarantee of bills of
exchange.
Account An Account is a record of all financial transactions that are related
to an asset, individual, transaction or any organization.
Account Account Reconciliation is a process with the help of which the
Reconciliation account balance can be easily verified. Account Reconciliation is
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usually done at the end of a week, month, and financial year or at
the end of any financial period.
Accretion Accretion is a process, where increments and periodic increases
are made in the book value or the balance sheet value of an asset.
Annuities Annuities are contracts that guarantee income or return, in
exchange of a huge sum of money that is deposited, either at the
same time or is paid with the help of periodic payments.
Anti-Money Anti-Money Laundering refers to the laws, regulations and
Laundering procedures intended to prevent criminals from disguising illegally
obtained funds as legitimate income.
Automated Teller Automated Teller Machine is an electronic machine operated by a
Machines customer himself to deposit or withdraw cash.
Asset An Asset is anything of value or a resource of value that can be
converted into cash. Individuals, companies, and governments own
assets.
Bank Litigation Bank Litigation or any Financial Litigation arises over specific loans,
trades, transactions or financial products. Litigation is the process
of filing a legal lawsuit against a particular person or company may
be.
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Bear It is very popular term indicating the behaviour of someone who
anticipates that prices will fall in the Capital Market.
BOLT It is a system that provides a quote driven automated trading
facility to members of exchange working on direct connection to
broker office and through telephone leased lines.
Bull A term given to speculator on stock exchange who buys securities
in expectation of a rise in prices.
Bearer Securities These are those securities that do not require registration of the
owner's name in the company's books and are freely transferable.
Book Building Book Building is the process to assess demand for a particular
public issue at various prices, based on which the issue is priced
and sold to the investors.
Bharat Bill Payment It is a tiered structure for operating the bill payment system in India
System (BBPS) with a single brand image providing convenience of 'anytime
anywhere' bill payment to customers, under Payment and
Settlement Systems Act, 2007.
Banking Outlet A Banking Outlet is a fixed point service delivery unit, manned by
bank's staff or business correspondent where services of
acceptance of deposits, encashment of cheques/cash withdrawal
or lending are provided for a min of 4 hours per day for at least 5
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days a week. There should be regular off-site and on-site
monitoring.
Business Facilitator For greater financial inclusion and increasing the outreach of the
banking sector, scheduled commercial banks including RRBs and
Local Area Banks (LABs) can use the services through the use of
Business Facilitator.
Bancassurance Bancassurance (without risk participation) relate to distribution of
insurance products (life and non life), as corporate agents, through
bank branches.
Bills Rediscounting A scheme whereby a bank may raise funds by issue of Usance
Scheme Promissory Notes in convenient lots and maturities on the strength
of genuine trade bills discounted by it. This scheme is known as the
Bills Rediscounting Scheme (BRDS).
Balanced Fund This fund invests in bonds and blue chip stocks to conserve capital.
It pays reasonable income capital appreciation.
Bank Rate Bank Rate is the standard rate at which Reserve Bank of India is
prepared ti buy or rediscount bills of exchange or other
commercial papers eligible for purchase under RBI Act, 1934.
Bills of Exchange Bills of Exchange is an instrument (a) in writing, (b) containing an
unconditional undertaking (or promise), (c) signed by the maker,
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(d) directing a certain person to pay, (e) a certain sum of money
only (f) to, or to the order of, a certain person or to the bearer of
the instrument.
Balance of Payment Balance of Payment is the summary of economic transactions of
the residents of a country with the non-residents outside India,
during a specific period of say, one year.
Bankruptcy A Bankruptcy refers to economic insolvency, wherein the person's
assets are liquidated, to pay off all liabilities with the help of a
bankruptcy trustee or a court of law.
Bond A Bond is a certificate that represents an interest bearing debt,
where the issuer is required to pay a sum of money periodically till
the maturity, and then receive back the accumulated amount.
Bridge Financing Bridge Financing is a loan where the time and cash flow between
a short term loan and a long term loan is filled up.
Bitcoin Bitcoin is a digital or virtual currency created in 2009 that uses
peer-to-peer technology to facilitate instant payments.
Bail Out Bailout is a general term for extending financial support to a
company or a country facing a potential bankruptcy threat. It can
take the form of loans, cash, bonds, or stock purchases.
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Brown Label ATM These ATMs are not owned by the bank instead they are taken on
lease to provide the service to the customer.
Bharat Interface for Bharat Interface for Money (BHIM) is an Indian mobile payment
Money (BHIM) App developed by the National Payments Corporation of India
which is intended to facilitate e-payments directly through banks
and drive towards cashless transactions
Balance Sheet A Balance Sheet can be defined as a statement of assets and
liabilities/financial position of a business concern on a given date.
Break Even Point This type of analysis involves a calculation of the Break-Even Point
Analysis (BEP). The Break-Even Point is calculated by dividing the total fixed
costs of production by the price per individual unit less the variable
costs of production.
Capital Conversation CCB ensures that banks build up capital buffers (profit or surplus)
Buffer (CCB) during normal times which can be used if losses are incurred during
a stressed period.
Casino Banking A practice of commercial banks engaging in unduly speculative or
riskly financial activities to record high profits.
Credit Risk The risk to the bank when there is possibility of default by the
counter party (say a borrower) to meet its obligation. Credit Risk is
associated with the loans which are given by the banks.
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Cross Listing It refers to the listing of instruments of a company on the stock
exchange abroad. The number of such firms in India is still very
small although Cross Listing is growing.
Circular Trading Circular Trading is where the members of an exchange forms a
cartel and trade among themselves creating huge false volumes
and rigging the price of shares, thus misleading the common
investors.
Crowd Funding Crowd Funding is a method of raising finance from a large number
of people, each contributing a small amount of money. Crowd
Funding makes use of internet to talk to thousands to potential
funders.
Cash Reserve Ratio Cash Reserve Ratio (CRR) refers to the ratio of banks's cash reserve
(CRR) balances with Reserve Bank of India with reference to the bank's
net demand and time liabilities to ensure the liquidity and solvency
of the Scheduled Bank.
Corporate The Corporate Governance refers to conducting the affairs of a
Governance banking organisation by following the best business practise, in
such a manner that gives a fair deal to all stake holders i.e.
shareholders, bank customers, regulatory authority, society at
large, employees etc.
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Cross Selling Cross-Selling stands for offering to the existing and new
customers, some additional banking products, to expand banking
business, reduce the per customer cost of operations and provide
more satisfaction and value to the customer.
Call/ Notice Money Under Call Money Market, funds are transacted on overnight basis
Market and under notice money market , for 2 days to 14 days.
Certificate of Deposit This scheme was introduced in July 1989, to enable the banking
system to mobilise bulk deposits from the market, which they can
attract competitive rates of interest.
Currency Swaps It is an interest rate swap where the two legs to the swap are
denominated in different currencies. Additionally the parties may
agree to exchange the two currencies normally at the prevailing
spot exchange rate with an agreement to reverse the exchange of
currencies, at the same spot exchange rate, at a fixed date in the
future generally at the maturity of the swap.
Collateralised CBLO, an RBI approved money market instrument, is developed
Borrowings and by CCIL for the benefit of the entities phased out from inter bank
Lending call money market or given restricted participation in terms of
Obligation(CBLO) ceiling on call borrowing and lending transactions and who do not
have access to the call money market.
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Commercial Paper It is a money market instrument sold by large corporations to
obtain funds to meet short-term needs of liquidity.
Capital Market Capital Market is the market for long term funds unlike the Money
Market, which is the market for short term funds generally more
than one year.
Close-Ended Scheme A scheme where funds are raised for a fixed period. The scheme
is wound up after that period and funds are returned with capital
appreciation to unit holders.
Credit Information A CIC is an entity licensed by Reserve Bank of India that enters into
Companies an agreement with banks, NBFCs and FIs, as its members and
aggregates data and identity information for individual borrowing
customers and business entities, from its members.
Cheque As per Section 6 a Cheque is (a) A Bill of Exchange (b) drawn on a
specified bank and (c) not expressed to be payable otherwise than
on demand.
Crossing of a Cheque Crossing of a Cheque means two parallel transverse lines on the
face with or without words such as "& Co", "Not Negotiable",
"Payee's Account Only" etc.
Currency Currency includes all currency notes, postal notes, postal orders,
money order, cheques, drafts, travellers cheques, letters of credit,
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bills of exchange and promissory notes, credit cards, debit cards,
ATM cards or any other instrument which can be used to create a
financial liability.
Currency Chest The Reserve Bank of India (RBI) stored all of the excess money of
banks in a currency chest. Whenever the RBI prints fresh currency
notes, it first distributes them to currency chests, who then
distribute them to banks. A currency chest is a depositary of the
Reserve Bank of India.
Cash Flow Cash Flow is defined as the liquid balance of cash as well as the
bank balance that is available with an organization or a
corporation.
Compound Interest Compound Interest is the interest that is 'compounded' on a sum
of money that is deposited for a long time.
Collateral Security Collateral is an asset or property that an individual or entity offers
to a lender as security for a loan. It is used as a way to obtain a
loan, acting as a protection against potential loss for the lender
should the borrower default in his payments.
Capital Adequacy Capital Adequacy Ratio is a measure of how much capital a bank
Ratio has available, reported as a percentage of a bank's risk-weighted
credit exposures.
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Centralized Funds Centralized Funds Management Systems was operated and
Management maintained by RBI to enable operations on current accounts
Systems maintained at various of the RBI, through standard message
formats in a secure manner.
Cheque Truncation Cheque Truncation System (CTS) is a cheque clearing system
System (CTS) undertaken by the Reserve Bank of India (RBI) for faster clearing of
cheques.
CORE Banking CORE banking solutions (CBS) are the bank’s centralised systems
Solutions (CBS) that are responsible for ensuring seamless workflow by automating
the frontend and backend processes within a bank.
Contingent Liabilities These liabilities are not shown in the body of Balance Sheet but
are recorded as a footnote.
Current Assets These are the assets which are required by the business for the
purpose of re-sale and re-circulating and arise out of usual
business dealings.
Current Ratio The Current ratio is the relationship between Current Assets and
Current Liabilities. The ratio helps in knowing about the liquidity
position of a firm during the course of a year.
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Co-branded Credit A co-branded card is a credit card that a retailer of consumer

Card
goods or services issues in partnership with a particular credit card
issuer or network.
Door-Step Banking As the name Door-Step Banking suggests it is that type of banking
where bank offers few of its services at the doors of the customers
like opening of accounts, FDs or RDs and many more services.
Depository A Depository is an organisation which holds securities of investors
in electronic form at the request of the investors through a
registered Depository Participant.
Dematerialisation Dematerialisation is the process by which the paper certificates of
an investor are taken back by the company/registrar and actually
destroyed and an equivalent number of securities are credited in
electronic holdings of that investor.
Derivatives As per RBI, derivative means a financial instrument to be settled at
a future date, whose value is derived from change in some other
variable such as interest rate, foreign exchange rate, stock market
index, credit index, index of prices, etc.
Debt Market Debt Market is the market where debt instruments are traded.
Debt Instruments are the assets which require a fixed payment to
the holder, usually with interest.
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Doubtful Asset A Doubtful Asset is the one which has remained Sub-Standard
Asset for more than or exceeding the time period of 12 months.
Debt Recovery Debt Recovery Tribunals have been constituted under provisions
Tribunals of the DRT Act for establishment of Tribunals for expeditious
adjudication and recovery of debts due to Banks and Financial
Institutions and for matters connected therewith.
Deferred Payment This is a guarantee undertake to make payment of installments
Guarantee payable by the buyer of capital goods such as machinery, on long
term credit, given by the supplier.
Demand Draft Demand Draft is an order to pay money drawn by one office of a
bank upon another office of the same bank for a sum of money
payable to order on demand.
Debt Recovery Debt Recovery is the process that is initiated by the banks and
lending institutions, by various procedures like debt settlement or
selling of collaterals.
Dividend A Dividend is a distribution of profits by a corporation to its
shareholders. When a corporation earns a profit or surplus, it is
able to pay a proportion of the profit as a dividend to shareholders.
DEMAT Account A DEMAT Account is an account to hold financial securities (equity
or debt) in electronic form. In India, demat accounts are maintained
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by two depository organisations, National Securities Depository
Limited and Central Depository Services Limited.
Deflation When the overall price level decreases so that inflation rate
becomes negative, it is called Deflation.
Dear Money Dear Money refers to money that is hard to obtain because of
abnormally high interest rates. Dear Money is often referred to as
tight money because it occurs in periods when central banks are
tightening monetary policy.
Depreciation Depreciation means decline in the value of an assets as a result of
ear and tear due to actual use, passage of time, obsolescence,
accident or fall in market value.
Debt-Equity Ratio The ratio is important one since it shows the dependence of the
unit on outside long-term finance. A Debt-Equity Ratio of 2
1 is considered
desirable by the
banks and Reserve
Bank of India.
Debt Service The ratio explains the relationship between the funds available for
Coverage Ratio servicing the long term outside liabilities on the one hand and
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amount of interest and installment of long term outside liabilities
on the other side.
Debtor Turnover Debtor Turnover Ratio indicates the number of times average
Ratio debtors have been converted into cash during a year.
Economic Policy Economic Policy refers to the positive and negative actions that
government of a country generally initiates in the economic field.
Equity Market An Equity Market is the market where shares of companies are
issued and traded, either through exchanges or over-the-counter
markets.
Endorsing Endorsing means signing on the face or backside of an instrument
(or even on a paper called Allonge or stamped paper), for the
purpose of negotiating (transfeering to next person) a negotiable
instrument.
External Commercial External Commercial Borrowing are the borrowings by eligible
Borrowing resident entities from recognised non-resident entities.
Exchange Earner's It is a facility provided to the foreign exchange earners, including
Foreign Currency exporters, to credit 100% of their foreign exchange earnings to the
Account account, so that the account holders do not have to convert
foreign exchange into rupees and vice versa, thereby minimising
the transaction costs.
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Earnest Money An Earnest Money Deposit is made by the buyer to the potential
Deposit seller of a real estate, in the initial stages of negotiation of
purchase.
Exchange Rate Exchange Rate is a basically a rate, with the help of which one
country's currency can be exchanged with the currency of another
country.
Equated Monthly An Equated Monthly Installment is a fixed payment amount made
Installment by a borrower to a lender at a specified date each calendar month.
Electronic Clearing Electronic Clearing Services is a mode of electronic funds transfer
Services from one bank to another bank account using services of a
Clearing House for bulk transfers.
Electronic Benefit Electronic Benefit Transfer (EBT) is a product offered under
Transfer (EBT) Financial Inclusion which facilitates payments to reach the intended
beneficiaries of government sponsored schemes, through bank
accounts.
Fiscal Policy Fiscal Policy is the deliberate manipulation of tax rates and
government spending to achieve changes in aggregate demand.
Forensic Audit (FA) Forensic Audit is an examination and evaluation of an entity's
financial information for use as evidence in a court. A Forensic
Audit can be conducted to prosecute a party for fraud,
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embezzlement or other financial claims and to determine
negligence.
Financial Inclusion Financial Inclusion stands for delivery of financial products, at
affordable costs to sections of disadvantaged and low income
segments of society, to ensure continuity and certainty of
investment.
Financial Literacy The financial literacy or financial education stands for ability to
know and effectively use financial resources to enhance the well
being and economic security of oneself, one's family and business.
It enables individuals to take effective action to improve overall
wellbeing & avoid financial distress.
Forward Rate It is a Financial contract between two parties to exchange interest
Agreement (FRA) payments for a notional principal amount on settlement date, for
a specified period from start date to maturity date.
Futures A future is a standard contract based on an agreement to buy or
sell an asset at a certain price at a certain time in future. It is an
obligation on the buyer to purchase the underlying instrument and
the seller to sell it.
Forwards The forward is a contract that is traded off-the-stock exchange, is
self regulatory and has certain flexibility unlike future which are
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traded at stock exchange only, do not have flexibility of quantity
and quality of commodity to be delivered and these are regulated
by SEBI, RBI and other agencies.
Factoring The arrangement in which short-term domestic receivables on
sale of goods or services are sold to a company (known as
FACTOR) is called Factoring
Forfaiting Forfaiting represents the purchase of obligations, which fall due at
some future date and arise from delivery of goods or services in
export transactions, without recourse to the previous holder of the
obligation.
Forward Contracts Forward Contract is contract which affords adequate protection
to an exporter or importer against exchange risk.
Foreclosure A Foreclosure is a standardized procedure where creditors like
banks, are authorized to obtain the title of the real estate property
that has been pledged as collateral.
Fiscal Deficit A Fiscal Deficit is a shortfall in a government's income compared
with its spending. The government that has a Fiscal Deficit is
spending beyond its means.
Follow on Public Follow on Public Offer is an issuance of shares by a public
Offer company whose shares are already listed on an exchange.
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Funds Flow Funds Flow Statement is a statement prepared to analyse the
Statement reasons for changes in the Financial Position of a Company
between 2 Balance Sheets.
Green Bonds A green Bond is a bond where the issuer of the bond, publicly
states that capital is being raised to fund green projects. Green
projects typically include projects that relate to renewable energy,
emission reduction etc. These are issued by multilateral agencies.
Golden Share Golden Share is a special share which carries veto powers, over-
riding the votes of all class of share holders.
Grace Period A Grace Period is an interest-free period that is to be given by a
creditor to a debtor after the period of the loan gets over, before
initiating the process of loss recovery.
Gross Domestic Gross Domestic Product (GDP) is the monetary value of all finished
Product goods and services made within a country during a specific period.
Green Label ATM These ATMs are installed for the transaction related to agriculture.
Hot Money Hot Money are the investible funds seeking short term gains from
investment in stock, bullion and currencies, commodities or real
estate.
Hypothecation A charge in or upon by a borrower in favour of a secured creditor
without delivery of possession of the moveable property to such
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creditor, as security for financial assistance and includes floating
charge and crystallization of such charge into fixed on movable
property.
Hedge Hedge is a strategy that is used to minimize the risk of a particular
investment and maximize the returns of an investment.
Helicopter Money This is an unconventional monetary policy tool aimed at bringing
a flagging economy back on track. It involves printing large sums
of money and distributing it to the public.
Inventory Turnover Inventory Turnover Ratio is a ratio that measures the number of
Ratio times inventory is sold or consumed in a given time period.
Intangible Assets Certain Assets in business don't have any physical presence or in
other words these are just book entries created with certain specific
objectives.
Immediate Payment Immediate Payment Service (IMPS) is an instant interbank
Service (IMPS) electronic fund transfer service through mobile phones. It is also
being extended through other channels such as ATM, Internet
Banking, etc.
Islamic Banking An Islamic Bank is a deposit taking banking institution whose
scope of activities includes all currently known banking activities,
excluding borrowing and lending on the basis of interest.
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Interest Rate Risk This is the risk arising from adverse movement of interest rates
during the period when the asset or liability was held by the bank.
This risk affects the net interest margin or market value of equity.
Insider Trading Insider Trading refers to the buying or selling of securities by a
person with access to priviledged information (to which none else
in the market has access to), usually done with the motive of
making profits or avoiding losses.
Interest Rate Swaps It is a financial contract between two parties exchanging or
(IRS) swapping a stream of interest payments for a notional principal
amount on multiple occasions during a specified period. Such
contracts generally involve exchange of a fixed to floating or
floating to floating rates of interest.
Inter Bank It is a short-term money market instrument whereby the banks can
Participation raise money/deploy short-term surplus. In the case of IBPC the
Certificates borrowing bank passes/sells on the loans and credit that it has in
its book, for a temporary period, to the lending bank.
Initial Public Offering Initial Public Offering means the process of offering shares of a
company for the very first time in a new stock issuance.
Intrinsic The method of valuation of stock, using data input such as sale,
profit, debt, assets ect. to determine a price, value of stock.
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Inchoate Instrument Inchoate Instrument is an incomplete instrument which is legally
valid (it bears signature of the drawer but some particular say date
or amount or place is missing).
Interest Interest is a charge that is paid by any borrower or debtor for the
use of money, which is calculated on the basis of the rate of
interest, time period of the debt and the principal amount that was
borrowed.
Internet Banking Internet Banking is a system wherein customers can conduct their
transactions through the Internet. This kind of banking is also
known as e-banking or online banking.
Inflation Inflation refers to the rise in the prices of most goods and services
of daily or common use, such as food, clothing, housing,
recreation, transport, consumer staples, etc.
Indian Financial IFSC Code is a unique eleven-digit number which is a combination
System Code (IFSC of alphabets and numerals. It is used to transfer funds online for
Code) NEFT, IMPS and RTGS transactions.
Kiosk Banking The Kiosk Banking is the initiative taken by the RBI for those living
in villages or other remote areas who are deprived of banking
services due to the non-availability of a bank branch in their
locality.
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Liability A Liability is something a person or company owes, usually a sum
of money. Liabilities are settled over time through the transfer of
economic benefits including money, goods, or services.
Liquidity Coverage Liquidity Coverage Ratio is present in the firm to promote short
Ratio (LCR) term resilience of banks to potential liquidity disruption by
ensuring that banks have sufficient high quality liquid assets to
survive an acute stress scenario lasting for 30 days.
Liquidity Risk This is the risk arising due from funding of long term assets by
short term liabilities or funding short term assets by long term
liabilities.
Legal Entity Identifier Legal Entity Identifier Code a 20 digit unique code, is conceived as
a key measure to improve the quality and accuracy of financial data
systems for better risk management post the Global Financial
Crisis.
Liquidity Adjustment Liquidity Adjustment Facility is a tool which is being used Reserve
Facility Bank of India to fulfill the the daily liquidity needs of the
commercial banking system.
Loss Asset A Loss Asset is one where loss has been indentified by the bank
or internal or external auditors or the RBI Inspectors, but the
amount has not been written off, wholly or partially.
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Letter of Credit A Letter of Credit is a commercial instrument of assured payment
and widely used by the business community for its various
advantages. In an LOC, a bank undertakes to make payment to a
seller on production of documents stipulated in the credit.
Lead Bank Scheme Lead Bank Scheme is the scheme which includes the corrdination
of activities of banks and other developmental agencies to
promote the bank's role in overall development of rural sector.
Lien Lien is defined as the right of the creditor to retain the possession
of the goods and securities owned by the debtor until the debt has
been paid.
LORO Account If a bank in India (say SBI) has an account with Citi Bank New York
and another India bank say BoB wants to refer to that account while
corresponding Citi Bank, New York, it would refer the said account
as LORO Account.
Lease A contract, through which, the owner (lessor) of a certain property,
allows another (lessee) to use the same for a specified period, in
exchange for a value called the rent.
Lock-in Period A guarantee given by the lender that there will be no change in
the quoted mortgage rates for a specified period of time, which is
called the lock-in period.
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Liquidity Liquidity refers to the ease with which an asset, or security, can be
converted into ready cash without affecting its market price. Cash
is the most liquid of assets while tangible items are less liquid.
Monetary Policy Monetary Policy refers to the use of monetary instruments under
the control of the central bank to regulate magnitudes such as
interest rates, money supply and availability of credit with a view to
achieving the ultimate objective of economic policy.
Market Risk or Price It is the risk that arises due to adverse movement of value of
Risk investments/trading portfolio, during the period when the
securities are held by the bank.
Masala Bonds Masala Bonds are the bonds issued for rupee-denominated
borrowings by Indian entities in overseas markets.
Money Laundering It is a process for conversion of money obtained illegally to appear
to have originated from legitimate sources.
Money Market It is a market for short term debt securities, such as commercial
paper, repos, negotiable certificates of deposit, and Treasury Bills
with a maturity of one year or less.
Merchant Banking Merchant Banking stands for providing various services relating to
capital market and financing the corporate sector.
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Mutual Funds Mutual Funds are associations or trusts of members of public who
wish to make investments in the financial instruments or assets of
the business sector or corporate sector for the mutual benefit of its
members.
Marginal Standing Marginal Standing Facility is a tool of commercial banks where
Facility banks takes the liquidity from Reserve Bank of India in an
emergency when inter-bank liquidity dries up completely.
Mortgage Mortgage is transfer of interest in specific immovable property for
the purpose of securing the payment of money advanced by way
of loan, an existing or future debt or the performance of an
engagement which may give rise to pecuniary liability.
Mutilated Banknote Mutilated Banknote is a banknote, of which a portion is missing or
which is composed of more than two pieces.
MIRROR Account The account of a foreign bank, as maintained in the books of bank
in India is called MIRROR Account or Shadow Account.
Maturity The term maturity is used to indicate the end of investment period
of any fixed investment or security. After maturity, the investor is
repaid the invested amount along with the interest that has been
accumulated.
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Market Value Market Value is the value at which the demand of consumers and
the supply of the manufacturers decide the price of a commodity
or service.
Market Capitalisation Market Capitalisation refers to how much a company is worth as
determined by the stock market. It is defined as the total market
value of all outstanding shares.
Money Transfer It is a method of transferring only personal inward remittances
Service Scheme from abroad to beneficiaries in India.
(MTSS)
Magnetic Ink Magnetic Ink Character Recognition Code is a technology used to
Character verify the legitimacy or originality of paper documents, especially
Recognition (MICR) cheques.
National Automated National Payments Corporation of India (NPCI) has implemented
Clearing House “National Automated Clearing House (NACH)” for Banks, Financial
(NACH) Institutions, Corporates and Government a web based solution to
facilitate interbank, high volume, electronic transactions which are
repetitive and periodic in nature.
Net Stable Funding It is defined as the amount of available stable funding relative to
Ratio (NSFR) the amount of required stable funding.
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Narrow Banking Narrow Banking is way or the banking process where a bank keep
its finds in risk-free assets with maturity period matching its liability
maturity profile, so that there is no problem relating to asset
liability mismatch and the quality of assets remains intact without
leading to emergence of NPAs. It is best suited for high NPAs.
Net Asset Value The price or value of one share of a fund. It is calculated by
summing the quoted values of all the securities held by the fund,
adding in cash and any accrued income and subtracting liabilities
and dividing the result by the number of shares outstanding.
Near Money Near Money is the cash equivalent and other assets which are
easily convertible into cash like Gold.
Net Worth Net Worth comprises of Paid-Up Capital plus Free Reserves
including Share Premium plus Investment Fluctuation Reserve and
Credit Balance in Profit and Loss Account, less Debit Balance in
Profit and Loss Account, Accumulated Losses, Intangible Assets.
Neo Banks Neo banks are financial technology (fintech) firms that offer
banking and other financial services entirely through mobile apps.
Simply described, they are online-only banks that do not have any
physical branches.
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Negotiated Dealing Negotiated Dealing System - Order Matching is an anonymous
System - Order electronic order matching platform own by RBI to facilitate
Matching secondary market trading in all kinds.
Non-Banking NBFC is a company registered under Companies Act and engaged
Finance Company in the business of loans & advances, acquisition of
shares/stocks/bonds/debentures/securities issued by Government
or Local Authority.
Non-Performing A Non-Performing Asset refers to a classification for loans or
Asset advances that are in default or in arrears. A loan is in arrears when
principal or interest payments are late or missed. A loan is in default
when the lender considers the loan agreement to be broken and
the debtor is unable to meet his obligations.
Net Present Value Net Present Value is the difference between cash outflows at base
period and present value of future cash inflows.
Negotiable A Negotiable Instrument is an document or a piece of paper which
Instrument guarantees the payment of a particular amount either on demand
or at a specific time whose name is mentioned on that document.
NOSTRO Account NOSTRO Account is an account maintained by a bank (say State
Bank of India) with a bank abroad (say Citi Bank) in the currency of
that country.
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Non - Resident A Non-Resident Ordinary (NRO) Account is a popular way for
Ordinary Accounts many Non-Resident Indians (NRIs) to manage their deposits or
income earned in India such as dividends, pension, rent, etc. This
account allows you to receive funds in either Indian or foreign
currency
National Electronic National Electronic Fund Transfer is a nation-wide payments
Fund Transfer system that allows the transfer of funds from one bank's account
to another. With an increased focus on online banking, NEFT has
become one of the most popular ways of transferring funds.
Niche Banks Niche banks are stripped-down banks which cater to very specific
markets or customer segments.
National Financial National Financial Switch (NFS) is the largest network of shared
Switch automated teller machines (ATMs) in India. It was designed,
developed and deployed with the aim of inter-connecting the
ATMs in the country and facilitating convenience banking.
Non-Convertible The debentures which can't be converted into shares or equities

are called non-convertible debentures (or NCDs). Non-convertible
Debentures (NCD)
debentures are used as tools to raise long-term funds by
companies through a public issue.
Operational Risk It is the risk arises due to the failed internal processes, people or
systems or from external events. It includes a number of risks, such
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as fraud risk, communication risk, documentation risk, comptence
risk, model risk, culture risk and many more.
Options It is a contract that provides a right but does not impose any
obligation to buy or sell a financial instrument (say a share or a
security).
Overdraft As the name suggests, it is a check or rather an amount of check,
which is above the balance available in the account of the payer.
Open Market Open Market Operations is the simultaneous sale and purchase of
Operation (OMO) government securities and treasury bills by RBI. The objective of
OMO is to regulate the money supply in the economy.
Onsite ATM These ATMs are inside the bank compound and hence are known
as Onsite ATMs.
Offsite ATM These ATMs are located in various places except inside the bank
premises and thus named as Offsite ATM
Payments Banks Payments Banks is the new type of banks which is given by Reserve
Bank of India. These banks are like any other bank but operating
on a smaller scale with less credit risk as compared to Nationalised
Banks.
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Prompt Corrective Prompt Corrective Action comprises of set of rules or the model
Action which is being implemented by the Reserve Bank of India on the
banks which shows the signs of stress or have high risks.
Peer-To-Peer Peer-To-Peer Lending, is practise of lending money to individuals
Lending or businesses through online services that match lenders directly
with borrowers.
PradhanMantri Jan PMJDY launched on 28.08.14, is a National Mission for Financial
DhanYojana Inclusion to endure access to Banking/Savings &Deposit Accounts,
Remittance, Credit, Insurance, pension in an affordable manner.
The scheme was for 4 years initially and on 05.09 18, it has been
extended beyond 28.08.18. PMJDY accounts are opened with zero
balance.
Participatory Note A Participatory Note (also called Off-Shore Derivative Instrument)
is a financial derivative instrument issued against an underlying
security (shares).
Pledge In Pledge, the legal rights are different from Hypothecation as the
possession of the securities remains with the bank while the
ownership remains with borrower.
Promissory Note Under Section 4, Promissory Note is an instrument (a) in writing,
(b) containing an unconditional undertaking (or promise), (c)
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signed by the maker, (d) to pay a certain sum of money, (e) to or
to the order of a certain person or to the bearer of the instrument
Post Dated Cheque The cheques which bear date subsequent to the date on which it
is drawn and the date has fallen due till presentment are called Post
Dated Cheques.
Permanent Account A Permanent Account Number is a 10 character alphanumeric
Number number allotted by the Income Tax Department, to a tax payer who
is eligible the file the income tax return.
Personal Personal Identification Number or PIN is a secret code of numbers
Identification and alphabets given to customers to perform transactions through
Number (PIN) an automatic teller machine or an ATM.
Principal Principal is basic amount which is invested to yield returns over a
certain period of time at a given rate of interest.
Plastic Money Plastic Money refers to the hard plastic cards we use every day in
place of actual bank notes. For example ATM cards like credit card
and debit card are electronic generated card that acts as plastic
money at the time of buying of goods and services.
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Prime Lending Rate Prime Lending Rate is the interest rate which are being charged
by banks from their most creditworthy customers, generally large
corporations.
Pre-Paid Payment Pre-Paid Payment Instruments are payment instruments to
Instruments purchase of goods and services and funds transfer, against the
value stored on such instruments.
Quick Ratio The ratio measures the capacity of the organisation to pay off
Current Liabilities of the urgent nature immediately.
Return on Investment Return on Investment tries to directly measure the amount of
return on a particular investment, relative to the investment's cost.
Return on Equity Return on Equity is a measure of financial performance calculated
by dividing net income by shareholders' equity. Because
shareholders' equity is equal to a company's assets minus its debt,
ROE is considered the return on net assets.
Retail Banking Retail Banking is also known as Consumer Banking or Personal
Banking is the provision or banking services which are being
offered by a bank to the general public, rather than to companies
or big corporate.
Risk Management Risk can be defined as the potential loss from a banking
transaction, which a bank can suffer due to various reasons and
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management of such types of risks can be termed as the Risk
Management.
Reputation Risk It is the risk which arises due to negative public opinion. It can
expose an institution to litigation, financial loss or decline in
customer base.
Real Estate Real Estate Investment Trusts is a vehicle for making collective
Investment Trusts investment in commercial real estate. It provides a channel to make
(REIT) diversified investment in reality.
Resident Foreign The Resident Foreign Currency (RFC) Accounts are opened with
Currency Account an authorised dealer in India to maintain funds earned in a foreign
currency.
Recession An Macro-Economic term that refers to a significant decline in
general economic activity in a designated region.
Revolving Credit Revolving Credit is an agreement that permits an account holder
to borrow money repeatedly up to a set dollar limit while repaying
a portion of the current balance due in regular installments.
Statutory Liquidity Section 24 (2A) of Banking Regulation Act 1949 required every
Ratio (SLR) banking company to maintain in India equivalent to an amount
which shall not, at close business on any day, be less than as
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prescribed by Reserve Bank of India as percentage of total of its
net demand and time liabilities in India, which is known as SLR.
Systematically This term is given to those banks the failure of such banks can
Important Banks cause disruption of banking service in any economy.
Small Finance Banks Small Finance Banks is also the latest segment of banking which is
given by Reserve Bank of India under the guidance of Government
of India with the motive of extending the Financial Inclusion to the
unserved and unbanked region of the country.
Shadow Banking Shadow Banking comprises a diverse set of institutions and
markets that, collectively carry out traditional banking functions -
but do so outside, or in ways only loosely linked to, the traditional
system of regulated depository institutions.
Strategic Risk It is that risk which arises due to adverse business decision,
improper implemtation of decisions etc.
Stress Testing Stress Testing is described as the evaluation of a bank's financial
position, under a severe but plausible scenario, to assist in decision
making within the bank.
Subprime Lending Subprime lending (also referred to as B-paper, near-prime, or
second chance lending) is a practise followed by lenders in various
countries to sanction loans to the borrowers, who do not qualify
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for the best market interest rates, due to certain deficiency in their
credit history.
Swap A swap is a contract that hinds two counterparties to exchange
the different streams of payments over the specified period at a
specified rate.
Short Sale Short Sale means sale of a security one does not own. When banks
treat sale of a security held in the investment portfolio as a Short
Sale, these are referred to as 'notional' short sales.
Sweat Equity Sweat Equity is a non-monetary benefit that a company's
stakeholders give in labor and time, rather than a monetary
contribution, which benefit the company.
Spot Trading Trading by delivery of shares and payment for the same on the
date of purchase or on the next day.
Standard Assets Standard Asset is one which does not disclose any problems and
which does not carry more than Normal Risk attached to the
business
Sub-Standard Assets Sub-Standard Asset is an account which has been classified as
NPA for a period not exceeding 12 months.
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Stressed assets Stressed assets are equal to non-performing assets plus written off
assets plus restructured loans (NPAs + Restructured loans +
Written off assets).
Special Mention Special Mention Accounts are those assets/accounts that shows
Accounts
symptoms of bad asset quality in the first 90 days itself or before it
being identified as NPA.
Self-Help Groups Self-Help Groups are registered or unregistered small
economically homogenous and affinity groups of rural poor,
voluntarily coming together for mutual benefits.
Scheduled Bank As per Section 2 (e) of RBI Act, 1934, a Scheduled Bank means a
bank whose name is included in the 2nd schedule of RBI Act, 1934.
Stale Cheque On the date of presentation, if the validity period of a cheque has
already expired it is called a Stale Cheque, it cannot be paid.
Soiled Note Soiled Note means a note which, has become dirty due to usage
and also includes a two piece note pasted together wherein both
the pieces presented belong to the same note, and form the entire
note with no essential feature missing.
Special Drawing Special Drawing Rights is the supplementary foreign exchange
Rights reserve assets defined and maintained by the International
Monetary Fund.
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Society for A SWIFT Code is a standard format of Bank Identifier Code (BIC)
Worldwide Interbank used to specify a particular bank or branch. These codes are used
Financial when transferring money between banks, particularly for
Telecommunication international wire transfers. Banks also use these codes for
(SWIFT Code) exchanging messages between them.
Speed Clearing Speed Clearing refers to collection of outstation cheques through
the local clearing.
Treasury Bills These are the instruments (jn the form of promissory notes) of
short term borrowing by the central govt, first issued in India in
1917.
Take-Out Financing Take-Out Financing is a method of providing finance for longer
duration projects (say of 15 years) by banks by sanctioning medium
term loans (say 5 to 7 years).
Time Deposit A kind of bank deposit which the investor is not able to withdraw,
before a time fixed when making the deposit.
Universal Banking Universal Banking means allowing all the Financial Institutions and
banks to undertake all types of banking or development financing
activity, subject to compliance of statuatory and other
requirements of RBI, Government of India and related legal acts.
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VOSTRO Account VOSTRO is a local currency account maintained in local bank (say
State Bank of India) for a foreign bank (say Citi Bank, New York).
Ways & Means WMAs were introduced as per an agreement between RBI and
Advances Govt. WMAs are temporary overdrafts by RBI to Govt. under
section 17(5) of RBI Act. WMAs replaced the earlier ad hoc T-Bills
system w.e.f. 01.04.1997.
Waiver In banking terms, a waiver is relinquishing the rights. Sometimes
also considered to be the exemption or settlement of a part of
debt.
White Label ATM These ATMs are set up & owned by Non-Banking Financial
Companies and offer all the services are known as White Label
ATMs.
Working Capital Working Capital is the difference between a company's current
assets, such as cash, accounts receivable (customers' unpaid bills)
and inventories of raw materials and finished goods, and its current
liabilities, such as accounts payable.
Yield-to-Maturity The average annual yield that an investor receives because he
(YTM) holds it for life or till the maturity date is called as the yield to
maturity.
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Yellow Label ATM These ATMs are mainly installed to provide for E-Commerce
facility.
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The Complete Banking Awareness PDF

Banking Awareness - Complete Guide

S. No Table of Contents Page No

1. Structure of Banking in India 7

2. History of Banking and Amalgamation 9

4. Reserve Bank of India 15

1. Roles and responsibilities

2. Monetary policy Instruments

3. Acts and Sections under RBI

4. Banking Regulation Act

3. Non- Resident Deposits

8. Payments Banks and Small Finance Banks 40

9. Non-Banking Financial Companies 45

10. Development Banks 48

11. Financial Institutions 53

4. International Finance Corporation

12. All India Financial Institutions

13. Rupee Denomination 60

14. Assets and Liabilities 60

15. Financial Inclusion 65

ii) Lead Bank Scheme

iv) Business Correspondents

16. Banking Ombudsman Scheme 70

17. KYC – Know Your Customer 73

18. Small Savings Schemes 75

1. Public Provident Fund

3. Senior Citizen Savings Scheme

4. National Savings Certificate

5. Kisan Vikas Patra

19. Negotiable Instruments 82

2. Cheque and its Types

20. ATM and its types 92

21. Payment and Settlements system 95

22. NPCI and its Products 98

23. Basel Norms 102

24. Credit Rating Agencies 105

25. Financial Market 110

26. Risks and its Types 115

27. Types of Money 117

28. Loans 118

3. Reverse Mortgage Scheme

29. Non-performing Assets 121

30. Prompt Corrective Action 123

31. SARFAESI Act 125

2. Role and Objectives

3. Debt Recovery Tribunal

32. Asset Reconstruction Company 127

33. FDI and FPI 128

34. Priority Sector Lending 129

35. Numbers and Codes used in Banking 133

36. Technologies used in Banking 139

37. Schemes 142

38. Banks Amalgamation, Headquarters and Tagline 146

39. Committees in Banking 150

40. Banking Abbreviations 153

41. Banking Terminologies 161

Policy rates (based on 06.09.2022):

Policy rate Current rate

Repo rate 5.40%

Reverse repo rate 3.35%

Bank rate 5.65%

Small Savings Scheme