BFSI Training Manual - PDF - 20230810 - 164502 - 0000

Publisher of Monetary and Economic DataRBI maintains and provides all the essential banking and other economic
data with analysis and e
directions. Devising new measures for influencing the allocation of credit in socially desired
RBI has several accomplishments to its credit and is continuously engaged in performing non-traditional, promotional tas
Some of these tasks relate to :
• Commercial banking
• Co-operative banking
• Industrial finance
• Export finance
• Credit guarantees
• Differential rate of interest scheme (loan to very poor people at a very low interest
rate)
• Credit to priority sectors (e.g. agriculture, small-scale industries, small business, micro and
small enterprises etc.) including weaker sections of society.
ASSIGNMENT:
Activity: Visit website of RBI www.rbi.org.in; check broad heads under which information activities of RBI is available. Link
information available with the various functions of RBI.
ASSESSMENT:
A.
State the objectives of establishment of RBI.
B.
Choose the correct answer to the following statements.
1.
RBI commenced its operations in the year –
a.1935 b.1947 c.1949 d.1955
2.As a banker to the government, RBI is responsible for : a.Providing short term credit to the government b.Managing all th
issues of government c.Servicing the government debt outstanding
d.All of the above
3.Which of the following is not the role of RBI as promoter :

a.Promotion of cooperative banking b.Credit to Priority sector c.Promotion of import credit
d.Promotion of export credit
4.Which of the following departments of RBI is responsible for managing the currency in circulation and its withdrawal from ci
a.Banking Department
b.Issue Department
c.
Circulation Department
d.All of the above
5.
As a banker to the Government, RBI performs which of the following responsibilities?
a.
Provides centralized clearing and
b.Manages new issues of government securities
d.Bc.uHyosldasnsdomseellsofgtohveerncashmernetseservceusriotifebsanks
ANSWERS:
(1)-a
(2)-d
(3)-c
(4)-a
(5)-b
CHECK LIST FOR ASSESSMENT ACTIVITY
Use the following checklist to meet all the requirements for Assessment Activity.
PART – A
Learn objectives of establishment of Reserve Bank of India and describe it
functions.
PART –B
Learn the primary functions of RBI. Learn the regulatory functions of RBI.
Enumerate the steps taken by RBI since independence under its developmental role.
PART-C
Performance Standards Yes No
Able to state the objectives of establishment of Reserve Bank of India
Able to enumerate the function of Reserve Bank of India
Able to explain the regulatory function of Reserve Bank of India
Able to explain the promotional role of Reserve Bank of India and its contribution to
the economic
development
Homework
• Write 10-15 lines on a bank or
• Read a bank website
ASSIGNMENT
Activity: Visit a Bank. Go through the bank publicity material and displays of products and services provided by the bank.
deposit and loan products and other services of the bank.
ASSESSMENT
State True or False –
1.The unorganised sector includes money lenders, nidhi funds, credit societies and indigenous private bankers, who exist
2.Post office savings bank, owned by Government of India, aims to direct small savings funds of household sector to the G
3.Foreign banks operating in India are not commercial banks.
4.Central Bank of India is the monetary authority of the country.
5.R eserve Bank of India does not possess regulatory powers over functioning ofco-operative banks.
6.EXIM bank basically caters to the financial needs of foreign customers.
7.SIDBI is established for promoting, financing and assisting the development of industrial units in small scale sector.
8.Some commercial banks of India do have joint ventures and representative offices at foreign Centres.
Answers : (1) True (2) True (3) False (4) False (5) False (6) False (7) True (8) True
CHECK LIST FOR ASSESSMENT ACTIVITY
Use the following checklist to see if you have met all the requirements for Assessment Activity.
PART – A
1 Learn about different types of banks.
2. Learn about the various financial institutions operating in the financial system of India.
PART –B
Identify and understand the main objectives of various types of banks and financial institutions in
India.
exporter receives sale proceeds in foreign currency or if a person receives money in foreign currency from his relative livi
or if a foreign tourist travelling into India wants rupee in exchange of foreign currency, the banks buy foreign currencies f
people and pay rupee. Thus through this service banks help in promoting international trade, international tourism and m
of funds to
and from foreign countries.
4
Sale of Mutual Funds, Insurance Policies, etc : Banks are allowed to have tie- ups with mutual funds
.
and insurance companies to sell their products (mutual fund schemes / Insurance policies) to their
retail (individual) customers. Banks also provide the facility of opening of DMAT account of company
shares. These services are offered to customers as an alternate channel of investment to the traditional mode of investment
deposits. Many banks have their own subsidiary companies who
deal in life insurance, general insurance, mutual funds and capital market investments. The
customers of the banks are thus able get all the financial services need by them under one roof.
The above stated functions of the banks are only illustrative, and not exhaustive. The modern banks perform many oth
like trusties, merchant bankers, under writers of capital
market issues, portfolio managers etc.
ASSIGNMENT
i)Enlist the various customer needs and relate it to various banking products and services.
ii)Activity: Visit a Bank. Go through the bank publicity material and displays of product and services provided by the bank. L
deposit and loan products and other services of the bank.
ASSESSMENT :
A. Identify main functions of the banks and their products and services Understanding of various of functions of ba
Features of various products of the banks and utility of their various services.
B.
Choose the correct answer to the following statements.
W1.hich deposit provides no interest?
a)Current Deposit
b)Savings Deposit
c)Recurring Deposit
d)Term Deposit
2.In which deposit the amount of interest will be the highest at the end of one year?
Ra)s.20000/- kept in Current Deposit for one year b)Rs.12000/- kept in Savings Deposit for one year
c)Rs.12000/- kept in Term Deposit for one yeard)Rs.1000/-
deposited in each month for one year
3.Which statement is correct?
i)Banks can do only those businesses which are permitted under Banking Regulations Act, 1949.
ii)Banks accept deposits from the public which are payable on demand.
a)
Only (i) is correct.
b)Only (ii) is correct.
c)
Both (i) and (ii) are correct.
d)Both (i) and (ii) are incorrect.
4.Which form of loans and advances is not for personal expenditure or creation of personal assets for
individuals?
a)Education loan
b)House Loan
c)Cash Credit
d)Loan against LIC policy
5.
Which loan is repaid over a period of time?
a)
Cash Credit
b)Overdraft
c)
Term Loan
d)Bill Discounting
6
a) If bank details like account number, name of the bank etc. of the person to whom payment is to be
.
made is not available and the person resides in another town, which is the most preferred method of
payment through bank.

a)Banker’s cheque
b)Draft
c)Electronic Funds Transfer
d)Debit Card
If the payment for the purchase is not to be made immediately, which is the most preferred mode of payment
7.
a)Draft
b)Debit Card
c)Credit Card
d)Electronic Funds Transfer
8.If an importer wants to pay for the goods imported, he is required to –

a)ask his bank / authorised dealer to sell foreign exchange to him and arrange to pay the same to the exporter abroad
b)ask his bank/ authorised dealer to buy foreign exchange from him and arrange to pay the same to
the exporter abroad
c)buy foreign exchange from an exporter who gets foreign exchange from abroad.
d)ask his relative abroad to pay for the import and deposit money in his relative’s account.
9.Which facility is provided to the customer to keep a specific valuable in the bank for safety?
a.Safe Deposit Locker
b.Safe Custody Facility
c.
Safe Deposit Account
d.Such facility is not available with the bank

10
Which facility is not provided in a modern large size bank? 2019
. a)
Opening of Demat account of shares
b)Investment in mutual funds
c)
Issue of Life Insurance Policies
d)All the above facilities are provided by the modern large size banks
Ans : 1.a, 2.c, 3.c, 4.c, 5.c, 6.b, 7.c, 8.a, 9.b, 10. d
Fill in the blanks :
1.“RTGS” stands for
.
2. RTGS system is primarily meant for value
transactions.3.In RTGS, beneficiary bank has to credit the beneficiary’s
account within hour of receiving the funds transfer message.
4.The full form of NEFT is
5.NEFT is an electronic fund transfer system that operates on a
basis which settles transactions in batches whereas in RTGS the
transactions are settled
.
6.The customer can make payments to the merchant establishment/shopkeepers by swiping the debit/credit card th
machine against the purchases from his account and there is no need to carry the cash.
Answers: 1. Real Time Gross Settlement 2. Large. 3. 30 4. National Electronic Funds Transfer 5. Deferred Net S
(DNS), & individually 6. POS Terminal
Staff to possess adequate job knowledge regarding their respective desks. The Bank’s systems / procedures / instructio
understandable. Educating customers through pamphlets, etc. in local language.
Manning the counters/ desks continuously (not leaving the desks / counters unattended).
Reducing unnecessary delays.
Starting counters on time and availing of only prescribed lunch hours.
2.4 : CUSTOMER SERVICES: IMPORTANT DEFINITIONS

Customer:
As per KYC (Know Your Customer) Guidelines prescribed by the RBI (Reserve Bank of India), a customer is :
a.
A person or an entity (institution / organisation / company, etc.) that maintains an account and / or has a
business relationship with the bank.
b.One on whose behalf the account is maintained.
c.
Beneficiary of transactions conducted by advocates, chartered accountants, etc. (as permitted under the
law).
d.Any person or entity connected with a financial transaction.
As per the “Oxford Advanced Learner’s Dictionary”, “a customer is a person or an organisation that
buys something from a shop/ store”.
Assignment Activity
Visit a Branch. Interact with different categories of customers and know their wants and needs.
Assessment
1
Fill in the blanks.
.
Code of Fair Banking Practice is also known as .
1
Banks pay compensation to their customers as per the respective Bank’s
.
Policy.
2
KYC stands for .
.
The term “services” is defined in Act.
A is the most important person in any business.
An3s(w2)eCrosm: (p1e)nsCaitiizoenn’s Charter (3) Know Your
( 4 ) C o nsumer Protection(5) customer.
Cus t o m e r
.
.4
5Say YES or NO
b
.
1.The BCSBI imposes penalties on Banks in case of deviation from the Citizen’s charter.
2.Time test norms for different Banking transactions have been prescribed by the RBI.
3.The officials of RBI pay secret visits to bank branches.
4.The KYC Guidelines have been prescribed by the Indian Banks’ Association.
5.Customer orientation relates to Banks’ launching products / schemes / services to meet the customer’s specific needs.
Answers: (1) Yes (2) No (3) Yes (4) No (5) Yes
Checklist for Assessment Activity
Use the following checklist to see if you have met all the requirements for assessment activity.
Part A
L1e. arn about different steps taken by RBI to improve customer services in Banks.
2.
Learn about different steps taken by different banks to improve customer services in Banks.
2.5 : CHECK-LIST FOR RENDERING EFFICIENT CUSTOMER SERVICES
Activity:
Activity: Make a check-list for rendering efficient customer services. Divide the activities in daily, fortnightly, monthl
quarterly timeframe.
DAILY
Service with smile : courteous behaviour by staff. Enforcing punctuality / discipline.
Propagating Nomination facility (display of a suitable notice board).
Prompt updating and delivery of passbooks (savings book, recurring deposit etc.). Prompt despatch of statement of acco
customers.
Prompt despatch of Debit / Credit advices to customers.
Immediate credit of eligible outstation cheques (up to the prescribed amount).
Staff concerned to perform duties as per the Bank’s / RBI instructions. Prompt transfer of deposit accounts (SB / RD) , etc
Advance intimation to be sent to depositors regarding due dates (maturity dates). Propagating Bank’s schemes / product
services.
Prompt payment of periodical interest on deposit accounts (savings bank accounts, fixed / term
deposits.
Prompt settlement of claims of legal heirs of deceased customers Prompt collection of outstation cheques through couri
speedpost.
Branch Managers and other Managers are positively available at the Branches at the prescribed
hours on the customer day.
Deputy General Managers and Zonal / Regional Managers are also available on the customer day at their respective offic
On this day, customers and user public may call on any executive / official of the bank (with or without
appointment).
A suitable indication board about the customer day is displayed prominently / invariably in the banking hall, for the infor
the general public.
It is mandatory for all top functionaries at the head office, zonal / regional offices and the Branch Managers to make themselv
for a minimum of two hours on the prescribed day(s) of every
month for customers (to attend to their grievances and listen to their suggestions).
Assignment Activity
Visit a Branch. Study the way the Branch staff deals with different categories of customer.
Assessment
a.Fill in the blanks.
a.“May I Help You” counters are also known as .
b.The customer should be treated .
c.In respect of complaints, etc. the Banker should try to find a term solution.
d.“Anger” is one letter shorter than .
e.In dealing with a customer, a Bank employee is a representative of
.
Answers: (1) Grahak Mitra / Grahak Dost (2) nicely / properly (3) long (4
danger (5) his bank. )

b
Say YES or NO
1.No. desk should remain unmanned.
2.Different types of banking transactions should generally be completed within the time test norms prescribed for them.
3.Treat the complainant / customer as you would like to be treated.
4.In his capacity of a Bankman, winning an argument is important.
5.In dealing with a customer, a Bankman can get personal.
Answers: (1) Yes (2) Yes (3) Yes (4) No (5) No
Part A
a.
Learn about customer’s expectations from the banks’ staff regarding discipline and punctuality.
Don’t give your account details, password or other security information to anyone.
(Giving your card and disclosing PIN to someone is like giving a blank signed cheque). Don’t write down or record your PI
password or other security information.
Don’t allow anyone else to use your card, PIN, password or other security information.
In any case, do not keep PIN and the card together.
Don’t issue cheques without maintaining sufficient funds in the account.
Frequent dis-honour/ returning of cheques due to insufficient funds may lead to closure of an
account. (It is also a offence).
Assignment Activity
Visit a Branch. Have a look at different notice-boards educating customers about safety of their
interests.
Assessment
Fill in the blanks.
1
An important precaution to be taken by customers before sending the cheques / drafts by post / courier
.
.
2.PIN is the abbreviation for .
3.The document informing the customer about his PIN is called .
4.Returning of cheques due to insufficient funds is known as .
5.The cheque book issued to customers should always be kept under .
Answers: (1) cross the cheques / drafts (2) Personal Identification Number
(3) PIN mailer (4) bouncing of cheques (5) kept under lock and key.
b
Say YES or NO
1.A.customer should immediately inform the Bank when his ATM card, cheque book, pass book, blank cheque is stolen o
2.It is not necessary to change the PIN periodically.
3.A customer should record his PIN in his diary.
4.Any change / alteration in a cheque must be verified by the initials of the customer / drawer.
5.In no case the customer can keep PIN and the Debit Card (ATM card) together.
Answers: (1) Yes (2) No (3) No (4) No (5) No
Part A
a.Learn about different precautions to be taken by customers for safeguarding their interests.
b.Learn about some of the activities which the customer should not do so as to safeguard his interests.
ASSESSMENT
Part A
Fill in the blanks:
1. A , is a box-usually located inside a bank-which is used to store
valuables.
2. The contents of a safe deposit box are not in the same way as bank deposits are.
3. Banking is a system that allows customers of a financial
institution to conduct a number of financial transactions through a mobile device such as a
mobile phone or tablet.
4. A is an automated banking machine that enables the customer of a financial institution to pe
financial transactions without the need for human cashier,
clerk or bank teller.
5. In a ATM card, authentication is provided by the customer entering a
.
6. alert messages are received in the mobile of the customer which
is registered with the Bank.
7. enables customers to make payments for purchases made through cards without the need of c
cash.
Answers:
1 Safe deposit 2. Insured 3. Mobile 4. ATM(automated teller machine) 5. Personal
identification number (PIN) 6. SMS 7. POS Terminal
Part B
-Describe the concept of safe deposit vault
-What is meant by ATM?
-Differentiate between Internet banking and Mobile banking.
CHECKLIST FOR ASSESSMENT
Use the following check list to see if you have met all the requirements for the Assessment Activity.
-Learn the various service products offered by a Bank
-Learn the working of ATM and Internet Banking
charges nominal higher rate than the rate payable on deposit. This loan is not required to be
repaid and usually adjusted on the maturity date of the deposit.
Bank also sanctions loans against securities like NSC, surrender value of LIC policy and selectively against shares of b
chip/reputed companies.
Non Performing Assets (NPA)
NPAs are those loans or advances in which there have been no repayment of interest or principal for a period of 90d
more. There are broadly four types of assets, in terms of the repayment done by borrowers:
Standard Assets are those where the principal and interest get serviced regularly and even if there is a default once
the outstanding period has never been for 90days or more. Sub Standard Assets are those loans which are overdue
to one year.
Doubtful Assets are outstanding for more than a year and hence leave very little hope for
recovery.
Loss Assets are those which have been identified as a loss and may get written off by the bank.
Activity:
The facilitator should distribute the bank loan forms and ask the aspirants to fill up the forms
without extending any help . The facilitator should also ask each one of the aspirants to get the
KYC documents within one or two days to complete the KYC formalities for their form. The facilitator may make Pee
aspirants and ask the opposite person to check the
application form to see whether it is complete.
EXERCISE
Have a group discussion on types of credit facilities extended by a bank. Summarize
the essential features of it.
List out various loan products under personal segment. Summarize the essential features.
ASSESSMENT
Part A
the banker advances a lump sum for a certain period at an agreed
rate of interest repayable in installments.
is an arrangement by which the customer is allowed to borrow money up to a certain limit.
is an arrangement between a banker and his customer by which
the customer is allowed to withdraw over and above the credit balance in the current
account up to an agreed limit.
Overdraft facility may be either or .
bills are payable on demand whereas bills are payable after expiry of credit period.
Answers: 1. Term Loan 2. Cash Credit 3. Overdraft 4. Personal security , assets 5. Demand, usance
Part B.
Write notes on what is meant by term loan, demand loan, cash credit and
overdraft.
Checklist of Assessment
Use the following check list to see if you have met all the requirements for the Assessment
Activity
Learn the basic lending facilities.
Learn the loan products available to individuals under Personal Segment.
PERFORMANCE STANDARDSYes No
Able to state the various credit facilities Able to understand what is term loan Able to understand what
is cash credit
Able to understand important loan products available to personal segment Customers
Threshold Limit of Transactions
At the time of opening of the account, based on customer's category (individual, firm, company etc.) and profile, a t
limit of transaction is to be determined. The limit is to be reviewed and revised from time to time. Any transaction b
limit should be looked into with extra caution.
Activity monitoring should cover all accounts including existing accounts for which profile should be available with t
Branch/Bank. Managers should use reasonable judgment in
determining the suspiciousness of the transaction. The accounts, wherein the suspicious transactions are found, sho
closely monitored at the branches, so that the
documentary evidence upon which a suspicion is aroused is not lost.
Risk Management
All Banks are required to put in place an effective KYC programme by establishing
appropriate procedures and ensuring their effective implementation. It should cover proper systems and controls, s
of duties, training and other related matters.
Responsibility of each officer/ employee should be clearly allocated within the bank. The nature and extent of due d
the time of opening of account and permitting
operations therein will depend on the risk perceived by the bank.
Bank’s internal audit and compliance functions have an important role in evaluating and ensuring adherence to the
policies and procedures. The compliance function should
provide an independent evaluation of the bank’s own policies and procedures, including legal and regulatory requir
Internal Inspectors should specifically check and verify
the application of KYC procedures at the branches/offices and comment on the lapses observed in this regard. The c
in this regard may be put up before the Audit
Committee of the Board by HO (Inspection) on quarterly intervals.
EXERCISE
Visit RBI website/ a Bank website and go through the KYC norms. Prepare a chart listing
the key requirements as mentioned in the website.
ASSESSMENT
ASSESSMENT
Part A
Fill in the blanks:
1. is the process used to verify the identity of their clients.
2. The objective of KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal e
for
activities.
3. Bank should develop a Policy laying down explicit criteria for acceptance of customers.
4. Banks should prepare a for each new customer based on risk categorisation.
5. means identifying the customer and verifying his/ her

identity by using reliable, independent source documents, data or information.
6. The Customer profiles incorporated in the opening forms have to be reviewed once in years.
7. Banks are required to record and report all individual cash deposits and withdrawals of
Rs. lac and above in deposits, cash credit and overdraft
accounts etc, at fortnightly intervals to their respective Zonal Offices.
8. The customer profile will be a document.
1.KYC or Know Your Customers2. Money laundering 3.Customer Acceptance

4. profile 5. Customer identification 6.Three 7. 10.00 8. confidential
Answers
Part B
1. Explain what you understand by KYC. What are its objectives?
2 What are the key elements in KYC policy. Write note on Monitoring of
Transactions?
.

1. Understand the concept of KYC
2. Learn the key elements under it.
3. Know the process of classifying, reporting, threshold of limit etc.
PERFORMANCE STANDARDSYes
Able to explain what is KYC and it’s objectives.
Able to understand the concept, purpose and implementation of Customer
Acceptance Policy
Able to understand the concept, purpose and implementation of Customer
Identification Procedures
Able to understand purpose and related guidelines in respect of Monitoring
of Transactions and Risk Management
Able to state the threshold of transaction limit under suspicious nature and
it’s reporting process
the pensioner. Any revision in pension including payment of family pension, transfer of accounts is also done by b
commission is paid to banks for these pension- payment related jobs. A pensioner can draw his/ her pension fro
even earlier, treasury was making payment of pension. A pensioner has to present himself before start of p
payment for identification. Pension sanctioning authority is the ministry/ department/ office, where the
employee served last before retirement. Pension can be credited in existing savings account of the pensioner. T
need to have a separate account for this purpose. Pensioner can open a joint account with spouse, with ‘e
survivor’ or ‘former or survivor’ operational instructions. The same account can be continued for payment o
pension after the death of the pensioner, if the joint account holder is authorized as per PPO and is survivor. No p
attorney to operate pensioner’s account is acceptable to banks. Pensioner has to abide by rules for minimu
as framed by his bank. Pension payment account can be transferred to other bank/ branch .The bank officia
the residence of the pensioner or hospital, incase pensioner is not in a position to come to bank, to obtain
signatures or thumb/toe impression. A detailed record of pension payments is maintained by the banks. Bank
obtain an authority from the pensioner, to recover any excess payment, if made. Every pensioner is re
submit life certificate/ non- employment/ employment certificate to the pension paying bank, in the month
November every year. Pension paying bank is responsible to deduct income tax at source.
A pensioner, not able to put his signatures or thumb/toe impression or unable to come to bank can also draw his/he
by putting a mark on cheque/ withdrawal slip indicating
a person to receive payment. This person needs to be identified by two independent witnesses. The person, actually
money has to submit his/ her specimen
signatures for the purpose. Banks are required to pay interest for the delayed credit of pension/ arrears@8% p.a. w
waiting for a claim from the pensioner. For any
deficiency in services rendered, pensioner can approach to bank Manager/ higher authorities of bank/ banking omb
for redressal for other matters pension paying
aEuXthEoRriCtyISisEto be approached.
1. Have a group discussion on different types of individual customers of a bank. Write a note on minor customers.
2. Visit to a nearby branch and observe various types of customers. Note down, how the senior citizens and illiterate
banking.
ASSESSMENT
Part-A
Fill in the blanks:
1. A person is a whose money has been accepted on the basis that the
banker will drawings up to the amount standing to his credit irrespective of
his connections being short or long term.
2. A can be defined as a user or potential user of bank services.
Fill in the blanks:
1. A person is a whose money has been accepted on the basis that the
banker will drawings up to the amount standing to his credit irrespective of
his connections being short or long term.
2. A can be defined as a user or potential user of bank services.
3. A contract with a minor is , abinitio.

4. A minor’s nomination is --.
5. Facility of cheque book to blind customers given, by banks.
of
6. A minor can open self operated account with a bank after completing------
age.
7.A person not having both the hands, is permitted by banks, to put his/ her
- on withdrawal form, for withdrawing money from his account.
Answ Customer, honour Customer
ers 1. Null & void
2. Valid Can be 10 Years
3. Toe impression.
4.
5.
6.
7.
Part-
B 1. Explain who is customer for a bank.

2. List down the different types of individual customers of a bank with two features
of each.
3. Write important points on operation of the account by blind persons.
Use the following checklist to see if you have met all the requirements for the assessment activity.
Understand a customer of the bank.
Learn the various types of individual customers and their special features. Performance standards Yes No
Able to define a customer of the bank.
Able to understand a minor customer.
Able to understand a senior citizen and pensioner customers.
Able to understand blind/ physically challenged customers.
Banking 2019 the Indian Succession Act. Probated will and letter of administration issued by the
competent court, are the basic documents for banks to deal with such customers.
EXERCISE
1. Write a short note on Self Help Group.
2. Have a group discussion on Limited Liability partnerships and prepare a note on its similarities with partnership fi
company.
ASSESSMENT
Part-A
Fill in the blanks:
1. The members of an HUF are called-----------and the manager is known as-----
-- .
2. All major members are required to sign on for opening an account
with bank.
3. An is a person appointed by central government and is attached to
a High Court.
4. Maximum number of partners in a partnership firm can be --.
5. An is the person named in a will to manage estate of the deceased.
6. An is the person appointed by the court to manage the estate of
deceased , who died intestate.
7. Model bye-laws for Self Help Group have been drafted by --.
8. Probate is an order of --.
ANSWERS
ANSWERS
1. Coparceners, karta
2. HUF letter
3. Official liquidator
4. 100
5. Executor
6. Administrator
7. NABARD
8. The court
Part B
Define the following and list out two important features of each.
i. Partnership firm
ii. Hindu Undivided Family
iii. Self Help Group
iv. Official liquidator
9
6
Loan facilities are not afforded by banks to unregistered bodies even having provisions of borrowing in their bye-law
Local Authority and Government Department
The authorities such as Municipal Corporation, Zila Boards, Notified Area Council etc. are
established under statute of state/ central legislature. The relevant statute is the basic
document of establishment of these bodies. These establishments can open and operate bank
accounts as per the provisions of the relevant statute. In case of a Government Department, Government Notificati
rules and regulations, form the base, to open and operate the
account. Head of the Department authorizes the signatories for the purpose. Banks exercise due caution in dealing w
accounts of such customers. No overdraft or finance is allowed
to such authorities unless the relevant statute permits specifically.
EXERCISE
Have a group discussion different type of customers viz. trust, society, club and association of persons. List out the f
these customers.
Fill in the blanks:
1. Basic document for creation and functioning of a trust is --.
2. Public trusts are created for the benefit of --.
3 controls trusts of Muslims.
4. The activities of society and association of persons are controlled by rules and
regulations mentioned in their --.
5. Societies other than cooperative societies are required to be registered
under .
6. Banks need to obtain permission from Registrar of Cooperative Societies, for
opening an account of a --.
7. Cheques received in the name of any office bearer of society/ club/ association for
the purpose of society/ club/ association collected in the personal account of
the office bearers.
8. A trustee delegate the powers vested in him by a trust deed to others.
Answ
ers 1. trust deed

Part- 2. public
B 3. Wakf Act
i. 4. bye-laws.
ii. 5. Societies Registration Act 6. Cooperative society.
7. can not be
8. can not.
1. Define the following and list out two important features of each. Trust
Society
may commence its business immediately after obtaining the certificate of incorporation from the registrar of companie
certificate of commencement of business is to be obtained from
registrar of companies by all newly incorporated public and private companies having share
capital, before commencing the business or exercise of borrowing powers.
Resolution
A company makes decision and speaks by resolution
The copy of the resolution submitted to bank for opening of accounts or for any other purpose
should be signed by the chairman of the meeting (in which it is passed) and countersigned by the company secretar
A company cannot pursue an activity which is not mentioned in its memorandum of Association. It is called doctrine
vires, It is assumed that any person dealing with the
company have read the basic documents viz. memorandum of association and articles of association of the compan
known as doctrine of constructive notice. Compliance of
internal rules by the management need not be checked by the outsiders dealing with the company. This is stated as
of indoor management.
Companies can open accounts with the bank as authorized by resolution, passed by the
company. Deposit accounts with exception of savings bank account can be opened in the
name of the company. Borrowal accounts depending upon the credit facility sanctioned by bank, can also be opened
do not require introduction while opening accounts in the
name of companies.
Even after the death or insolvency of an authorized signatory of the company, cheques signed by him will be honored, if
in order. Cash payment of a cheque (even a bearer cheque) in the name of a limited company (payee) by bank is not in o
will not collect a cheque
endorsed in favour of a director or any company official without proper enquiries. If a company is not able to pay its debt
not be declared insolvent instead will go in liquidation. Liquidation or windup is the process of dissolution of a company.
EXERCISE
1. Have a group discussion on private limited, public limited and Government
companies. Note down the salient features of these companies.
2. Have a class room debate on ‘Corporate Social Responsibility’ of companies.
ASSESSMENT
Part-A
Fill in the blanks:
1. A company is a entity.
2. The members liability in a limited company is limited to their in the company.
3. Company seal is the of the company. Maximum number of members in a
private limited company can be ---
4. Paid up share capital of a public limited company is minimum --.
5. There are in memorandum of association of a company.
2. The members liability in a limited company is limited to their in the company.
3. Company seal is the of the company. Maximum number of members in a
private limited company can be ---
4. Paid up share capital of a public limited company is minimum --.
5. There are in memorandum of association of a company.
6. Certificate of commencement of business is required in case of---------

companies.
7. Rules and regulations for internal management of the company are contained in
.
8. Certificate of incorporation is of companies.
Answers
Answers
1. Legal
2. Shareholding
3. Signatures, 200.
4. Rs. 5 lac
5. 6 clauses
6. All
7. Articles of Association
8. Birth certificate
Part-B
1. Explain the following type of companies.
(i) Private limited company
(ii) Government company
(iii) Public limited company
2.Explain the following.
(i) Doctrine of ultra vires.
(ii) Doctrine of indoor management
(iii) Doctrine of constructive notice
Use the following checklist to see if you have met all the requirements for the assessment
activity.
Understand the concept of company and learn various type of companies with
their special features.
Learn basic documents for creation and functioning of
companies. Understand doctrines concerning companies.
PERFORMANCE STANDARDSYes No
Able to understand concept of company and doctrines concerning its functioning.
Able to know different type of companies.
Able to list special features of various type of companies. Able to know basic documents for forming
companies.
EXERCISE
1. Visit a couple of nearby banks; enquire with the ‘help desk’ regarding the documents
required by the bank for opening current account for a partnership firm
and a company.
Fill in the blanks:
1. Memorandum of Association is required to be obtained from the Company to mainly verify
ASSESSMENT
2. A Company gives authority to one or more of its directors/ managers to operate bank account through
.
3. The
Part A terminology of beneficiary is associated with (Company, Trust, Firm, Association)
4. While opening an account Permanent Account Number (PAN) Card is obtained.
This is issued by .
5. When a customer does not have a PAN card, is obtained by the bank in its place.
Answer
1) its Objectives (main activity) 2) Board Resolution 3) Trust
4) Income Tax authority 5) Form 60/ 61.
Part B
1. Describe the documents required to be obtained for opening an account of a
Partnership Firm.
2. Distinguish between the documents to be obtained from a Company and a
Society at the time of opening of their accounts.
Checklist of Assessment
1. Learn about the key documents required for banking operations
2. Know the contents of these documents and it’s specific usage.
EXERCISE
1. Collect 5 important specimen documents required by banks for individual savings account bank.
ASSESSMENT
Part A
Fill in the blanks:
1. Customer need to comply with the guidelines which are
mandatory
2. The will need to come to the branch, in person, for opening the
account.
3. Most of the banks follow the concept of during opening of new

bank accounts of a new customer.
4. The customer identification will be on the basis of documents provided by the customer as (a)
(b) .
5. Bank is required to obtain of the customer or declaration in Form
No. as per the I.T. Act (vide Section 39A)
from the person opening the account.
6. In case of , the proof of identity as well as that of the current
address is to be separately furnished by the applicants.
Answer
1. Know Your Customer (KYC) 2. Applicant(s) 3. Introducer
4. Proof of identity, Proof of address 5.Permanent Account Number (PAN), 60 or 61
6. Joint Bank Account
Part B
1. Describe in brief the concept of Proof of identity, Proof of address.
2. List out 5 important documents under Proof of identity.
3. List out 5 important documents under Proof of address.
CHECKLIST OF ASSESSMENT
1. Learn the concept of Proof of identity and Proof of address. Its importance.
2. Understand the documents required for opening of an account – Individual.
EXERCISE
1. Prepare a chart depicting the KYC documents required to be submitted by the customer to the bank for
Partnership firm Proprietorship
firm HUF
ASSESSMENT
Fill in the blanks:

Part A trusts, companies, HUF etc. falls in category
1. Firms,
2. Generally account is opened for non-individuals.
3. Certificate/licence issued by the Municipal authorities under Shop &

Establishment Act is required for firm.
4. deed is required for partnership firm.
5. Declaration from Karta is required as a document for .
Answer
1. Non Individuals 2. current 3. proprietorship
4. Partnership5.HUF
1. List out 5 important documents required for proprietorship firm during opening of bank account.
2. List out 5 important documents required for partnership firm during opening of
bank account.
Part B
CHECKLIST
1. UnderstandOF
theASSESSMENT
documents required for partnership, proprietorship and HUF
accounts.
2. Learn the significance of these documents.
EXERCISE
Prepare a chart depicting the KYC documents required to be submitted to the bank for
Companies
Trust
ASSESSMENT
1. Certificate of incorporation and DIN are required as documents for
.
2. MOA
Part A is
3. Documents required by the banks help it to identify that there are no gaps for
.
4. List of directors and copy of Form 32 is required for a .
5. Certified true copy of Certificate of Commencement of Business is a
obtained by banks from .
6. Resolution of the Managing Body of the Foundation is obtained by bank from
.
7. Trust is a document required during formation of a .
Answers
1. Companies 2. Memorandum of Association 3. fraud and money laundering

activities 4. company 5.Document , Companies. 6. Trusts 7. Deed , Trust
Those who enter a joint account should be aware that all partners are liable for all the dealings in an account as a sin
joint entity. So joint accounts should be opened only with the person one can trust.
Meaning of Nomination
Nomination is the facility given to a depositor, to authorize someone, who, incase of the
depositor’s death, can claim the funds lying in his/her account. There can be only one
nominee in an account and the nominee cannot operate the account during the life of
accountholder/s. Nomination facility is extended to individuals and proprietorship firm only and not to partnership,
etc. It is advisable that the accountholder nominates
somebody so that the legal heirs don’t have to go through the hassle of paperwork and documentation, incase the
accountholder dies without nominating anyone to claim the
balance in the account. The accountholder has the right to change the nominee, anytime
he wants to.
Effect of Nomination in case of joint accounts
In hierarchy of powers, the nominee comes after each of the account holders. For
example, if a joint account is operated as ‘Former or survivor’ and the former is no more, the survivor will have the r
receive the money first followed by the
nominee. If the survivor continues to operate the account and over time, he/ she also dies, then the nominee would
rights. Or on the other hand, as soon as
the former dies, the survivor can end the account and take out the money. In other words, If there is a nominee to a
account, the nominee gets access to the
account only when all the account holders cease to exist. In case of death of the
account holders as well as the nominee, the legal heirs of depositor/s will get the
funds.
Dormant /Inactive accounts:
An account becomes dormant or inactive if there are no customer initiated transactions in
the account for a long period of time, say two years. Such an account can be activated by
accountholder only on resubmission of KYC documents, along with a letter explaining the
reason for non operation in the account. It should be noted however, that even while the account is in inactive/dorm
status, the bank continues to pay interest to the depositor.
EXERCISE
1. Have a group discussion on the account operating instructions given by a
customer(s) to the Bank. List down the salient features of each type.
2. Collect the account opening form from a nearby bank. Identify the box where it is written “ËorS”, “ForS”,
us”
ASSESSMENT
Fill in the blanks:
1. Deposit accounts can be opened by an individual in his own name called or by two or more individual
Part
calledA .
2. E or S means
3. A or S means
4. F or S means
5. L or S means
6. A savings bank account can be opened in the name of a minor jointly with a
.
7. If the survivor continues to operate the account and over time, he/she also dies, then the would get t
8. In case of a joint account, all the depositors are singly and jointly liable for
.
Answers
1. Single account , joint account 2. Either or Survivor
3. Anyone or Survivor 4. Former or Survivor
5. Latter or Survivor 6. Guardian 7. Nominee 8. Overdraft
vii. Online request for issue of cheques: Customer can also request for issue of cheque book through the internet
viii internet banking), the ATM using his ATM card, or his registered mobile (under Mobile Banking). In such
. the cheques are dispatched through speed post or approved courier to his address registered with the
As a matter of precaution, whenever a cheque book is issued to a third party authorised to receive the
the account holder or a cheque book is dispatched through speed post/ courier, the customer is advised of th
through a separate letter/ message and is requested to acknowledge the receipt. This is to ensure that
the cheque book does not fall in the wrong hands.
EXERCISE
1. Obtain a pass book from your family member. Look out for the various transactions
done. List out 5 (minimum) features/ types of information observed in the pass
book.
ASSESSMENT
Fill in the blanks:1. records all deposits and withdrawals.2. Pass book is supplied by the bank to its every who
Part A
1. Passbook 2. customer 3. ledger4. Statement of Account 5.debits and credits 6. chequePart B1. Explain in brief the difference between a pa
Answer
CHECKLIST OF ASSESSMENT
1. Understand the concept of passbook and statement of account.
o
Don’t violate the Bank’s prescribed instructions/ norms just to make the
complainant feel happy.
o
Don’t be part of the problems; be part of the
solution. Don’t complete the sentences for the complainant.
o Don’t engage with more than one customer at a

time. Don’t interrupt the customer.
o Don’t think that your politeness is a sign of your weakness.
MISCELLANEOUS
o Remember that as a bank employee, you are the representative of your
mother institution (and that you are not working in your personal capacity).
o Remember, “anger” is one letter shorter than “danger”.
o Different types of customers are required to be handled differently. (One shirt does not fit all).
SUMMARY
o Difficult customers will always be there. Apologise (sincerely say
sorry).
Offer to help the complainant (or, to co-operate with him).
Listen to tho customer.
e
Empathise with the customer.
o
o Understand the
patiently.Take the problem seriously (but not personally).
problems/ grievances
o Offer a practical/ reasonable/ workable/ realistic

solution. Ascertain customer’s satisfaction.
o The best way to get tough is to get tactful/ smart.
SHORTEST COURSE IN HUMAN BEHAVIOUR
6 Important words: I admit I made a mistake.
5 Important words: You did a good job.
4 Important words: What is your opinion?
3 Important words: Will you please? 2 Important words: Thank you.
1 Important word: We.
Least Important word: I.
EXERCISE
Have a group discussion on customer complaints. List down 5 important reasons why customers complain and 5 imp
points towards resolving the complaints / grievances.
ASSESSMENT
Fill in the blanks:
Part
1. AnAexpression of dissatisfaction whether justified or not is called as a
.
2. Before filing a consumer complaint, it is a good idea to read the
carefully.
3. There are 4 main ways to complain (a) (b) (c) (d)
.
4. Service providers need to encourage complaints and discourage
.
5. Everyone who complains on the telephone, by letter, or by e-mail should get a
and response.
6. In case of a genuine mistake / lapse, to the complainant sincerely.
7. While dealing with a complainant, never use language.
8. The best way to get tough is to get .
Answers
1. Complaint 2. Guidelines 3. In person, by telephone, by letter, by e-
mail / internet 4.Direct, Indirect 5. Rapid, appropriate 6. Apologise
7. Un-parliamentary 8. Tactful / smart.
1. Describe in brief what you understand by a complaint. List the 4 ways of complaining.
2. Write a note on Complainant’s Psychology.
3. List the Do’s and DONT’s (5 points each) towards tactful handling of difficult
customers.
4. Narrate the shortest course in human behaviour.
Use the following check list to see if you have met all the requirements for the Assessment Activity:
1. Understand what is meant by a complaint. Steps for making a complaint.

2. Learning the psychology of customer complaints.
3. Enlist the Do’s and Don’ts when handling a difficult customer.
4. Understand the process and actions to be followed when a complaint is received.
Able to understand what is a complaint and why it happens Able to Performance standards Yes No
understand the psychology of customer complaints
Able to recall the golden rules of handling – strategic and Process - Actions
Able to list out the Do’s and Don’ts when handling a difficult customer. Able to understand the shortest course in hu
behaviour
9.3 : REDRESSAL MECHANISM
Banking 2019
Mr. Kumar purchases a bond issued by a company with a maturity period of five years.
The issue price of the bond, known as the “face value” or “par value”, is Rs 5000. The bond bears an interest rate of
annum (known as the “coupon rate”) payable on an
yearly basis. Thus every year an amount of Rs 750 (15% of Rs 5000) will be paid to the
bond holder, Mr. Kumar. At the end of the fifth year, on maturity, an amount of Rs 5000
(face value) will be paid along with the interest for the fifth year. The cash flow would thus be as follows:
The amounts received by the holder of the bond at the end of each year represent the
cash flow at the end of that year.
At the above
In the end of1st Year2ndrdthth
example, Year
we see five 3 Year
cash flows4occurring
Year 5 Year
at the end of various years. The fifth cash flow is higher than
Cash Flow - Interest 750 750 750 750 750
the original amount of the bond, equal to the face
valueFlow
Cash (or par value) has
- par been paid along with the interest for the fifth year.
5000
THE CONCEPT OF INTEREST
value
Another
Total Cashconcept that750
Flow 750 we750
must review
750 5750for a better understanding of the time value of
money is that of interest, which is primarily of two types - simple interest and compound interest. In this session, w
using only simple interest for calculating present
value and future value. The application of compound interest will be explained in the
subsequent sessions.
SIMPLE INTEREST
The following terms will be used while discussing simple interest:
Principal “P” is the original amount invested, taken as loan etc.
Rate of interest per annum is the rate at which the money grows every year. It can be
expressed either in terms or in decimal form. For example, if money is growing at a rate of 12% per month, rate of in
can be written as
r = 12 % = 12/100 = 0.12
We shall be mostly using the decimal form of rate of interest.
The time for which an amount is invested or taken on loan etc will expressed in number of years, “n”.
Banking 2019
Simple Interest on an amount of “P” at the rate of r % per annum for a period of n years is given by the formula
Simple Interest I = Pnr (“r” is in decimal form ) (i)
Total amount after n years (Principal + Interest): A = P + I
or
A = P + Pnr = P(1+nr) (ii)
From equation (ii), we get
P = A / (1+nr) (iii)
Example-4
A purchased a scooter by obtaining a loan of Rs 30000 at the rate of 15% simple interest
p.a. How much interest in total he will pay if the loan is taken for 3 years?
Solution: Principal P = Rs 30000, r = 15 % = 15/100 = 0.15, n = 3 years. From formula (i), the total interest paid is
I = 30000 x 3x0.15) = 30000 x 0.45 = Rs 13,500
Example-5
Mr. A invests Rs 7000 at simple interest of 20 % for a period of four years. What amount will he get after four years?
Solution:
Here P= Rs 7000, r = 20 % = 20/100 = 0.20, n = 4 years. From formula (ii), the amount
received after four years is
A = 7000 x (1+ 4x0.20) = 7000 x 1.80 = Rs 12,600
Example-6
The maturity value of a deposit is Rs 22,100 after 3 years at simple interest of 10% per annum. What is the principal
the deposit?
Solution:
Here A= Rs 22,100, 1 = 20 % = 10/100 = 0.10, n = 3 years.
From formula (iii), the amount received after three years is
P = A / (1+nr) = 22,100 / (1+3x0.10) = 22,100 / 1.30 = Rs 17,000
Banking 2019 CALCULATION OF PRESENT VALUE AND FUTURE VALUE USING SIMPLE
INTEREST
If present value of an investment made today is Vp and simple rate of interest “r” is prevalent in the market, then th
value of this investment Vf will be
Vf = Vp (1+nr) (iii)
Here (1+nr) is called the compounding factor.
Conversely, if future value is known, the present value can be calculated using
the formula
Vp = Vf / (1+nr) (iv) In the above equation, 1/
(1+nr) is known as the discounting factor.
Let us now see some examples of present value and future value in a scenario where simple interest is being applied
Example-7
Mr. A has a surplus amount of Rs 15000 which he can invest in some deposit scheme. If a
simple interest of 12% per annum is being offered in the market, what would the value of this money after 5 years?
Solution:
In this question a present value of Rs 15000 has been given, and we have to calculate its
future value, which will obviously be more than present value. Here r = 12 % = 12/100
=).12 and n = 5 years, Applying formula (iii), the future value is Vf = 15000/ (1 + 5 x0.12) = 15000 x 1.60 = Rs 24000
This example illustrates the fact that the value of an amount of money received today increases in future as there is
opportunity to invest it at the interest rate prevailing in the
market.
Example-8
Mr. B has promised to Mr. C that he will give him Rs 12000 after two years. What is the
present worth of this amount, if a simple interest rate of 15 % is prevailing in the market?
Solution:
In this question a future value of Rs 12000 has been given, and we have to calculate its
present value, which will be less than future value. Thus the rate given here (15 %) is discount rate, and we have to
discounting factor for the purpose. Here r = 15 %
and n = 2 years, Applying the present value is
Vp = 12000 / (1 + 2x0.15) = 12000 / 1.30 = Rs 9231
Vp = 12000 / (1 + 2x0.15) = 12000 / 1.30 = Rs 9231
Banking 201
9
As may be observed from the above example, if some money received in future is, its value today is less. tha
amount actually received.
We have seen above that calculation of present value and future value depends on two factors - interest rate/ dis
“r” and time period “n”. We have assumed other factors associated with the money market, i.e. inflation, fl
in currency prices etc. to be constant, as they are highly unpredictable and involve complicated calcula
a basic understanding of the concept of time value of money (present value and future value) learning about the im
these two factors is adequate.
It is easy to see that both increase and decrease in time value of money are directly
proportional to both interest (and discount) rate and time period. Thus, the value of money
goes up or down to a larger degree with the increase in these factors.
In this session we have limited ourselves to calculations involving simple rate of interest and a single cash flow for th
a basic understanding of time value of money.
However, in real life situations, we have to mostly deal with compound interest and
multiple cash flows. These will be discussed in detail in the subsequent Sessions.
ASSIGNMENT
Explain the concept of present & future value of money and interest giving examples of
practical situations.
ACTIVIT
PYrepare a chart showing year-wise growth of money with simple interest over the years. You may calculate Simple
“I” and total amount “A” taking different values of the
Principal Amount “P”, number of years “n” and annual rate of interest “r”
ASSESSMENT
A. Answer the following:

1. What do you mean by time value of money? Explain.
2. How can we find the real worth of money that we are likely to receive on future date?
3. Write the formula for finding future value of a sum of money you are having today.
4. If P is the original amount invested (principal) for a period of n years with simple interest
at a rate r (expressed in decimal terms), and I is the interest accrued at the end of this
period, then which of the following equations is (are) correct?
Banking 2019
(i) A = P + I (ii) A = P + Prn (iii) I = A - P (iv) A = P (1 + r n)
a) Only (i) b) Only (ii) c) Only (i) & (iv) d) All of these e) None of these
5. The simple interest rate prevailing in market is 10%.p.a. If you have a surplus amount of Rs 17,000, and want to in
what amount you can expect to receive after four years?
6. With a simple interest rate of 12%.p.a. what is the present value of a sum of Rs 32,000
that would be received five years from now?
4. d) 5. Rs 23,800 6. Rs 20,000
B. Fill in the blanks.
Answers:
1. Money has a value because it can be invested to make more money.
2. The process of finding the PV from the FV is called ..
3. Cash flow means or of money on various dates.
4. The the interest rate, the lower the PV and the higher the FV.
5. Two important factors on which the time value of money depends are
and .
Answers:
1. Time 2. Discounting 3. Receipt, payment
4. Higher 5. Rate of interest and time period of investment
CHECK LIST FOR ASSESSMENT
Part A
1. Familiarity with the concepts of present and future value of money
2. Ability to work out present and future value of money based on simple interest and discount
Part B
Discussed in the class following:
1. Calculation of present and future value of money
2. Problems relating to present and future value of money based
on simple interest and discount
PERFORMANCE STANDARDS . YES NO
201
Banking
9
Able to understand the concept of interest and discount Able to explain the relevance of time
value of money
Able to work out present value from future value and vice
versa
Able to understand the concept of interest and discount Able to explain the relevance of time
value of money
10.2to:work
Able POWER OF COMPOUNDING
out present value from future value and vice
versa
RELEVANT KNOWLEDGE
While calculating simple interest on a sum of money, at the end of every year interest is calculated on the original am
only, that is, on the “principal” only. Thus the amount of interest applied each year remains the same. In the case of
compound interest, at the end of each specified period interest is applied on the principal plus the entire intere
accumulated.
The specified period for interest application (the interval at which interest is applied) can be a year, six months, thre
one month, one day or any other interval. This
process of adding the interest already applied to the principal, before calculating further interest, is known as comp
Thus compounding can be yearly, half-yearly
quarterly, monthly, daily, and so on.
The difference between simple interest and compound interest can be understood easily through the following exam
Example-1
Suppose a person invests Rs 10,000 for 4 years in deposit scheme “A” offering simple
interest at the rate of 12 % per annum. Simultaneously, he also deposits the same amount
for same period in another scheme “B” which offers the same rate of interest, but on yearly
compounding basis. The growth of money in the two schemes will be as follows:
Scheme-A:
Simple interest @ 12 % p.a. r = 12/100 = 0.12 Principal P = 10,000
AT THE END INTEREST APPLIED INTEREST APPLIED CUMULATIVE OF ON

(P’) (P’r) BALANCE
1st YEAR 10,000 1,200 11,200
2nd YEAR 10,000 1,200 12,400
3rd YEAR 10,000 1,200 13,600
4th YEAR 10,000 1,200 14,800
On maturity of the deposit: Amount received : Rs 14,800

Total interest received = 1,200 + 1,200 + 1,200 +1,200 = Rs 4,800
Banking 201
9
Scheme-B:
Compound interest @ 12 % p.a. r = 12/ 100 = 0.12 Principal P = 10,000
AT
OnTHE END INTEREST
maturity APPLIED
of the deposit: INTEREST
Total amount APPLIED
received CUMULATIVE
= Rs 15,735.19
OF ONinterest
Total (P’) (P’r)received
BALANCE = 1,200 + 1,344 + 1,505.28 + 1,685.91 = Rs 5,735.19
1st
ThusYEAR 10,000
we see that1,200 11,200
2nd YEAR
a) The 11,200
total amount 1,344 12,544after a number of years is more when compound
received
3rd YEARis12,544
interest applied1505.28
instead14049.28
of simple interest.
4th
b) AtYEAR 14049.28
the end of the1685.91 15735.19
first year, both the total amount and interest are same in the
two cases. However, second year onwards, these are more in the case of compound interest.
The process used above for calculating compound interest is quite tedious. We shall be
using a simple formula for the purpose
AN IMPORTANT FORMULA USED IN THE COMPOUNDING PROCESS
For a clear understanding of the compounding process, let us consider the following
example:
Example-2
A quantity “P” increases by “p%” four times with compounding. What is the final value of
“Q”? You may express percentage increase in decimal form as r = p/100.
Solution:
We know that p% of Q is Q x p/100 = Qr where r = p/100 is the percentage increase in
decimal form. thus with p% increase once, the value of Q increases to P + Pr = P (1+r). Thus to increase P by p % or
we have to multiply it by (1+r).
On increasing second time by the same percent, the value of P becomes 2
P (1+r)(1+r) = P(1+r)
On increasing third time by the same percent, the value of Q becomes
Banking
P (1+r)(1+r)(1+r) = P(1+r)3 201
Finally, on increasing fourth time, the value of Q becomes n 9
P (1+r)(1+r)(1+r)(1+r) = P(1+r)
Thus we have arrived at an important formula:
On increasing a quantity “P” successively “n” times by a percentage of “r”
n
(expressed in decimal terms), its final value becomes P(1+r) (v)
What is stated above is nothing but compounding effect. In each step, we have applied
the compounding factor (1+r) to the previous value to obtain the new value.
Example-3
The population of a metropolitan city is 70,00,000. If the population increases by 14%
every year, what would be the population after 3 years?
Solution:
Here percentage increase
p = 14%. The percentage increase in decimal terms r = p/100 = 14/100 =
0.14. The population after 3 years = 70, 00,000 x (1+0.14)3 = 70,00,000 x
1.143 = 103,70,808
Now we are in a position to understand the formulae used for calculating compound interest.
CALCULATION OF COMPOUND INTEREST
The following parameters are relevant to the calculation of compound interest:
I. The original amount before application of interest is called the Principal, and will be
denoted by “P”
II. The applicable rate of interest per annum or per year will be denoted as “r”. We shall be using r in decimal form. F
example, if the rate of interest is 16 % per
annum, then r = 16% = 16/100 = 0.16
Although the periodicity of compounding rate can be of different durations (yearly, half yearly etc.), the interest rate
generally given on an yearly basis. The rate of interest
applicable to various types of compounding, “i”, is calculated as shown in the table below:
Banking 2019
Suppose the given interest rate r = 24% = 24/100 =0.24 per annum (per year)
Type of Compounding Compounding APPLICABLE RATE OF Compounding Period Periods Per Year
INTEREST “i”
Yearly One Year 1 i = r = 0.24
Half-yearly 6 months =1/2 2 i = r/2 = 0.24/2 = 0.12
year
Quarterly 3 months =1/4 4 i = r/4 = 0.24/4 = 0.06
year
Monthly 1 month = 1/12 12 i = r/12 = 0.24/12 = 0.02
year
Suppose
Thus we see the given
that theinterest
rate ofrate r = 24%
interest = 24/100to=0.24
applicable per annumperiod
a compounding (per year)
Type of Compounding
Rate of Interest per annum Compounding APPLICABLE RATE OF Compounding Period Periods Per Year
INTEREST “i”
i = --------------------------------------------------------
Yearly
Number Oneof Year 1 i = r = 0.24
Compounding Periods per year
Half-yearly 6 months
ii. The total time period =1/2 2 i which
over = r/2 =the0.24/2 = 0.12 take place will be denoted by number of years “n”.
calculations
year
ii. The compound interest accumulated over n years will be denoted by I.
Quarterly
ii. The total3 months
amount =1/4 4 i = r/4 =(principal+interest)
accumulated 0.24/4 = 0.06 over n years will be denoted
year
by A.
Monthly
Thus, A =1Pmonth
+I = 1/12 12 i = r/12 = 0.24/12 = 0.02 (vi)
year
In problems based on compound interest, it is more convenient to first calculate the total amount “A”. The compoun
can thereafter be calculated using the formula:
I=A-P (vii)
Now we are in a position to derive equations for calculating total amount and
CALULATION OF TOTAL AMOUNT WITH DIFFERENT TYPES OF COMPOUNDING
Ldeetci“mP”albe the principal amount and “r” the rate of interest per annum expressed in
terms.
a) Annual Compounding:
Then as per formula (v), the total amount after “n” years
n
A = P (1+r) (viii)
Compound interest accumulated in “n” years
I=A-P
Banking 201
9
b) Half Yearly Compounding:

In half yearly compounding, interest is applied (i.e. compounding is done) every six months i.e. two times per year. T
years, compounding is done “2n” times. Since “r” percent in decimal terms is the interest for one year, the interest f
applied every six months is “r/2” and the compounding factor is (1 + r/2). Hence,
the total amount after “n” years
r
/2nA = P (1 + 2 ) (viii)
I=A-P
c) Quarterly Compounding:
In half quarterly compounding, interest is applied (i.e. compounding is done) every
three months i.e. four times per year. Thus in “n” years, compounding is done “4n” times. Since “r” percent in decim
the interest for one year, the interest
factor to be applied every three months is “r/4” and the compounding factor is (1 +
r/4). Hence, the total amount after “n” years
r4n
A = P (1 + /4 ) (ix)
I=A-P
c) Monthly Compounding:
In monthly compounding, interest is applied (i.e. compounding is done) every month
i.e. 12 times per year. Thus in “n” years, compounding is done “12n” times. Since “r” percent in decimal terms is the
for one year, the interest factor to be applied
every month is “r/12” and the compounding factor is (1 + r/12). Hence, the total amount after “n” years
r12n
A = P (1 + /12 ) (ix)
I=A-P
d) Weekly Compounding:
In weekly compounding, interest is applied (i.e. compounding is done) every week
i.e. 52 times per year. Thus in “n” years, compounding is done “52n” times. Since “r”
percent in decimal terms is the interest for one year, the interest factor to be applied
d) Weekly Compounding:
In weekly compounding, interest is applied (i.e. compounding is done) every week
i.e. 52 times per year. Thus in “n” years, compounding is done “52n” times. Since “r”
Banking 2019 every week is “r/52” and the compounding factor is (1 + rr/52). Hence, the
total
amount after “n” years
A52=nP (1 + /52 )
r
(ix)
I=A-P
e) Daily Compounding:
In daily compounding, interest is applied (i.e. compounding is done) every day i.e.
times per year. Thus in “n” years, compounding is done “365n” times. Since “r”
every is “r/365” and the compounding factor is (1 + 1r/365). Hence, the total amount after “n” years
r36
A = P (1 + /5n365 ) (x)
I=A-P
Now let us take up an example to illustrate calculation of the final amount received on
application of simple interest and different types of compound interest
Example-4
Mr. Harish Kumar invests Rs 20,000 in each of the five schemes I, II, III, IV and V. Interest
rate offered in all the schemes is 12% per annum and the time period of investment is five years. Scheme I offers sim
of interest, while schemes II, III, IV and V offer interest
compounded at yearly, half-yearly, quarterly and monthly intervals respectively. Calculate
the final amount and accumulated interest received at the end of five years in each of the
schemes.
Solution:
We shall be solving this problem in a tabular form. In all the schemes, P = Rs 20000, r =
12% = 12/100 = 0.12 per annum and n = 5 years
SchemeInterest Offered Total Amount “A” after years 5Accumulated Interest (A

I Simple P(1+nr) = 20000(1+ 5x0.12) - P)
II Compounded Yearly = Rs 32000 32000 - 20000
(once a year) P (1+r) n = 20000(1+ 0.12)5 = Rs 12000
35247 - 20000
= Rs 15247
III Compounded Half- = Rs 35247
yearly 35817 - 20000

( 2 times in a year ) P ( 1 + 2 )2n r / = 20000( 1 + )= Rs 15817
0.122/
10
= Rs 35817
Banking 201
IV 9
Compounded r4
36122 - 20000
Quarterly P ( 1 + / = 20000( 1 + = Rs 16122
V ( 4 times in a year ) )
0.12/4 )
4
20
Compounded = Rs 36122
Monthly 36344 - 20000
( 12 times in a year) 12
P (1 + r
/
12
) ==2R0s010603(134+ )
60
/ = Rs 36334
0.1212
n
The following conclusions may be drawn from the above example:

a) The total amount received after an years is higher when compound interest is applied as compared to the amount
on application of simple
interest.
b) The total amount increases with the increase in the frequency of
compounding.
This example thus demonstrates adequately the power of compounding.
GENERAL FORMULA FOR COMPOUNDING
We are now in a position to write down a general formula for compounding.
If the principal amount is “P”, rate of interest in decimal terms is “r” per annum and compounding is done “m” times
then the total amount “A” after “n” years is
rmn
A = P (1 + /m ) (xi)
Here r/m is the interest rate per compounding period, which we shall be denoting by “i”. Thus the above formula ca
written as
A = P ( 1 + i ) mn where i = r/m (xii)
Example-5
Find the total amount and interest on Rs.50000 invested for two years at 10% p.a, interest
being compounded annually
SOLUTION:
n
Total Amount A = P(1+r) = 50000 (1+0.10)2 = Rs 60500
Compound Interest = A - P = 60500 - 50000 = Rs 10500
Example-6
rmn
A = P (1 + /m ) (xi)
Here r/m is the interest rate per compounding period, which we shall be denoting by “i”. Thus the above formula ca
written as
A = P ( 1 + i ) mn where i = r/m (xii)
Example-5
Find the total amount and interest on Rs.50000 invested for two years at 10% p.a, interest
being compounded annually
SOLUTION:
n
Total Amount A = P(1+r) = 50000 (1+0.10)2 = Rs 60500
Compound Interest = A - P = 60500 - 50000 = Rs 10500
Example-6
Banking 2019
Find the total amount and interest on Rs.11000 invested for two years at 8% p.a, interest being compounded half ye
SOLUTION:
T2ox2tal Amount A = P (1+r/2)2n = 11000 (1+0.08/2) =11000
4
(1.04) = Rs 12868.44
Compound Interest = A - P = 12868.44 - 11000 = Rs 1868.44
Example-7
Find the total amount and interest on Rs.7, 00,000 invested for two years at 10% p.a.,
interest being compounded quarterly.
SOLUTION:
Total Amount A =
P(1+r/4)4n = 7,00,000 (1+0.10/4 ) = 7,00,0 40x028(1.025) = Rs 8,52,882
Compound Interest = A - P = 8,52,882 - 7,00,0000 = Rs 1,52,882
CALCULATING FUTURE VALUE OF MONEY WITH COMPOUNDING EFFECT
Let the present value of a sum of money be Vp. If the compound interest rate prevailing in
the market (expressed in decimal form) is r with a compounding frequency of n times in a year. Suppose this money
invested in some scheme at this rate and it grows to an
amount Vf after n years. Then Vf, which is nothing but future value, can be calculated using formula (xii):
rmn
Vf = Vp ( 1 + /m ) (xi)
or
mnr
Vf = Vp ( 1 + i ) where i = /m (xii)
Thus in n years, the value of money equal to Vp (present value) increases to Vf (future value) due to compounding e
Example-8
The prevailing market rate at which investments can be made is 12% per annum. You
have a spare amount of Rs 6000 which can be invested. Find the future value of this
amount after four years.
amount after four years.
Banking 2019
a) Yearly compounding b) Half-yearly compounding
Solution:
Here the present value Vp = Rs 6000, r = 12% = 12/100 = 0.12 and n = 4 years. We shall
be using formula (xii) for calculating future value VF after 4 years
a) In the case of yearly compounding, frequency of compounding m = 1 and the compounding rate i = r/m = 0.12/1 =
Thus the value after 4 years Vf =
mn 1x4 4
Vp ( 1 + i ) = 6000 ( 1 + 0.12 ) = 6000x( 1.12 ) = Rs 9441
b) In the case of half-yearly compounding, frequency of compounding m = 2 and
the compounding rate i = r/m = 0.12/2 = 0.06. Thus the value after 4 years V f
=mVnp2(x41 8+ i ) = 6000 ( 1 + 0.06 ) = 6000x( 1.06 ) = Rs 9563
THE CONCEPT OF DISCOUNTING
While the compounding an amount leads to an increase in its value, discounting of an
amount leads to a reduction in its value. In the discounting process is the opposite of the compounding process. Let
simple example.
Example:
(Lient an amount of “P” (original amount) be invested today for “n” years at the rate of “r”
decimal form) compounded annually. Suppose in n years it grows to an amount “A” (final amount). Then we have
n
A = P (1+r)
Now, in the same problem, if we have been given the final amount after n years as A, the original amount can be cal
using the formula
n n
P = A / (1+r) or P = A x 1/ (1+r)
Here 1/ (1+r) n is known as the discounting factor.
n
Hence we see that if after applying the compounding factor (1+r) the final value is “A”,
n
we can obtain the original value by multiplying “A” by the discounting factor 1/ (1+r)
FINDING PRESENT VALUE USING THE CONCEPT OF DISCOUNTING
Banking 2019
Let the present value of a sum of money be Vp. If the compound interest rate prevailing in the market (expressed in
form) is r with a compounding frequency of n times in a
year. Suppose this money is invested in some scheme at this rate and it grows to an
amount Vf after n years. Then from formula (xi), Vp, the current value, can be calculated using formula:
rmn
Vp = Vf ( 1 + /m ) (xiii)
or
mn
Vp = Vf (1 + i) where i =r /m (xiv)
Example-9
The prevailing market rate at which investments can be made is 8 % per annum. There is a likelihood of your rece
amount of Rs 11000 three years from now. Find the present value of this amount..
a) Yearly discounting b) Quarterly discounting
Solution:
Here the future value Vf = Rs 11000, r = 8% = 8/100 = 0.08 and n = 3 years. We shall be using formula (xiv) for calcula
present value Vp .
a) In the case of yearly compounding, frequency of compounding m = 1 and the
compounding rate i = r/m = .08/1 = 0.08. Thus the present value
11000 11000
Vp = = = Rs 8732
1x33
(1 + 0.08) (1.08)
b) In the case of quarterly compounding, frequency of compounding m = 4 and the compounding rate i = r/m = .08/4
Thus the present value
11,000 11,000
Vp = = = Rs 8673
4x3 12
(1 + 0.02) (1.02)
201
Banking
9
From the above example, we see that with the increase in the frequency of compounding, the present value decrea
is, the frequency of compounding and the present value are inversely proportional to each other.
In this session we have learnt the methods of calculating future value and present value of
single cash flows. The same methods apply to multiple cash flows. This will be explained
in detail in Session 3.
ASSIGNMENT
Taking the principal amount = P, rate of interest = r per annum (in decimal form) and time period = n years, write do
formulae for calculating the total amount after 6 years with the following compounding frequencies:
a) Yearly b) Half-yearly c) Quarterly d) Monthly
ACTIVIT
YMake a chart on present and future value of a series of cash flows based on different compounding frequencies.
ASSESSMENT
A. Fill in the blanks.
1. Compound interest is calculated each period on the original principal and all
accumulated during past periods.
2. Present value of a future single sum of money is the value that is obtained
when the future value is at a specific given rate of interest.
3. Future value of a future single sum of money is the value that is obtained when the present value is
specific given rate of interest.
4. If “i” is the interest rate per compounding period, “r” is the interest rate per annum and “m” is the frequency of
compounding per year then i = .
5. The future value of a single sum of money is calculated by using the following
formula
Future Value Vnmf = × (1 + i) , where i = interest rate per
compounding period n = number of years
Answers
1.
2. discounted
interest 3. compounded
5. Present Value Vp
4. r/m
Answer the following questions.

B.
Banking 2019
1. Find the value that Rs.10000 would amount to under compound interest at 20% p.a., interest being compounded
in 3 years. (a) Rs 1750
(b) Rs 17958 (c) Rs 16751 (d) Rs 18908
2. If Rs.3000 amounts to Rs.3630 in two years under, interest being compounded annually, what is the annual rate o
(a) 10% (b) 21% (c) 11% (d) 10.5%
Hint: From formula (viii), 3000 (1 + r)2 = 36302 or (1 + r) = 3630/3000
=121/100 or (1+r) = √(121/100) = 11/10 = 1.10 or r = 1.10 - 1 = 0.10 = 0.10 x 100 % = 10 %)
3. A sum amounts to Rs.28800 in two years and to Rs.34560 in three years, interest being compounded annually. Fin
and the rate of interest
(a) Rs 20000, 20% (b) Rs. 25000, 15% (c) Rs 18000, 20% (d) Rs. 17500, 20%
(Hint: From formula (viii), P (1 + r)2 = 28800 -- (1) and P (1 + r)3 = 34560 -- (2) Dividing (2) by (1), we get (1+r) = 3456
6/5 = 1.20 Thus r = 0.20 =
0.20x100 % = 20 %
Put r = 0.20 in equation (1) above to get the value of P.)
4. If the market rate of interest is 14% per annum compounded half yearly, and you deposit Rs 70,000 in a scheme.
future value of this amount after two years.
(a) Rs 83450 (b) Rs 89958 (c) Rs 91756 (d) Rs 96876
5. The prevailing market rate at which investments can be made is 12 % per annum. If
someone promises to pay you Rs 18000 three years from now, what will be the present
value of this amount with quarterly discounting? (a) Rs. 10450 (b) Rs. 13958 (c) Rs. 11751
(d) Rs. 12625
1. (b) 2. (a) 3. (a) 4. (c) 5. (d)
F
Answers: S
Use the following checklist to see if you’ve met all the requirements for assessment activity.
Differentiating between calculation of present and future value of money
Working out total amount and accrued compound interest with monthly, quarterly, half yearly and annual compoun
Applying compounding and discounting factors for time value calculations
Banking 2019
many people you can get to smile back at you, just by putting your best face forward.
1. Answer the following:
a) What is a workplace?
b) What is communication at workplace?
c) Which organisation is considered to be successful?
d) How the leader of a team should communicate with the team members?
e) What is Internal Communication?
f) What is External Communication?
g) How the quality of communication at the workplace be improved?
Mention any five of them.
ASSESMENT
2. Fill in the Blanks
a) In fact, flow is crucial to any organisation and the better the flow,
the more successful the company or organisation is.
b) Communication with colleagues is a vital .
c) External communication should preferably be in nature.
d) Informal communication involves , grape vine talks and chit chats.
e) Body language is an important part of .
3. True or False?
a) Communication is important in workplace.
b) Body language can tell you just as much as what a person says, if not more.
c) The problem with email and social media is that it can be difficult to determine
the tone.
d) Face to face communication helps with building trust and openness.
e) An Internal communication should be by all means formal in nature.
Answers No. 2.
a. Information b) Skill c) Formal d) Gossip e) Communication
No. 3
a. True b) True c) True d) True e) False
CHECKLIST FOR ASSESMENT AC
Use the following checklist to see if you have met all the required assessment activities:-
Part –A
The students have learnt to-
Ba
Many people do not listen with the intent to understand, they listen with a
reply. Many people keeps themselves busy in preparation of the reply rather than listening to the speaker and
thoroughly what the speak
convey.
13. Repeating the Message or Paraphrase

Another listening technique that is very useful is distilling what you just heard and repeating it back to the speaker i
form. Paraphrase this with "So, what you are saying is..." and recap what he just told you. This truly shows that you
CHECKLIST
listening and FOR
payingASSESMENT ACTIVITY
attention. It also signifies that you care about the message the speaker is trying to impart and th
want to make sure you heard them correctly. If a conversation with an unhappy customer includes paraphrasing wh
think you understand so you can help solve a problem. Thus, the customer
feels validated and understood. This often diffuses a situation.
1. Prepare a story, call a student out of the class and narrate the story to him/her. Then call another student out of
and tell the 1st student to narrate the same story to this student. Let the 1st student sit inside the class witho
Call the 3rd/student
EXCERCISE and let the 2nd student narrate the same story to this student. Let the 2nd
ASSIGNMENT
student sit inside the class without talking.
Now, the teacher can read the story before the students of the class. Call the 3rd student inside the class and tell him
narrate the story before all the students. Now, the
students will find how much the story has been shifted from the original story. All these
happened because of lack of listening skill of the students narrating the story.
ASSESMENT
1. Answer the following:
a) What is listening?
b) If listening is same as hearing? If not, how it is different?
c) What are the different types of listening?
d) What a listener actually does during listening?
f) What are the factors that affect the listening process?
f) Define at least 5 principles of listening.
2.
Fill in the blanks.
Banking 2019
a) is an active process of selecting and interpreting information from the auditory and visual clues.
b) When somebody else is listen to what they are saying.
c) - try to understand the other person’s point of view.
d) Interrupting and judging are two behaviors that have no place in .
e) Volume and both add to what someone is saying.
f) We don’t just listen with our but also with our eyes.
3. True or False?
a) Paraphrasing is repeating it back to speaker you just heard.
b) A listener should be interested in the topic and understand the topic to make the listening effective.
c) Listening as an observer to the whole process – is not a type of listening.
d) Making the speaker comfortable to speak – is not the duty of the listener.
e) Many people do not listen with the intent to understand, they listen with intent to reply.
f) Listening is the ability to accurately receive and interpret messages in the communication process.
Answers to Question
No. 2.
a. Listening b) Talking c) Empathise d) Listening e) Tone f) ears
No. 3
a) True b) True c) False d) False e) True f) True
Use the following checklist to see if you have met all the required assessment activities:-
The students have learnt to-
Understand
Part –A what is listening
Understand how listening is different from hearing
Understand the four different types of listening
Understand the factors those affect the listening process
Understand the 12 principles to follow to make listening effective
Part – B
her economic data with analysis and evaluates the economic policies in India. To perform this function, RBI collects, collates,and publishes these data reg
credit in socially desired
non-traditional, promotional tasks as well.
and
n activities of RBI is available. Link the

the government b.Managing all the new
it
culation and its withdrawal from circulation?
bution to
nd services provided by the bank. List out the
enous private bankers, who existed since long.

unds of household sector to the Government.
ative banks.
al units in small scale sector.
oreign Centres.
Activity.
ia.
titutions in
eign currency from his relative living abroad
the banks buy foreign currencies from these
trade, international tourism and movement
utual funds
) to their
f company
he traditional mode of investment, i.e.
e
roof.
modern banks perform many other functions
ces.
nd services provided by the bank. List out the
nding of various of functions of banks

ne year
949.
assets for
ent is to be
ed method of
d mode of payment
me to the exporter abroad

the same to
nt.
y?
2019
swiping the debit/credit card through
d to carry the cash.
Transfer 5. Deferred Net Settlement
ystems / procedures / instructions should be

ed).
ndia), a customer is :
and / or has a
tted under the
sation that
and needs.
ow Your
et the customer’s specific needs.
ctivity.
ties in daily, fortnightly, monthly and

pt despatch of statement of accounts to
f deposit accounts (SB / RD) , etc.

gating Bank’s schemes / products and
d / term
utstation cheques through courier /
scribed
omer day at their respective offices.
with or without
in the banking hall, for the information of
ranch Managers to make themselves available

r.
test norms prescribed for them.
ctivity.
ality.
n’t write down or record your PIN,
of an
of their
post / courier
ss book, blank cheque is stolen or lost.
rawer.
ctivity.
s.
d his interests.
osits are.
ch as a
er of a financial institution to perform
ugh cards without the need of carrying

sment Activity.
ed to be
d selectively against shares of blue
t or principal for a period of 90days or

rowers:
d even if there is a default once in a while,
those loans which are overdue for 90days
pe for
y the bank.
he forms
to get the
m. The facilitator may make Peers of the
ures.
ow money up to a certain limit.
nt
le after expiry of credit period.

mand, usance
and
sment
m loan Able to understand what

ent Customers
m, company etc.) and profile, a threshold
time to time. Any transaction beyond this
rofile should be available with the
ious transactions are found, should to be
proper systems and controls, segregation
The nature and extent of due diligence at
and ensuring adherence to the KYC
ding legal and regulatory requirements.
es observed in this regard. The compliance
ting
or unintentionally, by criminal elements
acceptance of customers.
sation.
e in years.
als of
sment Activity.
No
mer
mer
itoring
re and
of accounts is also done by banks. A

er can draw his/ her pension from a bank
ent himself before start of pension-
partment/ office, where the
ings account of the pensioner. There is no
account with spouse, with ‘either or
be continued for payment of family
as per PPO and is survivor. No power of
to abide by rules for minimum balance
ank/ branch .The bank official visits
n to come to bank, to obtain specimen
maintained by the banks. Banks also
made. Every pensioner is required to
n paying bank, in the month of
at source.
me to bank can also draw his/her pension
witnesses. The person, actually, drawing
of pension/ arrears@8% p.a. without
uthorities of bank/ banking ombudsman
e a note on minor customers.

the senior citizens and illiterates do
ment activity.
nce standards Yes No

sued by the
s similarities with partnership firm and a

ns of borrowing in their bye-laws.
. are
ic
erate bank
rtment, Government Notification and
exercise due caution in dealing with the

ciation of persons. List out the features of
r
of
from the registrar of companies. Now
e companies having share

er purpose
igned by the company secretary.
Association. It is called doctrine of ultra
es of association of the company. This is
h the company. This is stated as doctrine
the
n the
ned by bank, can also be opened. Banks
igned by him will be honored, if otherwise

mpany (payee) by bank is not in order. Bank
ompany is not able to pay its debts, it will
ess of dissolution of a company.
pany.
pany.
ment
nctioning.
asic documents for forming
sk’ regarding the documents

ccount for a partnership firm
nly verify .
ank account through
irm, Association)
he bank in its place.
sment Activity.
account bank.
w
tomer as (a) and
n in Form
sment Activity.
tomer to the bank for
bank account.
sment Activity.
or
he dealings in an account as a single or
the
e
of
rm only and not to partnership, company
and documentation, incase the
time
more, the survivor will have the right to
o dies, then the nominee would get the
words, If there is a nominee to a joint
ons in
d by
g the
e the account is in inactive/dormant
ere it is written “ËorS”, “ForS”, “Any of

or by two or more individuals jointly
hen the would get the rights.
eque book through the internet (under

der Mobile Banking). In such cases
his address registered with the bank.
party authorised to receive the same by
er, the customer is advised of the fact
pt. This is to ensure that
ns
bank to its every who opens an account.3. The pass book is a copy of customer’s account in the bank’s .4.
in in brief the difference between a passbook and a statement of account.2. What do you understand by the term “cheque”. What are the important points t
sment Activity.
e
s not fit all).
not personally).
y customers complain and 5 important
ing.
sment Activity:
ce standards Yes No
rstand the shortest course in human
rs.
e bond bears an interest rate of 15% per
e
000
d thus be as follows:
he
he fifth cash flow is higher than others as
f
ound interest. In this session, we shall be
e
ate of 12% per month, rate of interest “r”
ber of years, “n”.

ears is given by the formula
rest
(i), the total interest paid is
ount will he get after four years?
t
er annum. What is the principal amount of
prevalent in the market, then the future
uation, 1/
e simple interest is being applied.
. If a
ue of this money after 5 years?
e its
0
12) = 15000 x 1.60 = Rs 24000
y increases in future as there is an
he
rket?
its
discount rate, and we have to use the
201
re is, its value today is less. than the
wo factors - interest rate/ discount rate

money market, i.e. inflation, fluctuation
d involve complicated calculations. For
ure value) learning about the impact 0f
money
rest and a single cash flow for the sake of

es of
ears. You may calculate Simple Interest
ate?
y.
nterest
is
2019
unt of Rs 17,000, and want to invest it,
,000
sment Activity.
d discount
201
9
st is calculated on the original amount
emains the same. In the case of
principal plus the entire interest already
) can be a year, six months, three months,
ther interest, is known as compounding.
asily through the following example:
e
mount
n yearly
201
interest.
be
ue of
n
r). Thus to increase P by p % or p/100 = r,
201
9
ed
interest.
hall be using r in decimal form. For
half yearly etc.), the interest rate is
elow:
ods Per Year

ods Per Year
mber of years “n”.
otal amount “A”. The compound interest
in
201
months i.e. two times per year. Thus in “n”

erest for one year, the interest factor to be
times. Since “r” percent in decimal terms is
h
percent in decimal terms is the interest
ount after “n” years
d
d
r/52). Hence, the

d
t after “n” years
on
rest
is five years. Scheme I offers simple rate
culate
of the
r=
ulated Interest (A
20000
00
20000
47
201
9
ied as compared to the amount received
compounding is done “m” times per year ,
“i”. Thus the above formula can also be
terest
erest being compounded half yearly.
.,
ing in
s in a year. Suppose this money is
d using formula (xii):
re value) due to compounding effect.
u
s
2019
all
pounding rate i = r/m = 0.12/1 = 0.12.

n
f the compounding process. Let us take a
of “r”
(final amount). Then we have
, the original amount can be calculated
A”,
ing in the market (expressed in decimal
ated using formula:
re is a likelihood of your receiving an

nt..
be using formula (xiv) for calculating the
ompounding rate i = r/m = .08/4 = 0.02.
201
9
nding, the present value decreases. That

each other.
lue of
ned
time period = n years, write down
ing frequencies:
nt compounding frequencies.
e present value is at a
m and “m” is the frequency of

.a., interest being compounded quarterly
nually, what is the annual rate of interest?
10 %)
being compounded annually. Find the sum
g (2) by (1), we get (1+r) = 34560/28800 =
deposit Rs 70,000 in a scheme. Find the
If
ent
1751
activity.
half yearly and annual compounding.
2019
.
ties:-
Banking 2019
o understand, they listen with an intent to
an listening to the speaker and understand
thoroughly what the speaker wants to
peating it back to the speaker in short

you. This truly shows that you were
peaker is trying to impart and that you
omer includes paraphrasing what you
hen call another student out of the class
dent sit inside the class without talking.
udent. Let the 2nd
dent inside the class and tell him/her to
ese
tory and visual clues.
listening effective.
o reply.
nication process.
ties:-

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Publisher of Monetary and Economic DataRBI maintains and provides all the essential banking and other economic

data with analysis and e

3.Which of the following is not the role of RBI as promoter :

3.Which statement is correct?

payment through bank.

8.If an importer wants to pay for the goods imported, he is required to –

d.Such facility is not available with the bank

2.4 : CUSTOMER SERVICES: IMPORTANT DEFINITIONS

2.5 : CHECK-LIST FOR RENDERING EFFICIENT CUSTOMER SERVICES

danger (5) his bank. )

Non Performing Assets (NPA)

5. means identifying the customer and verifying his/ her

1.KYC or Know Your Customers2. Money laundering 3.Customer Acceptance

CHECKLIST FOR ASSESSMENT

3. A contract with a minor is , abinitio.

B 1. Explain who is customer for a bank.

CHECKLIST FOR ASSESSMENT

ers 1. trust deed

6. Certificate of commencement of business is required in case of---------

3. Most of the banks follow the concept of during opening of new

Fill in the blanks:

3. Certificate/licence issued by the Municipal authorities under Shop &

1. Companies 2. Memorandum of Association 3. fraud and money laundering

o Don’t engage with more than one customer at a

o Offer a practical/ reasonable/ workable/ realistic

CHECKLIST FOR ASSESSMENT

1. Understand what is meant by a complaint. Steps for making a complaint.

9.3 : REDRESSAL MECHANISM

A. Answer the following:

CHECK LIST FOR ASSESSMENT

PERFORMANCE STANDARDS . YES NO

AT THE END INTEREST APPLIED INTEREST APPLIED CUMULATIVE OF ON

On maturity of the deposit: Amount received : Rs 14,800

b) Half Yearly Compounding:

SchemeInterest Offered Total Amount “A” after years 5Accumulated Interest (A

III Compounded Half- = Rs 35247

yearly 35817 - 20000

The following conclusions may be drawn from the above example:

Answer the following questions.

13. Repeating the Message or Paraphrase

credit in socially desired

non-traditional, promotional tasks as well.

n activities of RBI is available. Link the

enous private bankers, who existed since long.

modern banks perform many other functions

nd services provided by the bank. List out the

nding of various of functions of banks

me to the exporter abroad

ystems / procedures / instructions should be

tted under the

ties in daily, fortnightly, monthly and

f deposit accounts (SB / RD) , etc.

ranch Managers to make themselves available

test norms prescribed for them.

er of a financial institution to perform

ugh cards without the need of carrying

d selectively against shares of blue

t or principal for a period of 90days or

le after expiry of credit period.

m loan Able to understand what

rofile should be available with the

ious transactions are found, should to be

proper systems and controls, segregation