Pre promotion training

2022-23
General banking topics
BY Mohan N Ba Chennai
 BASEL Norms
The Basel Committee on Banking Supervision (BCBS) was formed in
1974 by a group of central bank governors of G-10 countries. Its head
office at Basel, Switzerland
BASEL 1 Norms Introduced 1988 -Implemented in India 1993)
BASEL 2 Norms Introduced 2006 -Implemented in India 2008)
BASEL 3 Norms Introduced 2010 -Implemented in India 2013)

 RWA - the minimum amount of capital that must be held by banks to

reduce the risk of insolvency (insolvency is the situation where a bank
cannot raise enough cash to meet its obligations
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 BASEL Norms
BASEL 3 Norms
BASEL – II failed because, it could not cover systemic risk.  It could not prevent 2008 financial crisis
 BASEL – III was proposed after 2008 financial crisis. Began 01-04-2013 and Fully implemented in India 31.03.2019
 The guidelines were based on three parameters, which the committee calls it as 3 pillars
1. Minimum Capital standards-
2. Supervisory Review –
3. Market Discipline
Pillar I - Minimum Capital standards- consists of
A) Tier-I capital (Going concern capital)
i)Common equity tier I and ii) Additional Tier I
B) Tier II capital
Banks are also to build CCB capital conservation buffer 2.5 % used if losses incurred during stressed period

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 BASEL Norms
BASEL 3 Norms  Introduced in 2010.(In India it was implemented in March 31st, 2019)  These guidelines were
proposed in acknowledgment to the financial emergency of 2008.

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 BASEL Norms
Pillar 1 Minimum capital requirement

Minimum total capital ratio + CCB = 11.5

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 BASEL Norms
Computation of BASEL III capital ratio
1. Common equity Tier I = Common equity tier I capital / RWA for (capital risk + Market risk + Operational Risk)
2. Tier I capital ration = Tier I capital / RWA for (capital risk + Market risk + Operational Risk)
3. Total Capital ratio CRAR = total eligible capital / RWA for (capital risk + Market risk + Operational Risk)

Methods for computation of risk implemented in India

Credit risk - Standard approach
Market Risk – Standard duration method
Operational risk – Basic indicator approach

Supervisory review process- objective to ensure that banks have adequate capital to support risk
2 imp. components
4. ICAAP- Internal capital adequacy assessment process
5. SAAP – Supervisory review and evaluation process
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 Types of Risks in Banking
Financial Risk: Risk develops from the business transactions done by the Banks which is exposed to
potential Loss.
Market Risk: Risk is a type of risk in which losses in on- or off-balance sheet positions that arise from
movement in market prices.
Credit Risk is the potential that a bank borrower/counter party fails to meet the obligations on agreed
terms.
Interest Rate Risk is the type of risk arises due to fluctuation in interest rate.
Liquidity Risk: This kind of Risk arises due to inability of bank to meet its obligations when any asset
may not be realized into cash.
Operational Risk: This risk arises due to failure of day to day activities, system or people. It includes both
internal and external frauds like failures related to policies, laws, regulations, documentation or any
technological risks
Systemic risk: refers to the risk of a breakdown of an entire system rather than simply the failure of
individual parts.
Capital Risk: This type of risk arises where the capital comes under risk partially or the whole in some
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cases emergencies
CAMELS rating developed by US
In 1988, the Basel Committee on Banking Supervision of the
Bank of International Settlements (BIS) proposed the
CAMELS framework for assessing financial institutions.
The CAMELS system is also based on composite ratings on a
scale of one to five based on ascending order of supervisory
concern.
Each factor is assigned a weight as follows:
Capital adequacy 20 % 
Asset quality 20% 
Management 25% 
Earnings 15% 
Liquidity 10% 
Sensitivity 10% 

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 Types of money
1. Dear Money : “The money which is available at high interest rates and hence restricts
expenditure by companies.” “ Due to restricted money supply, interest rates will be pushed up.
Hence, it is very difficult to raise money during this period of dear money.
2. Barren Money : Money which is not earning any interest  Money which is not invested
anywhere
3. Hot Money : Hot money refers to funds that are controlled by investors who actively seek
short-term returns. These investors scan the market for short-term, high interest rate investment
opportunities. A typical short term investment opportunity that attracts "hot money" is the
certificate of deposits
4. Hard Currency :  Hard currency, safe-haven currency or strong currency is any globally
traded currency that serves as a reliable and stable store of value.
5. Fiat Money  Fiat money is one that is declared legal tender. This includes any form of
currency in circulation such as paper money or coins. Fiat money is backed by a country's government
instead of a physical commodity.
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 Money Supply
The total stock of money in circulation among the public at a particular point of time is called money supply.
RBI publishes figures for four alternative measures of money supply, viz. M0, M1, M2, M3 and M4. They are
defined as follows:
1. Reserve Money M0 = Currency in circulation + Bankers’ deposits with the RBI + ‘Other’ deposits with the RBI

2. Narrow Money M1 = Currency with the public + Demand deposits with the banking system + ‘Other’ deposits
with the RBI

3. Intermediate Money M2 = M1 + Short-term time deposits of residents (including and up to the contractual
maturity of one year).

4. Broad Money M3 = M2 + Long-term time deposits of residents + Call/Term funding from financial institutions.
5. M4 = M3 + all deposits with post office savings banks

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 RBI
 Reserve Bank of India (RBI) is the central bank of the country. RBI is a statutory body. It is
responsible for printing of currency notes and managing the supply of money in the Indian
economy.
 Reserve Bank of India (RBI) is the highest monetary authority of India. RBI was established in
1935 by the RBI Act 1934. RBI works as a custodian of foreign reserve, banker’s bank, banker to
the government of India and controller of credit.
 Initially the ownership of almost all the share capital was in the hands of non-government
shareholders. So in order to prevent the centralization of the shares in few hands, the RBI was
nationalized on January 1, 1949.
 The Reserve Bank has adopted the Minimum Reserve System for issuing/printing the currency
notes. Since 1957, it maintains gold and foreign exchange reserves of Rs.200 Cr. of which at least
Rs.115 cr. should be in gold and remaining in the foreign currencies

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 Bharatiya Reserve Bank Note Mudran Private Limited

 Bharatiya Reserve Bank Note Mudran Private Limited is a subsidiary

of Reserve Bank of India.
 It was established on 3rd February 1995.
 It designs, prints and supplies banknotes for the Reserve Bank of
India(RBI) to meet the demand of the banknotes in the country.
 The headquarter is at Bangalore, Karnataka.
 BRBNMPL has two bank note presses in Mysore and Salboni.

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 DICGC
 Deposit Insurance and Credit Guarantee Corporation (DICGC) is a subsidiary of Reserve Bank
of India.  The authorized capital of the Corporation is 50 crore, which is fully issued and
subscribed by the RBI.
 It is headquartered in Mumbai.
 It was established on 15 July 1978 under Deposit Insurance and Credit Guarantee Corporation
Act, 1961 for the purpose of providing insurance of deposits and guaranteeing of credit
facilities DICGC insures all bank deposits, such as saving, fixed, current, recurring deposits for
up to the limit of Rs.5,00,000 of each deposits in a bank
 The insurance covers principal and interest is now up to a maximum amount of 5 lakh.
 The DICGC does not directly charge any premium from the depositor on this insurance. So
Now Banks will pay a premium of 12paise against 10paise per Rs.100 deposit.
 All commercial banks including branches of foreign banks functioning in India, local area
banks and regional rural banks are insured by the DICGC.
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 RRB
 After nationalization, of banks in 1960 there were problems which made it
difficult for commercial banks even under government ownership to lend to farmers.
Government set up the Narasimham Working Group in 1975.
On the basis of this committee’s recommendations, a Regional Rural Banks
Ordinance was promulgated in September 1975, which was replaced by the
Regional Rural Banks Act 1976.
First RRB: Prathama Grameen Bank
The RRBs were owned by three entities with their respective shares as follows:
 Central Government → 50%
 State government → 15%
 Sponsor bank → 35 %
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 NABARD
NABARD is an apex development bank, established in 1982 by a Special Act of the Parliament
 It has power to deal with all matters concerning policy, planning as well as operations in giving
credit for agriculture and other economic activities in the rural areas.
 Committee to Review the Arrangements For Institutional Credit for Agriculture and Rural
Development” under the Chairmanship of B. Sivaraman.
 Based on the recommendations, NABARD (National Bank for Agriculture and Rural
Development) started functioning from 12th July, 1982.
 Authorized Capital : RS.30,000crore/- present chairmen K V Shaji 07.12.2022 (G RChintala)
 A refinancing agency for those institutions that provide investment and production credit for
promoting the several developmental programs for rural development.  Improving the absorptive
capacity of the credit delivery system in India, including monitoring, formulation of rehabilitation
schemes, restructuring of credit institutions, and training of personnel.  Co-ordinates the rural
credit financing activities of all sorts of institutions engaged in developmental work at the field level
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 Lead Bank Scheme
After the nationalization of 14 banks in 1969, Govt. initiated steps to extend banks
reach to the rural areas.
 “National Credit Council” study group headed by Prof. D.R. Gadgil, first
recommended “Area” approach.
 The Committee of Bankers (Nariman Committee) appointed by RBI accepted
the ‘Area’ approach and gave the name “Lead Bank Scheme”.
 In 1969 itself, 380 districts in the country were identified with Lead Bank
Scheme, later on extended to all the rural districts of the country.

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World bank group

Nauru 189th member

David R. Malpass

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International monetary fund- IMF

190th member –The federal republic of

Yugoslavia

Kristalina Georgieva
1St deputy MD of IMF in India –Gita Gopinath

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ADB

68 countries and NIUE is the last member

Masatsuga Asakawa

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 SWIFT
•SWIFT Codes for All Banks
•The Society for Worldwide Interbank Financial Telecommunication
•Swift Code is a standard format of Bank Identifier Codes (BIC)
•The Swift code consists of 8 or 11 characters. When 8-digits code is given, it refers to the
primary office

AAAA BB CC DDD
First 4 characters - bank code (only alphabets) 
•Next 2 characters - ISO 3166-1 alpha-2 country code (only alphabets) 
•Next 2 characters - location code (letters and digits) 
•Last 3 characters - branch code, optional (letters and digits) 
•The last three codes are 'XXX' for primary office. 
EG: ALLAINBBRPN
ALLA identifies Allahabad bank  -IN is the country code for India -BB
is the code for New Delhi -RPN is the branch code of R.P.C., New Delhi

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 NBFC
It is engaged in the business of loans and advances, acquisition of bonds/debentures/securities
issued by Government or local authority or other marketable securities, leasing, hire-purchase,
insurance business, chit business but does not include any institution whose principal business is
that of agriculture activity, industrial activity, purchase or sale of any goods or
providing any services and sale or purchase of immovable property
Difference between Banks & NBFCs
NBFC cannot accept demand deposits
NBFCs do not form part of the payment and settlement system and cannot
issue cheques drawn on itself deposit insurance facility of Deposit Insurance and
Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in
case of bank

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 Payment banks
Payments banks are a new model of banks conceptualized by the Reserve Bank of
India (RBI). These banks can accept a restricted deposit which is currently limited
to INR 1 lakh per customer.
 Initial Capital - 100crore
 Payments Banks Formation - Nachiket Mor Committee
 For the first five years, the stake of the promoter should be 40% minimum.
 Foreign shareholding will be allowed in these banks as per the rules for FDI in
private banks in India on 19 August 2015, the Reserve Bank of India gave "in-
principle" licenses to eleven entities to launch payments banks.
Under Section 22 of the Banking Regulation Act, 1949

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 Payment banks

Out of 11payment bank license issued 7 are live now, Cholamandalam Distribution Services, Sun
Pharmaceuticals, and Tech Mahindra have surrendered their licenses.

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Small financial bank-Usha Thorat Committee

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Small financial bank Vs Payment banks

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 Name of   TransUnion TransUnion CIBIL Limited
organisation  CIBIL
"CIBIL" stands for 'Credit Information Bureau India Limited'
  Founded  August, 2000
• STAKEHOLDERS
HeadQuarter Mumbai, India
•TransUnion International Inc.(55%), SBI(6.1%),
MD and CEO Mr. Satish Pillai ICICI(6%), Indian Overseas Bank(5%), The Hong Kong
Chairman  Mr. M.V Nair & Shanghai Banking Corp. Ltd.(5%),
•Union Bank of India(5%), BOI(5%), BOB(5%), India
Total members 900 members
Alternatives Private Equity Fund(2.9%), India Infoline
  Website www.cibil.com Finance Limited(1%).

•In 2000, GOI decided to form an institution which keep records of every individual's credit score
and maintains it and Provide it to its members.
. In 2004, Credit bureau services are launched in India (Consumer Bureau).
• In 2006, Commercial bureau operations commenced.
• In 2007, CIBIL Score, India’s first generic risk scoring model for banks and financial institutions,
was introduced.
• In 2010, Two firsts for the credit industry in India with the launch of:   
•         (a) CIBIL Detect: India's first repository for information on high-risk activity.
         (b) CIBIL Mortgage Check: The first centralised database on mortgages in India.
•
In 2011, CIBIL TransUnion Score is made available to individual consumers.
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 History of Banking & Merger of Banks

Banking system commenced in India with the foundation of Bank of Hindustan in Calcutta (now
Kolkata) in 1770 which ceased to operate in 1832.
Presidency Banks: These banks were funded by the presidency government at that time.  Bank of
Bengal- Established in 1806.  Bank of Bombay - Established in 1840.  Bank of Madras -
Established in 1843.
These three presidency banks were re-organized and amalgamated to form a single entity named “Imperial
Bank of India” on 27th January, 1927. It was later transformed into “State Bank of India” in 1955.
Some old Banks:
 Allahabad Bank was established in 1865 at Allahabad (Uttar Pradesh). It is the oldest joint stock bank
of our country functioning till today.
 Oudh Commercial Bank was established in 1881 at Faizabad (Uttar Pradesh).It is the First limited
liability Bank in India and also first joint stock bank by Indians. However it failed in 1958.
 Punjab National Bank was established in 1895 at Lahore (pakistan) and it was also the first bank to be
managed solely by Indians.
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 History of Banking & Merger of Banks

Nationalization:  19th july 1969, 14 major Banks were nationalized.

1.Central bank India. 2. Bank of Maharashtra. 3. Dena Bank. 4. Punjab national bank. 5.
Syndicate bank. 6. United bank of India. 7. Indian bank. 8. Indian overseas bank. 9. Bank of
Baroda. 10. Union bank. 11. Allahabad bank. 12. UCO bank. 13. Canara bank. 14. Bank of India
In 1980 another 6 banks were nationalized: 1. Andhra bank. 2. Oriental bank of commerce. 3.
New bank of india. 4. Corporation bank. 5. Punjab and sind bank. 6. Vijaya bank.
The seven large PSBs (by size) are
1. State Bank of India (SBI) 2.Punjab National Bank (PNB) 3. Bank of Baroda (BOB) 4. Canara
Bank 5. Union Bank of India (UBI) 6.Bank of India (BOI 7. Indian bank
The five smaller PSBs are
1. Central Bank of India (CBI). [8th largest] 2. Indian Overseas Bank (IOB). [9th largest] 3. UCO
Bank. [10th largest] 4. Bank of Maharashtra (BOM). [11thlargest] 5. Punjab and Sind Bank. [12th
largest)
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 Money market

(i) Money market:

 It is used for short term credit.
 Borrowing and lending money is up to one year (1 day to 365 days).
 It includes RBI, commercial banks, except RRB’s, some NBFC, cooperative banks, primary
dealers, etc.
 T-bills, commercial papers, certificates of deposits traded in this market(banks and primary
dealers) to lend and borrow money when there is a mismatch of funds.
Call money : money is borrowed or lent for 1 day.
Notice money : money is borrowed or lent for 2 to 14 days.
Term money : money is borrowed or lent for exceeding 14 days to 365days
In call money and notice money, both the borrowers and lenders need to maintain a current
account with RBI because trading happens for very short tenure.

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 Money market

(i) Treasury bills(T-bills):

 It was implemented by 1986. It is also known as T-bills.
 In the money market, if we talk about the lowest risk instrument then it is T-bills.
 It is issued by the central government with fixed date and fixed time.
 They are highly liquid, bill holders can transfer or get discounts at any time from RBI.
 They are issued as well as auctioned by RBI only but can purchased by individuals, firms,
institutions and banks.
 T- bills are available at a denomination of 25000 and multiples of it.
 Its maturity periods are 91, 182, 364 days.

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 Money market

(i) Commercial paper(CP):

 It was introduced in 1990.It is issued in the form of promissory note.
 In this, the net worth of the company is not less than 4crore.
 All india financial institutions, primary dealers, big companies are permitted to issue commercial
paper to enable them to meet their short term financing requirements.
 The tenure of CP is 7 days to one year.
 CP is issued under the denomination of 5 lakh and multiple of it.
3. Certificate of deposits(CD):
 It was introduced in 1989.  Scheduled commercial banks (except Rrb, local area banks), all
india financial institutions are permitted by RBI to purchase the CD.
 The tenure of CD is 7 days to one year.
 Financial institutions can not issue less than 1 year and not exceeding 3 years.
 The denomination of CD is 1 lakh and multiple of it
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 Money market- Masala bond

Basically, overseas rupee bonds are known as

Masala bonds.
Indian firms have earlier raised money abroad
through bonds and other forms of borrowings,
but always in foreign currency, mainly via
ECBs (External commercial borrowings).
However, the first overseas rupee bonds were
issued in 2013 by the International Finance
Corporation, the World Bank’s private sector
investment arm.
To raise funds for capital expenditure,
the Indian Railway Finance Corporation will
be issuing bonds denominated in rupees.

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FDI VS FPI

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34
35
 CHATBOT in banks in India

SBI - SIA- SBI intelligent assistant

BOB - ADI- Assisted Digital Interaction
HDFC - EVA -Electronic virtual assistant
Humanoid - IRA -Intelligent robotic assistant
ICICI - iPAL an Omni channel bot
Kotak bank - KEYA -your very own virtual assistant
Indusind bank - Indus assist
AXIS BANK – AHA
HSBC - AMY
Andhrabank - ABHi

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 Types of ATM in india

RBI GUIDELINES ON SERVICE AT ATMs:

 Banks should resolve within 7 working days of complaint
 If not, banks should pay Rs.100/- per day for delay beyond 7 day
Cash out for more than 10 hours in a month is noticed RBI fine of rs.10000 per ATM

White label ATM : RBI permitted NBFCs/FIs to establish ATMs with their own brand name and These
are known as White Label ATMs  Tata Communications Payment Solutions (TCPS), a wholly owned
subsidiary of Tata Communications launched first white label ATM (WLA). Ex : Indicash, India One

Brown label' ATM are those Automated Teller Machines where hardware and the lease of the ATM machine is
owned by a service provider, but cash management and connectivity to banking networks is provided by a
sponsor bank whose brand is used on the ATM
Green Label ATM  ATM is provided for Agricultural Transaction
Orange Label ATM  It is Provided for Share Transactions
Yellow Label ATM  These are Provided for E commerce
Pink Label ATM  Such ATM are monitored by guards who ensure that only women access these ATM.
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 Monetary policy committee

The primary objective of monetary policy is to maintain price

stability while keeping in mind the objective of growth.
The MPC is a six-member panel which sets key policy rates. Out
of that, three are external. They are appointed for a fixed four year
term.
Among the three internal members, one is the RBI Governor who
chairs the committee. RBI’s deputy governor in charge of the
monetary policy is the second internal member. The third member
is one RBI official who is nominated by the central board of RBI.
According to the amended RBI Act, the MPC is required to meet
at least four times in a year.
The quorum for the meeting of the MPC is four members. Each
member of the MPC has one vote, and in the event of an equality
of votes, the Governor has a second or casting vote

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 Monetary policy committee

1. CRR – Cash Reserve ratio

CRR is the minimum percentage of deposits with
commercial banks that they need to deposit with the
central bank of RBI.
 All Banks have to maintain a minimum CRR of
Net Demand and Time Liabilities Presently CRR is
4.50 % (Total deposits) with RBI , as cash.
 It can be retained in the RBI currency chest.
 This is as per section 42(1) of the RBI Act, 1934.
{Amended through RBI (Amendment) Act, 2006}
CRR is maintained as cash balances with RBI on
fortnightly average basis
➢ No floor & No ceiling rate.
 To be maintained in cash, gold & approved
securities.
 To hold a certain percentage of NDTL in the
above forms as prescribed from time to time
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 Monetary policy committee

2. SLR
 All Banks have to maintain a portion of
their total deposits with RBI either as cash or
gold or approved securities.
 This is as per section 24 of the Banking
Regulation Act, 1949. {This was amended
through the Banking Regulation
(Amendment) Act, 2007}
 No floor rate, but the ceiling is 18 %.
 To be maintained in cash, gold & approved
securities.
 To hold a certain percentage of NDTL in
the above forms as prescribed from time to
time

Penal int. for the day on which not maintained at 3% p.a above bank rate.
For next day 5%
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 Monetary policy committee
3. Repo rate - 6.25 % (30th sep- 5.90%) used to regulate liquidity in the economy
 rate at which central bank of a country lends money to commercial banks.
 It is actually a repurchase agreement. When banks sell security, banks promise to buy back the same security from
RBI at a predetermined date with an interest at the rate of REPO. When RBI reduces the Repo Rate, the banks can
borrow more at a lower cost.
Impact 
 Minimum amount of loan Rs. 5 cr.
If commercial banks get more money they will lend more
 Repo rate actually short term lending( 1 to 90 days) money to people which will lead more demand in economy.
Thus prices will increase.
4. Reverse repo rate - 3.35%
 In case RBI borrows money from banks and the interest paid by RBI to banks on such borrowing is known as
Reverse Repo Rate. It is the opposite of the Repo rate.
 An increase in this rate can cause the banks to transfer more funds to RBI due to their attractive interest rates.
Hence RBI uses this way to draw out excess money from the banks.

5. MSF - Marginal Standing facility (6.50 %- for emergency borrowings for banks when liquidity dries up)
 Minimum amount which can be accessed through MSF is Rs. 1 crore and can be in multiples of Rs.1crore.
 While under Repo all member Banks are eligible to borrow, MSF provides for overnight borrowing facility from
RBI. Max limit 1% of NDTL
 No additional security is required. With the securities provided for SLR, the securities can be adjusted against SLR
 Only Scheduled commercial Banks are eligible 41
 FOREX
Nostro Account:
• These accounts are held by Indian Banks in foreign Banks in foreign currency.
• Example- Indian Bank has an account in Bank of America in dollars.
Vostro Account:
• These accounts are held by foreign banks in India in Indian Rupees.
• Example: Bank of America has an account in Indian Bank in Indian Rupees.
LORO Account:
Called their account with you . If SBI has an account with citi bank New York and another bank say, BOB wants
to refer to that account while corresponding with CITI bank, NY it would refer as LORO
Different Exchange rates
Direct rate: When foreign currency unit is fixed & indian rupees is variable Eg: 1$ = Rs.83.2
Indirect rate: When foreign currency rate is variable & Indian rupee is fixed Eg: Rs. 100 = 1.21$
Buying rate: When bank delivers RS. and gets foreign curn (Remittance from abroad, Export bill, FC traveler
cheque)
Selling rate : When bank delivers foreign currency and gets Indian rupee(import bill, issue of TC, remit abroad)
Spot rate: rate for next 2 working days
cash/ value rate: same day settlement, TOM- T+1 rate today deal completion ny next day
TT- T+2 settlement within next 2 days
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Forward rate: deal today deliver after spot
 FOREX
Liberalised Remittance Scheme (LRS)
1. Under the Liberalised Remittance Scheme, Authorised Dealers may freely allow remittances by
resident individuals up to USD 2,50,000 per Financial Year (April-March) for any permitted
current or capital account transaction or a combination of both. The Scheme is not available to
corporates, partnership firms, HUF, Trusts,
2. The Scheme is available to all resident individuals including minors. In case of remitter being a
minor,4 the Form A2 must be countersigned by the minor’s natural guardian.
3. The permissible capital account transactions by an individual under LRS are: (i) opening of
foreign currency account abroad with a bank; (ii) 8acquisition of immovable property abroad,
Overseas Direct Investment (ODI) and Overseas Portfolio Investment (OPI)
4. remittances for current account transactions (viz. private visit; gift/donation; going abroad on
employment; emigration; maintenance of relatives abroad; business trip; medical treatment abroad;
studies abroad) available to resident individuals
5. The received/realised/unspent/unused foreign exchange, unless reinvested, shall be repatriated and
surrendered to an authorised person within a period of 180 days from the date of such receipt/
realisation/ purchase/ acquisition or date of return to India, as the case may be
43

•FM unveiled the 4th Public Sector Bank
(PSB) Reforms Agenda ‘EASE 4.0’ for 2021-
22 which is tech-enabled, simplified, and
collaborative banking.
•EASE 4.0: The Enhanced Access and
Service Excellence (EASE) 4.0 reforms plan
was introduced in August 2021 by Finance
Minister Nirmala Sitharaman. With the help
of the Ease 4.0 reform, Public Sector Banks
(PSBs) will be able to institutionalize smart
banking and establish an ethical framework
•The Credit@click was a flagship
initiative under EASE 3.0 Around 4.4 lakh
customers have taken the benefit of
such initiative.
EASE 4.0
Key Initiatives of EASE 4.0:
1.24/7 Banking: To ensure the continuous availability of banking
services, EASE 4.0 has introduced the concept of 24x7 banking
with durable tech.
2.Focus on North-East: Additionally, banks are requested to
prepare special schemes for the North-East. CASA (Current
Account Savings Account) deposits in the Eastern States are a
cause for worry, suggested that banks provide a facility in the area
for wider credit development.
3.Bad Bank: A bad bank is a bank created with the purpose of
purchasing subprime loans and other illiquid assets of some other
financial institution. The proposed bad bank is exceptionally close
to receiving a license, according to the Finance Minister.
(NARCL- national Asset reconstruction com. Ltd.) N Sundar
4. Leveraging FinTech Sector: FinTech, or financial technology, is
the application of ground-breaking new technologies to the
products and services of the financial sector. Leveraging this field
might improve the banking industry and help banks with
technology.
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• Following is the detailed list of winners:
– (a) Canara Bank: Awarded with the 2nd runner-up in the Institutionalizing Prudent Banking theme
– (b) Punjab National Bank: Awarded as runner up for categories of: (a) Governance & Outcome centric HR (b) Institutionalizing
Prudent Banking.
• Awarded as 2nd runner-up in the best improvement category
– (c) Indian Bank: Awarded as the winner for best improvement category
– (d) Union Bank of India: Awarded as the winner for categories of: (a) Governance & outcome-centric HR (b) Deepening Financial
inclusion & customer protection.
• Awarded as 2nd runner-up for categories of: (a) Smart lending (b) Tech-enabled ease of banking themes
• Awarded as 1st runner-up in best improvement category. It was also awarded as 2nd runner-up for the EASE Reforms Index
Award 2021
– (e) Bank of Baroda: Awarded as the winner for categories of: (a) Smart Lending (b) Institutionalizing Prudent Banking themes.
• Awarded as 1st runner-up in Tech-enabled ease of banking
• Awarded as 2nd runner-up in Deepening Financial Inclusion and Customer Protection. It was also awarded as 1st runner-up for
the EASE Reforms Index Award 2021.
– (f) State Bank of India: Awarded as the winner for Tech-enabled Ease of banking
• Awarded as 1st runner-up for categories of (a) Smart Lending (b) Deepening Financial Inclusion and Customer Protection themes
• Awarded as 2nd runner-up in Governance and Outcome-centric HR. It was also awarded as Overall winner of the EASE Reforms
Index Award 2021
 Revolutions in Indian History
Sl Revolution
No
1 Black revolution
2 Pink Revolution
3 White revolution
4 Operation greens
5 Yellow revolution
6 Green revolution
7 Silver revolution
8 Golden revolution
9 Brown Revolution
10 Blue revolution
11 Round revolution
12 Silver fibre revolution
13 Evergreen revolution
Related to field
Petroleum products
production of onion, drugs, pharma, prawns, meat
Verghese Kurien -milk& dairy operation flood
Fruits & vegetable production
Oil seeds production
Agriculture 1966-69 –wheat HYV
Production of eggs & poultry- Mother of SR –smt. Indira Gandhi
Production of honey & horticulture products-nutrition
Meeting demand of coffee
Acqu culture
potatoes
Cotton production
Dr. M S Swaminathan
47
Income tax slabs old regime

48
Income tax slabs NEW regime SECTIONS

49
50
51
 Exemption TDS rates
Interest from other than interest from Senior Citizens- 50,000 10%
securities (from deposits with
banks/post office/co-operative Others- 40,000
society) 194A
Payment of any dividend 194 5,000 10%
Payment to contractor/sub- Single transaction- 30,000
contractor:-194C Ind/HUF 1%
Non ind 2%
Individuals/HUF Aggregate transactions- 1,00,000
Income for the insurance pay-out, 1,00,000 5%
while payment of any sum in respect
of a life insurance policy.194DA
Rent on 2,40,000 2%
plant and machinery 194I
Rent on 2,40,000 10%
land/building/furniture/fitting
Any sum paid by way of fee for 30,000 10%
professional services 194J
 Customer Due Diligence (CDD) - Contd

1.[PML second amendment rules - Rule (2) Sub Rule (1) (a) (ii)]
For All Individuals (Identity Proof & Address Proof)
1)  Passport,
2) Driving license,
3) Proof of possession of AADHAR card
4) Voter’s Identity Card issued by Election Commission of India,
5) Job card issued by NREGA duly signed by an officer of the State Government,
6) the letter issued by the National Population Register containing details of name, address or
any other document as notified by the Central Government in consultation with the Regulator.

It is implied that “Proof of address” also follows from the above documents only.

53
 CDD - Accounts of Foreign Students
Following procedures should be followed for opening accounts of foreign students studying in India.

 NRO account to be opened on the basis of his/her passport (with visa and immigration
endorsement) bearing the proof of identity and address in the home country together with a
photograph and a letter offering admission from the educational institution in India.

 A declaration about the local address should be obtained within a period of 30 days of opening the
account and verify the said local address.

 During the 30 days period, the account should be operated with a condition of allowing foreign
remittances not exceeding USD 1,000 or equivalent into the account and a cap of monthly
withdrawal to Rs. 50,000/-, pending verification of address.

 Prior permission has to be obtained from Reserve Bank of India for opening the accounts of
students with Pakistani and Bangladesh nationality. 54
 CDD - FATCA
– FATCA stands for the Foreign Account Tax Compliance Act.
– FATCA is a United States (US) legislation that primarily aims to prevent tax evasion by US
taxpayers by using non-US financial institutions and offshore investment instruments.
– FATCA requires financial institutions to identify accounts held directly or indirectly by the
US persons and to report the relevant account information to the US Internal Revenue
Services (IRS).
– In order to ascertain customers’ US or non-US tax status, FATCA requires financial
institutions to collect additional information or documentation from customers.
– Financial institutions are required to apply a 30% US withholding tax on certain types of
US source income paid to such customer where customers fail to provide the requested
information or documentation.
– FATCA and CRS require full compliance by Banks for “new accounts” opened on or after
55
01.01.2016.
 Reporting
Where features of unusual operation in the accounts are noticed, the matter should be immediately reported to
Head Office, for onward submission to Financial Intelligence Unit – India (FIU-IND).
The following are the various reports that are to be submitted:
Report Description
Cash Transaction Report (CTR) All accounts where the aggregate cash transaction in a
month exceeds Rs. 10 lakh are to be reported.
Non-profit Organization Transaction All transactions in NPO accounts where the credit
Report (NTR) (single) exceeds Rs. 10 lakh in a month are to be
reported.
Cross Border Wire Transfer Report All transactions of Rs. 5 lakh and above where either the
(CBWTR) source or destination is India are to be reported.

Counterfeit Currency Report (CCR)
Suspicious Transaction Report (STR)
All counterfeit notes detected at currency chests during
the month are to be reported. 15 days
All accounts where features of unusual operation in the
accounts are noticed are to be reported in 7 days of
56

detection.
 Small savings account
• Balance in such accounts at any point of time should not exceed
Rs.50,000/-
• Total credits in one year should not exceed Rs.1,00,000/-
• Total withdrawal and transfers should not exceed Rs.10,000/- in a
month.
• Foreign remittances cannot be credited to such accounts.
• Such accounts remain operational initially for a period of twelve
months and thereafter, for a further period of twelve months, if the
holder of such an account provides evidence of having applied for any
of the officially valid documents within twelve months of the opening
of such account. The bank will review such account after twenty four
months to see if it requires such relaxation.
57
 Beneficial owner
 What are the documents required for identification of Beneficial Owner?
Sl. Constitution of the Customer Document Required to be obtained
No.
1. Proprietorship Letter of Proprietor ship
2. Partnership Firm/ LLP Partnership deed
3. Private ltd Company Memorandum and Articles of Association
4. Association of Persons / Joint Ventures, HUF. Agreement between the members
5. Society Registered under Societies Registration By-Laws
Act
6. Co-operative Society Registered under Co- By-Laws
operative Societies Act
7. Private Trusts Trust Deed
8. Public Trusts Trust Deed
9. Unlisted / Public Ltd Company Memorandum and Articles of Association

58
 Stages of Money Laundering
As per PMLA act 2002
 Stage 1. Placement –physical disposal of bulk cash proceeds
derived from illegal activity
 Acquiring, Inserting, pushing in
 Stage 2. Layering-soaping-process of separation of illicit proceeds
from source by creating layers of transactions
 Cleaning, Soaping, twirling, winding etc
 Stage 3. Integrating- reinjection of laundered proceeds back to
economy
 Legalizing, giving it respectability etc.
59
 Reporting of Fraud Cases to Police/CBI
Amount involved in the Agency to whom Remarks
fraud complaint should
be lodged

Above Rs.10,000/- but below Rs. State Police (Local Police To be lodged by the branch concerned, If Committed by staff.
1,00,000/- Station)
No Need to be reported If committed by Outsiders.
to the police
Above Rs. 1.00 lakhs and below Rs.3 State Police To be lodged by the Regional Head concerned
Crore

Rs. 3.00 crore and above
(All Cases)
Refer to Circulars:
a) BCC:BR:112:76 Dated 11.02.2020
b) BCC:BR:112:120 Dated 03.03.2020
Head of Zone , CBI, BS&F All the complaints to be lodged at CBI, New Delhi.
Zone,5B-10the
Floor ,”A”Wings, CGO
Complex, Lodhi Road ,
New Delhi

60
Video on Bank Fraud
 SOILED NOTES

• Soiled notes are those which have become dirty and slightly cut
DUE TO NORMAL WEAR AND TEAR.
• a two piece note pasted together wherein both the pieces presented
belong to the same note and form the entire note with no essential
feature missing are also treated as soiled note.
• Essential portions in a currency note are name of issuing authority,
guarantee CLAUSE, promise clause, signature, Ashoka Pillar
emblem/portrait of Mahatma Gandhi, water mark, NUMBER
PANEL.

62
 Mutilated Notes
• Note of which a portion is missing or which is composed of more than
two pieces.
• It may be presented at any Bank branches.
• It should be accepted, exchanged and adjudicated as per NRR, 2018.

63
 Imperfect banknote - any banknote, which is wholly or partially,
obliterated, shrunk, washed, altered or indecipherable but does not include
a mutilated banknote.
mismatched note - a mutilated note which has been formed by joining a
half note of any one note to a half note of another note

64
 Exchange of soiled notes

Notes presented in small number: Notes presented in bulk:

Number of notes is up to 20 pieces with a Number of notes exceeds 20 pieces or

maximum value of Rs.5000 per day, banks Rs.5000 in value per day, banks may accept
should exchange them over the counter, them, against receipt, for value to be
free of charge. credited later. Banks may levy service
charges for that.

65
 Exchange of Mutilated and Imperfect notes at NC Br.

Notes presented in small Notes presented in bulk:

number:
Number of notes is up to 5 pieces
with a maximum value of
Rs.5000 per day, banks should
exchange them over the counter,
free of charge.
Number of notes exceeds 5
pieces or Rs.5000 in value per
day, banks may accept them,
against receipt, for sending the
same to Currency chest
branches for crediting in
customer account later.

 If the non-chest branches are not able to adjudicate the mutilated notes, the notes may be received against a receipt and sent to
the linked currency chest branch for adjudication.

 The probable date of payment should be informed to the tenderers on the receipt itself and the same should not exceed 30 days.
Bank account details should be obtained from the tenderers for crediting the exchange value by electronic means. 66
 RESERVE BANK OF INDIA (NOTE REFUND)
AMENDMENT RULES, 2018

REVISED DEFINITIONS

MUTILATED NOTES (Less than fifty rupees)

Full Value Half Value Rejected

If the area of the single largest undivided piece No half Value is payable If the area of the single largest
of note presented is more than 50% of the total for these denominations undivided piece of note presented is
area of the note rounded off to the next complete equal to or less than 50% of the total
square centimeter, full value of the note shall be area of the note, the claim shall be
payable. rejected

67

MUTILATED NOTES (Rs 50/ Rs 100/ Rs 200/ Rs 500/ Rs 2000)
Full Value
If the area of the single largest
undivided piece of the note
presented is more than 80 % of
the area of the respective
denomination rounded off to the
next complete square
centimeter, full value of the
mutilated note shall be payable.
RESERVE BANK OF INDIA
(NOTE REFUND) amendment RULES, 2018
REVISED DEFINITIONS
Half Value
If the area of the single largest
undivided piece of the note presented
is equal to or more than 40 % and
equal to or less than 80 % of the
area of the respective denomination,
half value of the mutilated note shall
be payable.
Rejected
If the area of the single largest
undivided piece of the note
presented is less than 40 % of
the area of the respective
denomination, no value shall
be payable and the claim shall
be rejected.
68
 CLAIMS OF Excessively soiled, brittle, burnt notes
• Notes which have become EXTREMELY BRITTLE or are
BADLY burnt, CHARRED OR INSEPARABLY STUCK
TOGETHER and, therefore, cannot withstand normal
handling can be exchanged only at Issue Office of the RBI. –
SPECIAL PROCEDURE.

69
 Notes bearing "PAY"/"PAID" "REJECT" stamps
After adjudicating mutilated notes, the Prescribed Officer is required to record his order by
subscribing his initials to the dated 'PAY'/ 'PAID'/ 'REJECT' stamp. The 'PAY' /'PAID' &
'REJECT' stamps should also carry the name of the bank and branch

Mutilated / defective notes bearing 'PAY'/'PAID' (or 'REJECT') stamp of any RBI Issue Office
or any bank branch, should be rejected under Rule 6(2) of Reserve Bank of India (Note
Refund) Amendment Rules, 2018.

Bank branches should not issue notes bearing PAY/PAID stamps to the public even
through oversight.

70
 Notes bearing slogans / political messages, etc.

Any note with slogans and message of a political nature

written across it ceases to be a legal tender and the claim on
such a note will be rejected under Rule 6(3) (iii) of Reserve
Bank of India (Note Refund) AMENDMENT Rules, 2018.

71
 Deliberately cut notes
• Notes, which are found to be deliberately cut, torn, altered or tampered with, if
presented for payment of exchange value should be rejected under Rule 6(3)
(ii) of the RBI (note refund) amendment rules, 2018.

• Although it is not possible to precisely define deliberately cut notes, a close

look at such notes will clearly reveal any deliberate fraudulent intention, as the
manner in which such notes are mutilated will follow a broad uniformity in the
shape/location of missing portions of the notes, especially when the notes are
tendered in large numbers.

72
 INCENTIVES
• Exchange of soiled notes/ adjudication of mutilated banknotes over the counter at bank
branches
• Incentive :
On soiled notes exchange –Rs.2 per packet up to Rs. 50 denomination
On mutilated notes – Rs.2 per piece in all denominations
on Distribution of Coins over the counter- Rs.25 per bag
• The incentives will be paid on the soiled notes actually received in the Issue Office of the
RBI.
• Currency chest branch will have to pass on the incentive to the linked branches for the soiled
notes tendered by them on a pro-rata basis.
• Incentive will be paid in respect of the adjudicated notes received along with the soiled note
remittances / sent separately by registered / insured post in a sealed cover to the RBI.

HO:BR:113/82 dated-06.04.2021 73
 Penalties
• Non-issue of coins over the counter to any member of public despite having stock.
• Refusal by any bank branch to exchange soiled notes / refusal by any currency chest branch to
adjudicate mutilated notes.
• Denial of facilities/services to linked branches of other banks.
• Non acceptance of lower denomination notes (i.e. denomination of 50 and below)
• Detection of mutilated /counterfeit notes in re-issuable packets prepared by the currency chest
branches.
Spot Penalty:
Rs.10000/- for any violation or deficiency above
Rs.5 Lakh in case of there are more than 5 instances.

HO:BR:113:80 dated-06.04.2021 74
 Penal Interest – Currency chest
branches
• Reporting of Currency Chest Transactions
(Min. Amt of Deposit and withdrawal from CC is Rs.1.00 lakh and
multiple of Rs.50000/-)
• Time limit for Reporting
(By 7 P.M. in portal)
• Levy of Penal Interest :
a) Delay in Reporting
b) Wrong Reporting
c) Inclusion of ineligible amounts in currency chest balances
• (Rate of penal interest : 2% over the prevailing bank rate)
 Penalties for CC
Nature of Irregularity Penalty

• Non-compliance
a) Non-functioning of CCTV with operational guidelines:
• Penalty of Rs.5000 for each
irregularity.
b) Branch cash/documents kept in strong room
• Penalty will be enhanced to
c) Non-utilization of NSMs for sorting of notes (NSMs not Rs.10,000 in case of
used for sorting of high denomination notes received over the repetition.
counter or not used for sorting notes remitted to chest/RBI)
Overt Features (can be identified by sight or touch)
Paper Quality See Through Register
Water Mark Electrolyte watermark
Intaglio Printing Number Panel
Security Thread Optically Variable Ink (OVI)

Identification Mark Latent Image

Year of Printing
Covert Features

Micro lettering Mahatma Gandhi’s Portrait

UV luminescence Optical Fibres

77
 Continuing:
Report to Police (upto 4 pieces) or file a FIR (5 pieces & above), as
the case may be

One PS is being designated as nodal PS. Each bank to appoint

one nodal officer who will report to PS on monthly consolidated
basis.

FIR is to be filed with respect to 5 pieces and above detected in a

single transaction

Obtain acknowledgement from Police authorities concerned in

respect of notes forwarded to them

Report data on FICN detected by all the branches of the bank in

the prescribed format on monthly basis to concerned Issue Office
of RBI and to Asstt. Director, National Crime Records Bureau,
Government of India, Ministry of Home Affairs, East Block-7, R.K.
Puram, New Delhi - 110 066.
78