Retail Liability Business

I. Saving Account: It is mainly opened by individuals for their various banking needs and
also to retain some amount in the account as savings and earn interest. The interest on SB
Accounts was earlier regulated (de-regulated since Oct 11). Generally, the number of
transactions/number of cheque books etc. on Saving Accounts are restricted to avoid any
misuse of the account for business transactions which ideally must essentially be carried
out through a current account. There is also a stipulation of the monthly average balance
to be maintained by the customer.

II. Current Account: A Current Account is meant purely to meet the business needs of
customers (receipts/payments for business needs). No interest is paid on balances in
Current Accounts. The money lying in these accounts is considered to be a hot money
and there are no restrictions on the number of transactions. Further, there is also a
stipulation of Monthly Average Balance to ensure profitability for banks.

III. Term Deposit: Term Deposits are also called Fixed Deposits and is a deposit repayable
after the expiry of the specified term varying from 7 days to 10 years. Since a Fixed
Deposits is repayable only after the specified period, it is not as liquid as Saving Deposit
and thus interest rate paid on Fixed Deposits is higher than on saving deposits. Interest on
FD may be paid out or reinvested as part of a cumulative fixed deposit plan. It may also
be withdrawn before the due date which is known as pre mature withdrawal which may
be subject to a penal interest charged or a lower rate of interest paid out.

Other variant of Term Deposits is Recurring Deposit Accounts, which help people to save
and invest a fixed amount every month and at the same time earn interest at the rate
applicable to fixed deposits. It is similar to making fixed deposit of certain similar
amount every month with a specific and common maturity date for all deposits.

IV. Third Party Products: ICICI Bank is involved in selling products of its group
companies like ICICI Prudential LIC Ltd. engaged in the Life Insurance business
regulated by IRDA and ICICI Lombard GIC Ltd which is into dealing with all general
Insurance products. The Bank earns a fee on every product sold and this adds to the
profitability of the bank.
This has led the bank to be a ‘One Stop Shop’ and caters to all financial needs of its apart
from Banking. The bank has also stepped into the role of an investment advisory and
portfolio management.

Life Insurance:

 Products like Life stage wealth II/ Life Stage Wealth Builder/ Elite Life/ Elite
Wealth/GSIP are sold by the bank.
 There are various criterions like age, financial capability, retirement needs, future
plans of a child’s education, life cycle that must be taken care of while suggesting
a suitable investment plan.
  There are benefits like rebates under 80C that may be claimed upto the tune of Rs.
1 Lac.
 The maturity benefits of tax free returns under section 10 (10)D is also available
to an investor.
 Life Insurance cover of upto 10 times of the annual premium paid in almost all
plans is a highlight apart from the investment opportunity.
 There are lock in periods which are different for every plan, a minimum of it
being 5 years to avail tax benefits.
 Banks earn their fee on BWRP( Blended Weighted Receipt Premium) calculated
according to weights allocated differently to every plan.
 Charges like allocation/ mortality/ FMC etc. are applicable.

General Insurance:

 Insurance other than life like health/ Motor/ Fire/Burglary/ Marine/ Shop/ Office/
Travel etc. is covered under the umbrella of the term General Insurance.
 Tax benefits under section 80D is available on a health insurance policy to the
proposer himself upto Rs 15000. Additionally, a proposer may also avail an
additional rebate of Rs 10000 on the income if he/ she covers the health of
parents.
 The USP of the health insurance offered by ICICI Lombard is its wide network of
hospitals providing cashless medical treatment.
 Pre and post hospitalization covers available.
 ADB (Accidental Death benefits)/ Critical Illness covers and disability taken care
of through the PP Annuity and other attractive plans.

KYC GUIDELINES: SAVINGS/ CURRENT ACCOUNT PROCESS

I. CUSTOMER ACQUISITION: Every bank follows a specific ‘Customer Acceptance
Policy’ that leads to the identification of those individuals with whom the account may/
may not opened. The PMLA 2002 forms the core of the legal framework and the bank
may accordingly classify the prospective customer as a high risk/ medium risk/ low risk
customer or non acceptable customers. A due diligence to be made while acquiring
customer to ensure that banking channel may not be used as a channel for illegal
activities.

II. CUSTOMER IDENTIFICATION PROCEDURES: Banks must obtain sufficient

information to verify the identity of natural persons or existence of entities. Apart from
this, the address details of the customer must also be obtained based on documentary
proof. In case of individuals, a pan card, voter id, driving license, passport, UID Card, etc
are the most commonly obtained documents.

 Verify the legal status of the legal person/entity through proper and relevant documents.
  Verify that any person purporting to act on behalf of the legal person/entity is so
authorized and verify the identity of that person.
 Understand the ownership and control structure of the customer and determine the
natural persons who ultimately control the legal entity.
 Monitoring of transactions as part of post account opening is essential.
 Risk Management

Important to note: As part of the customer identification policy the banks insists:-

 Customer is met in person by the bank employee,

 The documents are verified with original by the employee,
 The communication address of the prospective customer is verified with physical visit at
customer’s address,
 The customer profile is known to the employee and duly declared in the AOF,
 Gather knowledge about the customer’s banker, the banking needs and operations and
 Prohibit sourcing of relationship if the character/activities are found suspicious.

TYPES OF CUSTOMERS

I. Individuals: Bank allows opening of SB accounts in individual name or in joint names

with mode of operation as singly, ‘Either or Survivor’, Jointly or severally, etc. It is
generally used by individuals for withdrawals and deposits that do not involve a trade/
business transaction. Another type of SB is the salary account opened for salaried
individuals sourced through corporate tie ups. There is no minimum stipulation on the
monthly average balance for these accounts. Apart from this, an individual may also seek
to open a current account if he has any business/ professional income or transactions of
similar nature to be carried out through the bank.

II. Proprietorship Concerns: These are business entities that are owned by a single person
with generally him being the sole authorized signatory. Documents required Apart from
the AOF and photograph of the proprietor for opening of such accounts is two entity
proofs, address proof if different from the one mentioned in entity proof, ID proof and
Pan card( or Form 49A) of the proprietor, address proof of proprietor in case the firm is
new and a proprietorship letter is mandatory as part of KYC requirements.

III. Partnership Firms: These are entities that are established with two or more owners
commonly known as partners. They have unlimited liability as is also the case in
proprietorship firms. The KYC documents required are Partnership Registration
certificate if the firm is registered, AOF duly signed by all partners who wish to operate
the account along with photographs, Entity proof of the firm, Partnership deed,
Partnership letter, Pan card of the firm of Form 49A, Address proof of firm if different
from the one mentioned in entity proof, ID and address proofs of all partners.

IV. Companies (Public or Pvt. Ltd.): Companies are entities that have to be mandatorily
registered with The Registrar of Companies. Hence such entities must produce and
submit a Certificate of incorporation. If the company is a Public Ltd. co., it additionally
 has to submit a Certificate of Commencement which is also issued by The Registrar of
Companies. The AOF must be duly signed by all directors who wish to operate the
account along with photographs. Other documents required are Memorandum of
Association (MOA) and Articles of Association (AOA), a registered address proof if
different from the communication address mentioned in Certificate issued by ROC,
Board Resolution, ID proofs of authorized signatories, latest list of directors on Bank’s
format, Pan card of the company or Form 49A as guided by the bank’ policy in case of
non-availability of Pan number (in case of newly formed companies).

V. Limited Liability Partnership: Partnership firms that have the liability of some or all
partners limited to the extent of the capital invested by every partner. Also one partner is
not responsible for another partner’s misconduct or negligence. Documentation required
is Limited Liability Partnership Registration Certificate, Pan card of the firm or Form
49A in absence of Pan number, LLP letter on bank’s format, ID proof od authorized
signatories, AOF duly signed by all partners who wish to operate the account, MOP
letter, LLP agreement, Registration and communication address required additionally if
different from the one mentioned on registration certificates issued by relevant authority.

VI. Hindu Undivided Family (HUF): HUF is an extended family arrangement prevalent
among Hindus of the Indian subcontinent, consisting of many generations living under
the same roof. There is a Karta who is generally the authorized signatory with other
members as co parceners. The KYC requirement here as well is the AOF with signature
and photograph duly obtained from the Karta. Other documents required are Pan card
specifically in the name of HUF, HUF letter, ID proof of Karta, address proof of Karta or
HUF, NOC for any credit facility availed by the HUF from any other bank.

VII. TASC Accounts: A very important customer segment lies in various trusts, schools,
clubs, government corporations and bodies. Banks open accounts for Trusts,
Associations, Societies and Clubs with varied requirements for KYC in each case. Since
the government organizations are considered to be low risk profile customers for the
bank, waiver of ID proofs and photos of the authorized signatories is available in the
policy. Apart from these the trusts, clubs, etc have specific documents that need to be
submitted. Example: In case of a trust, the entity needs to submit trust deed, resolutions,
etc. to be submitted along with AOF.
IMPORTANT CONCEPTS

Physical Visit Report: While opening SB/ CA every employee must take care that the address
of the customer is visited. This ensures the genuineness of the documents submitted by customer
as address proof, his/ her profile, etc. While opening current accounts, the SM must ensure a
physical visit at the client’s address to ensure that no fraudulent accounts are opened with the
bank. A due diligence as an additional is guided by the bank’s policy to ensure the entity is
involved in genuine business transactions and no forged/ fake addresses are being produced for
implementing malafide intentions.

Nomination: It is a facility granted by banks to customers wherein a nominee declared by the

existing customer for his account is eligible to claim the amount lying in the account in case of
the death of an account holder. This ensures a smooth settlement of deceased’s claim in the event
of his/ her death. As mandated by RBI, every SB customer must be guided about the nomination
facility and its benefits granted by the bank.

Mandate Holder: An account holder may authorize another person on his/her behalf to operate
the account. This may be insisted by the account holder for convenience of transacting through
the account. Hence, the person who is authorized by the account holder is also called the’
mandate holder’.

Mode Of Operation: Every account opened must have a specific mode of operation specified on
the AOF. The MOP may also be modified by the account holders from time to time by
submitting the revised MOP as per bank’s format by the existing holders. If an account is in a
single name, the signature of the account holder alone is valid unless he has mandated another
person on his behalf to operate the account. In case of a joint account, the MOP varies according
to the instructions provided by the joint holders.

Either or Survivor: This means that the account may be operated by either of the account
holders. Transactions are carried out with the instruction of any one account holder signing on
instruments or other instructions. The survivor clause means that in case of the death of any one
or more account holders, the survivor is allowed to claim the proceeds and the account may be
continued in the name of the remaining survivors. It is important to note here that the nomination
in this case emerges only in case of death of all the account holders, else the proceeds may only
be claimed and account may be continued in the name of the surviving holders.

Jointly or severally: This specifies that the account may be operated only with joint instructions
received from all or some of the account holders. This may be subject to various combinations
linked to the amount of financial transaction involved.
RETAIL DESKS AT BRANCH

May I Help You/ Query Resolution: This is the welcome desk which is generally placed at the
branch entrance to facilitate the Lobby management. This is also the first point contact for the
Walk- In. The employee at this desk guides the customers to the relevant desk where the query
will be resolved. There are brochures, deposit slips, feedback forms, CRF and annexures
available at the desk. It is an integral part for the branch as it facilitates the controlling of
customer wait time.

Asset Servicing Desk:

FOREX DESK: PRODUCTS AND SERVICES

DEMAT SERVICE DESK: Banks act as Depository Participant for NSDL/CDSL: Banks
are authorized to accept various instructions with respect to Demat Seervices. Branch employee
responsible for Demat Services must be NCFM qualified. It offers many services that include
Dematerialization/ Rematerialization, Transfer Instructions for Delivery (TIFD) which include
market/ off market trades. A customer may request to pledge his shares against any loan/
obligation through the submission of a Pledge Request Form. The customers usually maintain 3-
in-1 account that combines the bouquet of Savings Bank account, Demat account and trading
account into one package. The Demat Account no is a 16 digit number and the first four stands
for the DP Id

PRIVILEGE BANKING COUNTERS: Privilege Banking Counters cater to a specific segment

of bank customers with MAB (Monthly Average Balance) commitment of Rs 50k and above.
The branch ensures priority services to these customers and almost all queries/ resolutions are
provided to the customer at one point within the branch. Privilege Bankers are designated branch
officials who have a list of PB customers (Managed Accounts Data) mapped to them in I-SFA.
The objective of this is to raise CASA balances and ensure quality and TAT in service delivery
along with generation of profits through cross- selling of products that generate fee and NII for
the bank. Third party products like GI, LI, MF are rigorously sold at these counters. The I View
is also an application that facilitates the communication between the customer and employee by
providing triggers like the investment needs, customer interests and habits, non- availability of
Pan no in system, etc. Some specialized services like Loan and Demat are only provided at the
specified desks. Some special discounts are offered to PB customers like discount on Gold coins,
allotment of lockers, etc.

WEALTH MANAGEMENT: This is a vertical that caters to customers with a Total

Relationship Value (TRV) of Rs 25 lac and above. Wealth Managers are mapped with a list of
Wealth management customers who are offered Investment Advisory and Portfolio management
services. The service related requests and queries for these pampered customers are taken care of
by the Wealth CSMs at branches. The bank has opened specialized branches as another initiative
to capture this segment in a better way. The Wealth managers understand the financial needs and
goals of the customers, assess the income, expenditures, assets and liabilities of the customers.
This enables the branch staff to allocate the assets of the customer in a way that maximizes the
returns. Thus, helping the customers grow their wealth and achievement of financial goals.

NRI SERVICES: Who may open NRI Accounts?

Non- residents, PIO, Govt. employees with diplomat passport, students studying abroad may
open NRI Accounts.

Who cannot open NRI Accounts?

Foreign nationals coming to India on work/ Indian going abroad for medical, short and leisure
trip, PIO Nepal, Pakistan, Bhutan and Bangladesh can’t open a/c.

NRI Accounts are required to meet the needs of family maintenance in home country, low or no
stability in resident country, investment needs and much more.

Types of NRI Accounts:

NRO: Non- Resident Ordinary accounts is the type of NRI Account that permits the deposit of
INR into the account. This account fulfils the objective of an NRI to deposit some kind of
income from Indian origin and proceeds from some investment in India. However, it does not
restrict the deposit of external currency into the account. If the amount is kept under this is
maintained in the form of FD, then it is subject to taxes according to Indian rules and regulations.
The funds in NRO account are not freely repatriable.

NRE: The Non- Resident External account restricts the deposit of Indian currency into the
account. This means that the external currency only may be deposited post conversion into the
account. FD created out of these proceeds is not subjected to Indian taxes and may only be taxed
by the relevant authority in resident country. The funds in the NRE account are freely repatriable
to the resident’s country.

Mandate Holder: It is a common practice amongst NRI account holders to appoint a person in
India, commonly a blood relative, as the mandate holder. This facility permits a mandate holder
to transact/ execute instructions in the account through the signing powers granted by the account
holder. This is mainly used by the NRIs to facilitate the transcations in his absence while he is in
the resident country. This has been granted to customer to provide convenience.

GENERAL BANKING OPERATIONS- CASH: Cash operations form the core and an utmost
important function at branches. Banking is a business of money and handling of physical cash is
a process highly critical to maintain the basic hygiene and profitability. Cash processes are
always carried out with a dual control concept. The cash in the branches are stored in safe vaults
and the keys/ access to these are provided jointly to two people, in practice with a Teller and a
Verifier. Both custodians are jointly responsible for the quality and quantity of the cash
contained therein.
CASH OPENING: The branch begins its day’s operations with the process of cash opening.
Since the cash in the branch in stored in the safe vaults during the overnight period, some amount
(generally less than Rs 5 lac as guided by the circular) is withdrawn by the cash custodians in the
morning. The process is carried out in the presence of a gunman to be available at the branch
gate. It is advised that the critical activities of cash opening and cash closing are always carried
out in the presence of the BM/ BOM. All loose cash must be withdrawn during the cash opening
and sorted into issuable and non- issuable currency while kept in the vault. No custodian singly
has access to the cash or other secured items placed in the vaults.

CASH RECEIPTS/ CASH PAYMENTS: Apart from the teller mapped to the vault there may be
other tellers performing the function of cash receipts and payments. Customers who wish to
deposit cash in an account must fill in a deposit slip. This slip must be duly filled in with a few
important details like date, account name, account holder’s name, denominations to be deposited,
amount in words and figures and the depositor’s signature. There must be no alteration or
changes in the slip. Changes/ alterations if any must be countersigned by the depositor marking
his acceptance to the alterations contained in the slip. He also fills in a counterfoil which is duly
acknowledged by the teller after checking in all details from finnacle and scrutiny of cash and
handed over to the depositor. There may be limitations with respect to the deposit that may be
accepted. For example: Branches cannot accept cash abover Rs 50k where the Pan number is not
available.

CASH PAYMENT: The payments in ICICI bank can only be made through instruments issued
by banks to its customers, merely called cheques. Hence payment through these cheques is
covered under the Negotiable Instruments Act. The teller must scrutinize the cheque before
making any payment.

 Date: The cheque cannot be post-dated. Any cheque with a date older than three months
cannot be paid. It is said to be stale and hence payment may be denied in such cases.
Others qualify.
 Account payee Cheques: A cheque cannot be account payee if it has to be paid over the
counter in cash.
 Amount in words and figures must match.
 Signature must be verified with branch records. A banker has the right to refuse payment
in case he/she is not convinced that the signatures pertain to the account holder.
 If a cheque is order and not bearer, the person to him it is issued may only collect the
payment and must furnish a copy of a vid Id proof and produce the document in original.

Double verification in I core: Every transaction must have a dual check in I Core. There is
always an enterer and a verifier of these transactions. For transactions that are auto verified, a
report may be generated at the day end and the same must be checked with vouchers by the
verifier to ensure that there is no discrepancy. Collection of government taxes, institutional fee
collection, etc. is also done at cash points.

CASH CLOSING: The cash can be closed at the day end after the cash is tallied with the
amount available in the system. Cash closing is also made in dual custody and the correctness of
the physical cash must be certified by both the custodians jointly marked in the Cash Balancing
Register. Cash Balancing Register must be available in the vault at all times and any movement
in cash must be correctly recorded and then entered in I Core.

BAIT MONEY: Is a set of two packets that run in serial numbers and are recorded in the CBR
as Bait money. No payment must be made out from these packets. As the name suggests, the
objective is to trace the money in case of a robbery.

ROLE OF CURRENCY CHESTS: An Integrated Currency Management Chest (ICMC) is

owned by RBI and managed by ICICI on behalf of RBI. The Currency chest controls the flow of
currency through the branch with a strong coordination with RBI. ICMC has facilitated the
controlling of cost of cash for many of our branches as they are responsible for the daily
remittances of cash into and out from the branches. These are processing centres that process the
cash accepted by them from branches and report the day end cash available in the chest. The
balances with ICMC is the cash available with RBI since the same is reported at the RBI
window. The CIT agencies perform the function for movement of cash. Branches put requisition
for cash and remit cash through CIT agencies and the list of the custodians is provided to
branches by ICMC.

CRL: Cash Retention Limit is the prescribed limit issued by Corporate office to hold cash upto a
specified amount only. This amount is covered under insurance and holding of cash beyond this
limit is not permitted.

HANDLING OF COUNTERFEIT/SOILED/MUTILATED CURRENCY: The banks play a

crucial role in the withdrawal of counterfeit, soiled and mutilated notes from the economic
system as part of RBI’s Clean notes Policy. Any counterfeit note produced at the bank’s counter
has to mandatorily be impounded and submitted to RBI. As per process, an acknowledgement
with complete note details must be provided to the depositor for notes impounded. An FIR may
be filed as per process and sent to ICMC. ICMC in turn submits the notes to RBI.
Exchange of mutilated/soiled notes: Notes that are mutilated may have full value, half or no
value. The banks cannot refuse to exchange soiled/ mutilated notes to any customer. The token
must be issued to the customer who seeks to exchange a currency and the appropriate value is
provided to the customer. These notes are further submitted to RBI.

REGISTERS: In order to ensure a smooth functioning and proper recording of all financial
transactions that involve cash, branch needs to maintain a number of registers like the CBR,
Sorting register (in case sorting is done by branch), DN2 register( for soiled and mutilated notes),
Fake note register, etc.

KEY REGISTER AND PROHIBITION ON KEY SHARING: Key register records the
movement of keys from one employee to another. Every movement has to mandatorily be
recorded in the Key Register to track accountability and control. Employees are not permitted to
share the keys with any other employee. Apart from this, it is also advisable never to move the
two keys of the same vault/ lock to the same person even at two different points of time. For
example: Mr A who was holder of the first set of keys of Vault A, must not be moved the other
set unless approved under exceptional circumstances by a competent authority.
REPORTING AND MONITORING: Cash operations play a vital role in supporting the very
basic needs of its customers. But, at the same time, it is also critical as there are various
regulatory requirements to be taken care of while handling cash. There may be chances of money
laundering, churning of black money into white through repetitive cash transactions. Hence, as a
banker, we must ensure a due diligence in transactions that involve cash.

CAT3: Banks are required to seek a specific source of funds in case of cash deposited for
amount of Rs 10 lac and above. Similarly, a reason for requirement of funds if a payment is
made for Rs 10 lac and above in cash. The same is reported to RBI as a regulatory requirement.

Filing of Form 60/61 returns: Every customer depositing an amount of Rs 50k and above in
cash in an account without furnishing a Pan proof is required to submit a Form 60/61 and the
same is filed in a half-yearly reporting format to the Income Tax authorities.

Monitoring: As part of the monitoring process, specialized teams like the transaction monitoring
team and compliance department triggers monitoring through service requests of Enhanced Due
Diligence (EDD).

GENERAL BANKING OPERATIONS- RTGS/NEFT: Real time gross settlement system

(RTGS) is a funds transfer system where transfer of money takes place from one bank to another
on a "real time" and on "gross" basis. Settlement in "real time" means payment transaction is not
subjected to any waiting period. The transactions are settled as soon as they are processed.
"Gross settlement" means the transaction is settled on one to one basis without bunching or
netting with any other transaction. Once processed, payments are final and irrevocable.

 Remitter initiates fund transfer through branch. Similar process maker, checker concept
HRTGS command in finnacle.
 Processed by RBI on real time basis. Gross debit and credit to Bank Accounts.
 Intimation to receiving bank on real-time basis, which in turn processes the credit in
beneficiary a/c.
 Recognition of receiving bank/branch through IFS Code. (Indian Financial System
Code). Unique Alpha Numeric code.
 Minimum amount of INR 2 lac.
 Fastest possible way of fund transfer in India.

NEFT is another electronic interbank settlement system that allows funds transfer through RBI
for amounts of less than Rs 2 lacs. The national electronic fund transfer (NEFT) system is a
nation-wide system that facilitates individuals, firms and corporates to electronically transfer
funds from any bank branch to any individual, firm or corporate having an account with any
other bank branch in the country. For being part of the NEFT funds transfer network, a bank
branch has to be NEFT-enabled. This transfer, unlike that of RTGS is routed through RBI by
netting of transactions in batches that have a cut off time. IFSC or Indian financial system code is
required to perform a transaction using NEFT or RTGS. IFSC code identifies a specific branch
of a bank. IFSC code can be found out on RBI website. These codes can also be known from the
individual bank branch.
  Remitter initiates fund transfer through branch through maker checker concept and
HNEFT command in finnacle.
 Data sent to RBI NEFT Center to be included in next settlement
 RBI NEFT Center sorts the transactions bank wise/branch wise and processes the net
debit credit to various bank accounts and bank wise remittance messages are transmitted
to Banks.
 Receiving bank processes the remittance message received from RBI and credits the
beneficiary account.
 Recognition of receiving bank/branch through IFS Code. (Indian Financial System
Code). Unique Alpha Numeric code. 11 digits – First 4 representing the Bank, next
character as reserved character, and remaining 6 characters to identify the branch

DROP BOX CLEARING

The cheque drop box clearing process is outsourced to an external agency and the vendors
collect the cheques daily in slots and in the presence of the branch official. The keys of the drop
box are only available with some designated branch staff. Sorting of cheques is also done at the
vendor end and then sent to RPC with complete details in excel sheet. For example: All credit
card payment cheques are sorted and sent in a different packet for processing. This reduces the
workload at RPC end.

CORPORATE INTERNET BANKING: CIB facility as the name suggests is a specialized

internet banking facility for corporates. This is a tool that empowers corporates with powers to
initiate faster, more secure and sometimes customized features that makes banking more
convenient. There is a unique corporate user Id and depending on the kind of access required-
view or transaction access, the password is issued. Customers may request for CIB by filling a
simple ‘Channel Registration Form’ and providing adequate documents along with the
application form. It has some salient features s listed below:

 More secure 128 bit encryption.

 3 levels of verification, host to host connectivity with customized MIS
 View access/ Tax payment only/ Transfers like RTGS, NEFT.
 Salary upload/ Bulk Upload.
 Maker Checker facility.
 Digital signature for authorization.
 1 Week to set up the CIB.
 Cheque/DD printing : Cheque through stationery given to the customer or by sending
request to RPC

TOP TEN QUERIES

 Issuance of Cheque Book, Debit Cards, ATM Cards, and PIN etc.: Customers may visit
branches to request for the issue of various deliverables like a cheque book, ATM cum
debit cards, PIN or any other stationery as required by the customer for transacting
through his/her account. CSO is required to raise relevant Service requests (SRs) through
 the Finnacle Customer Request Management (FCRM). Due care must be taken to address
and raise the relevant SR the same day, else this is identified as a lapse in the audit
process.
 Issuance of Bank Statement: Accountholders are entitled to receive quarterly statements
of their transactions free of cost. Yet, customers may require the bank statements for
various other purposes like submission for IT returns, applying for VISA and even
balance certificates. Requests executed through branches are generally chargeable unless
waived off in a few cases with the approval from the relevant authority.
 Transfer of Account: ICICI Bank offers the account portability facility to its customers.
The same may be required as a person who may have opened the account at one location
has moved out from the initial location. In such cases, the bank may transfer the account
to another branch within the country to provide the base location benefits upon the
request of the customer. The salient feature or advantage of this is that the account
number does not change.
 Internet Banking: ICICI Bank is a front runner of almost all technological advancements
in the field of banking. One such very basic facility started by the bank is the internet
banking facility. Customers may visit branches for requesting the issuance of a unique
User Id, User password and a transaction password. The same is also chargeable unless
waived off in a few cases. Recently, ICICI Bank has also introduced the E-locker facility
for storage of the most important documents of its customers.
 Addition of Name/Deletion of Name: Account holder/holders may jointly request the
addition or deletion of a name in the existing account. It is important that the request for
addition/deletion is requested by all the existing accountholders without fail. After
fulfilling all important pre requisites, the bank initiates the process by sending the request
for modification to RPC. The requests are subject to specific TATs, hence every request
must be duly executed through an SR in FCRM that ensures that the processing is also
done within TAT and without any inconvenience to the customers.
 Account Closure: The customers may also visit for closure of an account. The request
may be accepted by any branch within India. The branch official must try to understand
the reason for the customer to withdraw a relationship from the bank. In case, if closure is
enduced by a dissatisfaction, branches must try to restore the relationship by resolving
any grievance that the customer is facing and ensuring any remedy that may be taken to
provide quality service for future as well. A base branch is authorized to
 Special Situations /KYC Updation/ Dormancy/Activation: There may be some special
situations where the banks seek some formalities to be completed from the customer end
as a precautionary measure to prevent any fraud or misuse through bank accounts. Bank
may seek updated documents like Id proof and address proofs that are updated in bank
records. Apart from this, it may also happen that customers may not use their bank
accounts for a long time. In such cases, they are required to visit branches and furnish
required identification proofs for activation as they are classified as dormant.
 Customer Service/Complaint redressal etc.: Branches cater to the other varied needs of
customers, resolve queries and also address specific grievances or complaints.
 Transfer request: Intra-bank funds transfers, RTGS and NEFT are the transfer requests
received at branches. Account holder needs to submit a cheque with signed instructions
and beneficiary details.
  Retail Outward Remittances: Any remittance apart from the trade remittance that is
initiated by a resident in India for transfer to beneficiary in a foreign country in a foreign
bank account. These are subject to FEMA and RBI guidelines.
 Account Opening: Branches are responsible for sourcing of retail accounts like various
variants of SB, Current and NRI accounts. The branch staff must ensure adherence to
KYC guidelines. All business sourcing must be done with a complete understanding of
customer needs and suggesting a product variant most suitable to the needs.

Regional Processing Centre (RPC): Regional Processing Centre is the central hub for all the
banking related processing. All the account opening forms, documents, cheques etc. are sent to
RPC and they get processed there and required actions are taken to perform the intended task.
There are mainly four teams at RPC.

Account Opening Team: This team handles all the processing related to account opening.
Account opening forms from the branches come to this team and further processing takes place
here. AOT tracks the form through bar code. Rejection ratio of the account opening is to be
maintained below 2%. Following are the processes:

 RMR: Regional Mailing Room: It accepts all the AOF savings/current account (called
as inwarding) and route it to DVU (savings/current account).
 Document Verification Unit (DVU): This team verifies the documents along with
Account Opening Form (AOF). They check the consistency of the data in documents
with the information in AOF and scrutinize the AOF completely
 Risk Containment Unit (RCU): This team checks the authenticity of the documents and
confirms that the provided documents are genuine. This team prevents the risk of
fraudulent account opening. They check the documents using sampling method. There
are two methods for sampling (a) Random (b) Trigger based. With the help of sampling
process they give the results either as Decline, or as Positive, or as Referred. This team is
now known as Financial Crime Prevention Group (FCPG).
 Scanning Queue: This team scanned all the documents and sends it to CPC (Central
Processing Centre), Mumbai for opening of the account.
Clearing Team: This team handles following types of Clearing Process.
Cheque clearing would include Collection of Cheques on behalf of customers (cheques deposited
by customers for collecting the proceeds – Outward Clearing) and payment of cheques drawn by
the customers (cheques issued by customer to third parties – Inward Clearing).

Cheque – Meaning: A ‘Bill of Exchange’ drawn on a specified banker and expressed to be

payable only on demand (Section 6 of NI Act)

Features of Cheque

 Instrument in writing
 Containing an unconditional Order
 Signed by the Maker (drawer)
 Directing a specified Banker (drawee)
 To pay a certain sum of money
 To pay a certain person or to the order of that person or to the bearer
 On Demand

Inward Clearing: Cheques drawn by the customer of the Bank and presented in clearing by
Bank of the Payee. According to Section 31 of NI Act, the banker has the responsibility to pay
the customer’s cheque on demand, within the available balance, if the cheque is otherwise in
order. Once the cheques are collected from clearing center in the morning, the clearing officers
do the processing for cheques received in clearing.

Key process involves: To verify whether the cheques are in order, the cheques need to be
scrutinized in detail to include check for mutilation, special crossing, date (undated/post
dated/stale cheque), payee, amount in words and figures should tally, alteration (including
material alteration), available Balance, stop payment instruction, signature of the customer etc.
If in order customer account debited and cheque cleared. If the cheque is not in order the same to
be returned along with a Return memo clearly specifying the reason of Return and duly signed
by Authorised Signatory. Time schedule prescribed by clearing house must be adhered for return
house. Concept of counter return in case a cheque is passed erroneously and was to be returned.
Settlement between banks by RBI by debit/credit to drawee bank/collecting bank respectively.
CTS (Cheque Truncation System) have reduced the inward volume significantly.

Process:

 Receipt from clg house: From clearing house/RBI, ICICI bank vendor will collect the
cheques,
 Sorting: ICICI bank Vendor will do sorting sol-id wise + prepare soft copy of the file in
MIS.
 Handover the cheques + MIS soft copy to ICICI Bank RPC
 UV checking of the cheques are done by ICICI bank official and verification of the
physical cheque with data in MIS.
 Upload the data file in finacle and then generate report
 Refer to the branch for funding
 Technical verification (signature verification)
  Return marking for technical verification
 Zone closure

Outward Clearing: Cheques and other instruments (viz. Payorders/Demand Drafts/Warrants/

etc.) deposited by the customers during the day are verified, processed, relevant accounting
entries are made and sent to RBI for further processing and ultimate collection of proceeds from
the Drawee Bank on behalf of customer. Collecting Bank has to ensure that the Name of the
Payee tallies with that of the account holder, endorsements (if any) are in order, the cheque is not
stale or post dated, the cheque is not mutilated, there are no alterations or the alterations are
authenticated, the amount in words and figures tally and there is no special crossing etc. Time
schedule prescribed by clearing house must be adhered. Generally time for Local clearing
process is T 0 to T 2 where T 0 is the date of transaction and T 2 is the day when the funds are
available to the customer.

Cheques have MICR (Magnetic Ink Character Recognition) Band to identify the identity of the
cheque. This is of 9 digits. First 3 digits denote the City Code, next 3 digits denote the Bank
Code and last 3 digits signify the Branch Code. There is also space on cheque for encoding
machine to encode the amount in paisa. This is used for MICR clearing only.

Process:
 Cheque collection: ICICI bank vendor will collect the cheques of the customer.
 Segregation: Vendor will prepare MIS in soft copy
 Submission: Vendor will submit original cheques + deposit slips + MIS soft copy to
ICICI Bank RPC.
 The ICICI bank official at RPC will compare the MIS data with physical cheque and
deposit slip.
 ICICI bank official will do the entry in PROFUND software. Here, maker will first make
the entry and then checker will verify the entry.
 After verification, profund report is generated.
 Then the profund report is uploaded in finacle - Only single entry is made in finacle
 Now, the ICICI bank customer account will be credited and ICICI bank account will be
debited.

Cheque Truncation System (CTS) is now used for clearing process. In this process, the cheque
is converted from physical from to electronic form and then sent to Clearing House for further
processing. It is a project undertaken by RBI for faster clearing of cheques. CTS is an online
image based cheque clearing system where cheque images MICR data are captured at the
collecting bank and transmitted electronically. It eliminates the need to move the physical
instruments across branches. This result in effective reduction in the time required for payment
of cheques, the associated cost of transit and delay in processing etc.

Transaction Team: This Team is responsible for Salary Processing, Expenses of branches,
Transfer Cheques (ICICI to ICICI) and ATM. This team manages the TDS on all the transaction
and keeps record of all the required tax related processes.
RRC, RMR and Admin: Regional Response Centre (RRC) helps branches in query resolution.
Queries are handled by e-mail, Phone or FCRM. Regional Mailing Room (RMR)
collects/receives couriers/posts and sends to the required team. Admin team administers and
controls the processes.

Cash Management Services: ICICI Bank's Cash Management Services offer a full range of
receivable and payable services to meet the complex cash management needs. Payments received
from the dealers/ distributors and made to the suppliers are efficiently processed to optimise the
cash flow position and to ensure effective management of the operations of the business.

ICICI Bank provides a range of products and services, ensuring that all the business
requirements of the corporations are met under one roof. Further, ICICI Bank constantly
innovates and improves its product offerings in order to improve client servicing. 

Products and Services: Collection Solutions: ICICI Bank offers a wide range of collection
products to meet the specific requirements of the clients like local cheque collections, upcountry
cheque collections, cash collections and electronic collections. With a wide network, customised
MIS and multiple channels for delivery of MIS, ICICI Bank renders quick and effective
management of receivables. The products offering are as follows:

 Local cheque collection through:

• ICICI Bank branches

• Correspondent bank branches

 Upcountry cheque collection through:

• ICICI Bank branches

• Correspondent bank branches
• Other banks

 RTGS integrated collections

 Electronic collections (through auto-debit)
 Cash collections through our Doorstep banking services

Collection: Following products and services come under Collection services.

Cheque collections: ICICI Bank offers a wide network of locations for collection of
cheques. The various services offered under cheque collections are as follows:

Local Cheque Collections (LCC): Local Cheque Collections involve collection of local
instruments from various locations on behalf of customers. Cheques payable in local clearing
are processed and credit is given based on local clearing at the drawee location. The two
variants offered here are:
  For cheques drawn and presented at ICICI Bank locations
 For cheques drawn and presented at a location where ICICI Bank has a correspondent
bank tie up.

Upcountry Cheque Collections (UCC): Upcountry cheques are collected through our
branches and through a huge network of correspondent banks. You can manage your cash
flow by using our services to expedite your collections. We also provide you with collection
reports to help you monitor the status of cheque clearing and to facilitate easy reconciliation
of account receivables. Three variants offered under this service are:

 Cheques presented at and drawn at ICICI Bank locations

 Cheques presented at and drawn at locations where ICICI Bank has a correspondent bank
tie up
 Cheques presented at and drawn at a location where ICICI Bank has no presence and no
correspondent bank tie up.

Drop box services: Drop box services have been developed and implemented to extend
convenience to customers. It is a service where you can instruct your dealers or other channel
partners to drop cheques at any ICICI Bank ATM drop box for making payments. The
cheques dropped would be cleared at a pre-defined frequency. Detailed and customised MIS
can be provided for the facility. By extending a wide network of ATM drop boxes for cheque
collection, ICICI Bank offers unmatched coverage.

Cash Collections: ICICI Bank has gained vast experience in handling doorstep banking
services. The various services offered under doorstep banking include:

 Cash pick-up
 Cash delivery

Of these services, cash collection service has gained immense popularity across various
industry segments. ICICI Bank has implemented various customised cash pick-up solutions
to meet specific requirements of our customers. These solutions provide various benefits
such as:

 Minimisation of operational risk

 Reduction in cost
 Security
 Increased efficiency

ICICI Bank has pioneered Doorstep banking in India, with the largest network offering cash
pick-up /delivery services. 

Electronic Collections: The electronic collection services offered by ICICI Bank include auto
debit and RTGS Integrated Collections.
 Auto debit: 'Auto debit' is designed to leverage our extensive network coverage and a large
customer base. This facility eliminates the need for physical submission of cheques by
handling collections through one-time submission of the debit mandate forms to be executed
at regular and pre-defined cycles.

RTGS Integrated Collections: The RTGS Integrated Collections product offered by ICICI
Bank facilitates identification of the details of collections received through RTGS. Through
this product, the bank will facilitate the corporate with details of the payer and other details
related to the credits received through RTGS.

Features:

 Wide network coverage of over 670 own locations and over 4200 correspondent bank
locations
 Capability to process cheques drawn at any location
 Assured payment on fixed day basis, irrespective of the fate of the instrument sent in for
clearing
 Instrument outstanding report and credits in the pipeline report available to strengthen
internal control
 Multiple channels available for receipt of data including e-mails, faxes, courier and the
Internet
 Prompt realisation of cheques through an extensive network, supported by correspondent
banking relationships
 Availability of information on the amounts deposited at multiple locations with
information available at the instrument level
 Provision of uploading the system generated deposit slip details, in a single file
 Customised MIS and availability of scan images of instruments at select locations

Payments: The payment solutions offered by ICICI Bank include bulk disbursement solutions
for making payments to channel partners through multiple modes, Payable at Par solutions for
payment of dividend, interest or for redemption and Internet-based cheque writing facility for
printing of cheques at customer’s own premises.

Paper Based: Paper-based payment modes offered under the CMS payment solutions
include cheque printing, Demand draft printing and Internet-based cheque writing.

Cheque Printing: Cheque printing is offered to corporates for making payments. Along with
printing the instrument, the customer has an option to print the cover note advice and imprint
the facsimile signature of the signatories of the company. The advice shows beneficiary
details and some additional fields of information as required by you.

Further, ICICI Bank also offers remote cheque printing solutions wherein cheques are printed
at various locations across India and dispatched to your local office or to the beneficiary.
Through this facility the turnaround time for delivery as well as the costs involved are
reduced.
Demand Draft/ Pay Order Printing: Demand draft printing renders corporations to make
bulk disbursements through demand drafts. This facility includes printing and dispatch of
demand drafts / pay orders. In order to meet the requirements of corporations that want ICICI
Bank to issue demand drafts at locations where ICICI Bank does not have a branch, ICICI
Bank has tied up with various banks, also known as correspondent banks, thus rendering
corporations to make payments not only at ICICI Bank locations but also at our
correspondent bank locations.

Internet-Based Cheque Writing: Internet-based cheque writing solution of ICICI Bank

provides printing facility at your premises or at your branches, based on information
uploaded through Corporate Internet Banking.

Internet-based cheque printing offers the following advantages:

Cheques can be printed decentrally at your premises. This would reduce the turn around time
involved in the delivery of cheques

 Timely disbursement of funds with practically no paper work at the back office
 Both three per page and cover note stationery can be used for printing (advices and
annexures cannot be printed)
 Minimum processing cost on account of Straight Through Processing of cheques without
any intervention of ICICI Bank
 Convenience of e-authorisation for all uploaded transactions
 Larger geographical reach for making payments

Electronic Payments: Electronic modes of payment solutions offered by ICICI Bank

include Funds Transfer, Real Time Gross Settlement (RTGS) and National Electronic Funds
Transfer (NEFT). Further, ICICI Bank also offers the facility to send e-mail advices to the
beneficiaries for all electronic fund transfers.

Funds Transfer: This facility can be used for payment by customers to beneficiaries who
are ICICI Bank account holders. This method of funds transfer is the fastest and the most
secure form of remittance.

Real Time Gross Settlement (RTGS): RTGS offers functionality of online, real time, funds
transfer facility across banks. This facility can be used for transfers involving an amount
greater than or equal to Rs. 2,00,000.

RTGS advantages

 Seamless movement of funds

 Real time transfers and faster credit
 Elimination of delays due to outstation funds transfer
 E-mail alerts to beneficiaries
 National Electronic Funds Transfer (NEFT): NEFT facilitates transfer of funds
electronically from one account to another, between NEFT participant bank branches in
India. This product offers functionality of online funds transfer facility across banks. It is
primarily for low value transactions and offers an efficient, secure, economic, reliable and
expeditious solution for funds transfer.

Dividend Payments: This facility renders payments to shareholders/investors for dividend,

interest, redemption proceeds, IPO refunds and any other payouts. ICICI Bank is one of the
leading players in this business segment, serving many of the elite corporations in India.

You can choose among a wide array of payment modes that include the physical as well as
the electronic modes. The physical modes of payment comprise of warrants and demand
drafts, including foreign demand drafts. The electronic modes of payment comprise of Funds
transfers to ICICI Bank account holders, Real Time Gross Settlement (RTGS), Electronic
Clearing Service (ECS), National Electronic Funds Transfer (NEFT) and Foreign
Telegraphic Transfer (FTT).

ECS (Electronic Clearing System): Over the years, the number of cheques passing through the
clearing system has been increasing exponentially due to growth of households and increase in
banking habit coupled with growth in economy. While mechanization of clearing operations by
introduction of MICR cheques and high speed imaging and sorting machines have helped to
manage the increasing volumes, regulator realised that the answer to the problem lay in
encouraging electronic settlement of payment transactions and reducing the usage of cheques.
One of the initiatives in this direction is ECS. The ECS facility is available only in the centers
where clearing is managed by RBI. ECS is mode of electronic fund transfer for transactions that
are repetitive and periodic in nature. (generally)Used for making bulk payment e.g. Dividend,
Interest, Salary, Pension, Commission etc. or for bulk collection of amounts e.g. Telephone,
Electricity, Loan Payment, Periodic Mutual Fund payments etc. ECS facilitates transfer of
monies from one bank account to multiple accounts or vice versa. Two variants – ECS Credit
and ECS Debit

 Affording credit to large number of beneficiaries having accounts with bank branches at
various locations within the jurisdiction of ECS centers by raising a single debit to an
account of a Bank e.g. Dividend, Salary, Interest etc.
 Raising debit to a large number of accounts maintained with bank branches at different
locations for single credit to an account of a Bank.

Credit ECS: payment of dividend to multiple shareholders. To avoid clogging of

clearing system and to reduce the cost of paying dividends.

Process is as follows:

 The company making the payment will collect the bank account details of all the Payees
including the MICR code of the bank branch of the Payee.
 The company will prepare a list of all the payees with their bank account details and the
amount payable to each of them.
 The company will handover to their bank (sponsor bank) a cheque/debit authority for
total amount of dividend and the list of the payees. The list will be prepared centrewise.
 Sponsor Bank will debit the amount to the account of the company and upload the list of
the payees on RBI’s webserver for onward transmission to payee bank.
 The service branch/processing center of each bank will download the list pertaining to
them.
 The service branch/processing center of each bank will either process the same centrally
or transmit them to respective branches for onward credit to respective accounts.
 Settlement will be done by Clearing house by debiting the Sponsor Bank account and
crediting the respective banks where Payee accounts are there.

Helps the company to avoid printing and dispatching massive amounts of cheques and
also the administrative hassles associated with it. Helps the customers by getting the
credit of dividends speedily without having to take trouble of depositing the cheques with
their banks. The banking system and clearing house are saved the trouble of handling
large number of small value cheques.

Debit ECS – e.g. Utility service companies (electricity, telecom etc.) receive a large
number of cheques of small value, every month, in payment of bills. Collecting the
cheques from various locations and processing them is a costly procedure both for the
company and their banks and put enormous load on the clearing system. The process
would be as follows:

 The company wishing to avail the service has to first of all get a Debit ECS mandate
which is a letter of authority from the customer to claim the amount due from customer
from his bank. In the mandate, the details of bank account details will be mentioned
including MICR code. To verify the bank account details and confirm that it is indeed the
customer account, a cancelled blank cheque leaf also will be obtained with the mandate.
 As and when company generates the bills, it will prepare a list of customers who have
given them Debit ECS mandate, containing details of their bank accounts and the amount
to be recovered. The list will be prepared bank wise for each center.
 The list, both soft and hard copy, will be given to their bank, the Sponsor Bank.
 Sponsor bank will upload the list on the webserver of RBI. The payee bank, called the
destination bank, will download the list pertaining to them from the RBI webserver..
 The processing center of the destination bank will either upload it in their system for
respective account debits or split it branch wise and send it to the respective branches.
 The branches will debit the customer accounts and intimate to the processing center those
items which could not be debited due to any reasons, which will be returned to clearing
house who in turn will present it to present bank.
 After settlement, presenting Bank will credit the total amount collected to the account of
company.

Some of the features offered by the product are as follows:

  Online Validation
 Extensive network
 MIS and reconciliation
 Systems and checks to detect fraudulent encashment and duplicate payments
 Dedicated customer service desk
Tax Payments: In today's intensely busy business world, every minute is precious. In this
scenario, tax paperwork can be a tedious process. ICICI Bank with its technology-driven
banking gives you a better option - Online Tax. The key features of the Online Tax payment
process are:

 Cuts down on your paper work and simplifies the process

 You get an MIS link that shows you a record of all past payments made, along with
the payment status, as well as challan details
 You receive an immediate online acknowledgment of your challan
 You can easily view, download and print the acknowledged copy of the challan using
the MIS option.
Taxes you can be paid through Online Tax:

 Corporation Tax
 Service Tax
 Tax Deducted at Source
 Income Tax
 Wealth Tax
 Central Excise
Key Features: Payment solutions of ICICI Bank offered through Integrated Payment System
(IPS) not only offers multiple modes of payment but also facilitates functional, operational and
financial benefits like:

 Single file upload to effect multiple modes of payments

• Physical modes include cheques, demand drafts

• Electronic modes include direct credit to ICICI accounts, RTGS and NEFT

 Web-based access for uploading and authorising printing requests

 Host-To-Host connectivity for Straight Through Processing of transactions
 Data encryption for enhanced security
 Partial batch authorisation and processing
 Dynamic signature printing
 Printing of instruments and direct dispatch to beneficiaries
 Tracking of dispatches
 Advices over e-mail to beneficiaries
 Customised annexure printing for cheques
 Customised MIS
FDI (Foreign Direct Investment): Foreign Direct Investment (FDI) is a direct investment into
production or business in a country by a company in another country, either by buying a
company in the target country or by expanding operations of an existing business in that country.

Entry routes for investment in India: Under FDI scheme, investments can be made in shares,
mandatorily and fully convertible debentures and mandatorily fully convertible preference shares
of an Indian company by non-residents through two routes:

1. Automatic Route: Under the automatic route, the foreign investor in the Indian company
does not require any approval from the Reserve Bank or Government if India for the
investment.

2. Approval Route: Foreign investors should obtain prior approval from the Government
of India (Foreign Investment Promotion Board – FIPB) for the
investment.

Outward Remittances: The outward remittances refer to the process of sending money in
foreign locations from the home country for the business/intuitive purposes.

Advance Remittance for the import of services: Where the amount of advance exceeds USD
500,000 or its equivalent, a guarantee from a bank of international repute situated outside India,
or a guarantee from an AD Category – I bank in India, if such a guarantee is issued against the
counter-guarantee of a bank of international repute situated outside India, should be obtained
from the overseas beneficiary.
In the case of a Public Sector Company or a Department/ Undertaking of the Government of
India/ State Governments, approval from the Ministry of Finance, Government of India for
advance remittance for import of services without bank guarantee for an amount exceeding USD
100,000 (USD One hundred thousand) or its equivalent would be required.

Payment for the intangible goods/services – A2 Payments:

 For payment of intangible goods like patents, copyrights, royalty, IT/ITes, tours and
travels etc.
 Documents required: Customer request letter, FEMA declaration, A2 form.
 Additional documents like 15 CB (issued by CA of the company), 15 CA (to be filled
online on the income tax department website and to submit the print out in the branch).

Advance Payments:

In this case the exporter requires the importer to make full/partial payment in advance for the
goods to be exported.
Features of this type of transactions are;
  The importer has to rely on the integrity of the exporter and his capacity to execute the
contract in time.
 The transaction is financed by the importer which entails higher cost, and also risk is
entirely shouldered by him.
 Exchange control regulations of certain countries may prohibit advance payment by the
importer.
 Indian exchange control permit payment in advance for import of merchandise /
consumers goods and also capital goods.
 Cash-in-advance, especially a wire transfer, is the most secure and favorable method of
international trading for exporters and, consequently, the least secure and least attractive
option for importers.

Bank's instructions on Advance Remittance for Import based on RBI guidelines

Authorized dealers may allow advance remittance for import of goods without any ceiling
subject to the following conditions: 

1. The importer should hold the IEC copy of a valid import license if the goods to be imported
are those included in the negative list of imports in the Export and Import policy in force. 

2. Remittance is made direct to the suppliers. 

3. If the amount of advance remittance exceeds USD 200,000 or its equivalent, an unconditional,
irrevocable standby Letter of Credit or a guarantee from an international bank of repute situated
outside India or a guarantee of an authorized dealer in India, if such a guarantee is issued against
the counter-guarantee of an international bank of repute situated outside India, is obtained. In
cases where the importer (other than a Public Sector Company or a Department/Undertaking of
the Government of India/State Government/s) is unable to obtain bank guarantee from overseas
suppliers and the AD Category – I bank is satisfied about the track record and bonafides of the
importer, the requirement of the bank guarantee / standby Letter of Credit may not be insisted
upon for advance remittances up to USD 5,000,000 (US Dollar five million).

4. Physical import of goods into India is made within six months (three years in case of capital
goods) from the date of remittance and the importer gives an undertaking to furnish documentary
evidence of import within fifteen days from the close of the relevant period. 

5. In the event of non-import of goods, authorized dealer should ensure that the amount of
advance remittance is repatriated to India or is utilized for any other purposes for which release
of exchange is permissible under the Act, Rules or Regulations made there under.
 Direct Remittances:

Exporter first dispatches the physical good and then necessary documents (ex. Bill of lading etc)
to the importer.
Importer then approaches the bank along with documents for sending the full remittance to the
exporter.
Features:

 This is reverse of advance payment

 The goods are taken possession of by the buyer without payment and the payment is
made at a pre determined future date.
 This is possible only in buyer market.

Documentary collection

Under this method the Exporter entrusts the handling of commercial & financial documents to
remitting bank (usually exporter’s local bank) and gives banks instructions related to the release
of those documents to the Importer.

Banks involved do not provide any guarantee of payment.

It can be carried out in two ways:

Documents against payment (DP)

Documents against acceptance (DA)

Documentary requirements

I. Customer request letter.

II. Invoice
III. Sales contract
IV. Recommended Board Resolution for Companies / Partnership Deed for Partnership Firms
V. IE code number certificate
VI. FEMA declaration
VII. KYC report
VIII. Exchange control copy if applicable
IX. Packing list
X. Airway bill/ Bill of Lading
XI. Quality control certificate if demanded
XII. Non Negative List declaration.

Letter of Credit
Letter of Credit (LC): In international trade buyers and sellers are separated by long distances or
may not know each other or may be governed differently. Thus, when commercial parties in a
transaction are placed in such complicated and complex situations, then they adopt a mechanism
for settlement which is mutually convenient, reliable and safe.

Thus the most ideal method of payment is LETTER OF CREDIT method.

‘An import L/C is an unconditional undertaking, given by a bank at the request of a customer
(applicant) to pay a seller ( beneficiary) against stipulated documents provided terms &
conditions are complied with.

In simple word, it is an arrangement where in a bank guarantees, on behalf of its customers, to

make payment to the beneficiary upon presentation of documents specified in the credit.

Parties involved in Letter of Credit

I. Applicant: The buyer is responsible for providing precise and clear instructions for the
issuance of credit and amendments thereto. Since he applies to the bank to issue L/C he is
called the Applicant

II. Issuing Bank: The bank which issues the L/C. before issuing the L/C, it must satisfy
itself about the standing of the applicant. Once the documents are presented bank must
examine them to ascertain whether the documents presented are complaint and meet the
requirements of credit.

III. Advising Bank: The issuing bank will route the L/C through their correspondent bank
(advising bank) in the exporter’s country. The advising banks responsibility is to check
the authenticity of L/C before advising it to beneficiary.

IV. Beneficiary: The exporter is referred to as beneficiary in L/C parlance. On the receipt of
properly worded properly advised L/C the beneficiary has to ship the goods, prepare the
documents as per the terms of L/C and submit them to his bank for negotiation.

V. Nominated Bank: This bank is holder in due course. This bank is authorizing by issuing
bank to pay, incur deferred liability, accept bills of exchange, and pay on maturity and to
negotiate LC. Nominated bank is also responsible for examination of documents.
Beneficiary may also nominate the bank to receive payment and issuing bank is obligated
to pay. Article 12 of UCP 600 deals with nominated bank functions. Confirming bank can
also be nominated bank.

VI. Confirming Bank: In case the exporter does not have the confidence in the standing of
the issuing bank then he can demand a confirmed L/C. in which case the issuing bank
will request their correspondent bank (confirming bank) to add confirmation to L/C. This
bank will satisfy itself about the standing of the issuing bank, before agreeing to add
confirmation. By adding confirmation it steps into the shoes of issuing bank and it
 becomes bound to pay, accept or negotiate the documents drawn under L/C provide they
comply with the terms and conditions. For adding confirmation this bank will recover
commission. Article 8 of UCP 600 deals with the regulation associated with confirming
bank.

VII. Negotiating Bank: The bank to which beneficiary submits the documents. The bank
must examine the documents to satisfy that the documents are drawn in compliance with
the terms and conditions of L/C.

VIII. Reimbursing Bank: This bank is authorizing by issuing bank to honor the LC claim,
made by negotiating or paying bank. Issuing bank transfer the money into the Nostro
account, created with reimbursing bank. Article 13 of UCP 600 contains rules and
regulation of Reimbursing bank.

Exports: Pre shipment/Post Shipment

This term exports derive from the conceptual meaning as to ship the goods and services out of
the port of a country.
Servicing of export related trade transactions involved:
I. Bills on Collection
II. Bills against remittance received in advance.
III. Pre shipment and Post Shipment finance.
IV. Misc. activities like issuance of BRC (Bank realization certificate), issuance of GR
(guaranteed remittance) waiver.

Export bill on Collection: It is basically handling by banks on instruction received from the
seller of financial documents like Bills of Exchange or commercial documents against a
acceptance/payment to deliver documents.

 The foreign bank will act as ICICI Bank instruct.

 DA( Document against acceptance)/ DP ( Documents against payment.
 Export bills have to be submitted to the bank within 21 days from the date of shipment.

Bills against remittance received in advance:

 The importer sends remittance to exporter before the goods are shipped.
 Advance remittance received may be refunded back with or without interest ( cap on
interest).
 Refund beyond one year is subject to RBI approval.

Pre shipment/ Post Shipment finance:

 Export finance was introduced by RBI in 1967, intention to make short working capital
finance available to exporters at internationally comparable interest rate.
 Option of availing it in INR(Export packing credit) or in Foreign currency (Packing
credit in foreign currency).
 Pre-shipment is disbursed against sanction customer limits.
 Post-shipment may be disbursed against sanction customer limits or against bank
providing acceptance(Post shipment credit in foreign currency).
 Amount disbursed to the client in case of Pre-shipment finance against the confirmed
order. Value FOB-10%