24th Year of Publication

B anking
Registration RNI No.67802/98
Volume - XXIV No.03 : March 2021

Update
events

Contents of this Issue

• Data format for reporting to CICs
• FPI in defaulted bonds
• Exemptions in LEF
• Unhedged FC exposures
• LRS remittances to IFSC
• Basel III implementation
• IBA Model Education Loan Scheme 21
• Margin for derivative contracts
• SLR holding in HTM category
• Loans to directors (UCBs)
• Maintenance of SLR and MSF
• Banking Ombudsman- Practical Case

Multi-Option questions:8-9
Data Bank : 10

Those who win, are those, who think they can

Corporate & Distribution Office

1008, Sector 45-B, Chandigarh
Phone 0172 2665 623
eMail - bankingupdate123 @ gmail.com

www.banking update
update.. com
bankingindiaupdate

Executive Editor - S. Chand Singh Editor in Chief - Sh. N S Toor

2 ♦ Banking events updatE ♦ March 2021

RBI and Govt. Policy February 24, 2021

Large Exposures Framework –
Data Format for Furnishing of Credit Information to Exemptions
Credit Information Companies and other Regulatory
RBI had issued Large Exposures
Measures
Framework (LEF) on 3.6.2019. It also
As per circular dated 27.6.14, RBI had set out a Uniform Credit specified the exposures that are exempt from
Reporting Format for the purpose of reporting credit information the LEF. On a review, on 24.2.21, RBI
to the Credit Information Companies (CICs). The Format has decided to further exempt exposures to
two Annexes. The Annex-I contains two formats for credit foreign sovereigns or their central banks that
reporting, viz., Consumer Bureau and Commercial Bureau, are (a) subject to a 0% risk weight and (b)
whereas Annex-II contains credit reporting format for Micro denominated in the domestic currency of that
Finance Institution (MFI) segment. sovereign and met out of resources of the
On 12.3.21, RBI decided to modify the aforesaid three formats same currency.
as under:
Capital and provisioning requirements
(i) Consumer Bureau: The label of the field ‘Written off and for exposures to entities with Unhedged
Settled status’ modified as ‘Credit Facility Status’ and it will Foreign Currency Exposure
also have a new catalogue value, viz., ‘Restructured due to
RBI issued guidelines dated 3.6.2014 on
COVID-19’.
capital and provisioning requirements for
(ii) Commercial Bureau: The existing field ‘Major reasons exposures to entities with Unhedged Foreign
for restructuring’ will have a new catalogue value, viz., Currency Exposure (UFCE).
‘Restructured due to COVID-19’.
The guidelines mandate that information on
(iii) MFI Bureau: The existing field ‘Account status’ will have UFCE may be obtained by banks from
a new catalogue value, viz., ‘Restructured due to COVID- entities on a quarterly basis, on self-
19’. certification basis, and preferably should be
The modifications are being made to enable banks/AIFIs/ internally audited by the entity concerned.
NBFCs to report the information relating to restructured loans Sometime, banks are not able to obtain UFCE
to CICs as envisaged Resolution Framework for COVID-19 certificates from listed entities for the latest
related stress. quarter due to restrictions on disclosure of
Investment by Foreign Portfolio Investors (FPI) in such information prior to finalisation of
Defaulted Bonds - Relaxations accounts. In view of this, on 17.2.2021, RBI
Directions has been issued / amended by RBI on 17.10.19, decided that in such cases, banks may use
26.11.5 and 15.6.18 on the above subject. Currently, FPI data pertaining to the immediate preceding
investments in corporate bonds are subject to a minimum quarter for computing capital and
residual maturity requirement, short-term investment limit and provisioning requirements in case of
the investor limit in terms of the Directions. However, FPI Unhedged Foreign Currency Exposures.
investments in security receipts and debt instruments issued Remittances to International Financial
by Asset Reconstruction Companies and debt instruments Services Centres (IFSCs) in India
issued by an entity under the Corporate Insolvency Resolution under the Liberalised Remittance
Process as per the resolution plan approved by the National Scheme (LRS)
Company Law Tribunal under the Insolvency and Bankruptcy With a view to deepen the financial markets
Code, 2016 are exempt from these requirements. On 26.2.21, in International Financial Services Centres
RBI decided to exempt investments by FPI in NCDs/bonds (IFSCs) and provide an opportunity to
which are under default, either fully or partly, in the repayment resident individuals to diversify their portfolio,
of principal on maturity or principal instalment in the case of the extant guidelines on Liberalised
amortising bond from the aforesaid requirements, subject to Remittance Scheme (LRS) have been
conditions as per circular dated 15.6.21 (updated on 26.2.21) reviewed and on 16.2.2021, RBI decided to

(COMPILATION- SAPANDEEP TOOR & MANJOT TOOR, - on the basis of information available on RBI Website)

permit resident individuals to make remittances under LRS
to IFSCs set up in India under the Special Economic Zone
Act, 2005. Accordingly, AD Category - I banks may allow
resident individuals to make remittances under LRS to
IFSCs in India, subject to the following conditions:
i. The remittance shall be made only for making
investments in IFSCs in securities, other than those issued
by entities/companies resident (outside IFSC) in India.
ii. Resident Individuals may also open a non interest bearing
Foreign Currency Account (FCA) in IFSCs, for making
the above permissible investments under LRS. Any funds
lying idle in the account for a period up to 15 days from
the date of its receipt into the account shall be immediately
repatriated to domestic INR account of the investor in
India.
iii. Resident Individuals shall not settle any domestic
transactions with other residents through these FCAs held
in IFSC.
AD Category - I banks, while allowing such remittances,
shall ensure compliance with all other terms and conditions,
including reporting requirements prescribed under the
Scheme. It may be noted that any person resident in India
(outside IFSC) entering into any transaction with a person/
entity in IFSC shall only be governed by regulations/
directions and rules issued/notified by the Reserve Bank
of India and the Government of India respectively under
Foreign Exchange Management Act (FEMA), 1999.
Further, compounding of any contravention of FEMA
provision by such person resident in India shall be dealt by
the Reserve Bank of India in accordance with the extant
instructions/provisions on compounding of contraventions
under FEMA.
Basel III Capital Regulations- Review of transitional
arrangements
In view of the continuing stress on account of COVID-19
and in order to aid in the recovery process, RBI decided
on 5.2.21, to defer the implementation of the last tranche
of 0.625 per cent of the Capital Conservation Buffer
(CCB) from April 1, 2021 to October 1, 2021.
The pre-specified trigger for loss absorption through
conversion / write-down of Additional Tier 1 instruments
(Perpetual Non-Convertible Preference Shares and
Perpetual Debt Instruments), shall remain at 5.5 per cent
of risk weighted assets (RWAs) and will rise to 6.125 per
cent of RWAs from October 1, 2021.
• Phone: 0172-2665623, 09988221167
Banking events updatE ♦ March 2021 ♦ 3
Video Lessons
CAIIB-JAIIB-Promotion Exam
B-Sheet Analysis
Certified Credit Professionals
Foreign Exchange Operations
• Use lap top / Smart Phone, as our class room
• No travelling - no boarding/lodging charges
• Learn as per your time and place convenience
• Watch any video any no. of times during validity
CORRESPONDENCE
COURSE
PROMOTION EXAM
Based on latest trends of IBPS exam. A large no. of bankers
already succeeded by using the course material. If unable to
attend class room program, this is the best option.
Course Kit : The course kit include:
(a) subject-wise basic study material,
(b) assignment to improve retention
(c) objective type practice exercise
(d) recalled questions
(e) mock test papers.
Fee : May differ from bank to bank. May be checked before
remittance). Fee to be paid in advance.
How to enrol : Call us at the numbers given below.
CAIIB/JAIIB
Course is based on exam pattern of IIB&F. A large no. of
candidate have succeeded in all 3 papers in first attempt with
our study material.
Course Kit : The course kit include:
(a) subject-wise basic study material,
(c) objective type practice exercise
(d) mock test papers.
Fee : Fee differs for different papers. Fee payable in
advance, for which details may be obtained by calling
01722665623 .
How to enrol : To enrol, advise name, address for
correspondence, eMail id, mobile phone, bank name, subjects
for enrolment.
DS Institute of Banking
Office:SCO No.32, Sector 33-D, Chandigarh 160 020
4 ♦ Banking events updatE ♦ March 2021

IBA Model Education Loan Scheme - 2021

Indian Banks' Association, circulated the revised scheme on 15.2.21. It N S Toor App
is applicable for member banks. Banks can make changes as deemed fit.
Eligibility : Products
1) The student can be an Indian National, Non-Resident Indian, Persons
of Indian Origin (PIO) / Overseas Citizens in India (OCI). available
Video Lessons
2) Studend should have secured admission to a higher education course
in recognized institutions through Entrance Test/ Merit Based Selection
process after completion of HSC (10 plus 2 or equivalent). For studies
abroad, loans can be given on the basis of invite / conditional offer letter
from the Educational Institution. PDF Text
Eligible courses: Video lessons for-
Studies in India: Courses under Government Subsidy Schemes, courses
leading to graduate/ post graduate degree and P G diplomas/certificate · CAIIB - Advanced Bank
conducted by recognized colleges/ universities by UGC/ Government/ Management
AICTE/ AIBMS/ ICMR etc., Courses like ICWA, CA, CFA, or conducted · CAIIB- Bank Financial
by IIMs, IITs, IISC, XLRI. NIFT, NID etc. or approved courses offered Management
in India by reputed foreign universities.
· JAIIB - Principles and
Studies Abroad : Courses under Government Subsidy Schemes, Practice of Banking
Graduation (job oriented professional/ technical courses offered by reputed
universities / institutions), Post-graduation (MCA, MBA, MS, Courses · JAIIB - Accounting & Finance
conducted by CIMA- London, CPA in USA etc.) for Bankers
Expenses considered for loan: 1) College / hostel, examination/ library/ · JAIIB - Legal & Reg aspects
laboratory fee, travel expenses/ passage money for studies abroad, of Banking
Insurance premium for student borrower, 2) Caution deposit, building
· Bank Promotion Exam -
fund / refundable deposit supported by Institution bills/receipts. (max
General Banking
10% of total fee), 3) Purchase of books/ equipment / instruments/ uniforms,
purchase of computer, if required for the course, any other expense for · Certified Credit Professionals
course completion–like academic and maintenance fees, study tours, · Balance-sheet Analysis
project work, thesis, exchange program, etc. (cap of 20% of total fee)
Quantum of finance · Foreign Exchange Operations
Need based finance to meet above expenses. Facility to watch the videos,
Loans to individuals up to Rs.20 Lakh irrespective of the sanctioned amount on-line and off-line available.
can be classified as part of priority sector loans. You can download videos to
Margin: watch off-line, during validity
1) Up to Rs.4 lac – Nil. 2) Above Rs.4 lac up to Rs.7.5 lac 5% for study period of a course.
in India and 15% for study abroad (Nil, if eligible for credit guarantee of To download the App go to
NCGTC). Above Rs.7.5 lac, bank discretion. Google Play Store and
Margin may be brought in on a pro-rata basis when disbursements are download NS Toor App. After
made. Scholarship / assistantship to be included in margin. installation, go to Store
Collateral Security: Section to subscribe the
course.
Student to be primary borrower and parents / guardians / spouse to be
joint borrowers.
1) Up to Rs.4 lac – no security. 2) Above 4 lac to Rs.7.5 lac – 3rd party
I
guarantee. (no security if eligible for NCGTC
guarantee). Above7.5 lac – Tangible collateral security.
The future income of the student to be assigned to the
bank for repayment of loan.
Rate of interest
Bank discretion based on MCLR/EBLR. Differential
interest can be charged for collateralized and non-
collateralized loans and rating of institution/student.
During moratorium period, simple interest to be
charged. Servicing of interest during moratorium period
till commencement of repayment is optional.
Banks may provide 1% interest concession if interest
is serviced during moratorium period.
Appraisal / sanction/ disbursement
1) All applications will be mandatorily routed through
Vidya Laxmi Portal (VLP) of Govt. of India. Sanctions
or rejections shall be reported at VLP.
2) Sanction/rejection will be communicated within 15
days of receipt of application.
3) Decision to sanction shall be based on sound
commercial logic.
4) Rejection shall be with the concurrence of the next
higher authority.
5) Loan applications can be submitted at the bank
branches near the present / permanent residence of
parents / guardian or near to the Education institution.
6) Loan to be disbursed in stages as per the requirement
/demand directly to the Institutions/ Vendors of
equipments / instruments to the extent possible.
Repayment and moratoriam
1) Repayment Holiday / Moratorium: Course period +
1 year.
2) Repayment through EMI for 15 years (excluding
course and moratorium period).
3) Telescoping of repayment with stepped up
instalments with passage of time may be considered in
Most-used book Banking Problems
OUR by bankers 50th & Rationales 8th
(2021) Edn Rs.500 (2017) Edn Rs400
WIDELY
READ
BANKING
PROMOTION
BOOKS
Banking events updatE ♦ March 2021 ♦ 5
deserving cases.
4) Banks may consider moratorium based on under-
employment / unemployment, 2-3 times (max 6 months
at a time) during the life cycle of the loan.
5) Banks may encourage start-up units by giving
moratorium on repayment during incubation period up
to 2 years.
6) Extension up to 2 years can be allowed for
completion of study in deserving cases.
7) No prepayment penalty will be levied for prepayment
of loan.
Insurance: Banks can make the life insurance policy
/ credit life insurance policy / Personal Accident
Insurance, mandatory.
Follow up / monitoring
For studies abroad, student to submit Social Security
Number (SSN) / Unique Identification Number (UIN)
/ Identity Card. Aadhaar number be captured.
Charges: Vidya Laxmi Enrollment charges to be borne
by the student (Rs. 100 + GST, subject to change).
Bank Charges/Fees:
Nil for loan up to Rs.7.5 lac and at bank discretion for
loan above Rs.7.5 lac.
Capability certificate: Banks can issue such
certificate for students going abroad for studies.
Other conditions:
1. Loans can be sanctioned to more than one child
from the same family.
2. If student was a minor while the parent executed
documents for the loan, the bank will obtain a letter of
ratification from him/her upon attaining majority.
3. Banks may consider top up loans for further studies
within the overall eligibility limit.
4. No due certificate will not be insisted upon. Banks
may obtain a declaration confirming that no loans are
availed from other banks.
Practice Sets For Banking infor- For all types of
Mock Tests 20th mation in Hindi bank interviews
Edn Rs.275 11th Edn Rs.275 13th Edn Rs.300
6 ♦ Banking events updatE ♦ March 2021
RBI Policy continued from page..3
Margin for Derivative Contracts
RBI issued directions on 15.2.21, to allow posting and collection
of margin for permitted derivative contracts between a person
resident in India and a person resident outside India.
Accordingly, AD Cat-I banks may post and collect margin in
India, on their own account or on behalf of their customers, for a
permitted derivative contract entered into with a person resident
outside India in the form of:
i. Indian currency;
ii. Freely convertible foreign currency;
iii. Debt securities issued by Indian Central Government and
State Governments;
iv. Rupee bonds issued by persons resident in India which are:
a. Listed on a recognized stock exchange in India; and
b. Assigned a credit rating of AAA issued by a rating agency
registered with the Securities and Exchange Board of India. If
different ratings are accorded by two or more credit rating
agencies, then the lowest rating shall be reckoned.
AD Cat-I banks may post and collect such margin outside India
in the form of:
i. Freely convertible foreign currency; and
ii. Debt securities issued by foreign sovereigns with a credit
rating of AA- and above issued by S&P Global Ratings / Fitch
Ratings or Aa3 and above issued by Moody’s Investors Service.
If different ratings are accorded by two or more credit rating
agencies, then the lowest rating shall be reckoned.
AD Cat-I banks may receive and pay interest on margin posted
and collected on their own account or on behalf of their customers
for a permitted derivative contract entered into with a person
resident outside India.
AD Cat-I banks shall maintain a separate account in the name
of persons resident outside India for the purpose of posting and
collecting cash margin in India, and transactions incidental thereto.
SLR holdings in HTM category
As per extant guidelines, banks are permitted to exceed the limit
of 25 per cent of the total investments under Held to Maturity
(HTM) category provided:
a. the excess comprises only of SLR securities; and
b. total SLR securities held under HTM category is not more
than 19.5 per cent of Net Demand and Time Liabilities (NDTL)
as on the last Friday of the second preceding fortnight.
With respect to the limit stated at (b) above, banks have been
granted a special dispensation of enhanced
HTM limit of 22 per cent of NDTL, for SLR
securities acquired between September 1,
2020 and March 31, 2021, until March 31,
2022. The enhanced limit was required to be
restored in a phased manner over three
quarters beginning with the quarter ending
June 30, 2022.
On 5.2.2021, RBI decided to extend the
dispensation of enhanced HTM of 22 per cent
to March 31, 2023 to include SLR securities
acquired between April 1, 2021 and March
31, 2022. Thus, banks may exceed the limit
specified in 2(b) above, upto 22 per cent of
NDTL (instead of 19.5 per cent of NDTL)
till March 31, 2023, provided such excess is
on account of SLR securities acquired
between September 1, 2020 and March 31,
2022.
The schedule for restoring the enhanced HTM
limit to 19.5 per cent of NDTL has been
modified. The enhanced HTM limit shall be
restored to 19.5 percent in a phased manner,
beginning from the quarter ending June 30,
2023, i.e. the excess SLR securities acquired
by banks during the period September 1, 2020
to March 31, 2022 shall be progressively
reduced from the HTM category such that
the total SLR securities under the HTM
category as a percentage of the NDTL does
not exceed:
a. 21.00 per cent as on June 30, 2023
b. 20.00 per cent as on September 30, 2023
c. 19.50 per cent as on December 31, 2023
As per extant instructions, banks may shift
investments to/from HTM with the approval
of the Board of Directors once a year and
such shifting will normally be allowed at the
beginning of the accounting year. However,
in order to enable banks to shift their excess
SLR securities from the HTM category to
available for sale (AFS)/ held for trading
(HFT) to comply with the above instructions,
RBI allowed such shifting of the excess
securities during the quarter in which the
HTM ceiling is brought down. This would be
 Banking events updatE ♦ March 2021 ♦ 7

in addition to the shifting permitted at the beginning of the accounting September and 31 December), to the
year. concerned Regional Office of Department
Loans and advances to directors, their relatives, and firms / of Supervision of Reserve Bank of India
concerns in which they are interested – in case of Primary within 15 days from the end of the
Urban Coop Banks respective quarter. In the case of UCBs
functioning under Administrator(s) /
The Banking Regulation Act, 1949 (“the Act”) has been amended
Person(s)-in-Charge / Special Officers, the
by the Banking Regulation (Amendment) Act, 2020 notified for the
UCBs concerned should submit the
Primary (Urban) Co-operative Banks (UCBs) on September 29,
information in respect of loans and
2020 and deemed to have been effective from June 29, 2020.
advances availed by the Administrator(s)
Consequently, Section 20 of the principal Act has become applicable
/ Person(s)-in-Charge / Special Officers,
to UCBs. Keeping in view the above, the extant directions on the
including their relatives.
subject issued to UCBs have been reviewed by RBI on 5.2.21 and
the revised directions are issued as under: Basel III – Net Stable Funding Ratio
1. UCBs shall not make, provide or renew any loans and advances On 29.9.20, RBI had deferred the
or extend any other financial accommodation to or on behalf of implementation of the NSFR guidelines till
their directors or their relatives, or to the firms / companies / concerns April 1, 2021. In view of the ongoing stress
in which the directors or their relatives are interested (collectively on account of COVID-19, RBI decided
called as ”director-related loans”). Further, the directors or their on 5.2.21, to defer the implementation of
relatives or the firms / companies / concerns in which the directors NSFR guidelines by a further period of six
or their relatives are interested shall also not stand as surety/ months. Accordingly, the guidelines shall
guarantor to the loans and advances or any other financial come into effect from October 1, 2021.
accommodation sanctioned by UCBs. ‘Advances’ for the purpose Maintenance of Statutory Liquidity
shall include all types of funded / working capital limits such as Ratio (SLR) – Marginal Standing
cash credits, overdrafts, credit cards, etc. Facility (MSF)
As per circular dated 28.9.20, banks were
2. The following categories of director-related loans shall, however,
allowed to avail of funds under the MSF
be excluded from “loans and advances” for the purpose of these
by dipping into the Statutory Liquidity Ratio
directions:
(SLR) up to an additional one per cent (1%)
i. Regular employee-related loans to staff directors, if any, on the of their net demand and time liabilities
Boards of UCBs; (NDTL), i.e., cumulatively up to three per
ii. Normal loans, as applicable to members, to the directors on the cent of NDTL. This facility, which was
Boards of Salary Earners’ UCBs; initially available up to June 30, 2020 was
iii. Normal employee-related loans to Managing Directors / Chief later extended in phases up to March 31,
Executive Officers of UCBs; 2021 providing comfort to banks on their
iv. Loans to directors or their relatives against Government liquidity requirements and also to enable
Securities, Fixed Deposits and Life Insurance Policies standing in them to meet their Liquidity Coverage
their own name. Ratio (LCR) requirements. Banks are
allowed to continue with the MSF
3. UCBs shall submit information pertaining to their director-related
relaxation for a further period of six months,
loans as at the end of each quarter (i.e. 31 March, 30 June, 30
i.e., up to September 30, 2021.
Bank Fin Mgmt Accounting & Legal Aspects of Principles of
Adv Bank Mgmt Banking/General
Finance 16th Edn Banking 16th Edn Banking 16th Edn
10th Edn Rs.275 10th Edn Rs.225 Awareness
JAIIB BOOKS
OUR CAIIB &

Rs.250 Rs.250 Rs.300

 Banking events updatE ♦ March 2021 ♦ 8

Multiple Option Questions on Banking OUR USEFUL BOOKS

01 Under the provisions of SARFEASI Act 2002, where the FOR BANKERS
defaulting borrower contests the seizure of the assets proposed
Hanbdook of Banking Infor- Rs.500
for possession, whom can be approach: mation - 2018, 50th Edi-
a Supreme Court tion by N S Toor

b High Court having jurisdiction Bank Credit Management Rs.300

(2017) edition by N S Toor
c DRT having jurisdiction d DRAT
Banking Problems /
e Distt Court Rationals and Situation
Rs.400
02 Govt. policy to raise additional resources through taxation and Analysis (2017) N S Toor &
allocation of expenditure as per its priorities is called Arundeep Toor

a economic policy b 5-year plan Model Test Papers for Bank

Promotion (2020) N S Toor Rs.275
c expenditure and income policy d fiscal policy
Analysis of Balance Sheet Rs.250
03 The gratuity limit has been enhanced from __ to ___ by passing (2019) N S Toor
Payment of Gratuity (Amendment) Act w.e.f. 29.3.18: How to Face Bank Inter-
a Rs.2.50 lac to Rs.5 lac b Rs.5 lac to Rs.10 lac views? (2018) N S Toor Rs.300

c Rs.10 lac to Rs.20 lac d Rs.5 lac to Rs.20 lac Bhartiya Banking (Hindi) Rs.475
(2017) N S Toor
04 Lending to which of the following activities is part of priority
sector (1) agriculture (2) micro and small enterprises (3) Model Papers in Hindi N S Rs.150
Toor
renewable energy (4) social infrastructure (5) export credit
Banking Rationals and Prob-
a 1 to 5 all b 1 to 4 only Rs.125
lems (Hindi) N S Toor
c 1, 2 and 4 only d 1, 2, 3 and 5 only JAIIB Objective Type
05 Listed companies are required to disclose their quarterly financial (all books by N S Toor and
Arundeep Toor):
results within ___ from close of the quarter:
• Principles of Banking Rs.300
a 15 days b 30 days
• Accounting and Finance Rs.250
c 45 days d 60 days for bankers
06 A bill of lading mentions that certain packets of goods are not • Legal Aspects of Banking Rs.250
properly packed and packing is defective. This is: CAIIB Objective Type
(all books by N S Toor and
a claused bill of lading b clean bill of lading Arundeep Toor):
c defective bill of lading d stale bill of lading • Adv Bank Management Rs.225
07 Which of the following classification of the account is not correct • Bank Fin Management. Rs.275
as on Mar 31, 2018: IBPS Bank PO/ClerK
a in a cash credit account, the date of last sanction, is Jan 22, 2016 • Study Kits Rs.3000
• Banking & Financial GK Rs.400
– standard account
• E-Books Rs.1500
b in an account the balance is Rs.5 lac and security value is Rs.3 • E-Learning through Video Rs.3000
lac for 2 months – standard account - DVDs covering reasoning
ability, quantitative aptitude,
c in a sub-standard account, the balance is covered by security to
English language, computers
the extent of 45% after loss of security - sub standard account awareness, Banking & gen-
d an account is secured by 3rd party guarantee and it is running eral awareness
irregular for 5-6 months : sub-standard unsecured account To order these books, please call
0172-2665623 (10 am to 6 pm) on
08 A customer of a bank desires, transfer of funds from his NRE any working day. OR
account to an FCNR-B account. What exchange rate will be Call Skylark Publications, New Delhi
used (Ph 011 23361966)
 Banking events updatE ♦ March 2021 ♦9
a TT Buying Rate b TT Selling Rate capital for a company to become eligible to issue
c Bills buying Rate d Bills selling Rate a commercial paper ?
09 A customer of your branch has pledged goods in a Rs.4 cr b Rs.5 cr
the bank and he had some dues of tax authority. c Rs.10 cr d Any amount
You received a notice from tax authority for giving e Rs.20 cr
possession of theses good 14 For creating Equitable Mortgage, the title deeds
a bank has priority in recovery of loan. of the property are to be deposited at a branch
b You will handover goods to tax authority located at a) any place b) any place identified by
c tax authorities have prior charge Central Govt. c) Presidency towns d) Notified
Place by State Government:
d tax authorities can demand the goods on pro-rata
basis a a to d all b a, c and d only
10 When does a commercial paper becomes c c and d only d b and d only
transferable: 15 If a fixed deposit matures and proceeds are unpaid,
a Not transferable the amount left unclaimed with the bank will attract:
b After 15 days of issue a no interest as the amount is in the form of current
account
c After 29 days of issue
b interest rate for corresponding maturity
d Any time after issue
c saving bank interest rate
e after its maturity
d interest rate corresponding to min maturity of 7
11 Mr. Hamid, a customer of your branch has days.
deposited with the bank certain govt. securities
under safe custody. He has also requested the bank 16 Where a bank wants to migrate from standard
to collect interest on these securities and credit to approach in credit risk to IRB approach or from
his account. What relationship is between the bank basic indicator approach in operational risk to
and the customer for collection of interest? Standard approach or advance measurement
approach, permission from which of the following
a bailee and bailer is required
b bailer and bailee a Board of Directors of the bank
c agent and principal b Reserve Bank of India
d trustee and beneficiary c Basel Committee on Banking Supervision
e beneficiary and trusty d Ministry of Finance – Govt. of India
12 Interest on FCNR-B term deposit of 2 years, which 17 A bank finds it difficult to repay the short term
is cancelled after 8 months of its deposit would deposits on maturity to its depositor because the
be : funds of the bank are locked in long term loans or
a applicable for the period less penalty if any, investments. The risk arising from this situation is
b applicable for the period on date of deposit less called
penalty a Interest rate risk
c applicable for the period on date of withdrawal b Liquidity risk
less penalty c Operational risk
d no interest to be paid d Market risk
13 What is the amount of bank limit for working e Credit risk
Disclaimer : We have taken every care to provide information, we believe
ANSWERS
to be accurate and reliable and do not assume responsibility of any kind nor
shall be liable for losses & consequence arising from use thereof. Since this 01-C 02-D 03-C 04-A 05-C 06-A 07-C 08-B 09-A 10-D
information is based on the published reports mostly, correctness or otherwise
11-C 12-D 13-D 14-C 15-D 16-B 17-B
thereof may be verified by the user with the original sources, in advance.
.................................................Editor
10 ♦ Banking
Banking events ♦
events updatE updatE March
March♦2021 ♦ 2021
10 Registration RNI No. 67802/98 Postal Regn No.CHD /0001/2015-17
Practical Problems based on Banking Ombudsman Decisions DATA COLUMN
1) The bank was insisting on Succession Certificate for withdrawal of amount
of FD in the name of deceased husband, even though the wife was nominee as Business of Banks
(Rs.in cr) 10.04.20 26.03.21
per bank records. On taking up the case, the bank had stated that a dispute Aggregate deposits 13714927 15113178
was pending before the Court between the legal heirs and the Succession Cash in hand/RBI 486791 633445
Certificate was required based on the interim judgment of the Court. On a Investments 3925665 4462521
Bank Credit: 10339299 109515561
scrutiny of the judgement of the Court, BO observed that the bank could insist -Food 54073 61254
for succession certificate only if it was necessary for withdrawing the deposits -Non-Food 10295226 10890307
Cash-Deposit Ratio 5.27 3.83
as per banking rules. Further, the order of the Court was not intended to affect Investment-Deposit 28.14 30.23
the procedural formalities of the bank for releasing FD. As there was no order Credit-Deposit 72.95 71.74
from Court restraining the bank from making payment, BO directed bank to Money Stock
(Rs.in cr) 31.03.20 26.03.21
pay to the nominee in terms of extant regulatory instructions on this subject. M3 (Out of which) 16799930 18772693
2) Complainant, a State Govt. entity, alleged that it had placed FDs of Rs.8.10 (a) Currency with public 2349715 2757750
(b) Demand deposits-Banks 1737692 1984256
cr for 90 days as per bank’s offer with 8.8% interest and 1% penalty for premature (c) Time Deposits - Banks 12674016 13983341
withdrawal. Due to exigency, FDs were prematurely closed and bank levied 2% (d) Other deposits with RBI 38507 47347
Sources of Money Supply
penalty. The bank maintained that excess of 1% was wrongly quoted in offer (a) Net Bank credit to Govt 4906583 5692564
document due to clerical error. Further the complainant also alleged that the (b) Bank credit to Comrcl sectr 11038644 11612099
bank had deducted TDS on the total amount, though TDS was not applicable. (c) Net Forex assets of Banks 3798902 4511386
Important Banking Indicators
BO observed that complainant, being a Govt. body, had asked for quotation Statutory Liquidity Ratio 18.00% (10.04.2020)
from the bank before placing funds under FD. Hence charging of penalty of Cash Reserve Ratio 03.00% (28.03.2020)
Overnight LAF (of NDTL) 0.25%
2% as against 1% was a breach of trust by bank. The bank was advised to re- 14days term Repo(of NDTL) 0.75%
calculate the penalty for premature closure of FD at 1% and refund the excess Reverse Repo Rate 03.35% (22.05.2020)
Repo Rate 04.00% (22.05.2020)
amount deducted along with SB rate of interest from date of deduction till date MSF Rate 04.25% (22.05.2020)
of refund. Bank Rate 04.25% (22.05.2020)
3) The complainant, director of 3 companies, had availed from the bank, Cash P P F Small Savings Interest Rates
7.1% (01.04.2020)
credit (CC) limits and term loans at floating rate of interest. As the bank could 5-year NSC 6.8% (01.04.2020)
not sanction additional limits for expansion, the companies shifted the credit Sukanya Smridhi 7.6% (01.04.2020)
Senior Citizen Saving 7.4% (01.04.2020)
facilities to other bank. The bank charged foreclosure charges of 3% on the Capital & Money Market Indicators
outstanding term loans and on the entire CC limits. The complainant alleged Parameter end-Apr20 end-Apr21
that the companies were not informed about levy of foreclosure charges at the Dollar-spot TT (Rs.) 70.93 75.09
BSE - Sensex (points) 31863 47822
time of sanction of loan and that no foreclosure charges should be levied in NSE - Nifty(S&P CNX) 9313 14347
terms of extant RBI instructions. Foreign reserves (Million $) 479568 581213
Gold /Oz in USD) 1834 1723
The bank while agreeing that it had charged pre-payment charges of 3% plus
service tax @12.36% on the CC limits and outstanding balance of Term loans INDIAN ECONOMY-IMPORTANT PARAMETERS
as per the terms of sanction signed by these companies, informed that since
Growth estimate for FY 2021-22 : 11-11.5%
the Directors were common and had also extended their personal guarantee in GDP@constant mkt prices (cr) 2018-19 : 20442233
individual capacity to the credit facilities granted to the companies, they were GVA@2011-12 basic prices (cr) 2018-19 : 12906936
orally informed at the time of closure about upward revision in pre-payment GDP projected by Govt. for 2021-22 : 22287379
charges from the existing 2% to 3%, in case of takeover of the credit facility by Fiscal Deficit Target (2021-22) 6.8% of GDP :1506812 cr
any other bank or Financial Institution. Revenue Deficit Target (2021-22) 5.1.% of GDP :1140576 cr

It was observed from the complaint letters that the complainant was the Wholesale Price Index : 7.1%
Exports during 2019-20 (Goods+services) : 528.5 bn
authorized signatory/director of the three companies and had not availed the
Imports during 2019-20 (Goods+services) : 598.6 Bn
loan in individual capacity and hence the above mentioned RBI guidelines India's share in world merchandise export : 1.70%
were not applicable. Further, as the complainant had issued cheques to the India's currency rating (S&P) : BB Postv
bank as “pre-payment charges” indicated that he was aware of these charges. India's external debt (Jun 2020) US $ : 554.5 Bn
It was also observed from the sanction letters that there was a condition to Tax-GDP ratio (2019-20) : 9.9%
levy 2% foreclosure charges on all outstanding credit facilities and not 3%. Apr20- Feb21:Export $ 439.6 bn Imports : 447.4 bn
The bank had, however, based on their oral communication levied foreclosure Per capita GDP 2019-20 (Rs.) : 108620
Indian economy's ranking in PPP terms : 3rd
charges of 3% on the outstanding term loans and the entire CC limit.
Indian economy's ranking in world in value: 7th
BO advised the bank to levy 2% foreclosure charges on the terms loans and
on the outstanding CC limit as per the agreed terms and refund the excess
charges levied with service tax and interest at SB rate from the date of debit to
OUR PUBLICATIONS : REFER PAGE 9,11
the date of reversal. •
DATE OF DESPATCH - March 7/ 10, 2021

Published by Chand Singh at 1008, Sector 45-B, Chandigarh - Printed by Chand Singh in digital form. Editor - Chand Singh