Banking Awareness

BANKING AWARENESS
BANKING AWARENESS
TABLE OF CONTENTS
S.no Content Page No

1 RBI 2
2 Monetary policy 4
3 Financial Action Task Force (FATF) 7
4 Currency chest 8
5 Bank and Its Operation 9
6 Payment Instruments in India 12
7 Different types of online financial transactions 14
8 Types of Banks in India 19
9 Non - Performing Asset 25
10 Debt Recovery Tribunal 26
11 SARFAESI ACT 26
12 Risk in Banks and its types 27
13 Basel Norms 27
14 Priority Sector Lending 29
15 Financial inclusions 30
16 Financial Market 31
17 Regulating Bodies 34
18 International Organizations 36
19 Banking Schemes 37
20 Foreign Exchange Management Act 39
21 Credit Information Companies 41
22 Systemically Important Banks 44
23 Inflation and Its Types 45
24 BANKING ABBREVIATIONS 47
www.raceinstitute.in 1 For Support: 7550003885

Banking Awareness
RESERVE BANK OF INDIA (RBI):

• The Reserve Bank of India is the central bank of India, HQ in Mumbai
• Established on April 1, 1935 (Reserve Bank of India Act, 1934).
• Fully owned by the Government of India after nationalized in 1949 under the Banking Regulation Act 1949.
• RBI has 19 regional offices, and 4 Zonal offices.
• Governed by a central board of directors appointed for a period of four years by the Government of India
CENTRAL BOARD OF DIRECTORS – 21 MEMBERS, FOUR-YEAR TERM

I. Official Directors:
• One governor
▪ Section 8(1)(a) of the RBI Act, 1934, The Prime Minister's Office chooses the governor after consulting the finance
ministry and the outgoing governor.
• Four deputy governors under Section 8(1)(a) of the RBI Act, 1934
▪ Two from RBI ranks and are selected from the bank's executive directors.
▪ One is among the chairpersons of public sector banks
▪ One is an economist
II. Non-Official Directors
• Two finance ministry representatives under Section 8(1)(b) of the RBI Act, 1934 (usually the Economic Affairs Secretary
and the Financial Services Secretary)
• Ten government-nominated directors
• Four directors who represent local boards for Mumbai, Kolkata, Chennai, and Delhi.
BOARD FOR FINANCIAL SUPERVISION

• The Board for Financial Supervision (BFS) was constituted in November 1994 as a committee of the Central Board of Directors
of the Reserve Bank of India under the Reserve Bank of India (Board for Financial Supervision) Regulations, 1994.
• The BFS was set up to strengthen supervision and surveillance over the financial system and providing sharper focus to
supervisory policy and skills. It has four members, appointed for two years
• The BFS exercises integrated supervision over commercial banks, financial institutions and non-banking financial
intermediaries. The Department of Supervision assists and provides secretarial support to BFS.
FUNCTIONS OF THE RESERVE BANK:

• The Financial Stability Report (FSR) is published biannually by RBI (twice each year)
• Monetary policy
• Regulation and supervision of the banking and non-banking financial
Institutions under Banking Regulation Act 1949
and credit information companies under Credit Information Companies (Regulation) Act, 2005.
• Regulation of money, forex and government securities markets as also
certain financial derivatives under Reserve Bank of India Act, 1934.
• Debt and cash management for Central and State Governments Except for Sikkim. Maintains the Principal Accounts at its
Central Accounts Section, Nagpur
• Management of foreign exchange reserves
• Foreign exchange management—current and capital account management
• Banker to banks
• Banker to the Central and State Governments
• Oversight of the payment and settlement systems
• Currency management
• Developmental role
• Research and statistics

Banking Awareness
SUBSIDIARIES:
The Reserve Bank has Five fully-owned subsidiaries:
1. Deposit Insurance and Credit Guarantee Corporation of India (DICGC)
2. Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL)
3. Reserve Bank Information Technology Private Limited (ReBIT)
4. Indian Financial Technology and Allied Services (IFTAS)
5. Reserve Bank Innovation Hub (RBIH).
Deposit Insurance and Credit Guarantee Corporation of India (DICGC)

• It provides insurance to deposit holders of a bank whenever bank fails to pay its depositors (bankruptcy). DICGC insures bank
deposits like savings account, current account and all term deposits.
• DICGC is established in 1978 under Deposit Insurance and Credit Guarantee Corporation Act, 1961.
• Wholly owned subsidiary if RBI, HQ in Mumbai.
• Premium for the deposits 12 paise per ₹100 deposit.
• All commercial banks, foreign banks functioning in India, local area banks regional rural banks, co-operative banks, are
eligible to insure
• Recently, a committee set up to review the Customer Service Standards in RBI Regulated Entities has recommended that the
central bank examine the extension of DICGC cover to PPI.
• If you have deposits with more than one bank, deposit insurance coverage limit is applied separately to the deposits in each
bank.
• The deposit insurance scheme is compulsory and no bank can withdraw from it.
• The DICGC insures principal and interest up to a maximum amount of 5 lakhs.
• For example,
• If a person had an account with the principal of Rs.4,95,000 and interest accumulated of Rs. 4,000, the total amount covered
by the DICGC would be Rs.4,99,000. He will receive Rs.4,99,000,
• If the deposit is 5 lakh or higher, the insurance only covers 5 lakh, meaning the depositor will only receive Rs.5 lakh even if he
has more than 5 lakh in his account.
• Deposits which are not covered by DICGC:
• Deposits of foreign Governments, Central/State Governments, Inter-bank deposits, State Land Development Banks with the
State co-operative bank and deposits received outside India
• Any amount, that has been specifically exempted by the corporation with the previous approval of Reserve Bank of India
Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL):

• Established in February 1995 as a wholly-owned subsidiary of RBI
• It Prints bank notes in India
• Registered as a Public Limited Company under the Companies Act, 1956
• It has two Presses,
▪ Mysore, Karnataka
▪ Salboni, West Bengal.
Reserve Bank Information Technology Private Limited (ReBIT):

• ReBIT serves the IT and cybersecurity needs of RBI. ReBIT was founded in 2016. Its headquarters is in Navi Mumbai.
Indian Financial Technology and Allied Services:
• IFTAS designs, deploys & provides the essential IT-related services, required by the Reserve Bank of India, banks, and financial
institutions.
• IFTAS was established in February 2015 by the Institute for Development and Research in Banking Technology (IDRBT).
Reserve Bank Innovation Hub (RBIH):

• The Reserve Bank has set up Reserve Bank Innovation Hub (RBIH) to promote innovation across the financial sector by
leveraging on technology and creating an environment which would facilitate and foster innovation.
• RBIH would be guided and managed by a Governing Council (GC) led by a Chairperson.
Training Establishments:

Banking Awareness
RBI has six training establishments

Three are part of the Reserve Bank, namely,
• RBI Academy(Mumbai)
• RBI College of Agricultural Banking (Pune)
• Reserve Bank of India Staff College. (Chennai)
Others are autonomous, such as,
• National Institute for Bank Management,(Pune)
• Indira Gandhi Institute for Development Research (IGIDR)(Mumbai)
• Institute for Development and Research in Banking Technology (IDRBT)(Hydrabad)
MONETARY POLICY (BIMONTHLY)

• Monetary Policy is the Reserve Bank of India’s policy pertaining to the deployment of monetary resources under its control
for the purpose of achieving GDP growth and controlling the inflation rate.
• The Reserve Bank of India Act 1934 empowers the RBI to make the monetary policy.
Monetary Policy Committee:

• The Monetary Policy Committee (MPC) has been instituted by the Central Government of India under Section 45ZB of the RBI
Act 1934.
• MPC has six members for a four-year term formed in 2016.
• India’s MPC consists of three internal members – the Governor as the Chairperson, ex officio; the Deputy Governor in charge
of monetary policy as Member, ex officio; and one officer of the Bank to be nominated by the Central Board as Member ex-
officio – and three external experts appointed by the Central Government. These members are required to be less than 70
years of age at the time of appointment.
• The external members hold office for a period of four years and are not eligible for re-appointment.
• The RBI is required to publish a Monetary Policy Report (MPR) once every six months after the 14th day of the meeting held.
• The Reserve Bank of India releases its annual publication titled “Handbook of Statistics (HBS) on the Indian Economy “, which
contains statistical tables covering national income aggregates, output, prices, money, banking, financial markets, public
finances, foreign trade and balance of payments and select socio-economic indicators.
Monetary Policy Instruments:
• Monetary policy instruments are of two types namely qualitative instruments and quantitative instruments.
Quantitative instruments:
• Quantitative instruments include Open Market Operations, Bank Rate, Repo Rate, Reverse Repo Rate, Cash Reserve Ratio,
Statutory Liquidity Ratio, Marginal standing facility and Liquidity Adjustment Facility (LAF).
Repo Rate (Repurchase Rate)

• The rate at which the RBI injects liquidity(cash) into the banking sector is known as the repo rate.
• RBI lends money to the banks at this Rate for a short term (max 90 days).
• To curb inflation, the RBI increases the repo rate, The RBI does the opposite to fight deflation
• Banks that want to borrow money (for short term, usually overnight) have to pledge government securities as collateral.
• The government securities that are provided by banks as collateral cannot come from the SLR quota (otherwise the SLR will
go below 19.5% of NDTL and attract penalties).
Reverse Repo rate:

• The rate at which the central bank receives Liquidity(cash) from the banks is known as the reverse repo rate.
• Reverse Repo rate is the short-term borrowing rate at which Commercial banks deposit their excess funds with RBI.
• Used to control too much money floating in the banking system.
Bank Rate:
• Bank rate is the long-term rate at which the central bank lends money to other banks or financial institutions. Bank Rate is
always higher than Repo rate
• No collateral required

Banking Awareness
• If a bank fails to meet SLR or CRR requirements, then the RBI will impose a penalty of 300 basis points above the bank rate.
Cash Reserve Ratio (CRR)

• Banks in India are required to reserve a certain percentage of their Net demand and Time liabilities (NDTL) (i.e. Deposits) in
the form of cash in RBI (currency chest).
• If CRR is 4% bank with NDTL of Rs.100 crores must maintain Rs.4 crores as cash Reserve.
• The Percentage is decided by RBI’s Monetary Policy Committee.
• CRR is a tool used by RBI to control inflation, money supply, and liquidity in the banking system.
• Banks can’t lend the CRR money to corporates or individual borrowers, banks can’t use that money for investment purposes.
Banks do not get any interest on the money that is with the RBI under the CRR requirements.
Penalties for Non-Maintenance of Cash Reserve Ratio:
• If the CRR norm for a bank for a particular day was ₹500 Crore and it managed to maintain ₹450 Crore for the day, then the
penalty will be applied only on ₹50 Crore (500-450) and not on ₹450 Crore. For the first day, a penalty of 3% p.a. will be
applied. But, on every subsequent day, the fine will be increased to 5% p.a. + the bank rate.
Statutory Liquidity Ratio (SLR):

• SLR (full form – Statutory Liquidity Ratio) is the minimum percentage of Net Demand and Time liabilities that a scheduled
commercial bank, a state or central cooperative bank, and other primary cooperative banks are required to maintain in the
form of liquid assets, such as gold, cash, or other securities.
• The banks need not hold these deposits with the Reserve Bank of India (RBI). Instead, they keep this reserve to themselves
• RBI is empowered to increase SLR up to 40%.
• Default Maintenance penalty is the same as CRR
▪ Default for the first time,3% p.a. fine in addition to the Bank rate that banks pay to RBI
▪ Default on the next working day,5% p.a. fine + the Bank rate charged by RBI
• Banks have an opportunity to earn interest from their reserves held to meet SLR because they invest in a variety of sovereign
bonds and other liquid assets
NDTL: Net Demand and Time Liabilities

• Net Demand Liabilities means bank accounts from which you can withdraw your money at any time like your savings
accounts and current account
• Time Liabilities means bank accounts where you cannot immediately withdraw your money but have to wait for certain
period. (Fixed and Recurring Deposits)
Marginal Standing facility (MSF):

• All Scheduled Commercial Banks can borrow from RBI against approved government securities in an emergency situation
like cash shortage.
• It is an Overnight Fund, up to 3% of their respective Net Demand and Time Liabilities (NDTL)
• The minimum amount can avail is Rs. 1 crore and afterwards in multiples of rupees 1 crore.
• MSF Rate is 100 basis points above the LAF repo rate,
• It is introduced in May 2011
Liquidity Adjustment Facility (LAF):

• LAF is a facility extended by RBI to the scheduled commercial banks (excluding RRBs) and Primary Dealers (PDs)
• Under Repo, the banks borrow money from RBI to meet short term needs by putting government securities (G-secs) as
collateral. Under Reverse Repo, RBI borrows money from banks by lending securities. Basically, LAF enables liquidity
management on a day-to-day basis.
• Recommendations of Narasimham Committee, 1998. Introduced in 2000.
• Under the LAF, banks could only bid up to a maximum of 0.75 percent of their net demand and time liabilities (NDTL). Bids
will be received for a minimum amount of Rs.5 crores and in multiples of Rs. 5 crores thereafter.
Open market operation

• Open market operations are the sale and purchase of government securities and treasury bills by RBI

Banking Awareness
• RBI sells securities in the market when it wants to reduce the money supply in the market RBI wants to increase the money
supply, it will purchase securities from the market.
• The objective of OMO is to regulate the money supply in the economy.
• RBI carries out the OMO through commercial banks and does not directly deal with the public.
Qualitative tool:
A qualitative tool is a selective tool of monetary tools used for discriminating different uses of credit. The qualitative measures’
various tools are margin requirement, rationing of credit, moral suasion, and direct action.
• Margin Requirement- difference between the loan value and the market value of security offered for a loan.
• Rationing of Credit- the fixation of credit quota for different businesses.
• Moral Suasion- the RBI pressure on the Indian banking system without any strict action for compliance of the rules.
• Direct Action- RBI can impose action against a bank, if certain banks are not adhering to the RBI’s directives.
• Benchmark rate-the reference rate used to determine the interest rates on loans.
• Fixed rate loan-the interest rate is fixed for the entire tenor of the loan.
• Floating rate loan-interest rate does not remain fixed during the tenor of the loan.
Internal benchmark rate-a reference rate determined internally by the bank.
Benchmark Prime Lending Rate:

• It is a Benchmark Prime Lending Rate. It is not transparent in nature.it resulted in one borrower getting a loan at lower
interest than the other.
• RBI constituted a working group under the Chairmanship of Shri Deepak Mohanty to review the rate.
• The committee suggested changes to make credit pricing more transparent and submitted a report in October 2009.
Base Rate:
• Base rate is the minimum rate set by the Reserve Bank of India below which banks are not allowed to lend to its customers.
• All floating rate rupee loans sanctioned and renewed between July 1, 2010 and March 31, 2016 shall be priced with reference
to the Base Rate.
• Base rate is calculated on three parameters — the cost of funds, unallocated cost of resources and return on net worth.
Marginal Cost of Funds based Lending Rate (MCLR):

• All floating rate rupee loans sanctioned and renewed w.e.f. April 1, 2016 shall be priced with reference to the Marginal Cost
of Funds based Lending Rate.
• The marginal cost of funds-based lending rate (MCLR) is an internal reference rate for banks fixed by the Reserve Bank of
India (RBI). It helps banks to define the minimum interest rate on different types of loans.
• MCLR is based on four components such as the marginal cost of funds, negative carry on account of cash reserve ratio,
operating costs and tenor premium.
• The problem with the IBLR regime was that when RBI cut the repo and reverse repo rates, banks did not pass the full
benefits to borrowers.
External Benchmarks lending Rate:

• RBI mandated the banks to adopt a uniform external benchmark within a loan category, effective 1st October 2019.
• The Report of the Internal Study Group by Janak Raj to Review the Working of the Marginal Cost of Funds based Lending Rate
(MCLR) System had recommended the use of external benchmarks by banks for their floating rate loans instead of the
present system of internal benchmarks such as Prime Lending Rate (PLR), Benchmark Prime Lending Rate (BPLR), Base rate
and Marginal Cost of Funds based Lending Rate (MCLR).
• It has been observed that due to various reasons, the transmission of policy rate changes to the lending rate of banks under
the current MCLR framework has not been satisfactory. With a view to further strengthening monetary policy transmission,
all new floating rate personal or retail loans such as your car or home loans that are sanctioned by banks will have to be linked
to external benchmarks, and the central bank's repo rate is one of them.
External benchmark rate means the reference rate which includes:
• Reserve Bank of India policy repo rate
• Government of India 3-Months Treasury Bill yield published by the Financial Benchmarks India Private Ltd (FBIL)
• Government of India 6-Months Treasury Bill yield published by the FBIL
• Any other benchmark market interest rate published by the FBIL.

Banking Awareness
• Banks are free to decide the spread over the external benchmark. The interest rate under the external benchmark shall be
reset at least once in three months.
Repo-linked lending rate (RLLR):

• Repo-linked lending rate or RLLR is the lending rate which is linked to the RBI’s repo rate. However, the effective RLLR interest
rate depends on multiple factors.
• Every bank will have its own Repo linked lending rate or RLLR which will keep varying each time the Reserve Bank of India or
the RBI revises the repo rate. The central bank reviews the repo rate on a bi-monthly basis through its Monetary Policy
Committee or MPC.
Financial Action Task Force (FATF):

• Financial Action Task Force (FATF) is a global money laundering and terrorist financing watchdog organization. This inter-
governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society.
• FATF headquarters is located in Paris and it was established in 1989.
• India became a member of the FATF in 2010.
Money laundering:
• Money laundering is the process of hiding the source of money obtained from illegal sources and converting it to a clean
source, thereby avoiding prosecution, conviction, and confiscation of the criminal funds. It is an illegal exercise that converts
black money into white money.
Banking Ombudsman Scheme:

• The Banking Ombudsman Scheme was introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect
from 1995. Presently the Banking Ombudsman Scheme 2006 is in operation.
• The Banking Ombudsman is a senior official appointed by the Reserve Bank of India in each of its regional office for three
years to redress customer complaints against deficiency in certain banking services under Clause 8 of the Banking
Ombudsman Scheme 2006.
• All Commercial Banks, Regional Rural Banks, Scheduled Primary (Urban) Cooperative Banks and Non-Scheduled Primary
(Urban) Co-operative Banks with deposit size of Rupees 50 crore and above.
• All Non-Banking Financial Companies (excluding Housing Finance Companies) with an assets size of Rupees 100 crore and
above
• If the customer has any issues with the banking services first, he/she has to approach the concern bank to solve the issue If
there is no satisfactory reply he can approach Banking Ombudsman within 1 Year. Exceeding 1 year the complaint is not
accepted by the ombudsman.
• If a customer is not satisfied, either of the parties can approach the appellate authority within 30 days. The Appellate Authority
is vested with a Deputy Governor of the RBI.
• The Banking Ombudsman does not charge any fee for filing and resolving customers’ complaints.
• For any consequential loss suffered by the complainant, the Ombudsman shall have the power to provide a compensation of
up to Rupees 20 lakh, in addition to, up to Rupees One lakh for the loss of the complainant’s time, expenses incurred and for
harassment/mental anguish suffered by the complainant.
Integrated Ombudsman Scheme, 2021:
• Integrated Ombudsman Scheme launched on November 12, 2021.
• The Scheme integrates the existing three Ombudsman schemes of RBI namely,
o the Banking Ombudsman Scheme, 2006
o the Ombudsman Scheme for Non-Banking Financial Companies, 2018
o the Ombudsman Scheme for Digital Transactions, 2019.
Legal Tender- coin or a banknote
• The coins issued by the Government of India under Section 6 of The Coinage Act, 2011,
• GOI is responsible for the designing and minting of coins The coins are issued for circulation only through the Reserve Bank
in terms of Section 38 of the RBI Act.
• Bank notes are printed at four currency presses,

Banking Awareness
• Government of India-owned Security Printing and Minting Corporation of India Ltd. (SPMCIL)
• Reserve Bank of India owned subsidiary, Bharatiya Reserve Bank Note Mudran Private Ltd. (BRBNMPL).
Currency presses of SPMCIL:
I. Nasik (Western India)
II. Dewas (Central India)
Two presses of BRBNMPL:
I. Mysuru (Southern India)
II. Salboni (Eastern India)
Coins are minted in four mints owned by SPMCIL.
The mints are located at:
I. Mumbai
II. Hyderabad
III. Kolkata
IV. Noida.
Currency chest:
• Currency Chest are storehouses where banknotes and rupee coins are stocked on behalf of the Reserve Bank for distribution
to bank branches in their area of operation.
• The Reserve Bank has given permission to a few scheduled banks to set up currency chests.
• In terms of Section 22 of the Act, the Reserve Bank has the sole right to issue banknotes in India. Section 25 states that the
design, form and material of bank notes shall be such as may be approved by the Central Government after consideration of
the recommendations made by the Central Board of RBI.
• Banknotes in India are currently being issued in the denomination of ₹10, ₹20, ₹50, ₹100 ₹200, ₹500,
• The highest denomination note ever printed by the Reserve Bank of India was the ₹10000 note in 1938 which was demonetized
in January 1946. The ₹10000 was again introduced in 1954. These notes were demonetized in 1978.
• The paper currently being used for printing banknotes in India is made using 100% cotton.
• Fifteen languages appear in the language panel of banknotes in addition to Hindi prominently displayed in the centre of the
note and English on the reverse of the banknote.
• Soiled note: Dirty due to usage and also two-piece note pasted together
• Mutilated banknote: portion is missing or composed of more than two pieces.
• Imperfect banknote: completely or partially destroyed, shrunk, washed, changed, or unreadable but does not include a
mutilated banknote.
Volume and value of banknotes to be printed

• All banknotes issued by RBI are backed by assets such as gold, Government Securities and Foreign Currency Assets, as defined
in Section 33 of the RBI Act, 1934.
• The expected increase in Notes in Circulation depends on expected growth in GDP, inflation, interest rates, growth in non-
cash modes of payment etc. The replacement requirement depends on the volume of notes already in circulation and the
average life of banknotes.
Mobile Aided Note Identifier (MANI):

• Mobile Aided Note Identifier (MANI) is a mobile application launched by the Reserve Bank to aid visually impaired persons in
identifying the denomination of Indian Banknotes.
• The free-of-cost application, once installed, does not require internet and is capable of identifying the denominations of the
Mahatma Gandhi Series and Mahatma Gandhi (New) series banknote by checking the front or reverse side/part of the note
including half-folded notes at various holding angles and in a broad range of light conditions (normal light/day light/low light
etc). This Mobile application does not determine whether a note is real or fake.

Banking Awareness
Historical Monuments printed on Indian currency:

Currency Banknote Series Dimension Base Colour Motif
10 rupees note 63mm x 123mm Chocolate brown Sun Temple, Konark, Odisha.
20 rupees note Mahatma Gandhi (New) Series 63mm x 129mm Greenish Yellow Ellora Caves, Maharashtra.
50 rupees note 66mm x 135mm fluorescent blue Hampi with Chariot, Karnataka
100 rupees note 66mm x 142mm lavender Rani ki Vav, Gujarat
200 rupees note 66mm x 146mm. bright yellow Sanchi Stupa, Madhya Pradesh.
500 rupees note 66mm x 150mm. stone grey Red Fort
2000 rupee note 66mm x 166mm. magenta Mangalyaan
Bank and Its Operation

• A bank is a financial institution that accepts deposits from the public and lends money to the public. RBI is the regulator of
Banking system in India.
• Asset: An asset is something that we own. Ex: Loans (asset for bank)
• Liability: Liability is something that we have but is not owned by us. Ex: Deposits (liability for banks)
• i.e. For a bank, loans are an asset, whereas deposits are a liability. Loans are liabilities, while deposits are assets for the
customer.
Net interest margin

• Net interest margin is a gap between Assets and Liability. For example, bank charges 9% interest rate for loans. And it gives
4% interest for the deposits that lie with the banks. Now 9% - 4% = 5% will be the profit for the banks. The 5% is a net interest
margin for the banks.
• +3% NIM -The bank runs on profit. To get high net interest margin banks should reduce the cost of funds.
Cost of funds- interest paid to the customer for their deposits
Types of Accounts
Saving Accounts:
• It is a demand deposit account held with a bank to manage your savings, expenses, and investments.
• Bank pays interest to the amount in the saving account. Interest varies from 3% to 4%. Interest calculated on daily basis.
• Resident and non- Resident Indian Whose age is above 18 years can open the account. Below 18 years can open account
along with guardian.
• An Account holder eligible to get Cheque book, Debit cards
• Should maintain minimum balance of Rs. 500(without cheque book) or Rs. 1000(with cheque book) It may vary from bank to
bank.
• Charges can be deduced for not maintain minimum balance.
• Interest from savings account is exempted from tax for an amount up to ₹10,000 during a financial year. This deduction can
be availed under Section 80TTA of the Income Tax Act.
• Cheque book, overdraft facilities available.
• Banker requires KYC (Know your Customers) norms to be completed before opening a saving account.
KYC- Know your customer
• KYC check is the mandatory process of identifying and verifying the client's identity (Aadhar, voter id, passport, PAN, Driving
license etc.) when opening an account and periodically over time.
• If the person is not able to provide KYC Documents (OVD) to the bank, he can still open a bank account, which is known as a
small account.
• CKYC refers to Central KYC (Know Your Customer), an initiative of the Government of India.
• CKYC will be managed by CERSAI (Central Registry of Securitization Asset Reconstruction and Security Interest of India), which
is authorized by Government of India
• KYC Identification Number (KIN) is a 14 digit number allotted by CERSAI.

Banking Awareness
Current Account
• Current account is opened by businessmen who have a higher number of regular transactions with the bank. It is also known
as Demand Deposit Account.
• A current account can be opened by depositing Rs.5000 to Rs. 25,000.
• No interest paid to the deposit in the account
• Banker requires KYC (Know your Customers) norms to be completed before opening a current account.
CASA Ratio:
• CASA Ratio is the ratio of the deposits in the form of current and savings accounts to the total deposits.
Fixed Deposits
• A fixed deposit is a type of deposit in which a sum of money is locked for a fixed period of time. However, the tenure for the
fixed deposit is decided by the person who invests his funds.
• A fixed rate of interest is paid to the amount in the deposit. Once the term comes to maturity, the account holder or depositor
receives the invested principal sum with maturity interest.
• Minimum Tenure- 7 days, Maximum Tenure- 10 years
• Deposits of more than 2 crores are named as Bulk Deposits having high interest rates.
• TDS is deduced by the bank if the interest is more than 10,000/year.
• Fixed deposits come with a lock-in period of five years and are eligible for deductions under Section 80C of the Income Tax
Act, 1961. The maximum amount of deduction that can be claimed is up to
Rs. 1,50,000 /- per annum as per Income tax guidelines.
• Loan facility is available for up to 90% of the amount deposited.
• Penalty is paid for closing the deposit before tenure. I.e. before maturity.
Recurring Deposits
• A fixed amount is deposited every month and earns interest at a predetermined rate.
• RD can be opened with any Bank, Post Office or NBFC by any person, a senior citizen, a minor above 10 years with a guardian,
partnership firms, clubs, associations and NRIs.
• The minimum investment required to open an RD account is only Rs. 100 per month.
• Tenure ranges from 6 months to 10 years.
• TDS will be deducted as per the income tax extant guidelines.
• Interest paid varies from bank to bank.
Inactive account:
• If a current/savings account does not witness any transaction over a period of 12 months, it gets classified as an inactive
account.
Dormant account:
• If a current/savings account does not witness any transaction over a period of 24 months, it is reclassified as a dormant
account.
Depositor Education Awareness Fund (DEAF)
• Current/saving deposits unclaimed for more than 10 years (i.e. no transaction done for 10 years) are to be transferred to
RBI. Now, RBI will use this amount for the DEAF Scheme to educate the depositors.
NRI Deposits:
• For a Non-Resident Indian (NRI) or a Person of Indian Origin (PIO), can open, hold and maintain the following types of accounts
with a bank authorized to deal in foreign exchange.
• Non-Resident (Ordinary) Rupee Account – NRO Account
• Non-Resident (External) Rupee Account – NRE Account
• Foreign Currency Non-Resident (Bank) Account – FCNR (B) Account
• NRO/NRE deposits can be accepted only by banks, which are authorized by the Reserve Bank to accept such deposits.
NRO account:
• NRO (Non-Resident Ordinary) account is opened by an NRI to deposit his/her earnings that originate from India.

Banking Awareness
• NRO account is maintained in Indian rupee. Can be opened jointly with resident Indian
• Both principal and interest earned from this account is taxable because the fund is originated in India.
• Types of accounts opened under NRO account are savings, current and fixed deposits.
NRE account:
• NRE (Non-Resident External) account is opened by an NRI to deposit his/her earnings that originate from that individual’s
country of residence.
• NRE account is maintained in Indian rupee. Can be opened as a joint account with another NRI.
• Both principal and interest earned are exempted from tax in NRE account because NRI’s Residence country will levy tax on
the earning. If India also levied tax on it means it will be double taxation.
• Types of accounts opened under NRE account are savings, current and fixed deposits.
FCNR account:
• FCNR stands for Foreign Currency Non-Resident Account. An NRI can open an FCNR account to deposit his/her earnings from
that individual’s residential country.
• FCNR account is maintained in any permitted currency. Interest is exempted from tax.
• Only Fixed deposit is available in the FCNR account. Minimum term 1 year and maximum term 5 years.
No-Frill Account (Nov 2005)
• It is a zero-balance account. No other facilities are available.
• In August 2012, all the ‘No-Frills’ accounts were converted to Basic Savings Bank Deposit Accounts (BSBDAs)
Basic Saving Bank Deposit Account
• BSBDA is a type of bank account that has no minimum balance
• Services are at free of cost, such as internet and mobile banking, debit card and ATM Access.
• An individual is eligible to have only one BSBDA in one bank and not eligible for opening of any other saving account in that
bank.
• An individual can deposit a maximum of Rs. 50,000 in the account at one time.
• The total credit in your account should not exceed Rs. 1 lakh in a year.
• The maximum limit of withdrawal made in a particular month is Rs. 10,000.
• Can withdraw money as many as four times in a month, including ATM withdrawals.
• Cheque books facilities are not available, If the customer requests a check book, the account will be changed to a regular
savings account. i.e. he must maintain a minimal balance
Small Account
• When a Customer is unable to meet KYC requirements. This account is subject to a number of restrictions.
• The total amount of all deposits must not exceed Rs.1 lakh each year.
• The total amount of all withdrawals and transfers in a month cannot exceed Rs.10,000/-.
• The maximum balance shall not exceed Rs.50,000/-.
• Remittances from abroad cannot be credited to Small Accounts without completing normal KYC formalities
• Small accounts are valid for a period of 12 months initially which may be extended by another 12 months if the person provides
proof of having applied for an Officially Valid Document.
PMJDY Accounts
• Pradhan Mantri Jan-Dhan Yojana (PMJDY) is the National Mission for Financial Inclusion to ensure access to financial services,
namely, basic savings & deposit accounts, remittance, credit, insurance, and pension in an affordable manner.
• One basic savings bank account is opened for unbanked persons.
• There is no requirement to maintain any minimum balance in PMJDY accounts.
• Rupay Debit card is provided to PMJDY account holders.
• Accident Insurance Cover of Rs.1 lakh is for PMJDY accounts opened before 28.8.2018
• Accident Insurance Cover increased to Rs. 2 lakh for new PMJDY accounts opened after 28.8.2018
• An overdraft (OD) facility up to Rs. 10,000 to eligible account holders is available.

Banking Awareness
• PMJDY accounts are eligible for Direct Benefit Transfer (DBT), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), Pradhan
Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY), Micro Units Development & Refinance Agency Bank
(MUDRA) scheme.
LIBOR- The London Interbank Offered Rate (LIBOR)
• LIBOR was the benchmark interest rate at which major global banks lend to one another.
• Short-term loans -Overnight to 1 year.
• LIBOR was administered by the Intercontinental Exchange (UK)
The Secured Overnight Financing Rate (SOFR)
• It is replacement of LIBOR (London Interbank Offered Rate),
• SOFR is published by the Federal Reserve Bank of New York and is based on actual transactions in the U.S.
• The Rate is determined by the observable Repo rate and cost of borrowing
• Treasury repurchase market, where financial institutions lend and borrow money on an overnight basis, backed by U.S.
Treasuries as collateral.
DTAA- Double Taxation Avoidance Agreement

• It is an agreement between two countries with an objective to avoid taxation of the same income in both countries.
• For availing of DTAA benefits, the NRI has to submit “Tax Residency Certificate” (TRC) to the bank annually.
SNRR Account (External Commercial Borrowing)
Any Person residing outside India. Having a business open (SNRR account) with an authorized dealer for the purpose of putting
through bonafide transactions in the rupee which are conformity.
Demat account and Trade account
Demat account is an account to hold financial securities in electronic form. A trade account is an account used to conduct stock
trading activities.
Nostro Account
A Nostro Account is an account that a domestic bank holds in a foreign currency in a foreign bank.
Vostro account
A Vostro account is an account which is held by a foreign bank with a domestic bank in domestic currency.
LORO account
When a bank remits its foreign currency fund to a foreign bank for credit to an account of a third bank is called LORO account.
Escrow account
Escrow account is a third party account where funds are kept before they are transferred to the ultimate party. Value is held until
the fulfilment of specific conditions of the transactions.
GILT Account:
These accounts are maintained by investors with the Primary dealers for holding their Government securities and Treasury bills
in the Demat form.
Payment Instruments in India

1. Currency
Currency is an important means of payment in India was provided by the Negotiable Instruments Act, 1881 (NI Act).
2. Bill of Exchange
It is a Negotiable Instrument with an unconditional order to pay
A bill of exchange is a written order from the drawer (creator of the bill, i.e. buyer) to the drawee to pay money (who is directed
to pay, i.e. bank) to the payee (who received the payment, i.e. seller).
Ex:

Banking Awareness
The dealer has sold you goods, but you do not have the money to pay him now. You will pay him in a month, but he requires
payment today.
You can now go to a bank and direct them to pay him immediately and collect the required amount from you a month later (as
written in the bill). The bank now deducts commissions and pays the rest of the amount.
3. Promissory Note
A promissory note is a Negotiable instrument that represents an unconditional promise to pay a certain amount of money to a
specific person or entity at a specific date or on demand.
A promissory note involves two parties - the borrower (also known as the maker or debtor) and the lender (also known as the
payee or creditor/bearer).
3. Letter of Credit
• A letter of credit (LC) is a financial instrument issued by a bank on behalf of a buyer (importer) to guarantee payment to a
seller (exporter) for goods or services provided.
• LCs are used in international trade to mitigate the risk of non-payment by the buyer. The seller can be confident that they
will be paid, even if the buyer defaults on their payment obligations.
4. Cheque
• A cheque is a bill of exchange that is payable on demand.
• The 'drawer' of a cheque is the person who writes it, the 'drawee' is the bank directed to pay it, and the 'payee' is the person
who receives the money.
• The maximum validity period for a cheque is three months.
• The bank will not accept a damaged or torn cheque.
Types of cheques:-
Bearer cheque paid at the bank counter whoever carrying the cheque (No name on the cheque)
Order cheque are paid to the beneficiary only on identification (Name on the cheque) The payee can transfer an order cheque
to someone else by signing his or her name on the back of it.
Crossed cheques are only credited to the payee's bank account (two cross lines on the left corner of the cheques indicate the
amount to be paid in bank accounts).
Open cheque is basically an uncrossed cheque. This cheque can be encashed at any bank, and the payment can be made to the
person bearing the cheque. The payee can transfer the cheque to someone else by signing his or her name on the back of it.
Self-cheque, If the drawer wishes cash for himself, he can issue a cheque where in place of the payee’s name he can write 'SELF'
and get cash from the branch where he owns an account.
Ante-dated cheque, If the drawer mentions a date before the current date on the cheque, it is called an ante-dated cheque.
Staled cheque past its validity, three months after the date of being issued, is called a stale cheque.
A post-dated Cheque is a cheque that bears a future date. It can only be cashed or deposited on or after the date written on the
cheque.
A Dishonour cheque also known as a bounced cheque or a returned cheque,
This can occur for various reasons, such as insufficient funds in the account, a closed account, or error in the information on the
cheque.
Travellers cheques:
Carrying large amounts of cash is very risky especially when one is travelling. Travellers cheques are a secure and convenient
alternative to carrying cash. These are prepaid instruments available in fixed denominations Travellers cheques can be replaced
if they are lost or stolen at no additional cost. Travellers cheques are available in both domestic and international currency.
Magnetic Ink Character Recognition (MICR):

The MICR Code is a 9-digit numeric code that uniquely identifies a bank branch is printed on the MICR band of cheques issued by
bank branches.
The first 3 characters – city code,
The next 3 - bank code
The last 3 – branch code

Banking Awareness
Cheque Truncation System (CTS)-2010

Initially, banks used MICR technology to improve efficiency in check handling; however, clearing is slow since cheques must be
physically moved from the collecting branch of a bank to the drawee bank branch.
To overcome this, instead of physically moving the cheque, an electronic image of the cheque is transferred to the drawee
branch / bank. Along with the electronic image, certain essential important information is also transmitted.
3 types of images are captured & transmitted:
• Front Gray Scale
• Front Black & White
• Back Black and White
MICR band data like cheque number, MICR code, Short Account Number, Transaction Code is captured.
Clearing process carried out on the basis of images captured and sent to the drawee banks.
Settlement arrived at on the basis of captured MICR data.
Physical cheques are retained at the presenting bank itself for 10 years.
Positive Pay:
• Positive pay is a fraud-prevention mechanism provided by most commercial banks to businesses in order to safeguard them
from forged, altered, or counterfeit checks.
• Under the positive pay system, an issuer of a cheque will have to electronically submit details of the particular cheque (such
as date, name of the beneficiary, payee and amount) to the drawee bank. This can be done through various channels – SMS,
mobile app, internet banking and ATM.
• Cheque Truncation System (CTS) will then cross-check the provided information with the presented cheque. If there is a
difference, the CTS will report it to the drawee and presenting banks.
• This procedure would be used to high-value checks for Rs 50,000 or above.
Demand Draft:
The Demand Draught is a pre-paid Negotiable Instrument, which means that the issuer has already paid the amount. It is similar
to a check, but it is guaranteed by the issuing bank rather than by the account holder. The maximum validity period of the Demand
Draft is 3 months.
For Example,
If you want to pay your college fees, the college will ask for a DD instead of a cheque or cash because cash must be deposited in
a bank and a cheque may bounce. To obtain a DD, you must first deposit the amount to transfer it with the bank. The bank then
issues a DD for that amount, payable to the college. The college can then deposit the DD into its own account and receive the
funds.
Different types of online financial transactions
National Electronic Funds Transfer (NEFT) system:
▪ The National Electronic Fund Transfer (NEFT) system is a retail payment system and was introduced in November 2005, owned
by RBI.
▪ NEFT has a straight through process which operates in 48 half-hourly batches 24x7x365 with effect from December 16, 2019.
▪ NEFT operates in half hourly batches. Currently there are 48 settlements on all days including holidays. Therefore, the
beneficiary can expect to get the credit for the transactions on the same day.
▪ There is no limit or maximum amount for NEFT Transactions. However, each bank may have certain specified limits for their
NEFT services. No charges levied on savings bank account customers for online NEFT transactions.
▪ It is also available for one-way fund transfers from India to Nepal, which were introduced in May 2008, with a maximum limit
of 2 lakhs and 12 remittances in a year. It was paid in Nepalese rupees.
IFSC: Indian Financial System Code

▪ alpha-numeric code identifies a bank-branch used by the NEFT system
▪ 11-digit code
▪ 4 alpha characters representing the bank,
▪ Last 6 characters representing the branch.

Banking Awareness
▪ The 5th character is 0 (zero).
Real-Time Gross Settlement System (RTGS):

▪ RTGS system is a funds transfer mechanism for the Fastest transfer of money from one bank to another on a “real-time” (not
subjected to any waiting period) and on a “gross” (one-to-one basis without bunching with any other transaction) basis.
▪ The minimum amount to be remitted through RTGS is Rs.2,00,000 with no upper or maximum Limit.
▪ RTGS is available 24x7x365 with effect from December 14, 2020.
▪ The beneficiary bank must credit the beneficiary's account within 30 minutes of receiving the funds transfer message. In case
of any delay in returning the failed payment, the originating customer is eligible to receive compensation at current repo rate
plus 2%.
▪ RTGS system was implemented in March 2004.
▪ Unique Transaction Reference (UTR) number is a 22-character code used to uniquely identify a transaction in RTGS system.
▪ Inward transactions – Free, no charge to be levied.
▪ Outward transactions – ₹ 2,00,000/- to 5,00,000/-: not exceeding ₹.25/- (exclusive of tax, if any)
▪ Above 5,00,000/-: not exceeding 50 (exclusive of tax, if any)
▪ Banks may decide to charge a lower rate but cannot charge more than the rates prescribed by RBI.
Legal Entity Identifier:

• The Legal Entity Identifier (LEI) is a 20-character alpha-numeric code used to uniquely identify parties to financial transactions
worldwide.
• All payment transactions of value ₹50 crore and above undertaken by entities (non-individuals) using Reserve Bank-run
Centralised Payment Systems, viz., Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT) included
remitter and beneficiary LEI information from April 1, 2021.
Society for Worldwide Interbank Financial Telecommunication (SWIFT):

• SWIFT is an international payment network that identifies banks worldwide. Headquarters is located in La Hulpe, Belgium
• SWIFT code consists of 8 or 11 characters
• SWIFT code is 8 digits - referred to primary office
• SWIFT code is 11 digits
▪ First four digit represents bank code,
▪ 5th and 6th digit represents country code
▪ 7th and 8th digits represent location code
▪ 9th, 10th and 11th digits represent branch code.
NPCI- National Payment corporation of India

• The National Payments Corporation of India is an umbrella organization for operating retail payments and settlement systems
in India.
• It was created by RBI in 2008 to operate retail payments and settlement systems in India under the provisions of the Payment
and Settlement Systems Act, 2007.
• The NPCI is owned by a consortium of major banks. The authorised capital is ₹3 bn and the paid-up capital is ₹1 bn
BBPS- Bharat Bill Payment System

• BBPS mainly enables a user to pay bills online through its App or Website.
• It acts as a central reference for a customer who wants to make different payments — whether utility bills, loan repayments,
FasTag recharge, and so on.
• Product of the National Payments Council of India (NPCI) introduced in 2019.
For instance, as a customer you may have certain utilities such as phone, electricity, gas, and water bills to pay on a monthly basis.
Under BBPS, all these utilities are listed in a single website. You must choose the payments to make and that will take you to the
vendor website for the processing. You don’t have to go to each website separately to make the payment.
NPCI Bharat BillPay Limited (NBBL)

• In 2021, NPCI created a new subsidiary for the Bharat Bill Payment System (BBPS) to increase growth, especially in business
to consumer segment for small businesses.

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• This is done in view of growing traffic and workload from UPI, IMPS, the Aadhaar Enabled Payment System and National
Electronic Toll Collections.
Immediate Payment Service (IMPS)

• It is an instant electronic fund transfer service that allows inter and intra-bank transfers done in fraction of seconds.
• Service available 24x7 throughout the year, including on Sundays, banks, and state or national holidays.
• Access this facility through multiple channels such as mobile banking, SMS, Net banking or even ATMs.
• RBI increased the per transaction limit from Rs 2 lakh to Rs 5 lakh in IMPS.
• Money sent using,
▪ Mobile number & MMID: Send money to bank accounts mapped using mobile number.
▪ Account number & IFSC: Send money to bank accounts.
MMID -Mobile Money Identifier.

It is a 7-digit unique code issued to account holders by their banks to receive money using IMPS.
The first four digits -Bank
The last three digits- Account.
National Automated Clearing House (NACH):

• National Payments Corporation of India (NPCI) has implemented “National Automated Clearing House (NACH)” for Banks,
Financial Institutions, Corporates and Government a web based solution to facilitate interbank, high volume, electronic
transactions which are repetitive and periodic in nature.
• Bulk distribution of subsidies, dividends, interest, salary, pension etc.
• Bulk collection of payments pertaining to telephone, electricity, water, loans, investments in mutual funds, insurance premium
etc.
Automated Teller Machine (ATM)

• An ATM is a computerized machine that provides customers of banks the facility to access their accounts for dispensing cash
and to carry out other financial & non-financial transactions without the need to visit the bank branch.
• Free Charges financial and non- financial transactions,
• Five free transactions – Own bank ATM.
• Three free transactions in metros – Other bank ATM.
• Five free in non-metros – Other bank ATM.
• Beyond the free transactions, - ₹21 is charged
Interchange fee
Bank A's customer uses their card to makes a transaction at an ATM deployed by Bank B, Bank A must pay a fee to Bank B
Rs 17 for financial transactions
Rs 6 for non-financial transactions
• Green Label ATMs- Used for agricultural purposes
• Yellow Label ATMs- Used for e-commerce transactions
• Orange Label ATMs- Used for share transactions
• Pink Label ATMs- Specifically for females to help avoid the long queues and waiting time
• White Label ATMs – Introduced by the TATA group, white label ATMs are not owned by a particular bank but by entities
other than the bank
• Brown Label Banks- Operated by a third party other than a bank
National Financial Switch (NFS)

• National Financial Switch (NFS) is the largest network of shared Automated Teller Machines (ATMs) in India facilitating
interoperable cash withdrawal, card to card funds transfer and interoperable cash deposit transactions among other value
added services in the country.
• National Financial Switch is run by NPCI.
• National Financial Switch (NFS) was taken over by NPCI from Institute for Development and Research in Banking Technology
(IDRBT) on December 14, 2009.

Banking Awareness
Card Transactions:
Cards can be classified on the basis of their issuance, usage and payment by the card holder. There are four types of cards.
I. Debit card
II. Credit card
III. Prepaid card
IV. Electronic card
Debit card:
A card used on ATM withdrawals or deposits that is Linked to your bank account.
Credit card:
A credit card is a borrowing instrument that allows you to make payments or withdraw cash.
Credit cards give you access to a line of debt issued by a bank.
Prepaid card:
A prepaid card is not linked to a bank checking account or to a credit union share draft account. Instead, you are spending money
you placed in the prepaid card account in advance. This is sometimes called “loading money onto the card”.
Point of sale (POS):

• A point of sale (POS) is a place where a customer executes the payment for goods or services. RBI now permitting cash
withdrawals at POS, customer can now access cash through POS machines
• A cardholder can withdraw cash up to ₹2,000 per day per card in Tier III to VI centres within an overall monthly limit of
₹10,000.
• At Tier I and II centres, the withdrawal limit is Rs.1,000 per day per card.
• 1% charge for using the POS withdrawal
Bharat Interface for Money (BHIM)

• Bharat Interface for Money (BHIM) is an app that makes simple, easy and quick payment transactions interconnected with
every bank through the Unified Payments Interface (UPI).
• Instant bank-to-bank payments using Mobile number or Virtual Payment Address (UPI ID).
• BHIM is not a wallet. BHIM is currently available in 20 languages.
• Under BHIM, the maximum amount that can be transacted is Rs. 40,000.
• BHIM was launched 30th Dec 2016.
• NRI/NRE accounts can only be used outside India.
UPI:
• The Unified Payment Interface (UPI) is a real-time payment system developed by the National Payments Corporation of India
(NPCI) to enable all "digital" transactions in India.
• It facilitates inter-bank transactions by instantly transferring funds between two bank accounts without the hassle of typing
credit card details, IFSC code, or net banking/wallet credentials.
• UPI is the advanced version of IMPS (Immediate Payments Service).
• 24x7 service launched in 2016
• The UPI transaction limit per day is Rs.1 lakh as per NPCI. Rs.5 lakh for bill payments and merchants.
UPI 2.0:
• UPI 2.0 was launched on 16th of August 2018 with additional features of
• ‘Signed Intent & QR’,
• ‘Onetime Mandate with block functionality’, UPI mandate is to be used in scenarios where money is to be transferred later
• ‘linking of Overdraft as underlying account in UPI’,
• ‘Attachment in the Inbox’ and Foreign Inward remittance.
• UPI AutoPay is a recurring payments solution launched by the National Payment Corporation of India (NPCI) on 22 July 2020
as a part of UPI 2.0.

Banking Awareness
Virtual Payment Address (VPA):

• A virtual payment address (VPA) is an identifier that can be uniquely mapped to an individual account. Unified Payment
Interface services help customers to create VPAs for making and receiving payments.
National Electronic Toll Collection FASTAG

• FASTag is an electronic toll collection system in India, operated by the National Highway Authority of India (NHAI).
• It works on Radio Frequency Identification (RFID) technology
• Toll payments directly from the prepaid or savings account linked with FASTAG
• FASTag is affixed to the windscreen of the vehicle and the vehicle can be driven through the toll plazas without making a
stopover for transactions.
RuPay
• RuPay is the first domestic Card payment network of India, with wide acceptance at ATMs, POS devices and e-commerce
websites across India.
• Banks or Card Companies that issue a credit or debit card tie up with one of the following “labels” - American Express, Discover,
Mastercard, JCB or Visa.
• RuPay is a Indian label of NPCI, under the Payment and Settlement Systems Act, 2007,
UPI 123PAY
• It a 3-step method to initiate and execute UPI services for feature phone users without the use of internet connection or USSD
channel.
• It is based on Interactive voice response (IVR) technology which is good specially for rural areas.
• It is launched by RBI on 10 March 2022
BharatQR
• A Quick Response (QR) code is type of barcode easily readable with digital devices like smartphones. They store information
as a series of pixels in a square grid that can be read in two directions - top to bottom and right to left - unlike standard
barcodes that can only be read top to bottom.
• A common QR code developed by NPCI in collaboration with American Express, Mastercard and Visa for ease of payment and
interoperability.
e-RUPI:
• e-RUPI is a cashless and contactless digital payment medium, which will be delivered to mobile phones of beneficiaries in form
of an SMS-string or a QR code.
• e-RUPI is launched on August 02, 2021.
• It is a Digital platform which will be used for making digital payments and to strengthen the Direct Benefit Transfer (DBT)
scheme and digital transactions [Business to Business (B2B) transactions] among Micro, Small, and Medium Enterprises
(MSMEs).
• National Payments Corporation of India (NPCI) in association with Department of Financial Services (DFS), Ministry of Health
and Family Welfare (MoHFW), National Health Authority (NHA), and partner banks, together associated in development of
the ‘e-RUPI’.
• e-RUPI is a QR code or SMS string-based e-voucher which will be delivered to the mobile of the users. It is operable on basic
phones also, and hence it can be used by persons who do not own smart-phones or in places that lack internet connection.
The users will be able to redeem this voucher without any digital payment app, internet banking, or card. This initiative will
connect the sponsor of services with the beneficiaries and service providers. The connection will hold in a digital manner
without any kind of physical interface.
• Maximum limit of each e-RUPI shall not exceed INR 10,000 or as defined by regulator.
Aadhaar Payment Bridge System (APBS):

• It is a unique payment system implemented by National Payments Corporation of India (NPCI), which uses Aadhaar number
as a central key for electronically channelizing the Government subsidies and benefits in the Aadhaar Enabled Bank Accounts
(AEBA) of the intended beneficiaries.
• It is a payment system based on Aadhaar numbers issued by UIDAI & IIN (Institution Identification Number) issued by NPCI.

Banking Awareness
• APB System is used by the Government Departments and Agencies for the transfer of benefits and subsidies under Direct
Benefit Transfer (DBT) scheme launched by Government of India.
Unstructured Supplementary Service Data (USSD):

It is a networking standard used by GSM (Global System for Mobile) mobile phones to contact or text sending purpose from a cell
phone to an application hosted by the mobile operator.
How can I send Money offline?
• Dial USSD code *99# on your phone's dialler and press the call button.
• A menu of choices will appear on your screen. ...
• Enter your linked bank account number, registered phone number, or UPI ID.
• Once prompted, enter the amount you want to send and confirm it.
• To confirm the transaction, enter the UPI PIN.
NUUP (National Unified USSD Platform):

• The NUUP service is a USSD based mobile banking service from NPCI using which financial and non-financial transactions can
be done using mobile phone without mobile internet connection.
Payment and Settlement Systems Act, 2007:
• The PSS Act, 2007 provides for the regulation and supervision of payment systems in India and designates the Reserve Bank
of India (Reserve Bank) as the authority for that purpose and all related matters. It extends to the whole of India.
• Payment system means a system that enables payment to be effected between a payer and a beneficiary, involving clearing,
payment or settlement service or all of them, but does not include a stock exchange.
• Settlement means settlement of payment instructions and includes the settlement of securities, foreign exchange or
derivatives or other transactions which involve payment obligations.
Types of Banks in India

The Banking System in India is divided into several types, each serving specific functions and purposes.
Central Bank
The Reserve Bank of India (RBI) serves as the Central Bank of India and is responsible for regulating and controlling the monetary
and banking system in the country.
Scheduled Commercial Banks

Scheduled banks are those banks that are listed under Schedule II of the Reserve Bank of India Act, 1934.
Paid up capital must be 500 crores.
Regulated by RBI, CRR maintained with RBI
Permitted to borrow money from RBI
• public sector banks
• Regional Rural Banks
• private sector banks,
• Foreign banks
Public Sector Banks:
The public sector is a government-owned bank where the government holds more than a 51% stake in that bank.
Indian public sector banks must maintain a CAR of 12% while Indian scheduled commercial banks are required to maintain a CAR
of 9%.
The 12 public sector banks are –
• State Bank of India,
• Punjab National Bank, Bank of Baroda,
• Bank of India, Central Bank of India,
• Canara Bank,
• Union Bank of India,
• Indian Overseas Bank,

Banking Awareness
• Punjab and Sind Bank,

• Indian Bank,
• UCO Bank, and
• Bank of Maharashtra.
Regional Rural Banks (RRBs)

• These banks operating in rural and semi-urban areas in different states of India
• Regulated by RBI but supervisory powers have been vested with NABARD
• CRAR norms are not applicable to RRBs
• Owned by the government (50% share), commercial banks (35%), and state governments (15%).
• These were set up based on the recommendation of the Narsimham Committee report (1975), through the Regional Rural
Banks Act of 1976.
• The first Regional Rural Bank was set up in 1975 by the name Prathama Grameen Bank, Uttar Pradesh.
• At present, there are 43 RRBs
Private Sector Banks:

• These banks are owned by private individuals or corporations such as HDFC Bank, ICICI Bank, and Axis Bank.
• At present, there are 21 private banks in India, as of 1 March 2023.
Foreign Banks:
• These banks have branches in India and are headquartered in foreign countries. Some examples are Citibank, Standard
Chartered, and HSBC.
• Foreign banks set up a 100% wholly owned subsidiary
Non- Scheduled banks

• Non-Scheduled banks are those banks that are not listed under Schedule II of the Reserve Bank of India Act, 1934.
• Paid up capital less than 5 lakh
• Regulated by RBI, CRR maintained with themselves
• Interbank financial transactions and the cheque-clearing facility is not available
Ex: Co-operative banks
Co-operative Banks
• A co-operative bank is a small-sized, financial entity, where its members are the owners and customers of the Bank.
• In order to support the financial needs of a village or a specific community, people come together and provide banking services
such as loans, savings accounts etc.
• Regulated by the Reserve Bank of India and registered under the States Cooperative Societies Act.
The Co-operative banks are governed by the,
• Banking Regulations Act, 1949.
• Banking Laws (Co-operative Societies) Act, 1955.
• They are broadly divided into Urban and Rural cooperative banks.
Small Finance Bank:

• Small Finance Banks were formed under the recommendations of Usha Thorat committee.
• The license for small finance banks is provided as per section 22 of Banking Regulation Act 1949. It is registered as a public
limited company as per Companies Act of 2013.
• The bank shall primarily undertake basic banking activities of accepting deposits and lending to small farmers, small
businesses, micro and small industries, and unorganized sector entities. At least 25 per cent of its branches in unbanked rural
centres.
• It cannot set up subsidiaries to undertake nonbanking financial services activities. The small finance bank can also become a
Category II Authorised Dealer in foreign exchange business for its clients’
• Minimum paid-up capital -₹200 crore

Banking Awareness
• Promoter is required to hold at least of 40% of the paid-up voting equity capital for 5 years. In case the initial promoter
shareholding is more than 40%, it must be brought down to 40% within a period of 5 years, 30% within 10 years, as well as
15% in 15 years.
• It became an universal bank after satisfactory record of minimum of 5 years
• Primary (urban) co-operative banks/NBFC's that aim to convert into SFBs were allowed to continue with a minimum paid-up
equity capital of Rs 100 crore to begin with, but they are required to increase their minimum net worth to Rs 200 crore within
5 years.
• The central bank maintained that SFBs must be listed within 3 years of reaching a net value of Rs 500 crore.
• The Small Finance Bank cannot be a Business Correspondent (BC) for another bank. However, it can have its own BC network.
• Small finance banks can lend upto Rs. 25 lakhs.
• Priority Sector lending (PSL) requirement for Small Finance Bank will be 75% of Adjusted Net Bank Credit (ANBC) compared
to 40% for Scheduled Commercial banks.
• The maximum loan size and investment limit exposure to single and group borrowers would be restricted to 10% and 15%
respectively of its capital funds.
• Foreign shareholding is 74%. (49% under automatic route and 25% under approval)
• Once the net worth reaches Rs. 500 Crore, listing will be mandatory within 3 years of reaching the net worth
• Minimum CAR of 15% on risk weighted assets
• SFBs to be set up in future should be listed within 8 years from the date of commencement of operations.
• UCBs with a minimum net worth of Rs.50 crore and maintaining capital to risk (weighted) assets ratio of 9 per cent and above
are eligible to apply for voluntary transition to SFB under the RBI’s scheme.
• Shivalik Mercantile Co-operative Bank is the first bank in the country to transition from an Urban Cooperative Bank into a
Small Finance Banks (SFB)
• Unity Small Finance Bank is a digital-first bank with a business model of collaboration and open architecture, uniting all its
stakeholders to deliver a seamless digital experience.
List of 12- Scheduled Small Finance Banks
1. Au Small Finance Bank Limited
2. Capital Small Finance Bank Limited
3. Equitas Small Finance Bank Limited
4. Suryoday Small Finance Bank Limited
5. Ujjivan Small Finance Bank Limited
6. Utkarsh Small Finance Bank Limited
7. ESAF Small Finance Bank Limited
8. Fincare Small Finance Bank Limited
9. Jana Small Finance Bank Limited
10. North East Small Finance Bank Limited
11. Shivalik Small Finance Bank Limited
12. Unity small Finance Bank
Payments bank:
• Payment Banks were formed under the recommendations of Nachiket Mor committee.
• It can carry out most banking operations but can’t Lend loans or issue credit cards.
• It can, accept demand deposits (up to Rs 2 lakh),
• It cannot accept time deposits or NRI deposits.
• It cannot set up subsidiaries to undertake non-banking financial activities.
• Offer remittance services, mobile payments/transactions and other banking services like ATM and debit cards, net banking
and third-party fund transfers.
• minimum of 75 percent of their “demand deposit” invested in secure government securities only in the form of Statutory
Liquidity Ratio (SLR).
• The remaining 25% is to be placed as time deposits with other scheduled commercial banks.
• A Payment Bank can act as a Banking Correspondant for another bank. FDI limit in payment bank is 74%.
• Minimum paid-up equity capital is Rs. 100 crore.

Banking Awareness
• Minimum initial contribution of the promoter 40% of paid up capital for the first five years from the commencement of its
business.
• According to the RBI, Payments banks can apply for conversion into small finance banks (SFBs) after five years of operation,
provided they meet the eligibility criteria.
• If the promoter of a payments bank desires to set up an SFB separately, both the banks should come under the non-operative
financial holding company (NOFHC) structure.
• Note: RBI allows scheduled payment banks, scheduled small finance banks as agency bank to conduct government business
There are 6 payment banks in India:
1. Airtel Payments Bank,
2. Jio Payments Bank,
3. NSDL Payments Bank,
4. Paytm Payments Bank,
5. India Post Payments Bank, and
6. Fino Payments Bank.
On April 11, 2016, Airtel Payments Bank became the first entity in India to receive a payments bank license from the Reserve
Bank of India (RBI).
India Post Payments Bank (IPPB):

• India Post Payments Bank (IPPB) has been established under the Department of Posts, Ministry of Communication with 100%
equity owned by Government of India.
• IPPB was launched on September 1, 2018. Headquarters is located in New Delhi.
Neo-banks:
• Neo-banks are fully digital entities without any physical network. What they offer- accounts credits payments and other such
services. They usually don't have licences of their own but rely on bank partners to provide bank licensed services. So these
are basically fintech firms that provide digital and mobile-first financial solutions. Payment gateways and payments banks are
the existing models that are closest to such "neo-banks".
Bancassurance:
• The phenomenon whereby a financial institution combines the selling of banking products and insurance products through
the same distribution channel.
Non-Banking Financial Company (NBFC):

• A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956. Defined as NBFC under
Section 45 I(a) of the RBI Act, 1934
• The NBFCs are allowed to accept term deposits for a minimum period of 12 months and maximum period of 60 months. They
cannot accept demand deposits(SA/CA).
• Minimum Paid up capital 2 crore
• The functions of the NBFCs are managed by both the Ministry of Corporate Affairs and the Reserve Bank of India.
Do's
• loans and advances, Term deposits
• acquisition of shares/stocks/bonds/debentures/securities issued by GOI
• leasing, hire-purchase, insurance business, chit business
Don't
• agriculture activity, industrial activity, purchase or sale of any goods (other than securities)
• providing any services and sale/purchase/construction of immovable property.
• NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 12.5
per cent per annum.
Difference between banks & NBFCs:
(i) NBFC cannot accept demand deposits
(ii) NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself

Banking Awareness
(iii) Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike
in case of banks.
Systemically important NBFCs:
NBFCs whose asset size is of Rs. 500 crore or more as per last audited balance sheet are considered as systemically important
NBFCs.
Prepaid Payment Instruments (PPIs):

• PPIs are instruments that facilitate purchase of goods and services, conduct of financial services, enable remittance facilities,
etc., against the value stored therein.
• PPIs can be issued by banks and non-banks after obtaining approval from the RBI
• PPIs can be issued as cards or wallets.
• There are two types of PPIs,
o Small PPIs and full-KYC (know your customer) PPIs. Further, small PPIs are categorized as – PPIs up to Rs 10,000
(with cash loading facility) and PPIs up to Rs 10,000 (with no cash loading facility).
• PPIs can be loaded/reloaded by cash, debit to a bank account, or credit and debit cards.
o The cash loading of PPIs is limited to Rs 50,000 per month subject to the overall limit of the PPI.
• The timeline for conversion of minimum detail prepaid payment instruments (PPIs) to KYC compliant PPIs was extended from
18 months to 24 months.
• All non-bank entities seeking authorisation from RBI under the PSS Act shall have a minimum positive net-worth of Rs. 5 crore
as per the latest audited balance sheet at the time of submitting the application.
• Thereafter, by the end of the third financial year from the date of receiving final authorisation, the entity shall achieve a
minimum positive net-worth of Rs. 15 crore which shall be maintained at all times.
• All PPIs shall have a minimum validity period of one year from the date of last loading / reloading in the PPI.
• Maximum amount outstanding in respect of full-KYC is 2 lakhs.
Digital wallets:
• Digital wallets are basically secure storage systems for user information used for various payment methods and platforms.
These mostly work through apps on users’ smartphones.
Issuer
PPIs can be issued by banks and non-banks. Banks can issue PPIs after obtaining approval from RBI. The non-bank PPI issuers are
companies incorporated in India and registered under the Companies Act, 1956 / 2013. They can operate a payment system for
issuing PPIs to individuals / organisations after receiving authorisation from RBI.
Holder
Individuals / Organisations who obtain / purchase PPIs from the issuers and use the same for purchase of goods and services,
including financial services, remittance facilities, etc.
RBI has classified the PPI under four Categories:
1. Closed System Payment Instruments
2. Semi-Closed System Payment Instruments
3. Semi-open System Payment Instruments
4. Open System Payment Instruments
Closed System Payment Instruments:
• These are prepaid payment instruments which allow the person/entity for facilitating the purchase of goods and services from
the person who has availed the PPI Service.
• This instrument does not permit cash withdrawal or redemption. If the money is stored in the wallet so it can only be used
to purchase from the particular Site.
• Example - Freecharge credit, Ola money, Faasoos, Goibibo, BookMyShow, MakeMyTrip.
• It cannot be used for payment and settlement for any other party service, so they are not considered as the Payment system
and RBI approval is not required in this case.

Banking Awareness
Semi-Closed System Payment Instruments:

• Semi-closed wallet system means you will have authorization from RBI to hold virtual currency pay inside-outside website or
app send money to other users, receive fund from other users, pay bills, transfer fund to bank
• clearly identified merchant locations/ establishments which contract specifically with the issuer to accept the payment
instrument.
• These instruments do not permit cash withdrawal or redemption by the holder.
• Example - Paytm Freecharge, Udio, Mobikwik, Airtel Money
Semi-open System Payment Instruments:
• These are payment instruments which can be used for the purchase of goods and services at any card accepting merchant
locations (Point of sale terminals)
• These instruments do not permit cash withdrawal or redemption by the holder
• Example - several private label cards issued by merchants.
• Eg: Cash Cards by issued certain parties which can be redeemed at any POS merchants but cant be redeemed as cash. like
Happay cards
Open System Payment Instruments:

• These are payment instruments which can be used for the purchase of goods and services
• permit cash withdrawal at ATMs.
• Example - Almost every Visa, MasterCard or Rupay card issued in India.
• Mobile Prepaid Instruments:
• The prepaid talk time issued by mobile service providers
• This value of talk time can also be used for the purchase of 'value-added service' from the mobile service provider or third-
party service providers
Digital Payments Index

• The Reserve Bank has constructed a composite Digital Payments Index (DPI) to capture the extent of digitisation of payments
across the country. The RBI-DPI comprises of five broad parameters that enable measurement of deepening and penetration
of digital payments in the country over different time periods.
• The RBI-DPI has been constructed with March 2018 as the base period, i.e. DPI score for March 2018 is set at 100. Going
forward, RBI-DPI shall be published on RBI’s website on a semi-annual basis from March 2021 onwards with a lag of 4 months.
Payments Infrastructure Development Fund (PIDF):

• In an effort to give a push to digital payments across the country, the Reserve Bank of India (RBI) is setting up a Payment
Infrastructure Development Fund (PIDF) of Rs 500 crore.
• PIDF is intended to subsidise deployment of payment acceptance infrastructure in Tier-3 to Tier-6 centres with special focus
on North-Eastern States of the country.
• PIDF presently has a corpus of Rs.345 crore (₹250 crore contributed by RBI and Rs.95 crore by the major authorised card
networks in the country).
• It envisages creating 30 lakh new touch points every year for digital payments. (10 lakh physical and 20 lakh digital payment
acceptance devices every year).
• Payments Infrastructure Development Fund (PIDF) will be operational for a period of three years from January 01, 2021 and
may be extended for two more years depending upon the progress.
• Types of Acceptance Devices Covered
• Multiple payment acceptance devices / infrastructure supporting underlying card payments, such as physical PoS, mPoS
(mobile PoS), GPRS (General Packet Radio Service), PSTN (Public Switched Telephone Network), QR code-based payments,
etc.
• The fund will be governed through an advisory council but it will be managed and administered by the RBI.
Classification of Indian Cities
Classification of centres (tier-wise)

Population classification Population (2001 Census)

Banking Awareness
Tier-1 1 lakh and above

Tier-2 50,000 to 99,999
Tier-3 20,000 to 49,999
Tier-4 10,000 to 19,999
Tier-5 5,000 to 9,999
Tier-6 less than 5,000
Population-group wise classification of centres

Population classification Population (2001 Census)
Rural centre up to 9,999
Semi-urban centre 10,000 to 99,999
Urban centre 100,000 to 999,999
Metropolitan centre 1,000,000 and above
Buy Now Pay Later:

• Buy Now Pay Later, or BNPL for short, is a financing arrangement that allows consumers to make a purchase and pay for it
later. These payments typically spread the cost over multiple small installments – BNPL arrangements are often called point
of sale installment loans for this reason.
• BNPL is a short term credit facility extended by banks directly or retailers (through their tie-ups with banks and NBFCs), that
allow consumers to defer payment on their purchases for 15 to 365 days.
Non-Performing Asset
• Non-Performing Asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period
of 90 days. NPA is further classified into three types.
• Standard asset: receiving interest as well as the principal amount of the loan regularly from the customer.
• Sub-standard asset: remained as NPA for a period of less than or equal to 12 months.
• Doubtful assets: assets remained as an NPA for more than 12 months.
• Loss Assets: Loss Assets are assets that cannot be recovered by the lending institutions.
• Provisioning: Provisioning is the amount that the banks set aside from their profits or income in a particular quarter for non-
performing assets.
• Special Mention Accounts: Special Mention Accounts (SMA) shows symptoms of bad asset quality in the first 90 days itself.
SMA enables banks to initiate timely remedial actions to prevent their potential slippages into NPA. SMA is divided into three
types as SMA-0, SMA-1, SMA-2.
• SMA-0 account: No repayment of principal and interest for 30 days then that account will come under SMA-0 account.
• SMA-1 account: No repayment of principal and interest for 30 to 60 days then that account will come under SMA-1 account.
• SMA-2 account: No repayment of principal and interest for 60-90 days then that account will come under SMA-2 account.
NPA classifications:
• NPA is divided into two types. They are GNPA and NNPA.
• GNPA: Gross Non-Performing Assets is a total value of gross non-performing assets for the bank in a particular quarter or
financial year.
• NNPA: Net Non-Performing Assets means subtracts the provisions made by the bank from the gross NPA.
Prompt Corrective Action

• Prompt Corrective Action (PCA) is a framework under which banks with weak financial metrics are put under watch by the
RBI. RBI introduced the PCA framework in 2002 and reviewed in 2017. PCA is like a mechanism in which poorly performing
banks will come under PCA in order to strengthen the bank. If a bank is put under the PCA, several restrictions are placed on
it.

Banking Awareness
Revised Prompt Corrective Action framework

• The revised PCA framework is effective from January 1, 2022.
• Capital, asset quality and leverage will be the key areas for monitoring in the revised framework.
• Negative return on assets (RoA) criteria for determining risk threshold removed in the revised rules.
• Indicators to be tracked for capital, asset quality and leverage would be CRAR/Common Equity Tier I Ratio, Net NPA Ratio and
Tier I Leverage Ratio, respectively.
• The Reserve Bank of India (RBI) has decided to put in place a prompt corrective action (PCA) framework for troubled non-
banking finance companies to restore their financial health. Until now, the RBI had imposed PCA only on banks.
• The move comes in the wake of large NBFCs such as IL&FS, DHFL, SREI Group and Reliance Capital getting into financial trouble.
• The framework will apply to all deposit taking NBFCs, excluding government companies, and all non-deposit taking NBFCs
in the middle, upper and top layers.
• The Reserve Bank of India has decided to extend the ‘prompt corrective action (PCA) framework for NBFCs to government
NBFCs (except those in base layer) with effect from October 1, 2024.
Debt Recovery Tribunal

• Earlier Bank/FIs did not have any norms to recover loans to overcome this Tiwari Committee suggested the setting up of special
tribunals for recovery of dues of banks and financial institution.
• It was constituted by the Government under Section 8 of The Recovery of Debts Due to Banks and Financial Institutions Act,
1993.
• This Tribunal is also the second court of appeal in respect of cases filed under The SARFAESI Act, 2002.
• Debts Recovery Tribunals were instrumental in helping the Banks and Financial Institutions recover their NPA or bad loans.
• Debt recovery tribunal set up in district court has one presiding officer, to assist the Presiding officer, the government can
appoint the recovery officers
• Currently there are 39 DRTs and 5 DRATs operational in the country.
• The minimum due amount to file a case in DRT should be more than 20 lac rupees. Amounts lower than that have to be
pursued at the civil court level and follow the Civil Procedure Code.
• Debt recovery tribunals are set up in 39 places
Debt Recovery Appellate Tribunal

• A person/entity (who buys loan) aggrieved by orders of the DRT can appeal against its orders to Debt Recovery Appellate
Tribunal (DRAT).
• The appeal must be made within 45 days of receiving the orders from DRT.
• The DRAT shall not entertain the appeal until such person deposits the 75% of amount of debt so due determined by the
DRT.
• Both DRT and DRAT works on the principle of natural justice and have same powers as vested in any civil court.
• The debt recovery appellate tribunals are based in 5 places, in India, they are; Mumbai, Delhi, Kolkata, Allahabad, and
Chennai.
SARFAESI ACT
• Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act
• The act passed in 2002 for recovering bad loans and is applicable only for secured loans.
• If a borrower gets default in his loan, Under the Sarfaesi Act, a bank has the right to take possession of the property or
mortgaged assets after a notice of 60 days.
Asset Reconstruction company

• Narasimham Committee (1998) recommended setting up an ARC specifically for purchasing NPAs from banks and financial
institutions
• The bank has the option of taking legal action against defaulters, but it is not always financially feasible, so it chooses to cut
its losses, clean up its balance sheet, and keep the business moving in the better direction. This is where an Asset
Reconstruction Company (ABC) comes in.
• Should maintain capital adequacy ratio of 15% of their risk weighted asset.

Banking Awareness
• ARC should register under Section 3 of the SARFAESI Act, 2002.

• Minimum capital -Rs 300 crore. Regulated by the RBI.
• The banks will transfer the stressed assets to ARC at the net book value. The bank will in return receive 15% cash and 85%
security receipts against the amount of bad loan from the Asset Management Company.
Amortization
Amortization means elimination of debt by repaying it on periodic payments.
LTV ratio
Loan-to-Value (LTV) ratio is the proportion of the property value that a lender can finance through a loan. For a lender, if LTV
increases the perceived risk of borrower default increases which means if borrower share is low means chance of default of
borrower is high.
Risk in Banks and its types

• Risk is defined as the occurrence of an unexpected loss due to an event in the economy or in the financial markets.
• There are major two types of risk.
o Systematic risk
o Unsystematic risk.
Systematic risk
• The inability of a system participant to meet his payment obligations under the payment system as and when they become
due or
• Any disruption in the system
which may cause other participants to fail to meet their obligations when due and is likely to have an impact on the stability of
the system.
Unsystematic risk
Unsystematic risk is risk that affects a very small number of assets. Other types of risk are liquidity risk, interest rate risk, market
risk, credit risk, operational risk, reputational risk.
Liquidity risk: Occurs when a bank not able to finance its day to day operations. Liquidity risk arises mainly when bank follows
funding of long term assets by short time liabilities.
Interest rate risk: Arises due to movement in interest rate. Interest rate risk is mostly associated with fixed-income assets.
Market risk: Due to unfavorable movement in market prices in the investment done by bank.
Credit risk: Credit risk also known as default risk is the potential of the borrower to fail to meet the obligation in accordance with
the agreed terms.
Operational risk Operational risk is defined as risk of loss resulting from inadequate or failed internal process, people and systems
or from external events. Operational risk arises due to bad intentions of staff, hacking of systems etc.
Reputational risk: Reputational risk denotes the public loss of confidence in a bank due to a negative perception or image.
Reputational value is often measured in terms of brand value.
Basel Norms/ Basel Accord

• Basel norms, also known as Basel accords, are the international banking regulations issued by the Basel Committee on Banking
Supervision (BCBS).
• The set of agreement by the BCBS, which mainly focuses on risks to banks and the financial system are called Basel accord.
• The purpose of the accord is to ensure that financial institutions have enough capital on account to meet obligations and
absorb unexpected losses.
• India has accepted Basel accords for the banking system.
Bank of International Settlements (BIS)

• The BIS is an international organisation that serves central banks and other financial authorities across the globe to support
their pursuit of monetary and financial stability through international cooperation.
• The BIS is owned by 63 member central banks and monetary authorities from around the world.
• BCBS secretariat is located at the Bank of International Settlements (BIS) headquartered in the city of Basel in Switzerland.

Banking Awareness
• It also acts as a bank for central banks.

• BIS was established in 1930
Basel Committee on Banking Supervision (BCBS).

• The Basel Committee was established in 1974 by central bankers from the G10 countries.
• This Committee set standards regarding various banking supervisory matters.
• The main aim of these standards is to ensure the coordination of banking regulations worldwide.
• It has 45 members comprise central banks and bank supervisors from 28 jurisdictions.
• BCBS has decided all banks should maintain Captial Adequacy ratio(CAR) as reserve.
Capital Adequacy Ratio

CAR is the ratio of the Paid up Capital of a Bank and its Non-Performing Assets (RWA) (Bad loans). It is expressed in percentage.
CAR = (Tier 1 capital + Tier 2 capital)/risk weighted assets
If a Retail Bank has Rs 20 billion Paid up Capital and 500 billion Non-Performing Assets, then the CAR = 20 x 100 / 500 i.e. 4%
Tier 1 capital is the core capital of a bank, Tier 1 capital is a bank's core capital, which it uses to function on a daily basis.
This type of capital absorbs losses without requiring the bank to cease its operations;
Tier 2 capital is a bank's supplementary capital, which is held in reserve,
This type of capital is used to absorb losses in the event of liquidation
Risk Weighted Asset

Banks have various kinds of Assets on its Balance Sheets-Corporate loans, Personal loans, Sovereign loans(through Investment in
Bonds) etc.
Every financial asset carries a risk, RWA means assets with different risk profiles.
For instance, government bonds carry almost no risk while loans to government-promoted companies carry some risk.
On the other hand, loans to a corporate carry 100% risk weighted as the entire loan is exposed to risk.
For eg: If a bank has 200cr in sovereign bond, 150cr corporate loan and 50cr in Personal loan then RWA could be
0*200+20%*150+50%*50 =55cr and that bank needs to maintain (CAR) 8% of 55 cr.
Basel I:
Basel I introduced guidelines for how much capital banks must keep in reserve based on the risk level of their assets.
• Basel I introduced in 1988
• It focused almost entirely on credit risk. It defined capital and structure of risk weights for banks. TT
• Under Basel I, banks that operate internationally must maintain capital (Tier 1 and Tier 2) equal to at least 8% of their risk-
weighted assets.
• India adopted Basel I guidelines in 1999.
Basel II:
• Basel II refined those guidelines and added new requirements.
• Basel II introduced in 2004.
• It focused on 3 pillars, Capital Adequacy Requirements, Supervisory Review, Market Discipline
• Adequacy requirement of 8% of risk assets, Basel II norms in India and overseas are yet to be fully implemented though India
follows these norms.
Basel III:
• Basel III further refined the rules based in part on the lessons learned from the worldwide financial crisis of 2007 to 2009.
• Basel III guidelines were introduced in 2010.
• It focused on four vital banking parameters. Capital, Leverage, Funding, Liquidity
• BASEL – III recommended that the Capital Adequacy Ratio(CAR) was 8% internationally, while in India it is 9%.
• The RBI has introduced norms on the Basel III will come into effect from April 2024.
• Under RBI's current guidelines
o public sector banks CAR - 12%.
o Scheduled commercial private banks CAR -9%.
o NBFCs CAR -10%.

Banking Awareness
Priority Sector Lending:

PSL was recommended by Dr. K S Krishna Murthy committe in 1972.
Priority sector lending is a set of rules/directives given by RBI to banks in India, which states that out of total lending by banks,
40% of loans should be given to priority sectors (Agriculture, MSME, weaker sections, renewable energy, education and housing).
The scheme was gradually extended to all commercial banks by 1992.
RBI frames the guidelines of priority sector lending.
Education: not exceeding₹ 20 lakh
Startups: up to ₹50 crore
Housing:
i. Loans to individuals upto Rs. 35 lakh in metropolitan centres (overall cost of the unit not to exceed Rs. 45 lakh)
ii. Loans to individuals upto Rs. 25 lakh in other centres (other than metropolitan (overall cost of the unit not to exceed Rs. 30
lakh)
Social infrastructure:
i. Bank loans up to a limit of ₹5 crore per borrower for setting up schools, drinking water facilities and sanitation facilities including
construction/ refurbishment of household toilets and water improvements at household level, etc.
ii. Loans up to a limit of ₹10 crore per borrower for building health care facilities including under ‘Ayushman Bharat’ in Tier II to
Tier VI centres.
Renewable energy:
i) Upto Rs. 30 Crores solar, biomass, wind mills, micro-hydel plants and street lighting systems and remote village electrification.
ii)For individual households, the loan limit will be Rs.10 lakh per borrower
(CEOBE=Credit equivalent amount of Off-Balance Sheet exposure)
Categories Domestic Commercial Banks (excl. RRBs, SFBs) & Foreign Banks Foreign banks with less than 20
with 20 & more branches branches
Total Priority Sector 40% of ANBC or CEOBE, whichever is higher. 40% of ANBC or CEOBE,
whichever is higher.
Agriculture • 18% of ANBC or CEOBE for total agriculture Not applicable
• 10%* of ANBC for Small and Marginal farmers, within 18% target
for agriculture
Micro Enterprises • 7.5% of ANBC Not applicable
• No target for MSME as a whole
Advances to Weaker 12%* of ANBC or CEOBE, whichever is higher Not applicable
Sections
Categories RRBs SFBs UCBs

Total Priority 75% of ANBC or CEOBE, whichever 75% of ANBC or CEOBE, whichever 75% of ANBC or CEOBE, whichever
Sector is higher is higher is higher
Agriculture • 18% of ANBC or CEOBE for total agriculture No target
• 10%* of ANBC for Small and Marginal farmers,
within 18% target
Micro • 7.5% of ANBC or CEOBE
Enterprises • No target for MSME as a whole
Weaker Sections 15% of ANBC or CEOBE whichever 12% of ANBC or CEOBE whichever is higher
is higher.
Marginal Farmers
Farmers with landholding of up to 1 hectare.
Small Farmers
Farmers with a landholding of more than 1 hectare and up to 2 hectares.

Banking Awareness
The Central Government included retail and wholesale traders under the MSME (micro, small and medium enterprises)
classification making them eligible for priority sector advances by banks and financial institutions per RBI guidelines.
MSME:
Classification Investment in Plant and Machinery or Equipment Annual Turnover
Micro Enterprises Not more than Rs.1 crore Not more than Rs. 5 crore
Small Enterprises Not more than Rs.10 crore Not more than Rs. 50 crore
Medium Enterprises Not more than Rs.50 crore Not more than Rs. 250 crore
Priority Sector Lending certificates(PSLC) are recommended by Raghuram Rajan Committe. These certificates are
recommend to help those banks which do not achieve PSL target. PSLCs were introduced in 2015
Suppose there are two banks, bank A and bank B out of which bank A achieved its PSL target and bank B didn’t achieve. Now bank
A can give 50% percent of its achievement to bank B.
Bank A will get interest on PSL certificate which it issued to bank B.
The PSLCs would have a standard lot size of ₹ 25 lakh and multiples thereof.
All PSLCs will expire by March 31st and will not be valid beyond the reporting date (March 31st), irrespective of the date it was
first sold.
The PSLC trading and funds settlement takes place through the e-Kuber (CBS portal of RBI)
A bank is permitted to issue PSLCs upto 50 percent of previous year’s PSL achievement without having the underlying in its books.
Who can buy/ sell PSLCs?
Scheduled Commercial Banks, Regional Rural Banks, Local Area Banks, Small Finance Banks and Urban Co-operative banks.
Types of PSLCs:
i) PSLC Agriculture
ii) PSLC SF/MF
iii) PSLC Micro Enterprises
iv) PSLC General
e-Kuber
e-Kuber is the Core Banking Solution of Reserve Bank of India. e-Kuber was introduced in 2012. e-Kuber is used by the RBI to
execute various transactions with banks. Activities such as auction of government securities took place in e-Kuber.
Financial Inclusion:
The financial inclusion means enabling the weaker sections of the society or low-income groups to access financial services and
avail the credit at a low or affordable cost.
Lead Bank Scheme:

The Reserve Bank introduced the Lead Bank Scheme in 1969. Banks were made key instruments for local development and were
entrusted with the responsibility of identifying growth centres, assessing deposit potential and credit gaps and evolving a
coordinated approach for credit deployment in each district, in concert with other banks and other agencies. The Reserve Bank
has assigned a Lead District Manager for each district who acts as a catalytic force for promoting financial inclusion and smooth
working between government and banks.
Local area bank

Local area bank was established in the year 1996. Local area banks are a big step in financial inclusion done by the Government
of India (GOI). The area of operation of a local area bank is restricted to a maximum of three geographically contiguous districts.
In 2014, the RBI has allowed local area banks to be converted into a small finance bank.
Self Help Group

Self Help Group (SHG) is a small group of about 20 persons from a homogeneous class, which means a class of the same level.
They come together voluntarily to attain certain collective goals such as economic or social goals. Self Help Group members meet
at fixed intervals and collect their savings of a predetermined amount. These pooled savings are then used to make small interest-
bearing loans among themselves.

Banking Awareness
SHG-Bank linkage
SHG-Bank linkage was started in the year 1992 under the guidelines of NABARD and RBI. There are certain conditions which have
to be met to make SHG-Bank linkage such as the conditions as, if the group transactions were done without default for a period
of six months or more. It is like a signal that group has matured.
The process of linkage of a SHG with a bank begins when the bank opens its saving bank account for SHG. In SHG-Bank linkage
there is no collateral security. SHG is eligible to borrow from a bank in multiple of its savings.
Banks Board Bureau

Banks Board Bureau (BBB) is a self-governing autonomous body of the Central Government. BBB is an advisory authority to
improve the management of public sector banks. Banks Board Bureau was founded in 2016. Headquarter of BBB is in Mumbai.
Banking Codes and Standards Board of India (BCSBI):

The Banking Codes and Standards Board of India (BCSBI) was set up in February 2006 to evolve Codes and Standards for fair
treatment of customers by banks. Banks which are members of BCSBI voluntarily adopt the Codes for implementation.
Financial Market
Financial market is classified as
1. Money market
2. Capital market
1.Money Market
Money market instruments are short-term financing instruments aiming to increase the financial liquidity of businesses.
It is Regulated by RBI
Money market is for a maximum tenor of one year.
Depending upon the tenors, money market is classified into:
Overnight market (Call Money) - Call money market is a market for uncollateralized lending and borrowing of funds. The tenor
of transactions is one working day.
Notice money market – The tenor of the transactions is from 2 days to 14 days.
Term money market – The tenor of the transactions is from 15 days to one year.
Participants:
The following entities shall be eligible to participate in the Call, Notice and Term Money Markets, both as borrowers and lenders:
(a) Scheduled Commercial Banks (excluding Local Area Banks)
(b) Payment Banks
(c) Small Finance Banks
(d) Regional Rural Banks
(e) State Co-operative Banks, District Central Co-operative Banks and Urban Cooperative Banks (hereinafter Co-operative Banks)
(f) Primary Dealers.
Money market instruments:

I. Commercial Paper (CP):
• Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note and held in a
dematerialized form through any of the depositories approved by and registered with SEBI.
• It is usually issued by companies with a high credit standing
• It was introduced in India in 1990.
• A CP is issued in minimum denomination of Rs.5 lakh and multiples
• Shall be issued at a discount to face value.
• CP shall be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue.

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• Corporates, Primary Dealers (PDs) and all-India financial institutions (FIs) were also permitted to issue CP to enable them to
meet their short-term funding requirements.
• Individuals, banks, other corporate bodies (registered or incorporated in India) and unincorporated bodies, Non-Resident
Indians(NRI) and Foreign Institutional Investors (FIIs) shall be eligible to invest in CP
II. Certificate of Deposit (CD):

• Certificate of Deposit (CD) is a negotiable money market instrument and issued in dematerialised form or as a Usance
Promissory Note, for funds deposited at a bank or other eligible financial institution for a specified time period.
• A negotiable certificate issued by
o scheduled commercial banks (excluding Regional Rural Banks and Local Area Banks) ,
o select All-India Financial Institutions (FIs) that have been permitted by RBI
• CD is offered at a discount.
• Banks / FIs cannot grant loans against CDs.
• Banks can issue CDs for maturities from 7 days to one year whereas eligible FIs can issue for maturities from 1 year to 3 years.
• CDs can be issued by (i) to raise short-term resources within the umbrella limit fixed by RBI.
• A CD can be issued to a single issuer for a minimum of Rs.1 Lakh and its multiples
III. Treasury Bills (T-bills):

• Treasury bills or T-bills are short term debt instruments
• T-Bills are issued only by the central government in India.
• In three tenors, namely, 91-day, 182 days and 364 days.
• Treasury bills are zero coupon securities and pay no interest. Instead, they are issued at a discount and redeemed at the face
value at maturity.
• Treasury bills are issued via auctions conducted by the Reserve Bank of India at regular intervals.
• Minimum investment amount:
• Treasury bills are available for a minimum amount of Rs. 25,000 and multiples
Cash Management Bills (CMBs):

• In 2010, Government of India in consultation with RBI introduced a new short-term instrument known as Cash Management
Bills (CMBs) to meet the temporary mismatches in the cash flow of the Government of India.
• Issued for maturities less than 91 days.
2. Capital market
Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks, etc.
Market trades mostly in long-term securities, provided for periods More than 1 year.
Classified as
1.Primary Market
companies, governments and other institutions obtain funds through the sale of debt and equity-based securities.
It is an Initial Public Offering
IPO: An IPO is the first time a company offers its shares to the public. It occurs when a privately held company decides to go public
and list its shares on a stock exchange.
2.Secondary Market
It is a Follow on Public Offering
FPO: An FPO is a subsequent offering by a publicly listed company to raise additional capital. It happens after the company has
already completed its IPO.
Bond:
A bond is a debt instrument in which an investor loans money to an entity (typically corporate or government) which borrows the
funds for a defined period of time at a variable or fixed interest rate. Bonds are used by companies, municipalities, states and
sovereign governments to raise money to finance a variety of projects and activities.

Banking Awareness
Fixed Rate Bonds

These are bonds on which the coupon rate is fixed for the entire life (i.e. till maturity) of the bond. Most Government bonds in
India are issued as fixed rate bonds.
Floating Rate Bonds
FRBs are securities which do not have a fixed coupon rate. Instead it has a variable coupon rate which is re-set at pre-announced
intervals (say, every six months or one year). FRBs were first issued in September 1995 in India.
Capital Indexed Bonds
These are bonds, the principal of which is linked to an accepted index of inflation with a view to protecting the Principal amount
of the investors from inflation.
Inflation Indexed Bonds (IIBs)
IIBs are bonds wherein both coupon flows and Principal amounts are protected against inflation.
Government Security (G-Sec):
A Government Security (G-Sec) is a tradeable instrument issued by the Central Government or the State Governments. It
acknowledges the Government’s debt obligation. Such securities are short term (usually called treasury bills, with original
maturities of less than one year) or long term (usually called Government bonds or dated securities with original maturity of one
year or more).
In India, the Central Government issues both, treasury bills and bonds or dated securities while the State Governments issue only
bonds or dated securities, which are called the State Development Loans (SDLs). G-Secs carry practically no risk of default and,
hence, are called risk-free gilt-edged instruments.
G-Secs are issued through auctions conducted by RBI. Auctions are conducted on the electronic platform called the E-Kuber, the
Core Banking Solution (CBS) platform of RBI.
Commercial banks, scheduled UCBs, Primary Dealers, insurance companies and provident funds, who maintain funds account
(current account) and securities accounts (Subsidiary General Ledger (SGL) account) with RBI, are members of this electronic
platform. All members of E-Kuber can place their bids in the auction through this electronic platform.
The RBI in consultation with the Government of India issues an indicative half-yearly auction calendar which contains information
about the amount of borrowing, the range of the tenor of securities and the period during which auctions will be held. The Clearing
Corporation of India Limited (CCIL) is the clearing agency for G-Secs.
Sovereign Gold Bond (SGB):

Sovereign Gold Bonds (SGBs) are government securities denominated in grams of gold.
The Sovereign Gold Bond (SGB) Scheme was first launched by Government of India (GOI) on October 30, 2015.
The Bond is issued by Reserve Bank on behalf of Government of India.
They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in
cash on maturity.
The Bond is issued in both demat and paper form on behalf of Government of India.
The Bonds will be denominated in multiples of grams (s) of gold with basic unit of 1 gm.
Tenor of the Bond is available for a period of 8 years with exit option after the 5th year.
The minimum one can invest is 1 gram of gold and the maximum limit varies as per the categories given below. The maximum
investment limit per fiscal (April- March) is as follows:
Individuals – 4 Kg of gold
Hindu Undivided Family (HUF) – 4 Kg of gold
Trusts and similar entities – 20 kg of gold
Interest will be credited semi-annually to the bank account of the investor and the last interest will be payable on maturity along
with the principal.
Payment options for investing in the Sovereign Gold Bonds can be made through cash (upto ₹ 20000)/cheques/demand
draft/electronic fund transfer.
The investors will be compensated at a fixed rate of 2.50 percent per annum payable semi-annually on the nominal value.

Banking Awareness
Risks involved in holding G-Secs:

Market risk:
Market risk arises out of adverse movement of prices of the securities due to changes in interest rates. This will result in valuation
losses on marking to market or realizing a loss if the securities are sold at adverse prices. Small investors, to some extent, can
mitigate market risk by holding the bonds till maturity so that they can realize the yield at which the securities were actually
bought.
Reinvestment risk:
Cash flows on a G-Sec includes a coupon every half year and repayment of principal at maturity. These cash flows need to be
reinvested whenever they are paid. Hence there is a risk that the investor may not be able to reinvest these proceeds at yield
prevalent at the time of making investment due to decrease in interest rates prevailing at the time of receipt of cash flows by
investors.
Liquidity risk:
Liquidity in G-Secs is referred to as the ease with which security can be bought and sold i.e. availability of buy-sell quotes with
narrow spreads. Liquidity risk refers to the inability of an investor to liquidate (sell) his holdings due to non-availability of buyers
for the security, i.e., no trading activity in that particular security or circumstances resulting in distressed sale (selling at a much
lower price than its holding cost) causing loss to the seller.
Other Regulating Bodies

SEBI
Securities and Exchange Board of India (SEBI) was first established in 1988 as a non-statutory body for regulating the securities
market. It became an autonomous body on 30 January 1992 and was accorded statutory powers with the passing of the SEBI Act
1992 by the Indian Parliament.
Controller of Capital Issues was the regulatory authority before SEBI came into existence; it derived authority from the Capital
Issues (Control) Act, 1947.
The SEBI is managed by its members, which consists of the following:
The chairman is nominated by the Union Government of India.
Two members, i.e., Officers from the Union Finance Ministry.
One member from the Reserve Bank of India.
The remaining five members are nominated by the Union Government of India, out of them at least three shall be whole-time
members.
After the amendment of 1999, collective investment schemes were brought under SEBI except nidhis, chit funds and
cooperatives.
SEBI Complaints Redress System (SCORES):
SCORES is an online platform designed to help investors to lodge their complaints, pertaining to securities market, online with
SEBI against listed companies and SEBI registered intermediaries. All complaints received by SEBI against listed companies and
SEBI registered intermediaries are dealt through SCORES.
From 1st August 2018, an investor may lodge a complaint on SCORES within three years from the date of cause of complaint.
I. The complaint will be routed directly to the concerned entity. Since this is the first time the issue will be raised with the
concerned entity, such “Direct complaints” will be addressed by the concerned entity and the response will come to the investor
without any interference of SEBI officials.
II. The concerned entity is required to send a response to the investor directly within 30 days.
III. If the concerned entity fails to send a response within 30 days to the investor, then the complaint will be routed to SEBI
automatically. Thereafter, the complaint will have a new SCORES registration number.
IV. In case the investor is dissatisfied with the redressal of the complaint, the investor has to indicate the same against the
complaint and then the complaint will come to SEBI. If the investor does not indicate the same within 15 days of receipt of reply
from the company, it will be assumed that the investor is satisfied with the redressal and the complaint will be closed.
International Organization of Securities Commissions:
The International Organization of Securities Commissions (IOSCO) is the international body that brings together the world's
securities regulators and is recognized as the global standard setter for the securities sector.

Banking Awareness
IOSCO develops, implements, and promotes adherence to internationally recognized standards for securities regulation. It works
intensively with the G20 and the Financial Stability Board (FSB) on the global regulatory reform agenda. Its headquarters is in
Madrid, Spain.
National Housing Bank

NHB is an apex financial institution for housing. NHB was set up on July 9, 1988 under the National Housing Bank Act, 1987. The
Head Office of NHB is at New Delhi.
The broad functions of NHB as a part of its objective of building a strong, healthy, cost-effective, and viable Housing Finance
System include:
(i) Supervision and grievance redressal regarding Housing Finance Companies (HFCs).
(ii) Financing
(iii) Promotion and Development.
It is to be noted that NHB supervises HFCs while regulation of HFCs is with RBI.
Government of India hold 100% stake in NHB.
EXIM Bank:
Export-Import Bank of India is the premier export finance institution of the country that seeks to build value by integrating foreign
trade and investment with the economic rise of india. EXIM was set up in 1982.
Exim Bank extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, sovereign governments
and other entities overseas, to enable buyers in those countries to import developmental and infrastructure projects, equipment,
goods and services from India, on deferred credit terms. Headquarters of EXIM bank is in Mumbai.
SIDBI:
Small Industries Development Bank of India (SIDBI) was established under an Act of the Parliament in 1990. SIDBI is the Principal
Financial Institution engaged in promotion, financing & development of the Micro, Small and Medium Enterprises (MSMEs) sector
and coordination of the functions of the various institutions engaged in similar activities. The Head Office is in Lucknow.
National Bank for Agriculture and Rural Development (NABARD):

NABARD came into existence on 12 July 1982 by transferring the agricultural credit functions of RBI and refinance functions of the
then Agricultural Refinance and Development Corporation (ARDC). It is a development Bank of the Nation for fostering Rural
Prosperity.
Section 35(6) of the Banking Regulation Act, 1949, empowers NABARD to conduct inspection of State Cooperative Banks (StCBs),
District Central Cooperative Banks (DCCBs) and Regional Rural Banks (RRBs).
Government of India now hold 100% stake in NABARD.
Rural Infrastructure Development Fund (RIDF):

The domestic scheduled commercial banks, both in the public and private sector, having shortfall in lending to priority sector
and/or agricultural lending and/or weaker section lending targets, are required to deposit in Rural Infrastructure Development
Fund (RIDF) established with NABARD or other Funds set up with other financial institutions. RIDF was established with NABARD
in April 1995 to assist State Governments / State-owned corporations in quick completion of projects relating to irrigation, soil
conservation, watershed management and other forms of rural infrastructure.
Timeline of important financial institutions:
1962: Deposit Insurance Corporation
1963: Agricultural Refinance Corporation
1964: Unit Trust of India
1964: Industrial Development Bank of India
1969: National Institute of Bank Management
1971: Credit Guarantee Corporation
1978: Deposit Insurance and Credit Guarantee Corporation (The DIC and
CGC were merged and renamed as DICGC)
1982: National Bank for Agriculture and Rural Development
1982: Export-Import Bank of India
1987: Indira Gandhi Institute of Development Research
1988: Discount and Finance House of India

Banking Awareness
1988: National Housing Bank

1990: Small Industries Development Bank of India
1994: Securities Trading Corporation of India
1995: Bharatiya Reserve Bank Note Mudran Private Limited
1996: Institute for Development & Research in Banking Technology
2001: Clearing Corporation of India Limited
2008: National Payments Corporation of India
International Organisations
World Bank:
The World Bank is an international financial institution and its role is to lend money to its member countries to improve their
economies and standard of living of their people. World Bank is located in Washington DC. It was founded in 1944.
The World Bank is like a cooperative, made up of 189 member countries. These member countries, or shareholders, are
represented by a Board of Governors, who are the ultimate policymakers at the World Bank. Generally, the governors are member
countries' ministers of finance or ministers of development. They meet once a year at the Annual Meetings of the Boards of
Governors of the World Bank Group and the International Monetary Fund.
World Bank Group is a family of five international organizations.
The International Bank for Reconstruction and Development (IBRD)
The International Development Association (IDA)
The International Finance Corporation (IFC)
The Multilateral Investment Guarantee Agency (MIGA)
The International Centre for Settlement of Investment Disputes (ICSID)
IBRD provides financial development and policy financing
IDA provides zero-to low-interest loans and grants
IFC mobilizes private sector investment and provides advice
MIGA provides political risk insurance (guarantees)
ICSID settles investment disputes
IMF:
The International Monetary Fund or IMF promotes international financial stability and monetary cooperation. It also facilitates
international trade, promotes employment and sustainable economic growth, and helps to reduce global poverty. The IMF is
governed by and accountable to its 190 member countries. The IMF was conceived in July 1944 at the United Nations Bretton
Woods Conference in New Hampshire, United States. Headquarters is in Washington DC.
IMF publishes World Economic Outlook, Global Financial Stability Report.
SDR:
The IMF issues an international reserve asset known as Special Drawing Rights, or SDRs, that can supplement the official reserves
of member countries.
The value of the SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen,
and the British pound sterling.
SDR is an international reserve asset, created by the IMF in 1969.
The SDR basket is reviewed every five years, or earlier if warranted, to ensure that the basket reflects the relative importance of
currencies in the world’s trading and financial systems.
Value of the SDR is determined daily based on market exchange rates.
SDRs cannot be held by private entities or individuals.
New Development Bank (BRICS Bank):

The New Development Bank (NDB) was established in 2015 by BRICS countries – Brazil, Russia, India, China and South Africa. The
Bank’s membership is open to members of the United Nations. NDB commenced the admission of its first new member countries
in the second half of 2021.
The New Development Bank (NDB) has admitted the United Arab Emirates, Uruguay and Bangladesh as the first batch of new
members as part of its expansion drive.

Banking Awareness
NDB has an authorised capital of USD 100 billion. Headquarters of New Development Bank is located in Shanghai, China.
Asian Development Bank:
The Asian Development Bank (ADB) is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the
Pacific, while sustaining its efforts to eradicate extreme poverty. It assists its members and partners by providing loans, technical
assistance, grants, and equity investments to promote social and economic development.
ADB was established in 1966 and it is owned by 68 members. Headquarters of Asian Development Bank is located in Manila,
Philippines.
Asian Infrastructure Investment Bank (AIIB):

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank whose mission is financing the Infrastructure
for Tomorrow—infrastructure with sustainability at its core. AIIB began its operations in Beijing in 2016 and have since grown to
104 approved members worldwide.
International Investment Bank (IIB):

International Investment Bank is a multilateral development institution with headquarters in Budapest, Hungary. It was
established in 1970.
IIB specialises in medium term and long-term financing of projects aimed at supporting the economic development of its member
states.
European Bank for Reconstruction and Development (EBRD)

European Bank for Reconstruction and Development is an international financial institution established in 1991. Headquarters is
located in London. Direct financing by EBRD includes loans, equity and guarantees.
European Central Bank (ECB)

The European Central Bank is the central bank of the 19 European Union countries. Objective of the ECB is to maintain price
stability in the euro area and it adopted the euro currency. Headquarters is located in Frankfurt, Germany.
European Investment Bank (EIB)

The European Investment Bank is the multilateral financial institution and the lending arm of the European Union. The EIB is
financially autonomous and raises money by issuing bonds on the capital markets. EIB loans, guarantees, equity investments and
advisory services. Headquarters is located in Luxembourg.
Non-Operative Financial Holding Company (NOFHC):

Non-Operative Financial Holding Company (NOFHC) means a non-deposit taking NBFC which holds the shares of a banking
company and the shares of all other financial services companies in its group, whether regulated by Reserve Bank or by any other
financial regulator, to the extent permissible under the applicable regulatory prescriptions.
According to RBI that promoter / promoter groups will be permitted to set up a new bank only through a wholly-owned Non-
Operative Financial Holding Company (NOFHC). While the NOFHC will be registered as a non-deposit taking non-banking financial
company (NBFC) with the Department of Non-Banking Supervision (DNBS) of the Reserve Bank.
Banking Schemes
Public Provident Fund (PPF):
• Public Provident Fund or PPF Scheme was introduced by the Central Government of India in 1968.
• Public Provident Fund or PPF is a government-backed long-term savings scheme. PPF comes with a lock-in period of 15 years,
but you can make partial premature withdrawals after some years.
• The amount invested, interest earned, and maturity amounts are entirely tax-free.
• One can open PPF Accounts at post offices and nationalised or private banks.
• Minimum deposit amount of ₹500 and maximum deposit amount of ₹1,50,000 in one financial year.
• Loan facility is available from 3rd financial year upto 6th financial year.
• Withdrawal is permissible every year from 7th financial year.
Kisan Vikas Patra (KVP):

• Kisan Vikas Patra (KVP) is a small savings scheme issued by the Government of India.

Banking Awareness
• This small savings scheme was originally introduced in 1988, though this scheme was successful right from its inception, later
it was discontinued in 2011 based on the recommendation of the committee setup by GoI. This scheme was later re-introduced
by GoI with some changes in 2014.
• KVP certificates can be purchased from any Post Office in India or designated Bank branches.
• Hindu Undivided Families (HUFs) and Non-Resident Indians (NRIs) are not permitted to invest in KVP.
• Nomination facility is available.
• The minimum investment in KVP is Rs 1,000 and in multiples thereof, while there’s no limit on the maximum amount that
one can invest.
• If the beneficiary wants to invest Rs. 50000 or above then he/she have to deposit his PAN card details also.
• In 124 months the saving amount of the beneficiary will be double under Kisan Vikas Patra scheme.
Eligibility:
• a single adult
• Joint Account (up to 3 adults)
• a guardian on behalf of minor or on behalf of person of unsound mind
• a minor above 10 years in his own name.
Premature closure:
KVP may be prematurely closed any time before maturity subject to the following conditions:
• On the death of a single account, or any or all the account holders in a joint account
• On forfeiture by a pledgee being a Gazette officer.
• When order by court.
• After 2 years and 6 months from the date of deposit.
Sukanya Samriddhi Yojna:

• Minimum deposit amount of ₹250 and maximum deposit amount of ₹1,50,000 in a financial year.
• Account can be opened in the name of a girl child till she attains the age of 10 years.
• Only one account can be opened in the name of a girl child.
• Account can be opened in Post offices and in authorised banks.
• The account can be prematurely closed in case of marriage of girl child after her attaining the age of 18 years.
• The account can be transferred anywhere in India from one Post office/Bank to another.
• The account shall mature on completion of a period of 21 years from the date of opening of account.
• Interest earned in the account is free from Income Tax under Section -10 of I.T.Act.
Stand-Up India Scheme:

• Stand-Up India (SUI) scheme for financing SC/ST and/or Women Entrepreneurs launched on April 05, 2016.
• The objective of the SUI scheme is to facilitate bank loans between Rs.10 lakh and Rs. 1 Crore to at least one Scheduled Caste
(SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise.
• This enterprise may be in manufacturing, services, agri-allied activities or the trading sector. In case of non-individual
enterprises at least 51% of the shareholding and controlling stake should be held by either an SC/ST or woman entrepreneur.
• The loan is repayable in 7 years with a maximum moratorium period of 18 months.
MUDRA:
Micro Units Development and Refinance Agency Ltd [MUDRA] is an NBFC supporting development of micro enterprise sector in
the country. MUDRA provides refinance support to Banks / MFIs / NBFCs for lending to micro units having loan requirement upto
10 lakh. MUDRA provides refinance support to micro business under the Scheme of Pradhan Mantri MUDRA Yojana.
MUDRA is a wholly owned subsidiary of SIDBI.
Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Hon’ble Prime Minister on April 8, 2015 for providing loans
up to 10 lakh to the non-corporate, non-farm small/micro enterprises.
These loans are classified as MUDRA loans under PMMY. These loans are given by Commercial Banks, RRBs, Small Finance Banks,
MFIs and NBFCs.
Under the aegis of PMMY, MUDRA has created three products namely ‘Shishu’, ‘Kishore’ and ‘Tarun’ to signify the stage of growth
/ development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next
phase of graduation / growth.

Banking Awareness
1. Shishu: covering loans up to Rs 50,000

2. Kishor: covering loans above Rs 50,000 and up to Rs. 5 lakhs
3. Tarun: covering loans above Rs 5 lakh and up to Rs. 10 lakhs
The funding support from MUDRA are of two types:
I. Micro Credit Scheme (MCS) for loans up to 1 lakh finance through MFIs.
II. Refinance Scheme for Commercial Banks / Regional Rural Banks (RRBs) / Small Finance Banks / Non-Banking Financial
Companies (NBFCs).
MUDRA Card:
MUDRA Card is a debit card issued against the MUDRA loan account, for working capital portion of the loan.
Liberalised Remittance Scheme (LRS)

• The Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI) allows resident individuals to remit a certain
amount of money during a financial year to another country for investment and expenditure.
• According to the prevailing regulations, resident individuals may remit up to $250,000 per financial year.
• The Scheme was launched by Reserve Bank of India in 2004.
• This money can be used to pay expenses related to travelling (private or for business), medical treatment, studying, gifts and
donations, maintenance of close relatives and so on.
• Apart from this, the remitted amount can also be invested in shares, debt instruments, and be used to buy immovable
properties in overseas markets. Individuals can also open, maintain and hold foreign currency accounts with banks outside
India for carrying out transactions permitted under the scheme.
• However, LRS restricts buying and selling of foreign exchange abroad, or purchase of lottery tickets or sweep stakes,
proscribed magazines and so on, or any Items that are restricted under Schedule II of Foreign Exchange Management (Current
Account Transactions) Rules, 2000.
• The Ministry of Finance has announced that the implementation of a new Tax Collected at Source (TCS) rule, which includes a
higher rate of 20% on overseas remittances under the Liberalised Remittance Scheme (LRS), will be postponed by three
months. The rule will now come into effect from October 1 instead of the previously scheduled July 1, 2023. This decision was
made to allow sufficient time for banks and card networks to establish the necessary IT-based solutions.
• The higher TCS rate of 20% will only be applicable when payments made under the Liberalised Remittance Scheme (LRS)
exceed the threshold of Rs 7 lakh.
• Therefore, for all purposes under LRS and for overseas travel tour packages, regardless of the mode of payment,the TCS rate
will remain unchanged for amounts up to Rs 7 lakh per individual per annum.
• For the purchase of an overseas tour programme package, the TCS rate will continue to be 5% for the first Rs 7 lakhs per
individual per annum, with the 20% rate applying only for expenditures exceeding this limit.
Foreign Exchange Management Act (FEMA):

The Foreign Exchange Management Act, 1999 (FEMA) empowers the Reserve Bank to frame regulations to prohibit, restrict or
regulate transfer or issue of any security by a person resident outside India.
The Parliament has enacted the Foreign Exchange Management Act,1999 to replace the Foreign Exchange Regulation Act, 1973
(FERA).
FEMA came into force on the 1st day of June, 2000.
The Central Government have established the Directorate of Enforcement with Director and other officers, for the purpose of
taking up investigations of cases under the FEMA Act.
The object of the Act is to consolidate and amend the law relating to foreign exchange with objective of facilitating external trade
and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
FEMA extends to the whole of India and also apply applies to all branches, offices and agencies outside India owned or controlled
by a person resident in India. It is also applicable to any contravention committed outside India by any person to whom this Act is
applicable.
ED (Enforcement Directorate):
The Directorate of Enforcement was established in the year 1956 with its Headquarters at New Delhi.

Banking Awareness
ED is responsible for enforcement of the Foreign Exchange Management Act, 1999 (FEMA) and certain provisions under the
Prevention of Money Laundering Act.
Work relating to investigation and prosecution of cases under the PML has been entrusted to Enforcement Directorate. The
Directorate is under the administrative control of Department of Revenue for operational purposes.
The Directorate has 10 Zonal offices each of which is headed by a Deputy Director and 11 sub Zonal Offices each of which is headed
by an Assistant Directors.
Prevention of Money Laundering Act, 2002:

The Prevention of Money Laundering Act, 2002 (PMLA 2002) forms the core of the legal framework put in place by India to combat
money laundering. PMLA 2002 and the Rules notified there under came into force with effect from July 1, 2005.
Director, FIU-IND and Director (Enforcement) have been conferred with exclusive and concurrent powers under relevant Sections
of the Act to implement the provisions of the Act. The PMLA 2002 and Rules notified thereunder impose an obligation on banking
companies, financial institutions and intermediaries of the securities market to verify identity of clients, maintain records and
furnish information to FIU-IND.
Financial Intelligence Unit - India (FIU-IND):

Financial Intelligence Unit – India was set by the Government of India on 18th November 2004 as the central national agency
responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions.
FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence and enforcement
agencies in pursuing the global efforts against money laundering and related crimes
FIU-IND is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the finance minister.
Cash Transaction Report (CTR):

The Prevention of Money laundering Act, 2002 and the Rules there under require every banking company to furnish details of the
following cash transactions:
(A) All cash transactions of the value of more than rupees ten lakhs or its equivalent in foreign currency.
(B) All series of cash transactions integrally connected to each other which have been valued below rupees ten lakhs or its
equivalent in foreign currency where such series of transactions have taken place within a month.
Due Date:
The Principal Officer of a banking company to furnish the information of the cash transactions of a month to Director, FIU-IND by
the 15th day of the succeeding month.
Suspicious Transaction Report (STR):

Suspicious transaction means a transaction whether or not made in cash which, to a person acting in good faith –
(a) gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime; or
(b) appears to be made in circumstances of unusual or unjustified complexity; or
(c) appears to have no economic rationale or bonafide purpose.
Due Date:
The Suspicious Transaction Report (STR) should be furnished within 7 days of arriving at a conclusion that any transaction, whether
cash or non-cash, or a series of transactions integrally connected are of suspicious nature. The Principal Officer should record his
reasons for treating any transaction or a series of transactions as suspicious.
Exchange Earners' Foreign Currency Account (EEFC):

Exchange Earners' Foreign Currency Account (EEFC) is an account maintained in foreign currency with an Authorised Dealer
Category - I bank (a bank authorized to deal in foreign exchange). It is a facility provided to the foreign exchange earners, including
exporters, to credit 100 per cent of their foreign exchange earnings to the account, so that the account holders do not have to
convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs.
All categories of foreign exchange earners, such as individuals, companies, etc., who are residents in India, may open EEFC
accounts.
An EEFC account can be held only in the form of a current account. No interest is payable on EEFC accounts.
No restriction on withdrawal in Rupees of funds held in an EEFC account. However, the amount withdrawn in Rupees shall not be
eligible for conversion into foreign currency and for re-credit to the account.

Banking Awareness
Rupee Drawing Arrangement (RDA):

Rupee Drawing Arrangement (RDA) is a channel to receive cross-border remittances from overseas jurisdictions. Under this
arrangement, the Authorised Category I banks enter into tie-ups with the non-resident Exchange Houses in the FATF compliant
countries to open and maintain their Vostro Account.
There is no limit on the remittance amount as well as on the number of remittances. However, there is an upper cap of Rs.15 lakh
for trade related transactions.
No cash disbursement of remittances is allowed under RDA. The remittances have to be credited to the bank account of the
beneficiary.
Money Transfer Service Scheme (MTSS):

Money Transfer Service Scheme (MTSS) is a way of transferring personal remittances from abroad to beneficiaries in India. Only
inward personal remittances into India such as remittances towards family maintenance and remittances favouring foreign
tourists visiting India are permissible.
A cap of USD 2,500 has been placed on individual remittances under the scheme.
Amounts up to Rs.50,000 may be paid in cash to a beneficiary in India.
Foreign Contribution Regulation Act (FCRA):

FCRA, 2010 has been enacted by the Parliament to consolidate the law to regulate the acceptance and utilization of foreign
contribution or foreign hospitality by certain individuals or associations or companies and to prohibit acceptance and utilization
of foreign contribution or foreign hospitality for any activities detrimental to national interest and for matters connected
therewith or incidental thereto.
FCRA registration is mandatory for associations and NGOs to receive foreign funds.
Asian Clearing Union (ACU):

The Asian Clearing Union (ACU) was established with its head-quarters at Tehran, Iran, on December 9, 1974 at the initiative of
the United Nations Economic and Social Commission for Asia and Pacific (ESCAP), for promoting regional co-operation.
The main objective of the clearing union is to facilitate payments among member countries for eligible transactions on a
multilateral basis, thereby economizing on the use of foreign exchange reserves and transfer costs, as well as promoting trade
among the participating countries.
The Central Banks and the Monetary Authorities of Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri
Lanka are currently the members of the ACU.
Headquarters of Asian Clearing Union is in Tehran, Iran.
EASE (Enhanced Access and Service Excellence) reforms:

EASE index, which is prepared by the Indian Banking Association (IBA) and Boston Consulting Group, commissioned by the Finance
Ministry, is a framework that was adopted 2018 to strengthen public sector banks, and rank them on metrics such as responsible
banking, financial inclusion, credit offtake and digitisation.
EASE agenda is aimed at institutionalising clean and smart banking. The first edition EASE 1.0 was launched in January 2018.
Credit Information Companies (CICs):

The Credit Information Companies (CICs) have the widest mandate for collection and sharing of all sort of credit information from
banks, non-banks and other credit providing agencies.
CICs are regulated by RBI under the Credit Information Companies (Regulation) Act (CICRA), 2005. According to this Act, only
certain entities are allowed to be members of the CICs. They are Credit Institutions under Section 2(f) and Credit information
companies under section 2(e) of CICRA, 2005.
Existing CICs
The four CICs currently operating in the country are TransUnion CIBIL, Equifax, Experian, and CRIF Highmark.
1. Credit Information Bureau (India) Limited (CIBIL):

TransUnion CIBIL Limited is India’s first Credit Information Company, also commonly referred as a Credit Bureau. CIBIL collect
and maintain records of individuals’ and commercial entities’ payments pertaining to loans and credit cards. These records are

Banking Awareness
submitted to CIBIL by banks and other lenders on a monthly basis and using this information a CIBIL Score and Report for
individuals is developed, which enables lenders to evaluate and approve loan applications.
The TransUnion CIBIL Limited (formerly Credit Information Bureau (India) Ltd. (CIBIL)) was incorporated in 2000 and started
operations in April, 2004.
A Credit Bureau is licensed by the RBI and governed by the Credit Information Companies (Regulation) Act of 2005.
CIBIL Score:
The CIBIL Score plays a critical role in the loan application process.
CIBIL score or credit score is like your financial report card. In other words, it’s simply the numerical representation of your
repayment history.
CIBIL Score is a 3 digit numeric summary of your credit history.
The CIBIL score comes in the range of 300 to 900 in India. The closer your score is to 900, the higher are the chances of your loan
application getting approved.
Headquarters is in Mumbai.
2. Equifax:
Equifax got its Certificate of Registration in India in the year 2010. The company has a separate bureau dedicated to address the
growing lending and regulatory needs of the Microfinance Institutions.
3. Experian:
Experian Credit Information Company was established as a joint venture with several banks and financial institutions in India in
the year in 2006. Experian prepares credit reports of individuals based on the information provided by banks and other financial
institutions about the financial history of the individual.
4. CRIF High Mark Credit Information Services:

High Mark was founded in 2007. It commenced its bureau operations in March 2011, on receipt of Certificate of Registration (CoR)
from the Reserve Bank of India (RBI) to operate as a Credit Information Bureau in India in 2010. CRIF acquired majority stake in
High Mark in mid-2014. Following the acquisition, High Mark Credit Information Services was renamed CRIF High Mark Credit
Information Services.
Public Credit Registry (PCR):

A Public Credit Registry (PCR) is an information repository where all information about existing as well as new borrowers is stored.
This includes both corporate as well as retail borrowers.
The registry captures data on loans taken from all kinds of sources including from banks, NBFCs, corporate bonds, External
Commercial Borrowing, Inter-Corporate Lending, Masala Bonds, etc.
Why PCR:
India already has four private credit bureaus. Credit Information Bureau India Ltd or CIBIL, for instance, collects data on loan
repayment.
Central Repository of Information on Large Credits (CRILIC) collects information on large borrowers with exposure of over Rs 5
crores. The Reserve Bank has created a Central Repository of Information on Large Credits (CRILC) of scheduled commercial
banks, all India financial institutions and certain non-banking financial companies with multiple objectives, which, among others,
include strengthening offsite supervision and early recognition of financial distress.
But there are differences between a private credit bureau (PCB) and a PCR. The key being that PCBs are for-profit enterprises,
privately controlled and therefore tend to focus on the more profitable data segments. A Public Credit Registry, on the other hand,
is a non-profit entity, and therefore brings more comprehensive data coverage, from the largest to smallest borrowers
Participatory notes:
Participatory notes are financial instruments required by investors or hedge funds to invest in Indian securities without having to
register with the Securities and Exchange Board of India (SEBI).
State Development Loans (SDLs):

State Governments also raise loans from the market which are called SDLs. SDLs are dated securities issued through normal
auction similar to the auctions conducted for dated securities issued by the Central Government.

Banking Awareness
Net Interest Margin:

Net Interest Margin (NIM) is defined as the measure of the difference between the interest income earned by a bank or other
financial institution and the interest it pays out to its lenders (depositors), relative to the amount of their assets that earn interest.
Write-off
Loan write-off is a tool used by banks to clean up their balance-sheets.
Working capital
Working capital is obtained by subtracting current liabilities from current assets. Working capital indicates the liquidity level of a
company.
Short selling
Short selling is a technique in the stock market where an investor sells shares (that he does not own) in the hope that price of the
share will comes down in the near future and buys back at lower price to obtain profit. Short selling has to be done in the same
day.
Spread
The interest rate paid by the banks to depositors is lower than rate charged from the borrowers. This difference between these
two types of interest rates is called spread and it is the profit appropriated by the bank.
Quantitative easing
Quantitative easing is an expansionary monetary policy by central banks to increase money supply and spur economic activity.
Ponzi scheme
Ponzi scheme is an investment scam that promised high return. Returns are paid to investors from amount received from new
investors not from the profit.
Near Money:
Highly liquid assets which are not cash but can easily be converted into cash, such as bank deposits and Treasury Bills etc.
Frozen Account:
Frozen Account an account to which no withdrawal or purchase can be done.
Insolvency
Insolvency is a situation where individuals or companies are unable to repay their outstanding debt.
Bankruptcy
Bankruptcy is a legal declaration of one’s inability to pay off debts.
Insolvency and Bankruptcy Code (IBC):
Insolvency and Bankruptcy Code (IBC) is enacted in the year 2016.
IBC is used for the recovery of loans.
Insolvency and Bankruptcy Board of India

Insolvency and Bankruptcy Board of India (IBBI) is the apex body which administers the IBC.
The adjudicating authorities for resolution and the liquidation process are National Company Law Tribunal (NCLT) for companies
and Debt Recovery Tribunal for individuals.
The Insolvency and Bankruptcy Board of India was established on 1st October, 2016 under the Insolvency and Bankruptcy Code,
2016 (Code).
External Commercial Borrowing:

External Commercial Borrowings (ECB) is a commercial loan availed by a resident company from non-resident lenders. Most of
these loans are provided by foreign commercial banks and other institutions. The Ministry of Finance, along with RBI monitors
and regulates ECB guidelines and policies.
Through ECB, a large volume of fund is available. The funds are available for a long term and interest rates are lower compared to
domestic funds.
ECB can be raised in any freely convertible foreign currency as well as in Indian Rupees.

Banking Awareness
Forms of ECB:
The ECB Framework enables permitted resident entities to borrow from recognized non-resident entities in the following forms:
I. Loans including bank loans
II. Securitized instruments (e.g. floating rate notes and fixed rate bonds, non-convertible, optionally convertible or partially
convertible preference shares / debentures)
III. Buyers credit
IV. Suppliers credit
V. Foreign Currency Convertible Bonds (FCCBs)
VI. Financial Lease
VII. Foreign Currency Exchangeable Bonds (FCEBs)
Foreign currency-denominated convertible bond (FCCB):

Through an ECB one can raise foreign fund by issuing FCCB. Foreign currency-denominated convertible bond (FCCB) is issued by
an Indian company abroad, in which the holder has the option of converting the bond into equity shares. The principal and interest
are payable in foreign currency. FCCB is a hybrid instrument, which means the bond is converted into shares.
Foreign Currency Exchangeable Bond (FCEB):
Foreign Currency Exchangeable Bond (FCEB) is issued in foreign currency. FCEB is issued by an issuing company and subscribed to
by a person who is a resident outside India in foreign currency and exchangeable into equity shares of another company to be
called the offered company. The minimum maturity of an FCEB is 5 years. The issuance of FCEB shall require prior approval of the
Reserve Bank under the approval route for raising ECB.
FCEB issuing company shall be a part of the promoter group of the offered company. Offered company shall be a listed company,
which is engaged in a sector eligible to receive foreign direct investment and eligible to avail external commercial borrowings.
There are certain companies which are not eligible to issue FCEB, such as an Indian company, which is not eligible to raise funds
from the Indian securities market and companies which has been restrained from accessing the securities market by the SEBI shall
not be eligible to issue FCEB. The difference between FCCB and FCEB is that in an FCCB one company is involved whereas an FCEB
involves at least two companies. In FCCB, a bond is converted into a share of the company which issued a bond. In FCEB, the bonds
are exchangeable for shares of another company.
Systemically Important Banks

Systemically Important Banks means it is a big bank and it is difficult to default. Systemically Important Banks concept is provided
by Basel norms.
There are two types of Systemically Important Banks. They are Global Systemically Important Banks (G-SIB) and Domestic
Systemically Important Banks (D-SIB).
Global Systemically Important Banks:

G-SIBs are selected by Financial Stability Board (FSB), in consultation with the Basel Committee on Banking Supervision (BCBS).
FSB releases the list of G-SIBs.
Total number of G-SIBs at present is 30.
Domestic Systemically Important Banks:

One of the features of a bank to become D-SIB is Banks whose assets exceed 2% of GDP are considered as a part of this group.
The selection of a bank as a D-SIB by RBI is based on four indicators such as size, cross-jurisdictional activities, complexity,
Interconnection.
D-SIB in India till date is SBI, ICICI, HDFC.
As per the framework, from 2015, every August, the central bank has to disclose names of banks designated as D-SIB. It classifies
the banks under five buckets depending on order of importance.
Mortgage:
Mortgage is a mechanism by which borrower raise fund against the security of immovable assets.

Banking Awareness
Pledge:
Pledge is used when the lender takes actual possession of assets. Assets are movable securities. The pledgee retains the
possession of the goods until the pledger (borrower) repays the entire debt amount. In case there is default by the borrower, the
pledgee has the right to sell the goods in his possession. Examples for pledge are gold loan, advance against goods.
Hypothecation:
Pledging assets against a loan. The ownership of the asset or the income from the asset is not transferred, except that in default
of repayment of loan the asset may be sold to realize its value. Brokers will accept shares as collateral for loans to finance purchase
of shares or to cover short sales.
Inflation and Its Types

Inflation is defined as an increase in the price of goods and services over a period of time. There are various types of Inflation
such as demand-pull Inflation, cost-push Inflation, deflation, disinflation, reflation, creeping Inflation, walking Inflation, galloping
Inflation, hyperinflation, stagflation, core inflation, and headline inflation.
Demand-Pull Inflation:
Demand-pull Inflation is defined as an increase in demand over the available output which leads to this type of Inflation. It is like
a situation where too much money chases few goods and services.
Cost-Push Inflation:
Cost-push Inflation is defined as the increase in the prices of goods due to the increase in elements like labour costs and raw
materials, while demand remains the same.
Deflation:
Deflation is defined as the decrease in the general price level throughout the economy. Deflation is destructive and it occurs
when the economy of the country is low. It may lead to recession or depression.
Disinflation:
Disinflation is defined as the fall in the inflation rate. Under the disinflation, the economy is stable and in good shape.
Reflation:
Reflation refers to a fiscal or monetary policy enacted after a period of economic slowdown or contraction.
Creeping Inflation:
Creeping Inflation is Inflation in which the prices gently rise.
Walking Inflation:
Walking Inflation is Inflation where the prices rise by more than 3% but less than 10% per annum.
Galloping Inflation:
When Inflation rises to 10% or more, it is called galloping Inflation.
Hyperinflation:
Hyperinflation is a stage of a very high rate of Inflation.
Stagflation:
Stagflation is an economic situation in which Inflation and economic stagnation or recession occurs simultaneously.
Core Inflation
Core inflation is Inflation, which excludes transitory or temporary price volatility.
Headline Inflation
Headline inflation represents total Inflation in an economy, including transitory or temporary price volatility commodities.

Banking Awareness
Trade Receivables Discounting System (TReDS):

TReDS is an online mechanism for facilitating the financing of trade receivables of MSMEs through multiple financiers. It also
enables discounting of invoices of MSME sellers raised against large corporate, allowing them to reduce working capital needs. It
is an extended version of factoring on an electronic platform with multiple financiers.
Account Aggregator:
An Account Aggregator (AA) is a type of RBI regulated entity (with an NBFC-AA license) that helps an individual securely and
digitally access and share information from one financial institution they have an account with to any other regulated financial
institution in the AA network. Data cannot be shared without the consent of the individual.
The individual's bank just needs to join the Account Aggregator network.
Every company seeking registration with the Bank as an Account Aggregator shall have a net owned fund of not less than rupees
two crore.
Goods and Services Tax (GST):

GST is a tax on supply of goods or services or both and a single tax on entire value chain of supply, right from the manufacturer
to the consumer. Credit of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes
GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer
in the supply chain, with set-off benefits at all the previous stages.
GST is a consumption-based tax i.e. tax accrues to the State where goods and / or services are finally consumed.
Central / State Excise duty and VAT would be continued on five Petroleum products, which would be subject to the levy of GST
whenever notified on the recommendation of the GST Council.
Tobacco products could be subjected to both Central Excise duty and GST. Alcoholic liquor for human consumption had been kept
outside the ambit of GST.
Components of GST:
• Central Goods and Services Tax (CGST): payable to the Central Government on supply of goods and services within the
State/Union Territory.
• State/Union Territory Goods and Services Tax (SGST/UTGST): payable to the State/Union Territory Government on supply of
goods and services within the State/Union Territory.
• Integrated Goods and Services Tax (IGST): in case of inter-state supply of goods and services, IGST is levied by the Government
of India. Equivalent IGST is also levied on imports into India. IGST shall be apportioned between the Union and the States as per
the provisions of IGST Act.
• GST Compensation Cess: In addition to GST, a cess named GST Compensation Cess can be levied on notified goods and services
and currently such cess is levied on pan masala, tobacco, aerated drinks, cars and coal.
Key legislations:
The Constitution (One Hundred and Twenty Second Amendment) Bill, 2016, for introduction of Goods and Services Tax in the
country was passed by Rajya Sabha on 3 August 2016 and by Lok Sabha on 8 August 2016.
GST Council:
In terms of Article 279A (1) of the Constitution of India, as amended, the President of India constituted the GST Council with effect
from 12 September 2016.
The GST Council is a constitutional body for making recommendations to the Union and the State Governments on the issues
related to GST.
The GST Council, a joint forum of the Centre and the States, is chaired by the Union Finance Minister and members are the Union
State Minister of Revenue or Finance and Ministers in-charge of Finance or Taxation or any other Minister nominated by each of
the States.
Goods and Services Tax Network:

Goods and Services Tax Network (GSTN) was registered on 28 March 2013 under Section 8 of the Companies Act, 2013 as a Non-
Government Company and a ‘Not for Profit Organisation’.
GSTN was formed to provide common and shared Information Technology (IT) infrastructure and services to the Central and
State Governments, taxpayers and other stakeholders for implementation of the GST.

Banking Awareness
The Government of India holds 24.5 per cent equity in GSTN and all the States of the Indian Union, including NCT of Delhi and
Puducherry and the Council, together hold another 24.5 per cent. The balance 51 per cent equity is with Non-Government financial
institutions. On May4, 2018,it was decided to convert GSTN into a fully owned Government Company.
Government holds 100 per cent stake in GSTN, half of which will be held by the Centre and the rest by the states on pro rata basis.
Tax structure:
GST ushered in a tax structure in which the same good or service has been subjected to same tax rate across the States.
There are four major tax slabs right now (5 per cent, 12 per cent, 18 per cent and 28 per cent tax rates) with some luxury and sin
goods in the 28 per cent slab such as cars, tobacco products, pan masala and aerated drinks, being further subject to GST
Compensation cess.
GSTIN:
Good and Service Tax Identification Number(GSTIN) is a 15 digit unique registration number given to every taxpayer registered
under GST.
GSTIN is mandatory for businesses with an annual turnover exceeding Rs. 20 lakhs.
IBAN:
IBAN stands for International Bank Account Number. The IBAN facilitates the automation of cross-border payment transaction
processing. Each country has its particular national IBAN format.
An IBAN is an international bank account number. This sequence of numbers and letters - which can be up to 34 digits long -
contains much of the information needed by banks to process international transfers, including your account number, bank, and
country.
BANKING ABBREVIATIONS
A
☞ ACF – Auto-Correlation Function
☞ AD – Authorized Dealer
☞ ADB – Asian Development Bank
☞ ADR – American Depository Receipt
☞ ADSL - Asymmetric Digital Subscriber Line
☞ AEOI – Automatic Exchange of Information
☞ AEPS – Aadhaar Enabled Payment System
☞ AFS – Annual Financial Statement
☞ AGM – Annual GeneralMeeting
☞ AIIB – Asian Infrastructure Investment bank
☞ ASSOCHAM – Associated Chambers of Commerce and Industry of
☞ India
☞ AMFI – Association of Mutual Funds in India
☞ AML – Anti Money Laundering
☞ AMRUT - Atal Mission for Rejuvenation and Urban Transformation
☞ ALM – Asset Liability Management
☞ APBS - Aadhaar Payment Bridge System
☞ ASBA - Application Supported by Blocked Amount
☞ ATM – Automated Teller Machine
B
☞ BACS - Bankers Automated Clearing System
☞ BBB – Bank Boards Bureau
☞ BHIM – BHarat Interface for Money
☞ BIS – Bank for International Settlements
☞ BoP – Balance of Payments
☞ BCBS – Basel Committee on Banking Supervision
☞ BCSBI -Banking Codes and Standards Board of India
☞ BSR – Basic Statistical Returns

Banking Awareness
☞ BSE – Bombay Stock Exchange

C
☞ CAD – Capital Account Deficit
☞ CAG – Comptroller and Auditor General of India
☞ CAR – Cash Adequacy Ratio
☞ CARE - Credit Analysis and Research Limited
☞ CBS – Core Banking Solution
☞ CCEA – Comprehensive Economic Cooperation Agreement
☞ CCT – Conditional Cash Transfer
☞ CDBS – Committee of Direction of Banking Statistics
☞ CDR-Corporate Debt Restructuring
☞ CEPA – Comprehensive Economic Partnership Agreement
☞ CFMS - Centralised Funds Management System
☞ CFRA – Combined Finance and Revenue Accounts
☞ CGRA – Currency and Gold Revaluation Account
☞ CIBIL – Credit Information Bureau of India Limited
☞ CII – Confederation of Indian Industries
☞ CMIS - Currency Management Information System
☞ CPI – Consumer Price Index
☞ CRR – Cash Reserve Ratio
☞ CRAR - Capital to Risk (Weighted) Assets Ratio
☞ CNP- Card Not Present
☞ CVV – Card Verification Value
D
☞ DEAF- Depositor Education and Awareness Fund
☞ DICGC –Deposit Insurance and Credit Guarantee Corporation
☞ DRAT - Debt Recovery Appellate Tribunal
☞ DTAA – Double Taxation Avoidance Agreement
E
☞ EBT – Electronic Benefit Transfer
☞ EBRD - European Bank for Reconstruction and Development.
☞ ECB – External Commercial Borrowings
☞ ECS – Electronic Clearing Service
☞ EDFC – Eastern Dedicated Freight Corridor
☞ EEFC – Exchange Earner’s Foreign Currency
☞ EESS- Equity Linked Saving Scheme
☞ EFSF – European Financial Stability Facility
☞ EIB - European Investment Bank.
☞ ETF – Exchange Traded Funds
☞ EFTPOS- Electronic Funds Transfer at Point Of Sale
☞ EPS - Earning per Share
☞ EXIM – Export-Import Bank of India
F
☞ FATCA – Foreign Account Tax Compliance Act
☞ FATF – Financial Action Task Force
☞ FCA – Foreign Currency Assets
☞ FCNRA – Foreign Currency Non-Resident Account
☞ FCNR - Foreign Currency Non-Repatriable account
☞ FDI – Foreign Direct Investment
☞ FERA – Foreign Exchange Regulation Act
☞ FICCI – Federation of Indian Chambers of Commerce and Industry
☞ FII – Foreign Institutional Investor

Banking Awareness
☞ FIMMDA – Fixed Income Money Markets and Derivatives Association

☞ FINO – Financial Inclusion Network Operation
☞ FIPB – Foreign Investment Promotion Board
☞ FPI – Foreign Portfolio Investment
☞ FRA – Financial Redressal Agency
☞ FSSAI – Food Safety & Standard Authority of India
☞ FSDC – Financial Stability and Development Council
☞ FSLRC – Financial Sector Legislative Reforms Commission
☞ FSR – Financial Stability Report
☞ FTA – Free Trade Agreement
G
☞ GAAR – General Anti Avoidance Rule
☞ GDP – Gross Domestic Product
☞ GDR – Global Depository Receipt
☞ GFD – Gross Fiscal Deficit
☞ GIRO – Government Internal Revenue order
☞ GMS - Gold Monetisation Scheme
☞ GSTN - Goods and Services Network
H
☞ HDFC – Housing Development Finance Corporation
I
☞ IBBI -Insolvency and Bankruptcy Board of India
☞ IBRD -International Bank for Reconstruction and Development
☞ IBU - International Banking Unit
☞ ICICI – Industrial Credit and Investment Corporation of India
☞ IDBI – Industrial Development Bank of India
☞ IDRBT -Institute for Development and Research of Banking
☞ IFI – International Financial Institution
☞ IIB - International Investment Bank
☞ IFSC – Indian Financial System Code / International Financial Service Centre
☞ IMF – International Monetary Fund
☞ IMPS - IMmediate Payment Service / Interbank Mobile Payment Service
☞ IMT - Instant Money Transfer
☞ IPPB - India Post Payments Bank
☞ IPR – Intellectual Property Rights
☞ IRBI -Industrial Reconstruction Bank of India
☞ IRDAI-Insurance Regulatory and Development Authority of India
☞ IPO – Initial Public Offering
K
☞ KCC - Kisan Credit Card
☞ KVIC - Khadi and Village Industries Corporation
☞ KVP - Kisan Vikas Patra
☞ KYC - Know Your Customer
L
☞ LAF – Liquidity Adjustment Facility
☞ LDB - Land Development Bank.
☞ LIBOR – London Inter Bank offered Rate
☞ LTN - Long Term Note
☞ LTV – Loan To Value

Banking Awareness
M
☞ MAT- Minimum Alternate Tax
☞ MCLR - Marginal Cost of Funds based Lending Rate
☞ MDR - Merchant Discount Rate
☞ MFDF - Micro Finance Development Fund
☞ MFI – Micro Financial Institution
☞ MFSS – Mutual Fund Service System
☞ MIBOR – Mumbai Inter – Bank Offer Rate
☞ MICR -Magnetic Ink Character Recognition
☞ MMID - Mobile Money IDentifier
☞ MSS - Market Stabilisation Scheme
☞ MTN - Medium Term Note
☞ MUDRA - Micro Units Development and Refinance Agency
N
☞ NABARD –National Bank of Agricultural and Rural Development
☞ NACH – National Automated Clearing House
☞ NASSCOM – National Association of Software and Services Companies
☞ NAV - Net Asset Value.
☞ NBFC – Non-Banking Financial Company
☞ NDA - Net Domestic Asset
☞ NDS - Negotiated Dealing Systems
☞ NDTL - Net Demand and Time Liability
☞ NECS - National Electronic Clearing Service
☞ NEFT – National Electronic Funds Transfer System
☞ NFA - No Frills Account.
☞ NFC – Near Field Communication
☞ NFS - National Financial Switch
☞ NGN –New Generation Network
☞ NHB - National Housing Bank
☞ NITI Aayog – National Institution for Transforming India Aayog
☞ NPA – Non- Performing Assets
☞ NPCI - National Payments Corporation of India
☞ NPS – National Pension Scheme
☞ NPV - Net Present Value
☞ NRE - Non-Resident External
☞ NSFDC - National Scheduled Castes Finance and Development Corporation
☞ NSSF – National Small Savings Fund
☞ NSE – National Stock Exchange
☞ NUUP - National Unified USSD Platform
O
☞ OCAS – Online Customer Acquisition Solution
☞ OCB - Overseas Corporate Bodies
☞ ODIs-Offshore/Overseas Derivative Instruments
☞ OECD-Organisation for Economic Cooperation and Development
☞ OLP – Online Learning Portal
☞ OLTAS- Online Tax Accounting System
☞ OMO – Open Market Operations
☞ OTCEI - Over the Counter Exchange of India
☞ OTP - One-Time Password
P
☞ PACS - Primary Agricultural Credit Societies
☞ PAN - Permanent Account Number

Banking Awareness
☞ PCA - Prompt Corrective Action

☞ PCR – Provision Coverage Ratio / Public Credit Registry
☞ PDO - Public Debt Office
☞ PFRDA - Pension Fund Regulatory and Development Authority
☞ PGS - Payment Gateway System
☞ PIN - Personal Identification Number
☞ PIS - Portfolio Investment Scheme
☞ PLR – Prime Lending Rate
☞ P-Notes - Participatory Notes
☞ PoA - Power of Attorney
☞ PoS - Point of Sale
☞ P2P – Peer – to - Peer
☞ PPF - Public Provident Fund
☞ PPI – Prepaid payment Instrument
☞ PPP - Public-Private Partnership and Purchasing Power Parity
☞ PRSF - Partial Risk Sharing Facility
Q
☞ QIB - Qualified Institutional Bankers
☞ R
☞ RBI - Reserve Bank of India
☞ RBS - Royal Bank of Scotland.
☞ RDBMS - Relational Database Management System
☞ RDDBFI -Recovery of Debt due to Banks and Financial Institutions
☞ REC - Rural Electrification Corporation
☞ REER – Real Effective Excahnge Rate
☞ RERA - Real Estate Regulation Act
☞ RFC - Resident Foreign Currency
☞ RFID – Radio Frequency IDentifier
☞ RIDF - Rural Infrastructure Development Fund
☞ RTGS – Real Time Gross Settlement
☞ RoA - Return on Assets
☞ RoE - Return on Equity
☞ RRB - Regional Rural Bank.
☞ RSOC – Rapid Survey on Children
☞ RWA - Risk Weighted Assets
S
☞ SARFAESI- Securitization and Reconstruction of Financial Assets and
☞ Enforcement of Security Interest
☞ SBI - State Bank of India
☞ SCB - Scheduled Commercial Bank
☞ SDBS - Service Discharge Benefit Scheme
☞ SDR - Special Drawing Rights
☞ SDR – Strategic Debt Restructuring
☞ SEAC - Standing External Advisory Committee
☞ SEPA - Single Euro Payment Area.
☞ SFMS - Structured Financial Messaging Services
☞ SGB - Sovereign Gold Bond
☞ SIDBI – Small Industries and Development Bank of India
☞ SIDC - State Industrial Development Corporation
☞ SIFI - Systematically Important Financial Intermediaries
☞ SIP - Systematic Investment Plans
☞ SIPS - Systemically Important Payment System
☞ SJSRY - Swarna Jayanthi ShahariRozgar Yojana
☞ SLR - Statutory Reserve Ratio

Banking Awareness
☞ SLRS - Scheme for Liberation and Rehabilitation of Scavengers

☞ SME - Small and Medium Industries
☞ SMERA - SME Rating Agency of India Limited
☞ SMILE - SIDBI Make in India Loan for small Enterprises
☞ SPNS - Shared Payment Network System.
☞ SSC – Selective Credit Control
☞ SSI - Small Scale Industries
☞ SSSBE - Small Scale Service and Business Enterprises
☞ SWIFT - Society For Worldwide Inter Bank Financial
☞ Telecommunication.
☞ SHGs – Self Help Groups
☞ SEBI – Securities and Exchange Board of India
☞ SECC – Socio Economic & Caste Census
T
☞ TDS - Tax Deducted at Source
☞ TIN - Tax Information Network
U
☞ UBIN - Unique Business Identification Number
☞ UCB - Urban Cooperative Bank.
☞ UCT – Unconditional Cash Transfer
☞ UCNs - Uniform Code Numbers
☞ UEBA - Universal Electronic Bank Account.
☞ UIDAI - Unique Identification Authority of India
☞ ULIP – Unit Linked Insurance Plan
☞ UPI – Unified Payments Interface
☞ UPIN - Unique Property Identification Numbers.
☞ USB - Ultra Small Branch.
☞ USD - United States Dollar.
☞ USSD - Unstructured Supplementary Service Data
☞ UTI - Unit Trust of India
V
☞ VAT – Value Added Tax
☞ VDBS - Vertically Differentiated Banking System.
☞ VPA - Virtual Payment Address
☞ VVPAT - Voter Verifiable Paper Audit Trail
W
☞ WBCIS - Weather Based Crop Insurance Scheme.
☞ WCTL - Working Capital Term Loan
☞ WL ATM - White Label ATM.
☞ WMA - Ways and Means Advances
☞ WPI – Wholesale Price Index
Y
☞ YTM - Yield to Maturity

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BANKING AWARENESS

S.no Content Page No

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RESERVE BANK OF INDIA (RBI):

CENTRAL BOARD OF DIRECTORS – 21 MEMBERS, FOUR-YEAR TERM

BOARD FOR FINANCIAL SUPERVISION

FUNCTIONS OF THE RESERVE BANK:

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Deposit Insurance and Credit Guarantee Corporation of India (DICGC)

Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL):

Reserve Bank Information Technology Private Limited (ReBIT):

Reserve Bank Innovation Hub (RBIH):

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RBI has six training establishments

MONETARY POLICY (BIMONTHLY)

Monetary Policy Committee:

Repo Rate (Repurchase Rate)

Reverse Repo rate:

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Cash Reserve Ratio (CRR)

Statutory Liquidity Ratio (SLR):

NDTL: Net Demand and Time Liabilities

Marginal Standing facility (MSF):

Liquidity Adjustment Facility (LAF):

Open market operation

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Benchmark Prime Lending Rate:

Marginal Cost of Funds based Lending Rate (MCLR):

External Benchmarks lending Rate:

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Repo-linked lending rate (RLLR):

Financial Action Task Force (FATF):

Banking Ombudsman Scheme:

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Volume and value of banknotes to be printed

Mobile Aided Note Identifier (MANI):

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Historical Monuments printed on Indian currency:

Bank and Its Operation

Net interest margin

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DTAA- Double Taxation Avoidance Agreement

Payment Instruments in India

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Magnetic Ink Character Recognition (MICR):

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Cheque Truncation System (CTS)-2010

IFSC: Indian Financial System Code

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▪ The 5th character is 0 (zero).

Real-Time Gross Settlement System (RTGS):

Legal Entity Identifier:

Society for Worldwide Interbank Financial Telecommunication (SWIFT):

NPCI- National Payment corporation of India

BBPS- Bharat Bill Payment System

NPCI Bharat BillPay Limited (NBBL)

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Immediate Payment Service (IMPS)

MMID -Mobile Money Identifier.

National Automated Clearing House (NACH):

Automated Teller Machine (ATM)

National Financial Switch (NFS)