Banking Digest May 2015

HIGHLIGHTS

Banking & Finance

Recent Banking Developments

Concept Briefs

Model Tests

J. S . INSTITUTE OF BANKING AND FINANCE PVT. LTD.Ramanashree Park View, 2nd Floor, 2462, 24th Cross Road,Banashankari 2nd Stage, Bangalore - 560 070.E-mail : [email protected] : www.jsinstitute.co.in

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CONTENTSVol. - IX May-15 Issue - 9

BANKING & FINANCE –May 2015

SBI:Rupay Platinum Debit Card ............... 7Deals with E-CommerceCompanies ................................................. 7New Cards ................................................. 7Online Overdraft Facility ...................... 7Results ........................................................ 7

RBI:3 Banks Penalised ................................... 8Liberalised Branch AuthorisationPolicy ........................................................... 8NBFCs Selling MFs ................................. 8Funds for Start-ups ................................ 8AFA Relaxed for SmallValue Transactions ................................. 8Resolution Period for StressedAssets .......................................................... 8Internal Ombudsman ............................ 9RBI on FDI Inflows ................................. 9Swap Transactions ................................. 9Resilience against Outflows ................. 9Trade Transaction Limit ....................... 9

Banking/Other Banks:Micro ATMs WithdrawalLimits .......................................................... 9Panel for Selecting Chairmenin PSBs ........................................................ 9Ping Pay ....................................................1 0Switching Fee ...........................................1 0Insurance Schemes ofGovernment ..............................................1 0Chequebook App ....................................1 0HDFC Bank’s SmartBuy ......................1 0ATM Transactions Decline ..................1 0Credit Cards .............................................1 0SC Notice for Hiring ofTop Executives in PSBs ........................1 0Voice Recognition Software ................1 1

Finance, SE:LIC’s Market Share ................................1 1Gold Monetisation Scheme ..................1 1

Insurance Policies in RuralSectors ........................................................1 12-Wheeler Insurance ..............................1 2Privatisation of ITDC Hotels .............1 2Insurance Schemes .................................1 2

Corporates:Capgemini’s Acquisition ofiGate ............................................................1 2Future-Bharti Pact .................................1 3Investment in India ................................1 3Nestle’s Maggi Unsafe ..........................1 3

Economy:Divestment ...............................................1 3Growth Forecast ......................................1 3Bad Loans .................................................1 3Table of Key Statistics ..........................1 3

National:Salman Khan Convicted .......................1 4India’s Largest Power Plant ...............1 4Earthquake in Andaman ......................1 4Social Security Schemes .......................1 4MoUs in Chhattisgarh ...........................1 4SC on Photos of Politicians .................1 5Black Money Bill .....................................1 5Urea Policy ...............................................1 5Credit to Mongolia .................................1 5Farmer Suicide .........................................1 5Cabinet clears Land BoundaryBill ................................................................1 5Lok Sabha Clears GST Bill ..................1 5Tamil Nadu’s Chief Minister ..............1 6Raju Out on Bail .....................................1 6Proposed GST Council .........................1 6Elections in Bihar ....................................1 6Environmental Clearance forMining Auctions .....................................1 6Pollution Violations ...............................1 6Heat Wave in AP, Telangana .............1 6AAP-LG Conflict in Delhi ...................1 6

International:Indian-Americans’ MedianIncome ........................................................1 7UK PM........................................................1 7

JS Digest of Banking and Finance May15

ADB Loan for WaterResource management ......................... 1 7Human Capital Index .......................... 1 7Pakistan Helicopter Crash ................. 1 7Sentence for Malala Attack ................ 1 7India-Japan Pact ................................... 1 7Kazakhstan President .......................... 1 7Disaster Losses ...................................... 1 7Morsi’s Death Sentence ........................ 1 8Air Pollution ............................................ 1 8FT Top 50 Executive EducationSchools ...................................................... 1 8Nepal Earthquake ................................. 1 8Banks Fined ............................................. 1 8US Economy ............................................ 1 8Japan’s Economy ................................... 1 8Kazakhstan Elections ........................... 1 8Japan’s Plan for AsianInfrastructure .......................................... 1 9

Technology:Motorola Patent Penalty ..................... 1 9Flipkart’s Acquisition ofAppiterate ................................................ 1 9Verizon’s Acquisition of AOL .......... 1 9Cognizant Results ................................. 1 9Job Cuts .................................................... 1 9

Dates, Anniversaries:. ....................... 1 9

Personalities:. ..........................................1 9

Sports:. ..................................................... 2 0

Awards/Recognitions:. ....................... 2 0

Appointments: . ................................... 2 0

Recent Banking Developments-Feb’15P B Business:Xpress Credit .......................................... 2 1The employees of reputed privateschools and colleges are now includedunder Xpress Credit Loan Scheme on theundernoted terms and conditions: ... 2 1Agri Business:Warehouse Receipt Financing withcollateral Management services:Improvement in Margin, CollateralSecurity and Rate of Interest: ............ 2 1Financing Agri Value Chain: NewScheme for Financing “Farmers

Producer Companies (FPCs) ..............2 2C & I Business:Industry Specific Benchmarks:Change in Loan Policy ............................ 2 4Foreign Exchange:Digitization of clearances –External Commercial Borrowings(ECB) and Trade Credit ............................. 2 5Foreign Exchange ManagementAt, 1999–Import of Goods into India ... 2 5Delay in utilization of advance receivedfor Exports .................................................. 2 5Risk Management and Inter BankDealings: Foreign Currency (FCY) –INR Swaps .................................................... 2 6Foreign Investment in India byForeign Portfolio Investors ..................... 2 6Human Resources:Project – Gratuity Automation:Payment of Gratuity in HRMS ................ 2 7Gene r al :Gold Banking – Import of Gold:Review / Restart of Gold BankingActivities ...................................................... 2 7Guidelines on Import of Gold byNominated Banks/Agencies ...................... 2 8

Recent Banking Developments-Mar’15P B Business:Personal Banking Advances ................. 2 9Real Estate, Habitat &Housing Development ............................ 2 9SBI Scholar Loan Scheme ................. 30Central Government Salary Package(CGSP) ................................................... 31Agri Business:Financial Inclusion:Business Correspondents (BCs) ..... 32Interest subvention scheme .............. 32Educational Loan Scheme:Obtaining Aadhaar details ofborrowers ............................................... 33Pradhan Mantri Jan-Dhan Yojana(PMJDY) ................................................. 34Agri Business-SBI Special OTS forTractor Loans 2014 -15 ..................... 36SME Business:SMECCC has bee renamed asSME Centre ............................................. 39C & I Business:Lending under Consortium /

Multiple Banking Arrangement .........3 9Advances:Metal Gold Loan (MGL) andSale of Gold ..............................................4 0Foreign Exchange:Acquisition / transfer ofimmovable property ..............................4 1NRI Services .............................................4 1Mandatory use of StructuredFinancial Messaging System(SFMS) .......................................................4 3Human Resources:Payment of Family Pension ................4 3General:Western Union Remittances ................4 4PPF A/C: ..................................................4 4Service Tax ................................................4 4

Recent Banking Developments-April’15P B Business:Providing key fact statement topersonal and education loanborrowers ....................................................4 5Car Loans ...................................................4 5Home Loan above Rs.10 lacs ................4 5Campaign for opening of savingsbank accounts with non-personalisedwelcome kits ..............................................4 5SME Business:. ......................................4 6Rice Mill Plus .............................................4 7Loans without CGTMSE cover .............4 7Agri Business:Interest Subvention Scheme (ISS) .........4 8Mandatory use of ‘AGRI LOS’ ..............4 8RuPay (DEBIT) card to FIcustomers ....................................................4 8Financial Inclusion ...................................4 9Advances:Non-Cooperative Borrowers ..................4 9Modification in Provisioning norms ...5 0Collection and Dissemination ofInformation on Wilful Defaulters .........5 1Online Loan against shares ....................5 2Follow up of Loan Accounts ..................5 5Foreign Exchange:Risk Management and Inter-bankDealings ......................................................5 5KYC Documents for opening of NRE /NRO / FCNR (B) and RFC Accounts ....5 6Export of Goods and Services –

Project Exports ........................................5 7Gene r al :Safe keeping of vouchers/retrieval/destruction of records .............5 7Cross Selling – SBI Life: .........................5 8Fund Transfer using ATM .......................5 8Time of Credit ...........................................5 9Solvency Certificate ................................5 9RFIA / Credit Audit ...................................5 9Composite Rating Introduced ................6 0

Recent Banking Developments-April and May’15Human Resources:Mandatory Leave for Employees .........6 2Forex:Merchanting Trade to Nepal andBhutan Foreign Currency(Non-Resident) Account .........................6 2Foreign Currency(Non-Resident)Account (Banks)(FCNR(B)) Scheme ...6 3Deposits:Rights of transgender persons ................6 4Advances:Loan frauds in banks ................................6 5Early Warning Signals (EWS) andRed Flagged Accounts (RFA) ..................6 5Technology:Security and Risk mitigation Measuresfor Card Present and ElectronicPayment Transactions ............................6 7Gene r al :Dispension with ‘No Due Certificate’(NDC) for lending by Banks ..................6 7Simplified procedure for openingof Currency Chests ...................................6 8Calendar of Reviews .................................6 9Critical themes in board deliberations ..6 9Card Payments - Relaxation ..................7 0Mandatory issue of acknowledgementto Pensioners .............................................7 1

CONCEPT BRIEF - IndianEconomy Roundup – May 2015 ...........7 2MODEL TEST (BASED ON MAY2015 INFORMATION) .........................7 6PRIORITY SECTORADVANCES (Changes–April2015) Model Test – II ............................7 8Model Test-I (for STP aspirants)(MM II Confirmation Exam) ..............9 2SBI Results (2014-15) ......................... 121

65 Contents


BANKING & FINANCE–May 2015

SBI: Rupay Platinum Debit Card: SBI has launched a Rupay

Platinum debit card along with National Payment Corporationof India (NPCI). This card may be used at ATMs and Point ofSale (PoS) or merchant terminals as well as for e-commercetransactions. It also offers other benefits like 5% cash back onutility bills, complimentary airport lounge access, personalaccident death and permanent total disability insurance coverof Rs.2 lakh.

Deals with E-Commerce Companies: SBI has signed an MoUwith American e-commerce company Amazon to offer paymentsolutions to its customers. It has also tied up with India’s e-commerce company Snapdeal to enable sellers on the site to getassistance in raising collateral-free loans with favourable interestrates. Snapdeal’s data analytics will also help it gauge thecreditworthiness of sellers. It has also entered a pact withAmerican online payment system company PayPal to facilitateinternational trade and overseas funding for the GOI’s initiativeslike Swachh Bharat and Clean Ganga. Customers will also haveaccess to PayPal’s secure payment solutions as well as be able touse it to make payments for purchases made from overseaswebsites.

New Cards: SBI has launched two new cards – SBI INTOUCHcontactless Debit Card and SBI Signature Contactless Credit Card.Contactless cards use Near Field Communication (NFC)technology; customers may make payments by merely wavingthe card near the contactless reader. Since the card does not haveto be swiped, it is more secure.

Online Overdraft Facility: SBI has started an online overdraftfacility against fixed deposits (FD), wherein customers can availof an overdraft against fixed deposits, held in a single name, upto 90% of the FD amount. Special interest rate for the introductoryperiod: 0.5% above the TDR rate.

Results: State Bank of India (SBI)’s net profit for the year endedMar’15 increased by 23% to Rs.3,742 crore as compared to theprevious year. Gross Non-Performing Assets (GNPAs) were4.25%, down from 4.95% in the previous year while Net Non-Performing Assets (NNPA) reduced from 2.57% to 2.12%. It hasrestructured advances of Rs.71,229 crore in total.

RBI: 3 Banks Penalised: RBI has fined Dena Bank, Bank of

Maharashtra and Oriental Bank of Commerce (OBC) Rs.1.5 croreeach for not complying with regulatory guidelines that led to thefixed deposits fraud case. Fraudsters forged Fixed Deposit receiptsof these banks and availed of cash credit based on those receipts.Further, the central bank has cautioned some other banks namelyCentral Bank of India, Bank of India, Punjab and Sind Bank,Punjab National Bank, State Bank of Bikaner & Jaipur, UCO Bank,Union Bank of India and Vijaya Bank, in this regard.

Liberalised Branch Authorisation Policy: As part of its policystance to relax norms for opening branches, RBI has now statedthat banks need not report disputes in relation to leased premiseson a periodic basis. But they must ensure that the leased premisesare not illegal. Also, commercial banks except Regional RuralBanks (RRBs) need not seek RBI’s approval each time they openbranches anywhere in the country.

NBFCs Selling MFs: RBI has allowed all Non-Banking FinanceCompanies (NBFCs) to sell Mutual Funds (MFs) – there are nominimum eligibility criteria or approvals required from the apexbank. Earlier, NBFCs needed to have net owned funds of Rs.100crore and less than 3% net bad loans.

Funds for Start-ups: RBI has allocated Rs.10,000 crore to SmallIndustries Development Bank of India (SIDBI) to set up a VentureCapital (VC) fund. This is to attract private capital for start-upsby making available equity and other forms of risk capital.

AFA Relaxed for Small Value Transactions: To increasecustomer convenience, RBI has done away with the AdditionalFactor of Authentication (AFA) for small value card presenttransactions – i.e. of value lesser than Rs.2,000 across allmerchant categories. Banks may decide how often customerscan undertake such transactions. RBI has also stated that fromSeptember 2015, all banks must issue only Europay MasterCardVisa (EMV) chip – or PIN-enabled credit and debit cards to reducethe chance of fraud. RBI has also asked banks to put in placeearly warning systems for accounts over Rs.50 crore. Accountsthat have suspicious activity like bounced high value chequesor raid by tax officials may become Red Flagged Accounts (RFA).Banks are required to make full provision for the amount of thefraud once detected.

Resolution Period for Stressed Assets: RBI has extended theresolution period for Asset Reconstruction Companies (ARCs)

87 Banking & Finance


to restructure stressed assets to beyond 8 years. Internal Ombudsman: RBI has directed all Public Sector Banks

(PSBs) and some private and foreign banks, based on their assetsize and business mix (ICICI Bank Ltd., HDFC Bank Ltd., AxisBank Ltd., Kotak Mahindra Bank Ltd., IndusInd Bank Ltd.,Standard Chartered Bank, Citi Bank N.A. and HSBC Ltd.) toappoint an internal ombudsman – a Chief Customer ServiceOfficer (CCSO). This is to ensure that customers’ grievances aregiven due priority and attention.

RBI on FDI Inflows: RBI has issued a clarification that ForeignDirect Investment (FDI) inflow does not require its approval atany stage. FDI may flow into an Indian company through theautomatic route and the approval route. In the former, noapproval is required for FDI inflow while the approval of theForeign Investment Promotion Board (FIPB) is required in thelatter.

Swap Transactions: To enable foreign lenders to lend in Rupeesto Indian entities, RBI has allowed them to enter into swaptransactions with their overseas banks; these banks will thenenter into back-to-back swap transactions with Indian banks.

Resilience against Outflows: RBI Governor Raghuram Rajanhas expressed confidence in India’s ability to withstand suddencapital outflow because of its improved economic fundamentalslike foreign exchange reserves (US$ 353.87 billion as of May 152015) and Current Account Deficit (CAD).

Trade Transaction Limit: RBI has increased the tradetransactions limit under the Rupee Drawing Agreement fromRs.5 lakh to Rs.15 lakh per transaction.

Banking/Other Banks:Micro ATMs Withdrawal Limits: Banks have fixed thewithdrawal limit for micro ATMs at Rs.10,000. Up to Rs.2,000,there will be an interchange fee of Rs.2 per financial transactionwhile between Rs.5,000 and Rs.10,000, it will increase to Rs.15per transaction. Non-financial transactions will not be charged.Switching fees have been exempted till December 2015. A microATM is a hand-held device that Business Correspondents (BCs)use to accept deposits and dispense cash. They are less expensivethan ordinary ATMs. Of the 124,000 micro ATMs in the market,54,000 are Aadhaar-enabled and 8,000 Rupay card-enabled.Panel for Selecting Chairmen in PSBs: The Government hasappointed RBI Governor Raghuram Rajan as the head of a new

panel that will select non-executive Chairmen in Public SectorBanks (PSBs); the panel will set rules regarding eligibility criteriaand age limits.Ping Pay: Axis Bank’s mobile-based application Ping Pay willenable customers to make payments using different platformssuch as WhatsApp, Facebook, Twitter, email and SMS.Switching Fee: The National Payments Corporation of India(NPCI) has reduced the switching fee by 10% to 45 paise forATM transactions effective May 1, 2015.Insurance Schemes of Government: Central Bank of India (CBI)has signed an MoU with The New India Assurance Co. Ltd. tooffer the Pradhan Mantri Suraksha Bima Yojana (PMSBY). Thiswas announced in the Union Budget 2015-16.Chequebook App: ICICI Bank has launched ‘eftCheque’ mobileapplication. This will help customers, who are not conversantwith electronic modes of payment, transfer funds to beneficiarieswhose bank details are not required. The app replicates the lookand feel of a cheque.HDFC Bank’s SmartBuy: HDFC Bank plans to allow customersto buy products like groceries, clothes and other retail goodsthrough a platform called SmartBuy; customers will get discountsand facilities as a one-stop shop. This is to earn fee income bypartnering with various e-tailers to offer these products andservices.ATM Transactions Decline: According to the Confederation ofATM Industry (CATMI), the number of average daily ATMtransactions have declined from 137 to 108 between December2012 and December 2014. In this period, the number of ATMswent up from 1.05 lakhs to 1.76 lakhs and the number of debitcards also increased from 314.4 million to 500 million. The declinehas been attributed to the limited number of free transactions inATMs as well as the Direct Benefit Transfer (DBT) scheme nottaking off as anticipated.Credit Cards: The number of outstanding credit cards at the endof December was 20.29 million, according to data from RBI.SC Notice for Hiring of Top Executives in PSBs: The SupremeCourt has issued a notice to the Union Government based on aPublic Interest petition that claims that the top posts in PublicSector Banks (PSBs) must be filled from the pool of executivesserving in the banks rather than from other private banks. TheGovernment had issued an advertisement seeking candidatesfor the posts of Managing Director (MD) and Chief Executive



Officer (CEO) of Bank of Baroda (BoB), Bank of India (BoI), CanaraBank, IDBI Bank and Punjab National Bank (PNB). The petitionhas stated that seeking candidates from outside is againstbanking regulations.Voice Recognition Software: ICICI Bank has introduced a voicerecognition software at its call centres. Customers no longer needto validate their identities by typing in their card numbers orPINs as the technology will recognise their voice and authenticatethem; this is for the special convenience of those who use smartphones.

Finance, SE: LIC’s Market Share: The market share of Life Insurance

Corporation of India (LIC), in terms of first-year premium income,has reduced to 69.21% from 75% as a result of new regulationswherein it had to stop selling ULIP products.

Gold Monetisation Scheme: The Government has released adraft gold monetisation scheme. This seeks to optimally utilisethe idle gold reserves held by banks. Some of the proposalsinclude:o Interest earned on gold deposits will be exempted from all forms of taxation.o The minimum gold that can be deposited in gold schemes will be 30 grams, down from 500 grams.o Interest to the depositors will be valued in gold. Depositors may also receive the maturity amount in gold.o Banks may use the deposited gold for lending to jewellers, selling to customers and generating foreign currency.o There will be 350 hallmarking centres that will test the purity of the gold. These centres will also issue purity and weight certificates.

Insurance Policies in Rural Sectors: The Insurance RegulatoryDevelopment Authority of India (IRDAI) has stated that insurersmust increase the number of policies sold to rural sectors. As perrecently released draft guidelines, life insurers have to ensurethat they sell:

7% of the total policies written direct to rural areas inthe first financial year,

9% in the second financial year, 12% in the 3rd year 14% in the 4th year 16% in the 5th year

18% in the 6th and 7th year 19% in the 8th and 9th year 20% between the 10th to the 15th years and 25% from the 16th financial year onwards

General insurers have to ensure that they sell: 2% of the total gross premium income written direct in

the 1st financial year 3% in the 2nd year 5% between the 3rd and 7th years 6% in the 8th year 7% in the 9th year.

The rural obligations of stand-alone health insurers is half of thegeneral insurers’ obligations. In the social sector, for all insurersthe rural obligation begins at 0.5% in the 1st year and goes up to5% from the 19th year onwards. It is a percentage of the totalbusiness in the preceding financial year.

2-Wheeler Insurance: The Insurance Regulatory DevelopmentAuthority (IRDA) has stated that almost 75% of two-wheelers inIndia do not have insurance. The Supreme Court has set up acommittee on road safety to make a report with methods to identifythese vehicles in 3 months.

Privatisation of ITDC Hotels: The GOI has plans to privatisehalf of the 16 India Tourism Development Corporation (ITDC)hotels that are not performing well. This is part of the GOI’splans to offload sick units.

Insurance Schemes: The Union Budget had announced 2insurance schemes to provide social security to all Indians. Thisis valid for the period between June 1 2015 and May 31 2016 andhas to be renewed annually. Customers need not get a medicalcheck-up done.

PMJBY (Pradhan Mantri Jeevan Jyoti Bima Yojana) - Thisprovides a life insurance cover of Rs.2 lakh for an annualpremium of Rs.330 for those between 18 and 50 years ofage.

PMSBY (Pradhan Mantri Suraksha Bima Yojana) - Thisprovides an accident insurance cover of Rs.2 lakh for anannual premium of Rs.12/- for those between 18 and 70years of age.

Corporates:o Capgemini’s Acquisition of iGate: France-based software

company Capgemini has acquired US-based software company



iGate for US$ 4 billion. Its employee base will increase to 90,000post acquisition.

o Future-Bharti Pact: Future Retail and Bharti Retail have decidedto merge their operations; the joint venture will have a turnoverof Rs.15,000 crore with 570 stores in 243 cities.

o Investment in India: US automobile company Ford Motors plansto invest Rs.5,000 crore in its R&D centre in Chennai.

o Nestle’s Maggi Unsafe: Authorities in Uttar Pradesh havedetected a higher- than-permissible limit of lead and monosodiumglutamate in Nestle’s Maggie noodles. While furtherinvestigations are underway, Nestle has refuted the claims thatits product is unsafe for consumption.

Economy: Divestment: The Cabinet has approved a 10% stake sale for

Indian Oil and 5% sale for National Thermal Power Corporation(NTPC) and expects to garner an aggregate revenue of overRs.13,500 crore.

Growth Forecast: A UN World Economic Situation and Prospects(WESP) update expects India to grow by 7.6% in 2015 and 7.7%in 2016; it expects China to grow by 7% in 2015 and 6.8% in2016.

Bad Loans: According to data from RBI, there has been an increaseof 90% in the restructured loans that have been classified asfailed to Rs.56,995 crore as of March 31 2015 compared to theyear-ago period. The total value of restructured loans as of March31 2015 was Rs.2.86 lakh crore.

Table of Key Statistics:CRR 4%SLR 21.5%REPO 7.5%REVERSE REPO 6.5%MSF 8.5%BANK RATE 8.5%INFLATION (WPI)* -2.65%FDI** US$ 28.81 bnFII *** (into equity) US$ 17.2 bnSENSEX@ 27564NIFTY@ 8334RS/$@ 64.01GOLD/10 g@ 26,875

SILVER/kg @ 38,320Forex Reserves# US$ 353.87 bnCurrent Account Deficit asa % of GDP^ 1.6Industrial Output^^ 2.1%

* April 2015** April 2014 to February 2015*** FY 2014-15 up to mid-March 2015@ As on May 27 2015# As on May 15 2015^ October-December 2014^^ March 2015

National: Salman Khan Convicted: Hindi film actor and producer Salman

Khan has been convicted for culpable homicide not amountingto murder for driving under the influence of alcohol and killing1 person and injuring 4 others in 2002. He has received a sentenceof 5 years Rigorous Imprisonment (RI). Currently, he is out onbail pending appeal.

India’s Largest Power Plant: National Thermal PowerCorporation (NTPC) plans to set up a power plant withJharkhand State Electricity Board with a generation capacity of6,400 megawatt (mw) annually. This will be India’s largest powerplant.

Earthquake in Andaman: An earthquake measuring 5.4 on theRichter scale hit Andaman and Nicobar Islands without anycasualties.

Social Security Schemes: Prime Minister Narendra Modi haslaunched 3 social security schemes - Pradhan Mantri SurakshaBima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana(PMJJBY) and Atal Pension Yojana (APY) with the objective ofproviding social security protection, insurance cover and oldage income needs to all. He said that in the week since its launch,55 million people have been covered by these schemes.

MoUs in Chhattisgarh: On a visit to Chhattisgarh, PM NarendraModi signed 4 MoUs for infrastructure development in the stateannouncing investments worth Rs.24,000 crore includingRs.18,000 crore for a steel plant. Chhattisgarh has been besetwith Naxalite issues - Naxalites held 300 farmers hostage duringPM’s visit but released them later; however, one person was killed.



SC on Photos of Politicians: The Supreme Court (SC) has statedthat the photos of politicians must not be used in mediaadvertisements connecting them to Government policy with theexception of those of the Prime Minister, President and the ChiefJustice of India.

Black Money Bill: The Parliament has passed the Black Money(Undisclosed Foreign Income and Assets) and Imposition of TaxBill, 2015.o The Government has opened a compliance window for

offenders with undeclared taxable income to come forwardand state their overseas assets/income and pay tax pluspenalty of 60%.

o This will be applicable to residents and not non-residentsand professionals working abroad; it is meant to unearthforeign assets of residents.

o In 2017, the automatic global information exchange will come into effect.o Those with amounts equivalent to Rs.5 lakh in bank accounts abroad will not be targeted as they could be students.o The penalty for non-disclosure will be 120% tax plus penalty and 10 years imprisonment.

Urea Policy: The Cabinet has passed a new urea policy effectivefrom 2015-16 for 4 years; this will incentivise domesticmanufacturers based on their annual consumption of energyand allow free transportation of phosphorous and potassiumfertilisers.

Credit to Mongolia: India has extended a line of credit of US$ 1billion to Mongolia for infrastructure development. Indian PrimeMinister Narendra Modi was on a 2-day visit there.

Farmer Suicide: Gajendra, a farmer committed suicide at an AAPrally allegedly to protest against the Land Bill – he was unable tomeet loans due to a failed crop season caused by unseasonalrains. His death became a political hot potato as the ChiefMinister of Delhi and AAP’s head, Arvind Kejriwal even issuedan apology for continuing with his rally after the unfortunateevent occurred.

Cabinet clears Land Boundary Bill – The Cabinet has passedthe Land Boundary Bill that covers area that will be transferredto Bangladesh from the states of Assam, Tripura and West Bengaland vice versa.

Lok Sabha Clears GST Bill: The Goods and Services Tax (GST)

Bill has been passed by the Lok Sabha. Needs to go through theRajya Sabha.

Tamil Nadu’s Chief Minister: Tamil Nadu’s former ChiefMinister J Jayalalithaa has replaced O Panneerselvam as CMafter the Karnataka High Court found her not guilty of possessingassets disproportionate to her income. The case has been in courtfor 19 years. She had resigned her post as CM 7 months ago, aftera Bengaluru special court convicted and sentenced her to 4 yearsin prison and fined her Rs.100 crore.

Raju Out on Bail: Satyam’s Ramalinga Raju and 9 others are outof prison on bail as his 7-year sentence has been suspended.They were convicted and sentenced for manipulating Satyam’sbooks of accounts to the tune of Rs.7,000 crore.

Proposed GST Council: The Union Finance Minister, Arun Jaitleywill be the Chairman of the Goods and Services Tax (GST)Council. The other members will include the Union Minister ofState for Finance and other state finance ministers or tax ministersnominated by the states. The Council will take calls on tax rates,exemption and threshold limits. According to the proposed GSTcouncil, the Centre will have one-third voting rights while thestates will have two-thirds voting rights. Regardless of their size,all states will have an equal vote. Any proposal needs 75% votesto be passed.

Elections in Bihar: Bihar will have assembly elections inSeptember-October 2015, according to Chief ElectionCommissioner (CEC) Nasim Zaidi.

Environmental Clearance for Mining Auctions: The Centre hasstated that states need not get environmental clearance beforethey auction mining projects. States had argued that the CentralGovernment or the mining company must obtain these clearances.It is still not clear as to who will be responsible for obtainingthese clearances.

Pollution Violations: A 5-star hotel in Haridwar, Radisson Bluhas been closed for not conforming to rules as set by the NationalGreen Tribunal; it has allegedly released untreated sewage waterinto the Ganga.

Heat Wave in AP, Telangana: The severe heat wave in AndhraPradesh (AP) and Telangana has led to the death of 500 peoplein a matter of days. Other cities across the country also registeredrecord high temperatures.

AAP-LG Conflict in Delhi: There has been a conflict regardingposting and transfer of bureaucrats in Delhi between the Delhi



Government and the Lieutenant General (LG) Najeeb Jung. Bothparties have applied to the President seeking a resolution to theirclaims that they should have such powers. The Centre has issueda notification stating that the LG has the final powers.

International:Indian-Americans’ Median Income: According to the US CensusBureau, the median household income of Indian Americans isover US$ 100,000 as compared to the national median income ofUS$ 51,000 per annum. This is even higher than the medianincome of white, native-born Americans.UK PM: David Cameron has been re-elected as the Prime Minister(PM) of United Kingdom (UK). This is the first time a ConservativeGovernment has won a majority in 20 years. India-born PritiPatel has become minister of state for employment. ConservativeParty Member of Parliament (MP), British-Indian Rishi Sunak,son-in-law of Infosys co-founder Narayana Murthy, also wonfrom his constituency.ADB Loan for Water Resource management: AsianDevelopment Bank (ADB) has given a loan of US$ 31 million toKarnataka to enhance water availability in its river basins andimprove irrigation.Human Capital Index: India has been ranked 100 out of 124nations in the Human Capital Index compiled by the WorldEconomic Forum (WEF). Finland was ranked first. The indexmeasures how well human capital is developed and deployed.Pakistan Helicopter Crash: A military helicopter in Pakistanwas allegedly shot down by the Taliban. 2 foreign ambassadorswere among the 7 that died.Sentence for Malala Attack: 10 persons, held responsible forattacking Pakistani Nobel Peace prize awardee MalalaYousafzai, have been sentenced to life imprisonment by aPakistan court.India-Japan Pact: India and Japan have signed an agreement todouble Japan’s investment in India over the next 5 years as wellas to boost bilateral trade. The investment is for developingtownships in India and for other projects in infrastructuredevelopment.Kazakhstan President: Nursultan Nazarbayev won theKazakhstan presidential elections.Disaster Losses: According to a report by the United NationsOffice for Disaster Risk Reduction, India loses US$ 9.8 billion

annually due to disasters occurring because more than 58% ofland in India is prone to earthquakes and 8.5% of land is proneto cyclones.Morsi’s Death Sentence: Egypt’s former President MohammedMorsi and over 100 others were sentenced to death for the massprison break uprising in 2011. He was the first freely-electedhead of state of Egypt. Morsi was ousted from power in 2013 bythe military. He has been succeeded by Abdel-Fattah el-Sisi, themilitary chief who also won the elections last year.Air Pollution: According to a report by the World HealthOrganisation (WHO), air pollution has led to 4 times more deathsin the last 10 years around the world. India and China accountedfor two-thirds of the 4.3 million deaths due to indoor air pollution- 1.5 million deaths were in China and 1.3 million in India.FT Top 50 Executive Education Schools: The Indian Institute ofManagement, Bangalore (IIMB) has been ranked 48th on theFinancial Times (FT) Executive Education 2-15 Top 50 schools;it is the only Indian business school on the list.Nepal Earthquake: Nepal’s Prime Minister (PM) Sushil Koiralahas estimated that the death toll from the 7.6 on the Richter scalestrong earthquake that hit the country may cross 10,000. Theofficial toll is at over 6,000. 22 Mount Everest climbers died whilemany others went missing; the toll in India rose to 62. Indiaextended its support airlifting the needy from Nepal during thistime. Another earthquake measuring 7.3 on the Richter scalestruck Nepal again – 76 people were killed while thousandswere injured. There was also an earthquake in Afghanistan thatadded to the aftershocks that India suffered.Banks Fined: 4 major global banks – US banks JPMorgan Chaseand Citigroup, British banks Barclays Plc and Royal Bank ofScotland (RBS) have pleaded guilty to US criminal charges ofmanipulating foreign exchange rates. They have, in all, been finedUS$ 5.7 billion. Swiss bank UBS is also expected to plead guiltyto similar charges.US Economy: The US economy grew by 0.2% in the January-March 2015 quarter; in the year-ago period, it contracted by 2.1%.In the December 2014 quarter, it grew by 2.2%.Japan’s Economy: Japan’s economy grew by 2.4% annualisedrate in the March 2015 quarter and by 0.6% Quarter-on-Quarter(QoQ); in the December 2014 quarter, it increased by 1.5% QoQ.Kazakhstan Elections: Nazarbayev has won the elections to



continue his term as President of Kazakhstan; he has been inpower since 1989.Japan’s Plan for Asian Infrastructure: Japan will invest US$110 billion over the next 5 years in developing infrastructure inAsia. The Asian Infrastructure Investment Bank (AIIB), that has57 nations on board, is also expected to have a capital base ofUS$ 100 billion.

Technology: Motorola Patent Penalty: Motorola Mobility, a US mobile device

subsidiary of Chinese technology company Lenovo, has beenpenalised US$ 10.2 million by a US jury for using technology,patented by Japan’s Fujifilm Corp, in its phone.

Flipkart’s Acquisition of Appiterate: E-commerce companyFlipkart has acquired mobile engagement and marketingautomation company Appiterate to strengthen its mobileofferings.

Verizon’s Acquisition of AOL: US-based wireless providerVerizon Communications plans to acquire US mass mediacompany AOL for US$ 4.4 billion.

Cognizant Results: Cognizant Technology Solutions (CTS)’snet profits increased by 9.7% to US$ 382.9 million in the March2015 quarter as compared to the year-ago period.

Job Cuts: Engineering company Siemens plans to cut 4,500 jobsthis year. It has already announced that 7,400 jobs will be cut outof 340,000 employees worldwide.

Dates, Anniversaries:May 3 - World Laughter DayMay 9 - Victory Day - 70th Anniversary of victory over the NazisPersonalities:

o Dave Goldberg: The Chief Executive Officer (CEO) of poll-takingcompany SurveyMonkey has passed away after an accident at agymnasium. He was the husband of Facebook Chief OperatingOfficer (COO), Sheryl Sandberg.

o Alexandre Lamfalussy (86): One of the founding fathers of theEuro currency as a single currency for Europe has passed away.He was an economist and the first president of the EuropeanMonetary Institute, predecessor of the European Central Bank(ECB).

o Mrinal Datta Chaudhuri (82): The economist and former directorof the Delhi School of Economics has passed away; he was also

a visiting professor at the universities of Harvard and Minnesota.He was awarded Padma Bhushan in 2005 in the field of tradeand industry.

o John Nash (86): The Economics Nobel Prize winning Americanmathematician has passed away in a car crash. He won theNobel prize in 1994 for his various contributions to economicscience - game theory, Nash equilibrium and Nash embeddingtheorems. Oscar award-winning movie A Beautiful Mind wasbased on his life.

Sports: Boxing: American professional boxer, Floyd Mayweather beat

Filipino Manny Pacquiao in boxing’s most expensive fight takinghis record of unbeaten fights to 48. He has won 11 world titles sofar.

Tennis: India’s Rohan Bopanna and Romania’s Florin Mergeahave won the Madrid Open Men’s Doubles title, an ATP 1000Masters Series event.

Shooting: Indian shooter Gagan Narang won a bronze medal inthe ISSF World Cup in the US in the 50 m Rifle Prone Event. Withthis, he has earned a quota place in the 2016 Olympics to be heldin Rio de Janeiro.

Formula One: Nico Rosberg, of Germany, driving the Mercedeswon the 2015 Spanish and Monaco Grand Prix.

Cricket: Mumbai Indians beat Chennai Super Kings to becomethe champions of Indian Premier League (IPL) – 8.

Awards/Recognitions: Jnanpith Award: Marathi litterateur Bhalchandra Nemade

received the 50th Jnanpith Award for 2014. He has written bookssuch as Hindu and Kosala.

Appointments: BRICS Bank Chief: K V Kamath, Chairman of ICICI Bank, has

been appointed the first President of New Development Bank(NDB), the new bank of the BRICS (Brazil, Russia, India, Chinaand South Africa) nations.

Chief Statistician: T C A Anant’s term as the Chief Statisticianand principal secretary of the Ministry of Statistics andProgramme Implementation has been extended till January 2016.



RECENT BANKING DEVELOPMENTS –Feb’ 2015

PB Business:Xpress Credit:Presently only employees of State / Central Govt-run schools/colleges,by virtue of being State/Central Govt. employees, are eligible for ExpressCredit Loans. The employees of Educational Institutions of NationalRepute (defined as Institutions covered under SBI Scholar Loan Scheme)are also eligible under the scheme.

The employees of reputed private schools and colleges are now includedunder Xpress Credit Loan Scheme on the undernoted terms andconditions:i) These Private Schools and Colleges should not be government aided.ii) They should be at least 15 years old and should be affiliated to

CBSE/ICSE/UGC/AICTE etc.iii) They must have 5 years of Banking Relationship with us.iv) The number of employees (teaching and non-teaching) of such

Institutes should not be less than 50.v) There should not be any default in contribution towards EPFO

pertaining to the employees.vi) The Xpress Credit Loans will be sanctioned and disbursed through

only one Branch where the Salary accounts of the employees aremaintained for proper monitoring and follow up.

Agri Business:Warehouse Receipt Financing with collateral Management services:Improvement in Margin, Collateral Security and Rate of Interest:Now, improvement in margin, collateral security and rate of interest hasbeen made when services of Collateral Managers are utilized for lending.Improvements are:i) Margin:Category Existing RevisedA 40% 25% Of the Market Value – Lower of

the:a) Current Market Price of thecommodityb) Price prevailing at the time of harvestof the commodity

B 40% 20% Of Minimum Support Price –Wherever declaredHigher of the A or B above.

ii) Collateral Security: No Collateral SecurityExisting RevisedUp to Rs.10 lac Up to Rs.50 lac

iii) Rate of Interest: For loans up to Rs.50 lac per farmer.

Tenure of loan Existing RevisedUp to 6 months 200 bps to 400 bps 50 bps above BR-

Above BR (Card Rate) Effective Rate: 10.50%Above 6 months 200 bps to 400 bps 75 bps above BR –& up to 1 year above BR (Card Rate) Effective 10.75%

Stipulations:i) The improvement in margin, collateral security and rate of interest

will be applicable only for the loans granted against warehousereceipts under Produce Marketing Loan scheme where stocks aremanaged by bank’s approved Collateral Managers.

ii) Important roles of Collateral Managers under the scheme are asunder:

- Do sampling, testing, grading, assaying and certification of thecommodities.

- Perform storage/preservation (like pest control, insurance,fidelity etc)

- Provide MIS on market-related value movement of thecommodities.

- Place requests for margin top-up to the borrowers in case of need.- Provide sale and settlement support in case of default in the

loan.- Facilitate periodical inspection and verification of the stock.

The margin, collateral security and rate of interest for loans grantedagainst warehouse receipts under Produce Marketing Loan scheme issuedby Private Warehouses remain unchanged.

Financing Agri Value Chain: New Scheme for Financing “FarmersProducer Companies (FPCs):‘Farmer Producer Company (FPC)’ is a legal entity established underSection-581 of the Companies Act, 1956. These companies wereestablished to overcome the constraints face by the small size of farmers’landholding to leverage collective strength and bargaining power toaccess financial and non-financial input, services and appropriate

2221 Recent Banking Developments


technologies, reduce transaction costs, tap high value markets and enterinto partnerships with private entities on more equitable terms. Theefficiency is achieved with professional management, aggregation andeconomy of scale. These entities, improve return by produce modification,quality control and capability of price negotiation. Producer companiesare presently being established in cotton, pulses, dairy/poultry, seedproduction and similar value chains.Now, Small Farmers Agri Consortium (SFAC), a Govt of IndiaOrganization has introduced a Guarantee Scheme for covering financingto Farmer Producer Companies, to cover Collateral free loans up to Rs.1crore. The cover is available to the extent of 85%. The Bank has signed anMOU with SFAC.

The salient features of the revised scheme for financing FPCs are:Sl No. Parameters Brief Details1. Product Financing Farmer Producer Companies2. Company Incorporated as a Farmer Producer

Company under section 581 of IndianCompanies Act.

3. CRA Rating Trading / Non-trading model, asapplicable (new or existing) to be used.Threshold: SB10

4. Concession inInterest Rate a) 50 bps on the card rate, if covered

under Credit Guarantee Scheme of SFAC.b) 100 bps on the card rate, if financedunder tie-up with forward linkage,deposit of sale proceeds through loanaccounts.c) Maximum Interest Concession will notexceed 100 bps under (i) and (ii) above.

5. Relaxation in DER: 4:1; TOL/TNW: 5:1, DSCR GrossQuantitative Aspect (minimum): 1.75:1, DSCR Net– Acceptable levels (minimum): 1.5:1, Minimum Current

Ratio: 1.20, Promoter’s Contribution:20% of Equity.

6. Primary Security Creation of charge on the assets createdwith bank’s finance.

7. Collateral Security a) Where Guarantee Cover from SFAC isobtained:

No collateral security to be obtained otherthan charge on other movable/immovable assets of the company.b) Where Guarantee Cover from SFAC isnot obtained:Collateral security, as applicable, to beobtained other than charge on othermovable / immovable assets of thecompany.c) Personal guarantee of key Director/adequate security in the shape of pledge/mortgage of other assets of members to beobtained wherever feasible, when CreditGuarantee Cover from SFAC is notobtained.

C & I Business:Industry Specific Benchmarks: Change in Loan Policy:RBI has asked the Bank to lay down industry specific benchmarks forindustries with large exposures.Hence, separate benchmarks for TOL/Adj TNW and Current Ratio havebeen fixed for 5 industries.a) Hydrocarbon b) Power c) Iron and Steel d) Textiles and e) ElectricalEquipmentThese benchmarks would replace the existing benchmarks for TOL/TNWand Current Ratio for these 5 industries only.Desired level of TOL/Adj TNW and Current Ratio for each industry hasbeen prescribed.Maximum acceptable deviation range of up to 25% is also given. If valuesof TOL/Adj TNW or Current Ratio exceeds the acceptable range of 25%from desired level they would be treated as deviation and approval isrequired to be obtained.

Industry Specific Benchmarks for TOL / Adj TNW are as under:Industry Desired Level Maximum Acceptable LevelHydrocarbon <=4.00 <=5.00Power <=4.80 <=6.00Iron and Steel <=4.00 <=5.00Textiles <=4.00 <=5.00Electrical Equipments <=4.00 <=5.00Industry Specific Benchmarks for Current Ratio are given below:



Industry Desired Level Maximum Acceptable LevelHydrocarbon <=1.00 >=0.75Power <=0.60 >=0.45Iron and Steel <=1.00 >=0.75Textiles <=1.00 >=0.75Electrical Equipments <=1.00 >=0.75

Foreign Exchange:Digitization of clearances – External Commercial Borrowings (ECB)and Trade Credit:With effect from Feb 01, 2015, Authorized Dealer Category-I banks shouldroute all applications received from their constituents for ECBs / TradeCredit only through ATS. The supporting documents should also beuploaded on ATS along with the application.Foreign Exchange Management At, 1999 – Import of Goods into India:Hitherto, applications by persons, firms and companies for makingpayments exceeding USD 5,000 or its equivalent towards imports intoIndia must be made in Form A-1.To further liberalize and simplify the procedure, it has been decided byRBI to dispense with the requirement of submitting request in Form A-1for making payments towards imports into India. AD Category-I bankmay however, obtain all the requisite details from the importers and satisfyitself about the bonafides of the transactions before effecting theremittance.Delay in utilization of advance received for Exports:An exporter receiving an advance payment for exports (with or withoutinterest) from a buyer outside India shall be under an obligation to ensurethat the shipment of goods is made within the stipulated period from thedate of receipt of advance payment.It has been observed by RBI that there is substantial increase in the numberand amount of advances received for exports remaining outstandingbeyond the stipulated period on account of non-performance of suchexports (shipments in case of exports of goods), AD Category-I banks areadvised to efficiently follow up with the concerned exporters in order toensure that export performance (shipments in case of export of goods)are completed within the stipulated time period.It is further reiterated by RBI that AD category – I banks should exerciseproper due diligence and ensure compliance with KYC and AMLguidelines so that only bonafide export advances flow into India. Doubtfulcases as also instances of chronic defaulters may be referred to Directorateof Enforcement (DoE) for further investigation. A quarterly statement

indicating details of such cases may be forwarded to the concernedRegional Offices of RBI within 21 days from the end of each quarter.

Risk Management and Inter Bank Dealings: Foreign Currency (FCY) –INR Swaps:Presently, eligible residents can enter into FCY-INR swaps to hedgeexchange rate and / or interest rate risk exposure arising out of long-term foreign currency borrowing or to transform long-term INR borrowinginto foreign currency liability, subject to specific terms and conditions.Also, swap transactions, once cancelled, shall not be rebooked or re-entered, by whichever mechanism or by whatever name called.To permit greater flexibility to the residents borrowing in foreign currency,it has been decided that in cases where the underlying is still surviving,the client, on cancellation of the swap contract, may be permitted to re-enter into a fresh FCY-INR swap to hedge the underlying but only afterthe expiry of the tenor of the original swap contract that had beencancelled.

Foreign Investment in India by Foreign Portfolio Investors:RBI announced in the Sixth Bi-Monthly Monetary Policy Statement 2014-15, issued on February 03, 2015 that all future investments by registeredForeign Portfolio Investors (FPIs) in the debt market in India will berequired to be made with a minimum residual maturity of three years.RBI has clarified few matters as under in this regard:a) Query: The applicability of the directions to investment by FPIs incommercial papers (CPs).Clarification: Any fresh investments shall be permitted in any type ofdebt instrument in India with a minimum residual maturity of three years.Accordingly, FPIs shall not be allowed to make any further investment inCPs.b) Query: The applicability of these guidelines on debt instruments havingmaturity of three years and over but with optionality clause of less thanthree years.Clarification: FPIs shall not be allowed to make any further investmentsin debt instruments having minimum initial / residual maturity of threeyears with optionality clause exercisable within three years.c) Query: The applicability of these guidelines on amortized debtinstruments having average maturity of three years and above.Clarification: FPIs shall be permitted to invest in amortized debtinstruments provided the duration of the instrument is three years andabove.



Human Resources:Project – Gratuity Automation: Payment of Gratuity in HRMS:Application for Payment of Gratuity:Members/employees will apply for Payment of Gratuity in HRMS Portal.In case of Normal Retirement, they can apply three months prior to dateof retirement whereas in other cases i.e resignation, voluntary retirementetc., they can apply one month prior to date of separation, if their date ofseparation is marked in the HRMS system.In addition, there is a facility for Branch Head, Recommending authority/ designated (maker) official at LHO to apply on behalf of employeethrough Manger Self Service (MSS) (maker can apply from the linkavailable in ES), if employee is not able to apply through HRMS system.After submitting the application through HRMS Portal, applicant has totake the print of application and submit, duly signed and witnessed, tonext authority for recommendation / approval.On approval the intermediary account opened at CAO for the purposewill be debited on the next date of retirement/separation, or if alreadyretired/separated then next day of approval. Branch System SuspenseAccounts will be credited. The head of the Branch/OAD has to obtainnecessary documents viz stamped receipts etc before disbursement ofthe Gratuity amount by reversing the entry parked in System SuspenseAccount. The Branch/OAD officials can also generate Gratuity PaymentAdvice through HRMS Portal.

Based on the report generated through SAP, the designated Officer atCAO Kolkata will check the payments made during the day and zeroisethe intermediary account by reversing the entries and debiting the sameto Gratuity Trust Fund account.

General:Gold Banking – Import of Gold: Review / Restart of Gold BankingActivities:Now, Designated Branches (DBs) can start activity of Sale of Gold(Wholesale) on outright basis to domestic jewellers and also grant MetalGold Loan to domestic jewellers from consignment gold stock.

RBI has issued clarificatios as under:a) Nominated banks are now permitted to import gold on consignmentbasis,b) All sale of gold domestically will be against upfront payment only,c) Banks are free to grant Metal Gold Loans,

d) The obligation to export under the 20:80 scheme will continue to applyin respect of unutilized gold imported before November 28,2014 i.e thedate of abolition of the 20:80 scheme.Indenting for import of gold by the DBs for the purpose of outright saleshould be on back to back basis only. Gold will be supplied to our DBsfor outright sale on the basis of firm commitment from their customersby depositing the money, equivalent to applicable customs duty, withthe branch at the time of indent. All sale of gold will be against upfrontpayment only.

Guidelines on Import of Gold by Nominated Banks/Agencies:RBI Clarifications:i) The obligation to export under the 20:80 scheme will continue to applyin respect of unutilized gold imported before November 28, 2014 i.e thedate of abolition of the 20:80 scheme.ii) Nominated banks are now permitted to import gold on consignmentbasis. All sale of gold domestically will, however, be against upfrontpayments. Banks are free to grant gold metal loans.iii) Star and Premier Trading House (STH/PTH) can import gold on DPbasis as per entitlement without any end use restrictions.iv) While the import of gold coins and medallions will no longer beprohibited, pending further review, the restrictions on banks in sellinggold coins and medallions are not being removed.

Rationale:1. BPR branches have to submit ECS mandate in respect of Auto Loans tothe concerned RACPC immediately on disbursement and not wait for themigration of document.R: Corporate Centre has observed that there is a strong correlation amongNPA, frauds, non-migration of auto loan documents and timely activationof ECS mandate at BPR branches. Prompt submission of ECS mandatewill enable RACPC to activate the mandate and follow up recovery.



RECENT BANKING DEVELOPMENTS – Mar’ 2015

PB Business:Personal Banking Advances: Obtention of Report from CreditInformation Companies (CICs):Presently, operating units have to obtain Credit Information Report fromtwo of the four Credit Information Companies viz Credit InformationBureau (India) Limited (CIBIL), Equifax Credit Information Services PvtLtd (ECISPL), Experian Credit Information Company of India Ltd(ECICIPL) and Highmark Credit Information Services Pvt Ltd (HMCISPL)as follows:Particulars Report from one Report from two

Credit Bureau Credit BureausI) P Seg Secured Loans*Car Loans Limit upto Rs. 5 Lacs Limit > Rs. 5 LacsAll other Secured loans Limit upto Rs. 1 lac Limit > Rs. 5 lacs(including Education Loans,Two Wheeler & Super BikeLoans)II) P Seg unsecured LoansPersonal Loans Limit upto Rs. 1 Lac Limit > Rs. 1 LacEducation Loans Limit upto Rs. 4 Lacs Limit > Rs. 4 LacAll other Loans Limit upto Rs. 3 Lacs Limit > Rs. 3 Lac*Not applicable for Loans against Specified SecuritiesIn future CIC reports have to be obtained from the following two CICsonly for all the PBBU Segment for Loans above the threshold limitprescribed.i. Credit Information Bureau (India) Limited (CIBIL)ii Equifax Credit Information Services Pvt Ltd (ECISPL)It should be noted that CIBIL CIC report would be primary report andEquifax CIC report would be secondary report.

Real Estate, Habitat & Housing Development: Tab Banking: HomeLoan in Principle Approval (HLIPA):The maiden mobile client application has been designed and developedby GITC Belapur on Kony Mobile Application Development Platform(MADP). The features of the Application are as under: The Application will enable Field Staff to source a credit proposal

from a potential customer even when they are on move without theneed to carry and fill in any physical document.

The Application has been integrated with Lead management System(LMS).

Allows the field staff to access and process the leads assigned tohim or her by LMS. Also create a new lead of his own based onmarketing efforts / other channels.

Helps in meeting the potential Home Loan borrower on theirmarketing drive, collect the relevantdata, calculate the eligible loanamount based on all parameters and submit the application for inprinciple approval.

The application based on inputs, will also be sending email andSMS to the prospective customer informing his eligibility, rate ofinterest, EMI and other relevant details.

Through the application the Marketing executives are able to capturephotographs of the applicant, KYC documents, and geo locationsof the property along with its photographs.

The data captured through the application is integrated with LOSso that data up to QDE level in LOS could be captured and requiresno repetition.

The application will help in collecting the required documents andphotographs in one go and reduce the turnaround time in sourcingof Home Loan applications.

SBI: Scholar Loan Scheme:Hitherto, there were 3 types of Classification of eligible institutions: Now,reclassified into 4 groups (List AA, List A, List B and List C).List AA : 3 institutes - IIM Ahmedabad, ISB Hyderabad , ISB

Mohali.List A : 35 institutesList B : 12 institutesList C : 43 institutesTotal 93

Securities, Max Loan Amt:List Security Stipulated Maximum Loan AmountList AA without Tangible Collateral Rs. 30 lacsList A without Tangible Collateral Rs. 20 lacs

with Tangible Collateral Rs. 30 lacsList B without Tangible Collateral Rs. 20 lacsList C without Tangible Collateral Rs. 7.5 lacs

with Tangible Collateral Above Rs. 7.5 lacs & up to Rs. 30 lacsSome instructions have been excluded from the SBI Scholar Scheme; also,eligible Courses have been restricted in a few institutes. If loan cannot be



taken up under the SBI Scholar Loan scheme, it may be considered underSBI Student Loan Scheme.Home Loans:Process for Online approval of Builder Tie-ups (OPAS)The extant process for according approval to residential projects underBank’s Builder Tie-up norm involves (i) approval of the Project by theApproving Authority and (ii) uploading of Project details, on Bank’sBuilder Tie-up site. This two stage approval process has been replacedwith a ‘Online Project Approval Solution’ (OPAS).

Personal Loans: modification in standing instructions in CBS forstanding instruction (S.I) between Deposit and Loan Account:The Recovery of EMIs in Personal Loans are generally done by setting upof Standing Instructions (S.I) between the Deposit (salary) and Loanaccount at the time of opening of the loan account. This is particularlytrue for Xpress Credit and Pension Loans.Now, “Hold Required” has been made mandatory i.e., there will be nooption of choosing Yes/No, whenever an SI is to be created for recoveryof EMI (Loan Servicing) between a Deposit and Loan account. Themandatory “Hold” will be applicable for both SI creation and amendmenttransaction; also the chase period has been increased from existing 30days to 32 days. The extra two days of chase will help the system toprocess at least two SIs, if these are not older then 32 days.

SI is to be set with the actual tentative date of salary payment. Theoperating units should also be advised to choose “100: Loan Servicing”as ‘Purpose of SI’ in the Screen No.SCR:000900 as this would be requiredto activate the above mentioned functionality of automatic Hold andchase period of 32 days in case SI is set up for recovery of EMIs fromDeposit A/c to Loan A/c.

Central Government Salary Package (CGSP) Inclusion of Employeesof Autonomous bodies / academics/councils etc. under union ministries,under CGSP:Currently, CGSP is restricted to employees of various Union ministriesand their departments, Election Commission, CBDT, CBEC. But there arehost of other establishments coming under Union Government whichare not included under CGSP. These include employees of Autonomousbodies, Academies, Institutions, Statutory Bodies, Commissions,Committees, Councils, like ESIC, AIIMS, AIR, IGNOU, IITs, IIMs, KendriyaVidhyalaya, Port Trust, Universities, CVCs, etc. Employees of these

establishments are having salary accounts with us, but are not coveredunder the structured package. Now, employees of autonomous bodiesetc are also eligible.Agri Business:Financial Inclusion: Business Correspondents (BCs): appointment ofnon-deposit taking NBFCs (NBFC-ND) as BC’s:The Reserve Bank of India has permitted Banks to appoint NBFCs (Non-Deposit taking) (NBFC-ND) as BCs.Eligibility Criteria:1. RBI registered NBFCs-ND with asset size of Rs. 50 crore and above

and considered by RBI as Systemically Important (NBFC-NDSI)shall be considered to be eligible for engagement as BCs.

2. Such NBFC-NDSI should not be defaulters with any bank and theloan account with the bankshould have remained as StandardAssets all through.

3. The names of NBFC-NDSI and /or any of its promoters / directors/trustees etc should not be in the CIBIL defaulter’s list.

4. The NBFC-NDSI should not have Negative Net Owned Fund (NOF).5. The NBFC-NDSI should have been in existence for at least 3 years.Financial Inclusion: Business Correspondent channel: Issue of barcodebased Pass Book to FI Customers:Hitherto, passbooks were issued to customers at BC channel only by thelink branch and in no case can a passbook be issued at the BC/CSPoutlet by the CSP operator.As FI a/cs have been increasing steadily and as the Govt has directedbanks to issue PBs to all FI Customers, it has been decided to issue barcodebased passbook to all FI customers maintaining balance in the account.Interest Subvention Scheme - 2014-15:Based on the GOI guidelines, RBI has advised Banks to continue theinterest subvention scheme @2% for the year 2014-15.Details:A-Interest Subvention at 2% to Banks:i) Interest subvention of 2% p a will be made available to PSBs and PrivateSector Scheduled Commercial Banks (in respect of loans given by theirrural and semi-urban branches) on their own funds used for short-termcrop loans up to Rs.3.00 lacs per farmer provided the lending institutionsmake available short term credit at the ground level at @ 7% p a to farmers.ii) 2% interest subvention will be calculated on the crop loan amountfrom the date of its disbursement / drawal up to the date of actualrepayment of the crop loan by the farmer or up to the due date of the loanfixed by the bank, whichever is earlier, subject to a maximum period ofone year.



iii) The benefit of interest subvention will also be available to small andmarginal farmers having Kisan Credit Card for a further period of up tosix months post harvest on the same rate as available to crop loan againstnegotiable warehouse receipt for keeping their produce in warehouses.iv) To provide relief to farmers affected by natural calamities, the interestsubvention of two percent will continue to be available to banks for thefirst year on the restructured amount. Such restructured loans may attractnormal rate of interest from the second year onwards as per the policylaid down by the RBI.B-Additional Interest Subvention of 3% to prompt paying farmers:Additional interest subvention @ 3% p a will be available to the promptpaying farmers from the date of disbursement of the crop loan up to theactual date of repayment by farmers or up to the due date fixed by thebank for repayment of crop loan, whichever is earlier, subject to amaximum period of one year from the date of disbursement. This alsoimplies that the prompt paying famers would get short term crop loans @4% per annum during the year 2014-15. This benefit would not accrue tothose farmers who repay after one year of availing such loans.2. Interest Subvention Claim process: Interest subvention claims are to besubmitted in two stages in prescribed claim formats as under:- Unaudited half-yearly claim as at September 30, 2014.- Audited claim as at March 31, 2015.3. Restoration of normal lending rate after the end of subvention period:After expiry of the interest subvention period subject to a maximum periodof one year, normal lending rate has to be restored in these accounts toplug income leakage.Subvention details like subvention start date and subvention end dateare to be entered by the branches at the time of account opening for eligibleaccounts so that CBS can automatically restore the normal lending rateafter the expiry of the interest subvention period.This scheme is valid up to 31st March 2015.Education Loan Scheme: Obtaining Aadhaar details of borrowers:PAN card of the student and the Parent / Guardian was made a requireddocument for all new Education Loans w.e.f 18.02.2012.Now, CIBIL has introduced Aadhaar as one of the key identifiers inaddition to others based on which account details of the borrower will beaccepted in CIBIL database. Also, GOI has advised that Banks shouldendeavour to link loan/interest subsidy with Aadhaar Card for propertracking of students in the larger interest of all.Hence, Aadhaar details of the borrower should also be obtained whereveravailable, in addition to PAN and other identifiers prescribed by CIBIL.

However, no application will be rejected for mere want of Aadhaar detailsand the borrower will be advised to submit Aadhaar before the secondscheduled disbursement as being done hitherto in case of non-availabilityof PAN.In cases, where the borrower is not in possession of either PAN orAadhaar with him/her, obtaining Aadhaar details will be preferred asAadhaar is being used for administration of subsidies by the Govt. andis also a proof of identity and address anywhere in India. Moreover, it isbased on biometric system for identification of an individual and is morereliable.In cases, where the student has already submitted PAN, Aadhaar detailsshould also be obtained during the course of the study period.Pradhan Mantri Jan-Dhan Yojana (PMJDY):Claim Procedure for Life Insurance Cover of Rs.30,000/- provided byLIC.A life cover of Rs.30,000/- was announced by the PM for all those whosubscribe to a bank account for the fist time during the period 15th August,2014 to 26th January, 2015. The scheme aims to provide security to thosefamilies who cannot afford direct insurance, namely the urban poor andrural poor and who are not covered under social security scheme.The life cover of Rs.30,000/- will be payable on death of the accountholder due to any cause, subject to fulfillment of the eligibility conditionsas under:i) Person opening Bank account for the first time, with RuPay Card in

addition, during the period from 15-08-2014 to 26-01-2015.ii) The person should normally be head of the family or an earning

member of the family and should be in the age group of 18 to 59 (i.eperson should be at least 18 years old and should not havecompleted 60 years of age). In case the head of family is 60 years ormore of age, the second earning person of the family in the abovementioned age group will be covered, subject to eligibility.

iii) Person must have a RuPay Card and Bio-Metric Card (Aadhaar)linked to bank account or in process of being linked to bank accountif not already there.

iv) The account can be any bank account including a small account.v) For the coverage to be effective, the RuPay Card should be valid and

in force at the time of the death of the member.vi) Only one person in the family will be covered. In case of the person

having multiple cards/accounts the benefit will be allowed onlyunder one card i.e one person per family will get a single cover ofRs.30,000/-, subject to the eligibility conditions.



vii) The life cover of Rs.30,000/- under the scheme will be initially for aperiod of 5 years, i.e till the close of financial year 2019-20. Thereafter,the scheme will be reviewed.

viii) In case the PMJDY Account is held jointly, the first account holderi.e primary account holder will be eligible for cover subject to theeligibility conditions.

Ineligible Categories:i) Central Govt and State Govt employees (in service or retired) and

their families.ii) Employees (in service or retired) of Public Sector Undertakings,

Public Sector Banks, any entity owned by Central Govt, any entityowned by a State Govt or any entity owned by the Central Govt andany State Govt and their families.

iii) Persons whose income is taxable under IT Act 1961 or are filing theyearly Income Tax return or in whose case TDS is being deductedfrom the income, and their families.

iv) Persons who are included in the AamAadmiBimaYojana covering48 occupations defined under the scheme and their families.

v) Otherwise eligible account holders, who have life cover on accountof any other scheme of the Bank against the account, shall have tochoose between the two schemes and derive benefit from only one.

vi) All persons who do not fulfill the basic eligibility conditions of thescheme.

Claim Settlement Procedure:a) The claim is payable to nominee(s) / legal heirs of the account

holder. The nominee will be the person having nomination in theBank account. In the absence of nominee or if the nominee pre-deceases the insured member or if the nominee is not spouse, childor parent, the legal heirs of account holder should submit IndemnityBond to dispense with legal evidence of title in the prescribed format.

b) The claim will be credited to Bank account of nominee/legal heirsthrough APBS i.e the amount will be credited to account linked toAadhaar Card number.

c) The branch maintaining account of deceased account holder willforward the claim along with requisite documents to nearestPension and Group Scheme Unit (P & GS unit) of LIC designated forthis purpose for processing of claims.

d) The documents to be attached with claim forms will be self-attestedby claimant/legal heirs. However, Death Certificate has to be dulyverified/attested by the bank.

SBI Asset Backed Loan (Commercial Real Estate) – (ABL-CRE):Changes in prepayment penalty:- In case of pre-payment / pre-closure from internal accruals pre-

payment / pre-closure penalty will not be levied.- As per RBI Circular no-RBI/2014-15/72, Floating rate term loans

sanctioned to individual borrowers are exempted from levy offoreclosure charges.

- 2% of the drawing power.

Agri Business – SBI Special OTS for tractor loans 2014-15.Frequently Asked Questions (FAQs):

Sl No

Queries Clarification / response

1. Under the same CIF, one account is Sub Standard and other accounts are doubtful or loss assets or in the same CIF different IRAC status exists. What is the rate of waivers to be allowed?

Generally, all accounts in single CIF should have the same asset classification. If for any reason IRAC status is not the same, the worst IRAC among all the accounts would be taken for the purpose of calculation of OTS amount. For example, if one account is under D1 category and other is in D2 asset category, then both the accounts should be taken as D2 for calculation of OTS amount. If the assets value of securities in the borrower’s accounts is less than 10% of outstanding, all facilities will be treated as loss assets.

2. Whether standard accounts of same borrower which became NPA due to ‘one account NPA all account NPA’ norms in CCDP can be covered.

Yes, Standard accounts of the same borrower will also be covered which became NPA due to ‘one account NPA all account NPA’ norms in CCDP, as IRAC classification is borrower wise and not account wise.

3. Date of disbursement in The related linked accounts



3. Date of disbursement in case of tractor loans should be 31.03.2011 or before. What disbursement criteria is to be taken for related linked accounts in the same CIF?

The related linked accounts would be eligible even if sanctioned/disbursed after 31-03-2011, if they satisfy other eligibility criteria.

4. Same borrower is having multiple CIFs. Whether accounts opened in other CIF can be considered for OTS, if otherwise eligible.

Yes, if the accounts are in the same borrower’s name and capacity as of tractor loan NPA account.

5. In case a borrower having a tractor loan (NPA) and KCC (standard) though both the accounts are treated as NPAs as per IRAC norms (classification is borrower wise and not account wise) – whether it is necessary to close the KCC account though the account individually is standard. In case it is required to be closed whether any waiver can be given (say, in the accrued interest till the date of closure).

Generally, all accounts in single CIF should have the same asset classification as classification is borrower-wise and not account wise. Even through KCC is standard in CBS, it is NPA as per IRAC norms and may be considered eligible under the OTS. Waivers as applicable to tractor loan NPA account may be extended to KCC also. But both the accounts need to be closed.

6. In case a borrower is willing to settle the dues in tractor loan and want to continue the KCC as standard account. Whether the KCC account can be allowed to be continued?

No, as per the scheme, all accounts of the same borrower are to be settled concurrently under the OTS and need to be closed. As such the borrower has to close the KCC account also.

7. If there is shortfall in provision or sufficient provision is not available

Generally, provisions should be available as per IRAC status of account. The write off amount is

provision is not available for writing off the amount, what needs to be done?

account. The write off amount is less than the provision to be maintained (for example in D1 & D2 accounts, write off amount would be 15% whereas provision maintained would be 25% and higher). However, in cases where there is a shortfall in provision, branches should provide 100% provision on the remaining amount (After recovering the full OTS amount) as on 31.03.2015 and the amount should be written off in the Month of April, 2015.

8. Interpretation of “Waiver of entire notional /unrealized/unapplied interest and also waiver in outstanding on 31.12.2014”. Whether interest applied but not realised but not fully reversed at the time of stamping as NPA which now forms part of the outstanding can be included in the above statement?

Whatever outstanding is there as on 31.12.2014 that is to be reckoned for calculation of OTS amount (interest already debited to the account will be part of outstanding) and no accrued or notional interest is to be recovered. On this outstanding as on 31.12.2014 (except in case of substandard assets) applicable concessions will also be given i.e 15%, 20%, 25%, and 40% of the outstanding depending on the IRAC status of the borrowers.

9. Some of the Tractors had been seized by recovery agents and all these Tractor a/cs are coming under OTS Scheme. Since there is no provision to pay commission to recovery agents, we request you to kindly guide us in this matter so that we would settle all these Tractors NPA/AUCA a/cs under this OTS Scheme.

If the tractor loan is eligible under this OTS scheme, it should be settled immediately irrespective of whether the tractor is seized or not or given to recovery agent. Since the amount going to be paid is discounted outstanding (Bank own sacrifice), no need to part any commission. But suitable notification has to be sent immediately after the receipt of agreed settlement amount to recovery agent.

10. Whether loans given for purchase of Combine harvester are eligible or not?

Loans for purchase of combine harvesters are not eligible under this OTS scheme.


No fresh loans are to be sanctioned to the borrowers whose accounts aresettled under ‘SBI Special OTS for tractor loans 2014-15’.

SME Business:SMECCC has bee renamed as SME Centre.Technology:Swayam – Barcode based Passbook Printing Kiosks:Barcode based Passbook Printing Kiosks are being set up at variousbranches. Branches which are carrying high number of passbook printingtransactions have been identified for installation of these Kiosks. TheseKiosks are branded as ‘SWAYAM’.The number given below the barcode printed on the barcode sticker isrequired to be mapped to the customer’s account number in CBS.Customers may then go to SWAYAM and print their passbooks. It mayalso be noted that the barcode stickers can be provided to the brancheswhere SWAYAM has not been provided. With this, the customers ofsuch branches may also print their passbooks at SWAYAM which areinstalled at off-site locations etc available on 24*7 basis.Retail Internet Banking: User Friendly Ways of Resetting LoginPassword:Presently, a customer who has forgotten both his login and profilepassword is required to visit his ‘home’ branch for receiving duplicatepassword. The home branch after completing due-diligence issues a pre-printed kit and registers/enters it in Branch-Interface_INB.Now he can use the following options also.a) Online resetting of login password by INB customer using his ATM

card details.b) Resetting of login password at ‘any’branch.C & I Business:Lending under Consortium / Multiple Banking Arrangement:In connection with lending under Consortium or Multiple BankingArrangement, it is common experience that exchange of informationbetween lenders is far from satisfactory.Following are some of the important directions of RBI:- At the time of granting fresh facilities, banks may obtain declaration

from the borrowers about the credit facilities already enjoyed bythem from other banks in the prescribed format. In the case ofexisting lenders, all the banks may seek a declaration from theirexisting borrowers availingsanctioned limits of Rupees five croreand above or wherever, it is in their knowledge that their borrowersare availing credit facilities from other banks, and introduce a systemof exchange of information with other banks as indicated above.

- Subsequently, banks should exchange information about theconduct of the borrowers’ accounts with other banks in theprescribed format at least at quarterly intervals.

- Obtain regular certification by a professional, preferably a CompanySecretary, Chartered Accountant or Cost Accountant, regardingcompliance of various statutory prescriptions that are in vogue, asper prescribed specimen.

Advances:Metal Gold Loan (MGL) and Sale of Gold:Interest rates on MGL: Revised

For ECR of ‘BBB’ and better rated companies, interest rate can be improved.Rate of Commission on Sale of Gold (including sale on account of closureof MGLs): Revised

Existing Revised RatesRates

Domestic US$ 3.00 Volume per month Rate per troyouncePurpose per troyoun Rs.50 crs & above 50 cents

ce + Service Rs.20 cr - Rs.50 cr 75 centsTax, as appli below Rs.20 crs USD 1.00cable + Other In addition to the above, Service Tax,taxes, if any. as applicable, is also to be recovered.

Export US$ 1.50 per No change US$ 1.50 per troyoPurpose troyounce + unce + Service Tax,

Service Tax, as applicable +as applicable Other taxes, if any.+ Other taxes,if any.

Security Cash Security

BG/SBLC

Cash Credit limit

(A- and above)

Cash Credit limit

(Others)

Rate of Interest (both domestic and export purpose) if borrowed gold is used

4.00 4.25 5.00 5.75

Rate of Interest if GDS gold is used

3.75 4.00 4.75 5.50

4039 Recent Banking Developments JS Digest of Banking and Finance May15


Rate of commission may be reduced by the appropriate authority.For ECR of ‘BBB’ and better rated companies, margin up to 110% of valueof gold (plus applicable charges like Customs duty, CIP etc) may bereduced by the appropriate authority.Minimum period for interest payment: Minimum 15 days interest shouldbe recovered if the loan is closed within 15 days. It is applicable for bothdomestic and export purpose.

Foreign Exchange:Acquisition / transfer of immovable property – Prohibition on citizensof certain countries:No person being a citizen of Pakistan, Bangladesh, Sri Lanka,Afghanistan, China, Iran, Nepal or Bhutan without prior permission ofthe Reserve Bank shall acquire or transfer immovable property in India,other than lease, not exceeding five years.RBI has now included Macau and Hong Kong, the two SpecialAdministrative regions of China in the list.

NRI Services – Re-KYC procedure of NRI Accounts: Acceptance of self-attested documents in selected cases:NRI customers can submit fresh documents for re-KYC as under:a) Customers visiting the branch in person: KYC documents viz Proofs

of Identity and Overseas address proof etc have to be submittedacross the counters.

b) Customers not visiting the branch: The KYC documents have to besent to the home branch through post or courier from overseas.Additionally, third party attestation of all the requisite KYCdocuments is also required.

The requirement of third party attestation for re-KYC has been posinginconvenience to them. It has now been decided that the NRI customersresiding in a few selected low risk countries can submit the re-KYCdocuments with self-attestation subject to the following:a) The NRI should be a resident of any of the following 30 (thirty)

countries only: Australia, Austria, Bahrain, Belgium, Canada,China, Denmark, Finland, France, Germany, Hong Kong, Iceland,Ireland, Italy, Japan, Kuwait, Netherlands, New Zealand, Norway,Oman, Qatar, Saudi Arabia, Singapore, South Africa, Spain, Sweden,Switzerland, United Arab Emirates (UAE), United Kingdom (UK)and United States (US).

b) Each of the single/joint NRI account holder has to submit followingadditional document in addition to the proofs of identity andoverseas address as part of KYC documents:

- Bank statement of self-account carrying name/logo of anOverseas Bank in the country of residence, evidencing thatcredits / debits have taken place in the account in thepreceding three months period. The statement should not bemore than 3 months old. (In such cases, other additionaldocument, as per existing KYC policy for NRI customers, suchas cheque drawn, paid or cancelled of overseas account or anyproof of income/pay slip/tax slip will not be needed).

c) All the documents being submitted should be self-attested.d) NRI customers can send all documents to the home branch via his

registered email address as scanned copies or by post / courier. (Ifit is scanned and emailed, efforts should be made to procure hardcopies of these documents whenever the customer visits the branchin person.)

In this connection, it is reiterated that this procedure will be applicableonly for re-KYC of the existing KYC non-complaint accounts. This willnot apply to the KYC being done for new accounts and existinginstructions of third party attestation and documents in hard copy, forcustomers not visiting the branch should be adhered to in all new cases.

NRI Services: Requests for PIS/Demat/Trading Accounts beingsubmitted at our FOs:ADs are permitted to open PIS accounts for NRIs to capture / routetransactions being done by them in secondary equity market. It ismandatory for the NRIs to route their dealing in secondary market inIndia in shares and convertible debentures of listed Indian companieson a recognised stock exchange through PIS (Portfolio Investment Scheme)account only. The facility of opening PIS account is offered to NRIcustomers of the Bank. The PIS account, which is opened at NRI Branch,Mumbai is mapped with the respective NRE Savings Bank (SB) accountbeing maintained with any of the branches. It is also mapped to theDemat account and Trading account of the customer being maintainedwith SBI Capsec to enable the customer to execute trades online. Theunderlying linkage of these four accounts enables the NRI customer tocarry out sale/purchase transaction and funds settlement seamlesslywithout any manual intervention by using our INB facility and tradingplatform of SBICapsec.Many NRIs also approach our foreign offices with a request for openingof PIS/Demat/Trading accounts. Our FOs will handle these requestssubject to the local regulatory regulations.



NRI Branch Mumbai will be designated as a single contact point at thedomestic leg for our foreign offices. The applications for opening of PIS/Demat/Trading accounts sourced by any FO will be submitted to NRIBranch Mumbai, who will in turn coordinate with both SBICapsec andour domestic office (home branch of the NRI) for further processing ofapplication.

Mandatory use of Structured Financial Messaging System (SFMS) forreceiving or sending LC and other related transactions:A facility exists in Eximbills application for sending and receiving ofinland LCs through SFMS channel for intra and inter Bank transactions(LCs issued by SBI Branches / other Banks, amendment of LCs andpayment of bills).Negotiation of bills under non-SFMS LCs by a few identified branches isalso permitted.

Human Resources:Payment of Family Pension: provision for payment of ‘Family Pension’to parents for life:Now, the parents are also included as beneficiaries. As such, the eligibilityfor family pension will be as per the following sequence:a) To widow/widower up to his/her death or remarriage whichever

is earlier.b) Failing (a) above, the eldest of surviving children in order of their

birth up to the age of 25 years or he / she is gainfully employed,whichever is earlier.

c) In case beneficiary is an unmarried daughter, until she attains 25years of age or is married or is gainfully employed, whichever occursfirst.

d) This process will continue till the last beneficiary attains age of 25years or is gainfully employed or is married in case of daughter,whichever is earlier.

d) Failing (a) to (d) above, to son or daughter for life if he/she isphysically crippled or disabled so as to render him/her unable toearn a living even after attaining the age of 25 years.

e) Failing (a) to (e) above, to the parents who were wholly dependentupon the employee when he/she was alive provided the deceasedemployee has left behind neither a widow nor a child. Among theparents, mother will have precedence over father.

The words ‘gainfully employed’ shall mean that he/she is either selfemployed or is otherwise employed and is earning from such employment,

an income more than the amount of family pension to which he/she isentitled. Where the earning is less than the entitled family pension, theamount of family pension will be payable but be reduced by the amountof such income.

General:Western Union Remittances: Under the existing ABMT (Account BasedMoney Transfer) facility customers can directly credit to their accountsproceeds of remittances received from abroad through Internet Bankingfacility. As a large number of Suspicious Transactions have been noticedin this channel, ABMT facility will henceforth be available only foraccounts which have been in operation for 6 months.

PPF A/c:Option – Not to subscribe further in the PPF account beyond 15 years:Govt guidelines on continuance of PPF A/c:- On maturity of PPF account, depositor may also opt not to subscribe

further to his/her PPF account beyond 15 years or date of extendedmaturity (20, 25 years as the case may be)

- In such cases, depositor is entitled for interest on balances as on thedate of maturity at the rate applicable, until such time he/shedecides to close the account.

- Deposits made in the PPF accounts, after expiry of the contractualperiod viz 15, 20, 25 years, without exercising the option forcontinuance of account would not qualify for any interestthereon, as such subscription should be treated as irregular deposits.

- Further, Central Board of Direct Taxes (CBDT) has clarified thatdeposits made in PPF accounts, after expiry of the contractual periodviz 15,20,25 years, without exercising the option for continuanceof accounts would not enjoy concession available under Section 80-C of Income Tax Act.

Gift Cards: Issuance fee waived up to 31.03.2016.Service Tax:Service Tax on commission paid to Recovery Agents/Resolution Agents:Now, commission paid to the Recovery Agents is liable for Service Tax toGovt for the recovery charges paid to such agents. As the commission/remuneration paid to resolution/recovery agent is inclusive of servicetax, such payments should be made by debit to Charges only afterreducing service tax payable.



RECENT BANKING DEVELOPMENT: April’15

P B Business:Providing key fact statement to personal and education loan borrowers:Based on Reserve Bank of India guidelines, it has now been decided toprovide a Key Fact Statement to all customers availing loans and advancesunder any of the Personal and Education Loan Schemes. The detailedmodalities for issuance of Fact Sheet will be as under:i. A duly filled in Fact Sheet will be handed over to all customers againsttheir acknowledgment on duplicate copy at the time of receipt of completeloan proposals by the sourcing Branch/outfits.ii. Duplicate copy of Fact Sheet, duly acknowledged by the customers,will be enclosed with the loan application before submission to CPCs/Branches for processing and sanction.iii. At the time of documentation, Branches/CPCs will issue a revisedFact Sheet to the customers against acknowledgement of the customersand keep it along with the documents.

Car Loans: waiver of processing fee extended up to 30.06.15. It is applicableto all schemes for purchase of new cars.Waiver is applicable to SME Retail Car loans but not for purchase of taxi/ for transport operators / fleet operators.

Home Loans above Rs.10 lacs:Now, CIC reports have to be obtained from CIBIL and Equifax CreditInformation Services Pvt. Ltd (ECISPL) only for loans above Rs.10 lacs.

Campaign for opening of savings bank accounts with non-personalisedwelcome kits:One of our main USPs while opening new accounts with our bank isissue of non personalised Welcome kits (NPWK) to our customersimmediately. Personalised Welcome Kits are issued to customers (whospecifically request for them) by sending through speed post from LCPCafter collecting the cheque book and ATM card from the vendors.

The issue of Welcome Kit to customers which includes INB Kit & ATMcard will also help in decongestion of branches by migrating them toalternate channels. A special campaign viz Non-Personalised welcomekit campaign has been launched. The details are:Period: April 2015 to 30th June’15.Minimum no. of accounts to be opened (other than FI accounts) are asunder:

Metro / Urban : 500 accounts during the period. Semi Urban/ Rural : 400 accounts during the period.

The target for the Campaign: % of Non-Personalized Welcome Kits issued out of total new

accounts (excluding F.I. accounts) opened are given below.

Campus Branches eligible for Gold Crown only on achieving >85%.

Incentives are also proposed to be given.

Home Loans & Home Loan Related Loans:In addition to arrangement letter, Fact Sheet is now to be given to borrowersin respect of Home Loans, Top-up loans and Reverse mortgage Loans thetime of receipt of the complete loan proposed against borrower’sacknowledgement. At the time of documentation a revised Fact Sheetwill be issued.

SME Business:The Ministry of Housing and Poverty Alleviation has restructured theSJSRY scheme and launched the NULM (National Urban LivelihoodsMission).There are 4 products under the scheme.BR – TL NULM (SSI)BR – TL NULM (Groups) SSIBR – TL NULM SBFBR – TL NULM (Group) SBFSME documentation is applicable; also CGTMSE Cover is available foreligible activities.Tie-up with Ola Cabs: for financing operators engaged by Ola Cabs forpurchase of new passenger cars for hiring. Scheme is rolled out at 5centers.Min : Need-basedMax : Rs.50 lacsCGTMSE Cover available;Repayment : 30 – 60 months.

Crown Metro/Urban Semi Urban/Rural Gold > 80 % > 70 % Silver 60 – 70 % 55 – 65 % Bronze 50 – 60 % 45 – 50 %



Repayment will be facilitated by OLA CABS and will be done onfortnightly basis.

Review of SMECCC initiative and remedial measures.Nationwide rollout of recommendations of the Boston Consulting Group(BCG): SME delivery model for loans up to Rs. 50 cr.Change in nomenclature.As per revised SME Delivery Model, nomenclature of SMECCCs andRASMECCCs has been changed as SME Centre and RASMEC (RetailAssets & Small and Medium Enterprises Centre)

Rice Mill Plus – changes in collateral security stipulations:Loans up to Rs. 50 lacs to be mandatorily covered under CGTMSE. Forloans of Rs. 50 lacs – Rs.1 cr to be covered under CGTMSE only if theguarantee fee is borne by the borrower.

Loans without CGTMSE coverUnits with CRA rating SB – 4 and above: Equitable mortgage of property/ tangible security belonging to borrower / guarantor valued not lessthan 50% of the loan amount.

Units having CRA rating SB – 5 to 9: Equitable mortgage of property /tangible security belonging to borrower / guarantor valued not less than75% of the loan amount.

Rationale: NPAs under the scheme is high. Liberalised Scheme of Lendingto SMEs: Changes in collateral security stipulations.

Loans up to Rs.50 lacs: Loans eligible under CGTMSE should bemandatorily covered under CGTMSE.

For loans of Rs.50 lacs – Rs 1 cr: Loans eligible under CGTMSE to becovered under CGTMSE only if the guarantee fee is borne by the borroweras per the bank’s extant guidelines.

Loans not covered under CGTMSE: Collateral as per the existingguidelines under the scheme to be obtained.Rationale: NPAs under the scheme is high.CGTMSE Scheme and OLA CABS tie-up.As per existing stipulation disbursement in CGTMSE guaranteed loansshould be made only after generation of Demand Advice Notice (DAN)

by CGTMSE for guarantee. Usually, CGTMSE approves the applicationand generate DAN with in 2-3 days.But, as per the OLA CABS tie-up disbursement has to be made within 48hours as a special case, before generation of DAN.

Agri Business:Interest Subvention Scheme (ISS) Monitoring of end-use of crop loans:Now, RBI has advised all the Banks to:(i) Conduct a comprehensive scrutiny of the entire agri loan portfolio,with special focus an Agri gold loan portfolio, for 2012-13 & 2013-14 interms of the check list provided.(ii) Re-verify / re-submit the claims for 2013-14 based on scrutiny (asthese have not been paid yet).

Mandatory use of ‘AGRI LOS’ in all branches except ‘V-SAT’ branchesfor opening of loan accounts in CBS:LOS for Agri loans was launched in Jan’14 for appraisal, sanction, controland documentation thereby ensuring standardization of credit process.It has an interface with CBS, External Credit Bureau, Census India data,PAN data base, RBI defaulters’ list etc. 10 Agri loan products have beenrolled out for processing in Agri LOS. It ensures correct data entry, betterrisk management, validation of scoring models and develops historicaldata for moving to Internal Rating Based approach for capitalcomputation. It has been decided to block the usage of CBS for openingagri loan accounts directly.

Warehouse receipt financing with collateral management services.Waiver of processing charges.The processing charges under the scheme have now been waived to meetcompetition and garner more business.The waiver in processing charges would be applicable for demand loanssanctioned against warehouse receipts under Produce Marketing Loansscheme where stocks are managed by approved Collateral Managersonly. The concession will not be applicable for warehouse receipts issuedagainst the stocks managed by Private Warehouses.

RuPay (DEBIT) card to FI customers.Extension of retention period of RuPay PIN mailers.As the backlog in delivery of PIN mailer continues, the retention periodof undelivered PIN mailers for FI accounts opened / to be opened hasbeen extended till 30.06.2015. (i.e. PIN mailers generated for RuPay Card(FI) till 30.06.2015) up to 30.09.2015.



Financial Inclusion: Review of waiver of charges levied on customersserviced at BC channel in RUSU / URMET areas up to 30.09.2015:Now, account opening charge of Rs.20/- from customers at BC channelis levied w.e.f. 01.04.2015. However, waiver of charges for transaction atRuSu/UrMet areas has been extended up to 30.09.2015 as under:i) Extension of waiver of All transaction charges (except remittances)

in RuSu areas till 30.09.2015.ii) Waiver of transaction charges for AEPS (Aadhar Based Payment

System) and RuPay card based transactions in UrMet areas till30.09.2015.

Advances:Non-Cooperative Borrowers: Classification/Declassification andReporting: RBI Guidelines:Definition: The definition of a Non-Cooperative Borrower has beenmodified to read as:A Non-Cooperative Borrower is one who does not engage constructivelywith his lender by defaulting in timely repayment of dues while havingability to pay, thwarting lenders’ efforts for recovery of their dues by notproviding necessary information sought, denying access to assetsfinanced/collateral securities, obstructing sale of securities, etc. In effect,a Non-Cooperative Borrower is a defaulter who deliberately stone wallslegitimate efforts of the lenders to recover their dues.

Revised authority structure to approve classification/declassificationof Non-Cooperative Borrowers: RBI have prescribed a two tier authoritystructure to be put in place for classification/declassification of Non-Cooperative Borrowers. The first tier shall be responsible forclassification/declassification and the second for review of suchclassification/declassification. Accordingly, two Committees have beenconstituted for the purpose of classification/declassification and reviewas under:

SAMG shall extend the necessary secretarial assistance to both theCommittees

Other guidelines:a. The cut off limit for classifying a borrower as non-cooperative is

aggregate fund-based and non-fund based facilities of Rs.5 crorefrom the Bank.

b. A Non-Cooperative Borrower in case of a company will include,besides the company, its promoters and directors (excludingindependent directors and directors nominated by theGovernment and the lending institutions).

c. In case of business enterprises (other than companies), Non-Cooperative Borrowers would include persons who are in-chargeand responsible for the management of the affairs of the businessenterprise.

d. After considering the submission of the borrower, if theCommittee concludes to classify the borrower as Non-cooperative, the Committee will issue an Order recording theborrower to be Non-cooperative along with the reasons for thesame. In all cases the borrower should be provided an opportunityfor Personal hearing before issuing the Order.

e. The order issued by the Committee will be reviewed by a higherCommittee (Review committee/2nd Committee) and the order willbecome final only after it is confirmed by the Review Committee(2nd Committee).

f. Bank will report information on all Non-cooperative borrowersclassified as per the laid down procedure to RBI under CRILCC-Main return every quarter.

g. A review of the status of all Non-cooperative borrowers has to beconducted half-yearly.

h. Removal of names from the list of Non-Cooperative Borrowerswill be separately reported under CRILC with appropriatereasoning/rationale for such removal.

i. Since the criteria for classification of a Non-Cooperative Borrowerare different from those for classification of a Wilful Defaulter asdefined by RBI, the operating units may put up theirrecommendations for the classification/declassification of aborrower or a Wilful Defaulter or both, separately, for approvalby the Committees.

Modification in Provisioning norms: The Bank is now required to makehigher provisions as applicable to substandard assets in respect of new

Committee for classification/declassification of a borrower as Non-Cooperative Borrower (Identification Committee/1st Committee) Chairman of the Committee 1st Alternate 2nd Alternate

DMD (SAMG) DMD (MCG) DMD (Ops-NBG)

Members 01. Any one GM of CAG / MCG / SMEBU / RBU

02. GM (SAMG)



loans sanctioned to Non cooperative borrowers as also new loanssanctioned to any other company that has on its board of directors any ofthe whole time directors / promoters of a non-cooperative borrowingcompany or any firm in which such a Non cooperative borrower is incharge of management of affairs though for the purpose of assetclassification and income recognition, the new loans would be treated asStandard Assets.SBI Base Rate reduced to 9.85 pa; SBAR to 14.6 (w.e.f.10.04.15).Compliance certificate.Pre disbursement compliance of terms & conditions of sanction:With a view to strengthening the underlying processes, it has been decidedto introduce a structure along with standard format for ensuringcompliance of terms and conditions of sanction across the BusinessVerticals.For units with exposures below Rs.1.00 crore (FB+NFB Limits)Branch Manager/official responsible for disbursement will have to ensurethat terms and conditions of sanction have been complied with, and asimple confirmation to this effect, as detailed below, would be kept onrecord:-“Confirmed that all pre-disbursement conditions and formalities havebeen complied with, except the following for which approval of theappropriate authority is on record.”

Collection and Dissemination of Information on Wilful DefaultersRBI has advised the following mechanism for identification of WilfulDefaulters(a) The evidence of wilful default on the part of the borrowing company

and its promoter/whole-time director at the relevant time should beexamined by a Committee headed by an Executive Director andconsisting of two other senior officers of the rank of GM/DGM.

(b) If the Committee concludes that an event of wilful default hasoccurred, it shall issue a Show Cause Notice to the concernedborrower and the promoter/whole-time director and call for theirsubmissions and after considering their submissions issue an orderrecording the fact of wilful default and the reasons for the same. Anopportunity should be given to the borrower and the promoter/whole-time director for a personal hearing if the Committee feelssuch an opportunity is necessary.

(c) The Order of the Committee should be reviewed by anotherCommittee headed by the Chairman / CEO and MD and consisting,in addition, of two independent directors of the Bank and the Order

shall become final only after it is confirmed by the said ReviewCommittee.

Except in very rare cases, a non-whole time director should not beconsidered as a wilful defaulter unless it is conclusively established thatI. he was aware of the fact of wilful default by the borrower by virtue

of any proceedings recorded in the Minutes of the Board or aCommittee of the Board and has not recorded his objection to thesame in the Minutes, or,

II. the wilful default had taken place with his consent or connivance.

However, the above exception will not apply to a promoter directoreven if not a whole time director.

SBI: Appeals / Representations received from Borrowers / Promoters /Directors / Guarantors identified as Wilful Defaulters by the CompetentCommittees prior to 07/01/2015 will now be heard and disposed of bythe new Committees headed by DMD to be set up for identification ofWilful Defaulters as per revised instructions and not by the earlierGrievance Redressal Committee. Further, such borrowers will be finallydeclared as Wilful Defaulter after review / confirmation of the order ofthe Identification Committee by the next higher Committee to beconstituted as per revised instructions.

Online Loan against shares:Online loan against shares to Individuals/staff has been launched.Under the revised process, individuals are now required to submit loanapplication online and its processing, sanction and follow-up will becentralized at a single Nodal Branch, i.e., Specialised Securities FinanceBranch Worli, Mumbai.Henceforth branches are not authorized to sanction Loans against sharesto individuals or Staff members. Loans will henceforth be sanctioned bythe Nodal Branch.

The scheme envisages financing to individual borrowers against thesecurity of BSE-100 shares, which qualifies the parameters set foracceptance of shares as security

Eligibility Criteria:Existing individual customers with KYC compliant accounts, good pastrelationship, having demat account with our SBI CAP Securities Ltd (SSL).Loan will only be sanctioned to individuals in his/her individual name



i.e., loan will not be sanctioned jointly. The customer otherwise eligiblefor the loan should have an active mobile number and e-mail id. Thecustomer has to submit the following documents as a proof of incomealong with the loan Application form.(i) For employees:(a) Latest monthly salary slip showing deductions(b) Latest form 16 from employer(ii) For others:Copy of IT Returns for the last two years, duly acknowledged by ITOwith computation of income.Purpose:For meeting contingencies and needs of personal nature and forsubscribing to rights or new issue of shares against security of existingshares. [Max. Rs.10 lacs for subscribing to IPOs]However, the loans under the scheme are not to be sanctioned fori) Speculative purposeii) Inter-corporate investments, oriii) Acquiring controlling interest in company / companies.iv) Loan against our own SBI Shares.Loan Amount:a) Minimum : Rs.500/-b) Maximum: For any personal purpose maximum loan is Rs.20.00

lacsFor subscribing to IPOs maximum loan is Rs.10.00 lacs

Security: Pledge of Demat Shares.Margin: 50% of the prevailing Stock Exchange market prices of the sharesas calculated based on the prevailing market price as on the date andtime of loan sanction.Processing Fee: NilRepayment:Demand Loan:The loan is to be repaid in 30 EMIs. The first EMI will fall due on the nextmonth of loan sanction.

Overdraft: The drawing power of the Overdraft account will be reducedevery month and loan has to be liquidated in maximum of 30 months.

Opinion Report:Brief Opinion Report should be compiled in the prescribed format.

Prepayment Penalty:No prepayment penalty

Penal Interest Rate:If the EMI / Instalments(s) is not credited in the loan account of theborrower on due date, the undernoted charges will be recovered from theborrower:

Rs.500.00 + service tax (at present, Rs.562.00) for non-credit ofEMI / Instalment(s) on or before the due date.

2% per month penal interest on overdue instalment for theoverdue period.

Documentation:i) Simplified Application form to be generated through online portal.ii) Loan Agreement – Loan against Shares (to be generated through

LOS)iii) Arrangement letter (to be generated through LOS)

Coverage:Customer of any Branch can apply for the loan. The processing andsanction of loan will be done by a single nodal Branch i.e., SpecialisedSecurities Finance Branch, Worli. The loan will in the Books of the nodalBranch.Parameters for acceptance of shares as security:There is no change in the extant instructions on the parameters foracceptance of shares as security.i) The equity shares offered as security should be fully paid. No advance

will be granted against partly paid shares / debentures.ii) Preference shares will not be accepted as security.iii) No advances will be granted against SBI shares, as the same is

strictly prohibited under Section 20 (1) (a) of the Banking RegulationAct, 1949.

iv) The shares offered as security must be in Demat form.v) The shares offered should be of a company listed in BSE 100 Index

Companies, except those of SBI. The list of BSE 100 Index companiesis available on www.bseindia.com.

vi) Shares, the market price of which has fallen below par duringpreceding 52 weeks, will not be accepted as security.

vii) The market price of the security which will be at variance with thearithmetical average of preceding 52 weeks high and low by morethan 25% in downward direction will not be accepted as security.

viii) P/E ratio of the company should not exceed 40. In case P/E ratio isnot available, the shares of the concerned company should not beaccepted as security.

ix) The total number of shares of company traded on NSE and BSE



should exceed 25,000 on the day of financing and on each of thepreceding 2 days.

x) Security where the market price 52 week high is 4 times of the 52week low will not be accepted.

Follow up of Loan Accounts:The follow up of advances will be taken care by the Nodal Branch onregular basis. In case of the following eventualities SMS and e-mail willbe sent to the borrowers as under:1st Alert: If Margin falls below 37.50%, an SMS alert will be sent to borrowerwith copy to BM of the Nodal Branch. This will be followed by e-mail toborrower.a) 1st case: Borrower takes action and replenished the margin through

fund deposit and continues the account.b) 2nd case: If, no Action to replenish the margin is taken by the Borrower,

2nd alert as under will be sent.2nd Alert:i) If Margin further falls to below 25%, another SME alert will be sent

to borrower. This will be followed by an email to the borrower thathis securities will be squared off without any further intimations.

ii) SSL to invoke either full or partial pledge to liquidate outstandingwith interest.

iii) Depository to process pledge invocation request.iv) SSL to sell securities. Their brokerages and charges will be deducted.v) Credit of Sale of Proceeds by SSL to individual loan account of

the Borrower.vi) SSL to intimate the Nodal Branch and the Borrower.

Foreign Exchange:Risk Management and Inter-bank Dealings: Revised Guidelines relatingto participation of Residents in the Exchange Traded CurrencyDerivatives (ETCD) market.

Increase in position limits not requiring establishment of underlyingexposure:Presently, domestic participants are allowed to take a long (bought) aswell as short (sold) position up to USD 10 million per exchange. As ameasure of further liberalisation, it has now been decided by RBI toincrease the limit (long as well as short) in USD-INR pair up to USD 15million per exchange. In addition, domestic participants shall be allowedto take long as well as short positions in EUR-INR, GBP-INR and JPY-INR pairs, all put together, up to USD 5 million equivalent per exchange.

These limits shall be monitored by the exchanges and breaches, if any,may be reported. For the convenience of monitoring, exchanges mayprescribe fixed limits for the contracts in currencies other than USD suchthat these limits are within the equivalent of USD 5 million.

Increase in eligible limit for importers hedging contracted exposure:At present, importers are permitted to hedge their contracted exposuresin the ETCD market up to 5 per cent of their eligible limit. With a view tobringing at par both exporters and importers, it has now been decided byRBI to allow importers to take appropriate hedging positions up to 100per cent of the eligible limit.

KYC Documents for opening of NRE / NRO / FCNR (B) and RFCAccounts:Key features of KYC due diligence for NRIs are mentioned below:a) The KYC due diligence will entail obtention of “Proof of Status”,

“Proof of Identiy”, “Proof of Permanent Address (either of Overseasof Indian)” and “Current Address document (overseas only)”. Thecustomer has the liberty to indicate one of these addresses as theaddress for correspondence. For customers not visiting our branchesi.e. non-face to face customers, an additional proof will be needed.

b) In case of NRIs/PIOs/OCIs, they will mandatorily give copy oftheir passport for “Proof of Identity”, and the same document canalso be accepted for “Proof of Permanent Address” (provided thereis no change in permanent address). In case they want to givepermanent address other than the one appearing in Passport, thenany of the Officially Valid Document (OVD) carrying the addressshould be obtained. The Officially Valid Documents are Drivinglicense, Voter’s Identity card issued by Election Commission of India,Job card issued by NREGA duly signed by an officer of the StateGovernment and Letter issued by the Unique Identification Authorityof India containing details of name, address and Aadhaar number.

c) The NRI will have to also advise his current overseas address andthis can be done by submission of a self-declaration, to be submittedalong with supporting document for positive confirmation of theoverseas address. For the purpose, applicant can give self-declarationas per specified format or applicant may sign and write “Selfdeclaration of overseas address for NRI account opening purpose”on the document being given for positive confirmation.

d) NRIs with seafarer work profile can submit alternate document(other than VISA / work permit) for “Proof of Status”, as many ofthem do not have Visa / Work Permit.



e) If the NRI applicant does not have any acceptable document forcurrent (overseas) address, then he/she can submit current(overseas) address of their blood relative (spouse, father, mother,sister, brother and child) as per acceptable document list for currentaddress. In such case, NRI applicant will also be required to submitsupporting proof of relationship with the blood relative (Passport,PAN Card, Driving License, Voter Identity Card, Aadhaar Card,Marriage Certificate, Birth Certificate).

f) The address (out of current of permanent), preferred by NRIapplicant for receiving correspondences from the Bank, should beentered in ‘Address for correspondence Details (India / Foreign)’in the CIF screen. Accordingly, other address should be entered in‘Alternate address Details (India / Foreign)’ of CIF screen.

NRI account opening application form has also been revised. The newaccount opening form can be used for the purpose of opening RFCaccounts as well. However, it cannot be used for opening NRO accountby foreign tourists, for which a separate application form is beingdeveloped.

Export of Goods and Services – Project Exports:Presently, Exim Bank in participation with commercial banks in Indiamay extend Buyer’s credit up to the limit of USD 20 million to foreignbuyers in connection with export of goods on deferred payment termsand turn key projects from India.With a view to further liberalizing the procedure and as the WorkingGroup structure has been dismantled, it has been decided by RBI towithdraw the limit of USD 20 million for Buyer’s credit which may beextended to foreign buyers in connection with export of goods on deferredpayment terms and turn key projects from India.

General:Safe keeping of vouchers/retrieval/destruction of records: Issues Measures to be in place 1. Safe keeping 1. Voucher sorting to be done Teller-wise (and not of Vouchers & product i.e. SB/CA/TDR/BGL etc., wise) ondaily records basis.

2. Vouchers to be kept in date-wise bunches/boxes. 3. Vouchers to be moved to record room, on T + 2 basis, after entering them in Record register.

2. Retrieval of Voucher 1. Record to vouchers’ movement (in/out on

for verification / requisition) in Voucher movement register, destruction of vouchers. after authorization by BM/Service Manager.

2. BM/Service Manager will give certificate every month in BMMC that the movement of Vouchers from / to Record room has taken place after his / her authorization. 3. Destruction of vouchers / records at prescribed intervals, as per prevalent OP & SP instructions.

Interest rates on Small Savings Schemes:

Cross Selling – SBI Life: New Product – “ SMART INCOME PROTECT”(IRDA LICENSE NO: UIN:111N085V02):“Smart Income Protect” is an individual, non-unit linked, with profitendowment insurance Product and designed to satisfy the insuranceand financial needs of salaried class customers of the Bank. The policyprovides two options on maturity (1) Guaranteed annual payouts @11%of basic sum assured amount over a period of 15 years after maturity (2)Option to receive maturity benefit amount in lump sum which includesguaranteed sum assured @110% basic sum assured plus vestedreversionary and terminal bonuses, if any at maturity.

ATM: Fund transfer optiona) Card to card transferb) Account based transferFollowing changes have been made in the “Transfer Option” in ATMs.

Fund Transfer using ATM:One of the options available to the customer on the first screen after swipingthe card in the ATM is “Transfer”. Customers can choose either “Card toCard” or Account Based Transfer” to transfer money to any accountholder of SBI. To remit to an account in our Associate Banks, the senderwill have to choose “Card to Card” option only. In “Card to Card” option,


Scheme Rate of Interest w.e.f. 01.04.2015

5 Year SCSS, 2004 9.3% p.a PPF, 1968 8.7% p.a Kishan Vikas Patra 8.7% p.a Sukanya Samriddhi Account Scheme 9.2% p.a


the beneficiary’s debit card number has to be entered, in “Account BasedTransfer” the beneficiary’s account number is required.

Time of Credit:The credit in the case of an SBI beneficiary is afforded immediately and toAssociate Bank beneficiary on T+1 day.

The limits have been revised as under:

Solvency Certificate: Often, customers approach the Bank for issue of asolvency certificate.(i) Eligibility:- Min. 1 year satisfactory relationship except for education loan

borrowers or depositors. Can be issued for commercial purpose and Non-Commercial

purpose. Audited BS, IT Returns Statement of a/cs etc to be verified. SC is to be issued in standard format.

RFIA / Credit Audit:-The Audit Committee of the Central Board has made a number ofsuggestions toa) tighten the scoring parameters as per the risk residing at the auditee

unitb) draw up broad profiles for various types of branches andc) suggest new audit parameters.Matters to be improved in the Current Audit Scoring System:Of late, concerns have been expressed that due to rigidities in the existingformat and the different business mix at branches, the resultant risks arenot brought about adequately in the audit scores.Eg: (i) Gr 1 branches (including branches in CAG and MCG) get

maximum Credit Risk Management score (CRM) of 525 where ascredit – CPCs score is 700.

ii) Number of branches have income from non-credit business, andhence carry operational risk. This is not captured correctly.

iii) Even though a branch’s overall audit score may be good, somecomponents o the business could carry significant risk. Eg: In aMCG branch with a score > 75% (low risk), there may be say 2 / 3accounts with scores less than 60% (high risk).

The present system of reporting does not capture this type of information.iv) A sizeable number of branches have obtained CRM score < 70%;

but the overall scores exceeded 700 and hence such branches areincluded among AC branch category. The present system does notenable capturing of individual risk parameters. Hence, there is aneed for a composite scoring system revealing such risks.

Salient aspects of the Revised Scoring Matrix:(i) Max score for CRM has been increased to 700 for CAG and MCG

branches which are entirely credit oriented braches from the presentlevel of 525.

(ii) Group 1 NBG branches with credit level of Rs.500 cr and above arenow treated at par with MCG / CAG branches; for Gr 1 brancheswith credit level of Rs.250 to Rs.500 cr, CRM score has been increasedto 600; ORM score adjusted accordingly.

iii) Non BPR branches (Gr. II): A new category of branches with non-credit related income of Rs.1 cr and above or retail deposits of Rs.150cr and above has been carved out and given a higher score (450)under ORM, due to the inherent operational risk associated withthe business mix.

(iv) Gr II & III, BPR center branches with SME advances of Rs.50 lacsand above: Higher score of (Gr II:550; Gr III: 500) is given for CRM asthese advances reside at the branch

Composite Rating Introduced:i) If a branch is rated AC, but has a few High Risk Accounts, the rating

symbol would show the same (Eg: AC: HRA 3).ii) If a AC branch has a CRM / ORM score < 70%, this will be shown as

AC: C; AC: O.C – means CRM > 70%; O – means ORM < 70%.

iii) A separate rating for credit audit is being given now.Introduction of the revising scoring will enable Inspectors to capture riskmore accurately; also the process is made more objective.The scheme envisages financing to individual borrowers against thesecurity of BSE-100 shares, which qualifies the parameters set foracceptance of shares as security


Sr. No.

Detail Revised Limits

1 Maximum Per Txn Limit a) Maximum limit is Rs.40,000/- per day b) There is no limit on the number of transactions. c) The limit of Rs.40,000/- per day will be common across the C2C and Card to Account facility.

2 Maximum No. of Txns permitted

3 Maximum limit per day under Card to Card and Card to Account facility


RECENT BANKING DEVELOPMENT: Apr & May 15

Human Resources:Mandatory Leave for Employees Posted in Sensitive Positions or Areasof Operation:RBI has reiterated that, as a prudent operational risk managementmeasure, it is imperative that employees posted in sensitive positions orareas of operations (viz., treasury, currency chests, risk modelling, modelvalidation, etc.) are covered under a ‘Mandatory Leave’ policy whereinsuch employees are required to compulsorily avail of leave for a few days(say 10 working days) in a single spell every year, during their posting insuch areas. The bank should also identify such highly sensitive positionswhere the bank will, without any prior intimation, advise the employee tobe away from his desk for a specified number of working days each year.While the employee is on ’mandatory leave’ or asked to be away from hisdesk as above, it should be ensured that he does not have access to anyphysical or virtual resources related to his work responsibilities, withthe possible exception of corporate email.

Forex:Merchanting Trade to Nepal and Bhutan: In terms of the revisedmerchanting trade guidelines stipulated by RBI in Mar’ 14, for a trade tobe classified as merchanting trade, goods acquired should not enter theDomestic Tariff Area and the state of the goods should not undergo anytransformation. Further, the goods involved in the merchanting tradetransaction would be the ones that are permitted for exports / importsunder the prevailing Foreign Trade Policy (FTP) of India, as on the dateof shipment and all the rules, regulations and directions applicable toexports (except Export Declaration Form) and imports (except Bill ofEntry), should be complied with for the export leg and the import legrespectively.As Nepal and Bhutan are landlocked countries, there is a facility of transittrade whereby goods are imported from third countries by Nepal andBhutan through India under the cover of Customs Transit Declarationsin terms of the Government of India Treaty of Transit with these twocountries. In consultation with Government of India, RBI has clarifiedthat goods consigned to the importers of Nepal and Bhutan from thirdcountries under merchanting trade from India would qualify as traffic-in-transit, if the goods are otherwise compliant with the provisions of theIndia-Nepal Treaty of Transit and Indo-Bhutan Treaty of Transitrespectively.


STATEMENT ABOUT OWNERSHIP AND OTHERPARTICULARS OF BANKING DIGEST.

1) Place of Publication: Bangalore2) Periodicity of Publication: Monthly3) Publisher’s Name: Shri G. Subramanian

a. Nationality Indianb. Address: J. S. Institute of Banking

and Finance Pvt. Ltd.Bangalore – 560 070.

4) Editor’s Name: Shri G. Subramaniana. Nationality Indianb. Address: J.S. Institute of Banking

and Finance Pvt. Ltd.Bangalore – 560 070.

5) Name of Printing Press: Raja PrintersBangalore – 560 027.

6) The Name and Address of J.S. Institute of Bankingthe Owners: and Finance Pvt. Ltd.,

Ramanashree Park View,2nd Floor, 2462,24th Cross Road,Banashankari 2nd Stage,Bangalore – 560 070.

I, G. Subramanian, hereby declare that the particulars given aboveare true to the best of my knowledge and belief.30.05.2015 G. SUBRAMANIAN

Signature of Publisher.


Export of Goods and Services- Declaration of Exports of Goods/Software:Presently, every exporter of goods or software has to declare the same inthe prescribed form.To further liberalise and simplify the procedure, it has been decided todispense with the requirement of declaring the export of Goods /Softwarein the SDF in case of exports taking place through the EDI ports, as themandatory statutory requirements contained in the SDF have beensubsumed in the Shipping Bill format.

Foreign Currency (Non-Resident) Account (Banks) (FCNR (B)) Scheme:RBI has observed that Authorised Dealer banks are insisting on differentrequirements at the time of closure of FCNR (B) deposits and subsequentremittance of funds as under:i) Submission of A2 form sii) Insisting on physical presence of the account holderiii) Asking for purpose of remittanceIn this connection RBI has clarified banks that A2 form is to be filed at thetime of purchase of foreign exchange using rupee funds and hence is notapplicable while remitting FCNR (B) funds. Further, banks, with the helpof technology, will have to devise better alternatives/ methods forensuring bonafides of the transaction rather than insisting on physicalpresence of the account holder, in order to ensure hassle free remittanceof funds to the account holder.

Automated Process for Reversal of Inland Bills purchased/discounted/negotiated in Exim Bills:To eliminate delays in reversal of crystallized inland bills and preventincome leakage the reversing of bills in Exim Bills software has now beenautomated. This will also provide a list of crystallised bills of a customerover a period of time.The process of reversal in EXIM Bills software.Accounting entries which will be put through by the system automaticallyif Bills are not paid on the Notional Due Date (Sight Bills)/Due Date(Usance Bills)01. Dr. Overdue Inland Bills Purchased/Discounted/Negotiated (underL/C or Non – L/C) of the Customer (Intermediary account required to beopened)Cr. Inland Demand Bills Purchased Account (under L/C or Non-L/C ofthe Customer – Sight Bills) or

Cr. Inland Usance Bills Discounted Account of the Customer (under L/Cor Non-L/C of the Customer – Usance Bills)02. Dr.CC/OD/CA of the Customer (if sufficient DP/Balance is notavailable then excess drawings would automatically be permitted by theCBS without requirement of manual intervention and approval foroverdrawing). Exception Report would, however, be generated at EOD.Cr. Overdue Inland Bills Purchased/Discounted/Negotiated (under L/C or Non-L/C) of the Customer (The aforementioned Intermediaryaccount).All the above mentioned entries will be put through by the systemsimultaneously on the same day and Intermediary account will not haveany balance at the end of day.

In respect of Bills purchased (Sight Bills), if the payment is notreceived within 13 days from the date of purchase, the entrywill be reversed by the system on the 14th day. If the 14th dayhappens to be a holiday, it will be reversed on the previousworking day.

In respect of Bills discounted (Usance Bills), irrespective of thetenor, if the payment is not received on the due date, the Billentry will be reversed by the system on the next day. If theimmediate next day after the due date happens to be a holiday,it will be reversed on the immediately preceding working day.

Penal interest is applicable.In the Trade Finance site, on daily basis, a report containing a list ofinland bills which are due for auto-reversal after 7 days will be provided.The report may be used by the branches as a tool to follow up for retirementof bills on respective due dates.No manual reversal of overdue inland bills in CBS directly is permitted.

Deposits:Rights of transgender persons – Changes in bank forms/applicationsetc:

RBI has noted that transgender persons face difficulties in openingaccounts as there is no provision for them in the account openingand other forms.

2. in this connection, RBI has advised banks to refer to the judgementdated April 15, 2014 of the Supreme Court in the case of NationalLegal Services Authority v. Union of India and others on treatingall transgender persons as ‘third gender’. The Supreme Court, inthat case, upheld transgender persons’ right to decide their self-identified gender and directed the Centre and State Government to



grant legal recognition of their gender identity such as male, femaleor third gender.

3. Banks are, therefore, directed to include ‘third gender’ in all forms/applications etc. prescribed by the Reserve Bank or the banksthemselves, wherein any gender classification is envisaged.

Advances:Loan frauds in banks.RBI has expressed disquiet about the rising number of frauds in banks aswell as reporting delays in respect of frauds. It has issued a frameworkfor fraud risk management (7.5.2015).

Highlights:(i) The concept of a Red Flagged Account has been introduced as animportant step in fraud risk control.

Early Warning Signals (EWS) and Red Flagged Accounts (RFA)2.1 The concept of a Red Flagged Account (RFA) is being introduced inthe current framework as an important step in fraud risk control. A RFAis one where a suspicion of fraudulent activity is thrown up by thepresence of one or more Early Warning Signals (EWS). These signals in aloan account should immediately put the bank on alert regarding aweakness or wrong doing which may ultimately turn out to be fraudulent.A bank cannot afford to ignore such EWS but must instead use them as atrigger to launch a detailed investigation into a RFA.The threshold for EWS and RFA is an exposure of Rs.500 million or moreat the level of a bank irrespective of the lending arrangement (whethersolo banking, multiple banking or consortium). All accounts beyondRs.500 million classified as RFA or ‘Frauds’ must also be reported on theCRILC data platform together with the dates on which the accounts wereclassified as such.

Early Detection and ReportingAt present the detection of frauds takes an unusually long time. Bankstend to report an account as fraud only when they exhaust the chances offurther recovery.

Filing Complaints with Law Enforcement AgenciesBanks are required to lodge the complaint with the law enforcementagencies immediately on detection of fraud. There should ideally not beany delay in filing of the complaints with the law enforcement agenciessince delays may result in the loss of relevant ‘relied upon’ documents,

non-availability of witnesses, absconding of borrowers and also themoney trail getting cold in addition to asset stripping by the fraudulentborrower.

Penal measures for fraudulent borrowersIn general, the penal provisions as applicable to wilful defaulters wouldapply to the fraudulent borrower including the promoter director(s) andother whole time directors of the company insofar as raising of fundsfrom the banking system or from the capital markets by companies withwhich they are associated is concerned, etc. In particular, borrowers whohave defaulted and have also committed a fraud in the account would bedebarred from availing bank finance from Scheduled Commercial Banks,Development Financial Institutions, Government owned NBFCs,Investment Institutions, etc., for a period of five years from the date of fullpayment of the defrauded amount. After this period, it is for individualinstitutions to take a call on whether to lend to such a borrower. Thepenal provisions would apply to non-whole time directors (like nomineedirectors and independent directors) only in rarest of cases based onconclusive proof of their complicity.No restructuring or grant of additional facilities may be made in the caseof RFA or fraud accounts.No compromise settlement involving a fraudulent borrower is allowedunless the conditions stipulate that the criminal complaint will becontinued.

Central Fraud Registry:The Reserve Bank is in the process of designing a Central Fraud Registry,a centralised searchable database, which can be accessed by banks. TheCBI and the Central Economic Intelligence Bureau (CEIB) have alsoexpressed interest in sharing their own databases with the banks. Moreinformation in this regard would follow once the structure is finalised.

RESOLUTION PERIOD FOR BIFR/CDR/JLF CASES:In terms of RBI Guidelines, the maximum resolution period permitted toSCs/RCs for realisation of stressed assets acquired by them is 8 years.However, in most cases of restructuring proposals of stressed assets, asapproved by BIFR / CDR / JLF, the repayment period goes beyond a timeframe of 8 years. In such cases, SCs/RCs, who are holding a part of thestressed assets, express their inability to go along with the other lendersbeyond 8 years due to the regulatory constraints mentioned above andinsist on an exit at the end of 5 or 8 years, thereby jeopardizing therestructuring efforts of the majority lenders.



3. It has therefore been decided to make certain modifications to theexisting Directions as under:

(1) For the purpose of the restructuring proposals approved / to beapproved by BIFR/CDR/JLF, SCs/RCs shall be permitted to accepta resolution period co-terminus with other secured lenders.

(2) In all such cases, the redemption period of Security Receipts (SRs)held against these assets may be extended to be in congruence withthe resolution period approved by BIFR/CDR/JLF, subject to theIndependent Credit Rating Agencies continuing to positively ratethese SRs, i.e. as long as the Net Asset Value of the SRs continue tobe positive.

Technology:Security and Risk Mitigation Measures for Card Present and ElectronicPayment Transactions:RBI has already advised banks regarding the security issues and riskmitigation measures related to Card Present (CP) transactions and forelectronic payment transactions wherein various timelines wereindicated for accomplishment of tasks for securing card and electronicpayment transactions.2. The Reserve Bank has been gradually strengthening security and

risk mitigation measures in card transactions. The acceptanceinfrastructure is getting geared to accept EMV chip and pin cards.However, in case of card issuance, while some banks have alreadymoved to EMV chip and pin cards issuance, a large number of bankscontinue to issue Magnetic stripe cards. Thus, given the level ofreadiness of the card acceptance infrastructure at point of sale andalso the implementation of PIN@POS for debit cards, the time isappropriate to move further along the path to migrate away frommagnetic stripe only cards to chip and pin cards.

3. RBI has advised that with effect from September 01, 2015 all newcards issued – debit and credit, domestic and international – bybanks shall be EMV chip and pin based cards.

4. The migration plan for existing magnetic stripe only cards will beframed in consultation with stakeholders and timeline for the samewill be advised in due course.

General:Dispensing with ‘No Due Certificate’ (NDC) for lending by Banks:Due to technological developments and various alternatives availablewith banks to avoid multiple financing it has been decided by RBI tofollow the undernoted course of action:

I. To dispense with obtention of ‘No Due Certificate’ (NDC) fromindividual borrowers (including SHGs & JLGs) in rural and semi-urban areas for all types of loans including loans under GovernmentSponsored Schemes (GSS), irrespective of the amount involved,unless the GSS itself provides for obtention of NDC.

II. To use an alternative framework of due diligence as part of creditappraisal exercise other than the ‘NDC’ which could, among others,consist of one or more of the following: Credit history check through Credit Information Companies Self declaration or an affidavit from the borrower CERSAI registration Peer monitoring Information sharing among lenders.

Simplified procedure for opening of Currency Chests:Strict adherence to the Technical Specifications of construction asmandated by RBI must be ensured by banks.Final Approval from the respective RO of RBI may be sought afterconstruction is completed. No deviation will be permitted or consideredand any construction falling short of specifications will not be approved.

All other locations:1. Banks may construct new CCs at any place after informing the RO

concerned of the RBI, under whose jurisdiction it is to be established.Other conditions as above are the same.

2. The banks may also note to obtain all necessary approvals fromother agencies before beginning construction.

3. Strict adherence to the Technical Specifications of construction interms as stipulated by RBI must be ensured by banks.

4. Final Approval from the respective RO of RBI may be sought afterconstruction is completed. No deviation will be permitted orconsidered and any construction falling short of specifications willnot be approved.

The approvals will normally be accorded within 30 days provided theconstruction conforms to the specifications.

Acquisition of Accommodation on Lease/Rental basis by CommercialBanks for their use (i.e. for Office and Residence of Staff) –Liberalization of guidelines:RBI has advised that norms and procedures for acquisition ofaccommodation on lease / rental basis by commercial banks for their useare left to be determined by the banks themselves. Banks must ensure



that their branches are not functioning from premises unauthorized inlaw. Further, banks are advised that the legitimate grievances of ownersof property leased to the bank should be examined at appropriately seniorlevel in the bank and expeditious action should be taken to redress suchgrievances.

Calendar of ReviewsIt has been observed that Calendar of Reviews introduced by RBI usesconsiderable Board time and as a result the Board may not be in a positionto give focused attention to matters of strategic and financial importance.In this connection, the Committee to Review Governance of Boards ofBanks in India (Chairman - Dr. P J Nayak) had also recommended thatdiscussions in the Boards of banks need to be upgraded and greaterfocus should be on strategic issues.RBI has now dispensed with the Calendar of Reviews and replaced itwith the seven critical themes prescribed by the Nayak Committee namely,business strategy, financial reports and their integrity, risk, compliance,customer protection, financial inclusion and human resources and leaveit to the banks’ Boards to determine other list of items to be deliberatedand periodicity thereof.

Critical themes in board deliberationsCategory DescriptionBusiness Strategy Development of new products; competitiveness

of individual businesses; business reviews inrelation to targets.

Risk Policies concerning credit, operational, market,liquidity risks; assessing the independence of therisk function.

Financial Reports Detailed scrutiny of quarterly and annual financialand their integrity results; NPA management and reported NPA and

provisioning integrity.Compliance Regulatory requirements; adherence to RBI and

SEBI norms; observations from the annualfinancial inspection by RBI, and from the LongForm Audit Report; review of decisions in previousminutes of meetings, and key decisions withinsubsidiaries; review of action taken reports;appointments to board committees.

Customer Protection Mis-selling, particularly third-party products;laying down the appropriateness of products todifferent customer segments; understanding the

broad trends and concentration in the growth ofcustomer grievances and their resolution.

Financial Inclusion Review of priority sector lending; payments forthe disadvantaged; deposit mobilization fromweaker sections; support to microfinanceinstitutions; and other issues.

Human Resources Appointments and approvals of directors, perksand perquisites for employees, incentive schemesfor employees, promotion policies for employees,training and skill development of employees.

Card Payments – Relaxation in requirement of Additional Factor ofAuthentication for small value card present transactions:Reserve Bank has received requests for waiver of the additional factor ofauthentication (AFA) so as to foster innovative payment products /processes as also to enhance the convenience factor in certain types ofcard transactions.RBI has now, decided to relax the extant instructions relating to the needfor AFA requirements for small value card present transactions only usingcontactless cards. In this regard, it is advised by RBI that -i. Relaxation for AFA requirement is permitted for transactions for a

maximum value of Rs 2,000/- per transaction;ii. The limit of Rs.2000/- per transaction will be the limit set across all

categories of merchants in the country where such contactlesspayments will be accepted;

iii. Beyond this transaction limit, the card has to be processed as acontact payment and authentication with PIN (AFA) will bemandatory;

iv. Even for transaction values below this limit, the customer maychoose to make payment as a contact payment, which has to befacilitated by both issuing and acquiring banks. In other words,customers cannot be compelled to do a contactless payment;

v. Banks are free to facilitate their customers to set lower per-transactionlimits. The responsibility for authorizing the contactless paymentbased on such card-based limits will lie with the card issuing banks;

vi. Suitable velocity checks (i.e., how many such small value transactionswill be allowed in a day / week / month) may be put in place bybanks as considered appropriate; and

vii. The contactless cards should necessarily be chip cards adhering toEMV payment standard, so as to be acceptable across the existingcard acceptance infrastructure which are EMV compliant based onthe earlier mandate in this regard.



However, the above relaxations shall not apply to:i) ATM transactions irrespective of transaction value; andii) Card Not Present transactions (CNP).

Mandatory issue of acknowledgement to pensioners on submission oflife certificates:In terms of extant instructions, all pensioners are required to furnish alife certificate to the pension disbursing bank every year in November forcontinuance of pension. This certificate can be submitted at any branchof the pension paying bank. The Government of India has also launchedfrom September, 2014 a scheme for introduction of Aadhaar based digitallife certificates known as Jeevan Pramaan.However, complaints are received from central/state governmentpensioners/ pensioners’ associations regarding pensioners beingdeprived of regular pension payments due to misplacement of lifecertificates at the branches concerned. In order to alleviate the hardshipsfaced by pensioners on this account, all agency banks handlinggovernment pension payments may, henceforth, issue a duly signedacknowledgement to pensioners on receipt of the life certificate submittedin physical form. Banks may also consider entering the same in their CBSimmediately on receipt and issuing a system generated receipt to thepensioners. This would serve the twin purpose of acknowledgement tothe pensioners as well as real-time updation of records.

CONCEPT BRIEF – IIndian Economy Roundup – May 2015

Prime Minister Narendra Modi has visited many countries publicisingthe latent potential in India that makes it a favourable investmentdestination. The Government has been taking steps to make Indiaconducive for businesses to invest in line with India’s large requirementof funds towards developmental programmes in general andinfrastructural developments in particular.Monsoons: The Australian Meteorological Department has predicted thatthe probability of the El Nino effect is 3 times more likely in 2015 thannormally. The Indian Meteorological Department (IMD) has alsoconcurred with this and expects that while the monsoon will arrive earlierthan scheduled, the rainfall will be below normal – 93% of Long TermAverage (LTA) rainfall this year. Only 46% of cultivated land (140.8million hectares) in India is irrigated; the remaining 54% of land is stilldependent on rains. This makes the El Nino phenomenon a very realthreat for Indian farmers. The Government has announced compensationprogrammes for farmers across the country for the losses they havesuffered from untimely rain.Car Sales: India’s car sales increased by 4% in 2014-15. According toSociety of Indian Automobile Manufacturers (SIAM) data, domestic carsales increased by 18% to 1.59 lakh units in April 2015 as compared tothe year-ago period; this is the fastest growth in 30 months.Industrial Output: It grew by 2.1% in March 2015 against 4.9% in theprevious month. In 2014-15 industrial production increased by 2.8%.Core Sector growth contracted by 0.1% in March 2015, a 7- month low.Inflation: CPI inflation was 4.86% in April 2015 as compared to 5.25% inMarch 2015; food inflation was 5.11% as compared to 6.14% in March2015. Wholesale Price Index (WPI) deflation continued for the 6th monthin a row – 2.65% in April 2015 compared to 2.33% in March 2015.Interest Rates: There are hopes that RBI will reduce its rates further to spurdemand because of WPI deflation and decreasing trends in CPI inflation.However, over 70 scheduled banks have not reduced their base ratesdespite 2 cuts in policy repo rate by RBI in the recent past. Only majorbanks like SBI, HDFC Bank, ICICI Bank and Axis Bank reduced theirrates.Trade: Exports fell by 24% to US$ 22 billion while imports fell by 7.5% toUS$ 33 billion. The resultant trade deficit was US$ 11 billion. This is thefifth consecutive month of decline in exports. In 2014-15 exports wereUS$ 310 billion, 1.23% lower than the previous year and below the target

7271 Concept Brief


of US$ 340 billion. The World Trade Organisation (WTO) has reducedglobal trade growth forecast to 3.3% from 4%.Capital: The Finance Ministry has asked Public Sector Banks (PSBs) toattract investors to raise funds for capital to conform to BASEL III norms.Indian banks need Rs.2.4 lakh crore capital by 2018.NPAs: According to data from RBI, banks’ Gross NPA has increased to

4.45% as on March 15 2015 as compared to 4.1% in March 2014.GNPA for PSBs was 5.17% in March 2015. Overall stressed advancesof the banking system was 10.9% in March 2015 as compared to10% a year ago. Overall stressed advances includes restructuredstandard advances and GNPA. At the end of 2014, NPAs of PSBswas Rs.2.6 lakh crore.

Despite bad loans doubling in the last 3 years, RBI GovernorRaghuram Rajan has surmised that they have still not reached theirpeaks.

RBI has suggested that boards of banks look into their financialresults and Non-Performing Assets (NPAs) in detail during theirdiscussions. The P J Nayak Committee had recommended that banksreview their results with focus on 7 critical themes – businessstrategy, financial reports and their integrity, risk, compliance,customer protection, financial inclusion and human resources.

Gold: Gold imports increased by 19.5% to US$ 34.32 billion in 2014-15 ascompared to the previous year. In April, gold imports rose by 78% to US$3.1 billion as compared to the year-ago period. The Government hasreleased a draft gold monetization scheme to make use of the idle gold inthe hands of households and institutions as well as to reduce reliance onimports. Gold closed at Rs.27,284 per 10 g while silver closed at Rs.39,290per kg on May 20 2015.Currency Markets: The Rupee has fallen 3% this calendar year to belowRs.64 against the Dollar – this is a 20 month low. The Rupee closed at63.82 against the Dollar on May 20 2015.Stock Markets: The traditionally low yield on bonds in developed marketssuch as US and Germany rose to a year’s high. This was also affected byGreece using its emergency reserves to repay an IMF loan. This resultedin an outflow of funds from emerging markets. India’s stock markets andthe 10-year Government securities (G-Sec) fell on May 12 2015; the Sensexdropped by 2.3% and the Nifty by 2.4%. The Sensex closed at 27837while the Nifty closed at 8423 on May 20 2015.Bond Yield: The yield on the 10-year benchmark government bond hasalso hardened in line with global markets. It was 7.86% at the end ofApril 2015; it has increased to 7.98% as of May 8 2015.

Oil Prices: Oil prices increased to over US$ 60 a barrel; this is the first timethis year. It is expected that there will be a fall in shale gas output.Insurance Schemes of Government: Central Bank of India (CBI) has signedan MoU with The New India Assurance Co. Ltd to offer the PradhanMantri Suraksha Bima Yojana (PMSBY). This was announced in theUnion Budget 2015-16.Credit Growth: Bank credit grew by 8.6% in 2014-15 as compared to 14.3%in 2013-14. According to RBI data, credit to agriculture grew by 15% toRs.7.7 lakh crore as of March 20 2015 compared to the year-ago period; in2013-14, the growth was 13.5%. Credit to industry grew by 5.6% toRs.26.65 lakh crore. In 2013-14 the credit growth was 13.1%. Credit toservices also grew at 5.6% to Rs.14.12 lakh crore; in 2013-14, it was 16.1%.Tax Collections: The GOI collected Rs.47,747 crore in indirect taxes, inApril 2015, an increase of 46.2% over the year ago period. Gross taxcollections for 2014-15 were Rs.12.5 lakh crore a growth of 9% over theprevious year. The new service tax of 14% (up from the current 12.36%)will be effective from June 1 2015. The Budget also widened the servicetax base in preparation for the Goods and Services Tax (GST) that isexpected to be in place by April 2016.Fiscal Deficit: India’s fiscal deficit for 2014-15 was Rs.5 lakh crore or 4%of GDP; this is lower than the targeted 4.1% of GDP. The current year’starget is 3.9% of GDP. Revenue deficit for 2014-15 was Rs.3.6 lakh croreor 2.8% of GDP which is lower than the Revised Estimate (RE) of 2.9%.Disinvestment: The Government plans to partially divest stake in 25 publicsector companies expecting a revenue flow of over one third of the currentyear’s divestment target of Rs.41,000 crore.Black Money: The Enforcement Directorate (ED) has attached assets worthRs.9,003 crore in its efforts to flush out black money. It had filed 173chargesheets in 2014-15.Foreign Flows: FDI: Foreign Direct Investment (FDI) increased by 63% to US$ 3.28

billion in February 2015 as compared to the year-ago period. Venture Capital Funds: India has surpassed China in securing

Venture Capital (VC) funds in the first quarter of 2015 with 69 dealsagainst China’s 66. However the value of the deals in India wasUS$ 1.35 billion against China’s US$ 2.99 billion.

IPOs in China: A host of IPOs in China have led to outflow of fundsfrom Indian stock markets – 25 Chinese companies plan to mobiliseUS$ 377 billion.

Chinese Investment: India and China have signed 25 deals worthUS$ 22 billion during Indian PM Modi’s visit to China. ICICI Bankand Infosys plan to open branches in China. A Chinese consortium,

7473 Concept Brief


Guizhou International Investment Corporation (GIIC) plans to investUS$ 500 million in Indian GMR’s Kakinada Special Economic Zone(SEZ) Pvt. Ltd.

South Korean Investment: India and South Korea signed 7 agreementswith their bilateral relationship becoming a Special StrategicPartnership; South Korea will invest US$ 10 billion towardsdeveloping infrastructure in India.

MAT: GOI has set up a panel to study Minimum Alternate Tax (MAT)for Foreign Institutional Investors (FIIs) under justice A P Shah toaddress issues faced on tax on capital gains for FIIs.

Forex: Foreign exchange reserves crossed US$ 350 billion for thefirst time for the week ended May 1 2015. It was US$ 352.13 billionas on May 8 2015. This is an all-time high.

India on US’ IPR Watch: US has placed India, China, Russia and Ukraineamong 13 nations in its priority watch list for Intellectual Property Rights(IPR) violations.

Growth Forecast: The World Bank has estimated that India will grow by7.5% in FY16, 7.9% in FY17 and 8% in FY18. This is lower than theIndian Government’s Budget estimate of 8.5% and RBI’s estimate of 7.8%for 2015-16. According to a United Nations (UN) report, India is expectedto grow by 8.1% in 2015-16 on the back of consumer demand and reformmeasures undertaken by the Government. Finance Minister Arun Jaitleyexpects the Indian economy to grow by 9-10% who said that India hasthe potential to grow at this rate – reforms will be the catalyst. Fitch-owned Indian Ratings has estimated that India will grow by 7.7% forFY16. It has also stated that India will be able to weather foreign outflowsbetter because of its reforms agenda and lower oil prices.The challenges for the Indian economy are in the form of rising bad loanswithin the country and poor earnings within the industry. Increasingcrude oil prices on the back of geo-political tensions as well as forecast ofreduced shale gas output are pressures India faces on the external front.Foreign investors are also wary of some of the Government’s policy actionssuch as Minimum Alternate Tax (MAT) and retrospective taxation. TheGovernment has created a panel to look into MAT to ward off concern inthis regard. The Government completed one year in office in May 2015.While the mood in the market is still upbeat, ground-level action has notmatched the expectations of the industry and common man. Growthforecasts have been very positive but overall fundamentals are yet toshow signs of improvement and recovery.

MODEL TEST(BASED ON MAY 2015 INFORMATION)

1) Recently, France-based Software Company, Capgeminiannounced that it will acquire ______.

2) Who won the Jnanpith Award for 2014?3) All NBFCs may now sell Mutual Funds. There are no minimum

eligibility criteria. True/False?4) What is a micro-ATM?5) Expand SIDBI.6) Who will be the new head of the BRICS bank, New Development

Bank (NDB)?7) UK has elected _____ as its Prime Minister in the recently-concluded

elections.8) Floyd Mayweather is a _______.9) Additional Factor of Authorisation (AFA) is not required for card

present transactions of value less than Rs._____ per transaction.10) PMJJBY stands for _____.11) The head of the panel appointed by the GOI that will select non-

executive Chairmen in Public Sector Banks (PSBs) is _____.12) Ping Pay is the mobile-based application of _____.13) EMV chip stands for _____.14) The President of Egypt is _______.15) The 2016 Olympics will be held in ________.16) The Black Money Bill 2015 passed by the Parliament is mainly

focussed on ensuring that_______ are declared by Indianresidents.

17) eftCheque is a mobile app developed by ______.18) SmartBuy is an online platform of _______.19) FDI inflows may enter the country through the _____ and _____

route.20) Contactless cards use NFC technology to make payments through

readers. Expand NFC.21) Recently, SBI has signed MoUs with e-commerce companies

______ and ______ to fund online sellers.22) CATMI stands for ______.23) Who won the 2015 IPL?24) Who is the Chief Election Commissioner?25) Who will be Chairman of the proposed GST Council?26) India’s Chief Statistician is _______.27) The Tamil Nadu CM is ______.

7675


ANSWERS:1) US-based iGate2) Bhalchandra Nemade3) True4) A micro ATM is a hand-held device that Business

Correspondents (BCs) use to accept deposits and dispense cash.5) Small Industries Development Bank of India6) K V Kamath7) David Cameron8) professional boxer9) 2,00010) Pradhan Mantri Jeevan Jyoti Bima Yojana11) RBI Governor Raghuram Rajan12) Axis Bank13) Europay MasterCard Visa14) Abdel-Fattah el-Sisi15) Rio de Janeiro, Brazil16) foreign assets17) ICICI Bank Ltd.18) HDFC Bank Ltd.19) automatic; approval20) Near Field Communication21) Amazon; Snapdeal22) Confederation of ATM Industries23) Mumbai Indians beating Chennai Super Kings24) Nasim Zaidi25) Union Finance Minister Arun Jaitley26) T C A Anant27) J Jayalalithaa

PRIORITY SECTOR ADVANCES (Changes–April 2015)

Model Test - IIPriority Sector Lending – ChangesBased on the recommendations of the Internal Working Group, headedby Lily Vaders, Chief General Manager, RBI on priority sector lending,RBI has since issued revised guidelines.A Model Test covering the entire revised guidelines is given below.1. Which committee’s recommendations led to changes in priority

sector lending w.e.f 23.04.2015?A: The recommendations of an Internal working group, headed by lily

vaders, chief general manager, RBI led to the changes in prioritysector lending.

2. What are the different categories of advances under priority sectorfinance:

A: i) Agricultureii) Micro, Small and Medium Enterprisesiii) Export Creditiv) Educationv) Housingvi) Social Infrastructurevii) Renewable Energyviii) Others

3. What is the priority sector target fro SCBs and foreign banks with 20branches and above?

A: 40 percent of Adjusted Net Bank Credit [ANBC defined in subparagraph (iii)] or Credit Equivalent Amount of Off-Balance SheetExposure, whichever is higher.Foreign banks with 20 branches and above have to achieve the TotalPriority Sector Target within a maximum period of five years startingfrom April 1, 2013 and ending on March 31, 2018 as per the actionplans submitted by an Internal working group set up by RBI andapproved by RBI.

4. What is the priority sector target for foreign banks with less than 20branches?

A: 40 percent of Adjusted Net Bank Credit or Credit Equivalent Amountof Off-Balance Sheet Exposure, whichever is higher; to be achievedin a phased manner by 2020.

5. Is there any distinction between direct and indirect advances underAgriculture segment?

A: No. It has been abolished now.

7877 Model Test


6. What is the priority sector target for agriculture?A: 18 percent of ANBC or Credit Equivalent Amount of Off-Balance

Sheet Exposure, whichever is higher.Within the 18 percent target for agriculture, a target of 8 percent ofANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure,whichever is higher is prescribed for Small and Marginal Farmers,to be achieved in a phased manner i.e., 7 per cent by March 2016and 8 per cent by March 2017.

7. What is the priority sector target for agriculture for foreign banks?A: Foreign banks with 20 branches and above have to achieve the

Agriculture Target within a maximum period of five years startingfrom April 1, 2013 and ending on March 31, 2018 as per the actionplans submitted by the Internal working group and approved byRBI. The sub-target for Small and Marginal farmers would be madeapplicable post 2018 after a review in 2017.

8. Is there a sub-target for Micro Enterprises?A: Yes.

7.5 percent of ANBC or Credit Equivalent Amount of Off-BalanceSheet Exposure, whichever is higher to be achieved in a phasedmanner i.e. 7 per cent by March 2016 and 7.5 per cent by March2017.

9. What is the target for Weaker Sections?A: 10 percent of ANBC or Credit Equivalent Amount of Off-Balance

Sheet Exposure, whichever is higher.10. What is the target for foreign banks as regards Weaker Sections?A: Foreign banks with 20 branches and above have to achieve the

Weaker Sections Target within a maximum period of five yearsstarting from April 1, 2013 and ending on March 31, 2018 as perthe action plans submitted by Internal working group and approvedby RBI.

11. What is the time-period within which foreign banks with less than20 branches has to achieve the priority sector target of 40%?

A: Financial Year The Total Priority Sector as percentage of ANBCor Credit Equivalent Amount of Off-Balance Sheet Exposure,whichever is higher

2015-16 322016-17 342017-18 362018-19 382019-20 40

The additional priority sector lending target of 2 percent of ANBC eachyear from 2016-17 to 2019-20 has to be achieved by lending to sectorsother than exports. The sub targets for these banks, if to be madeapplicable post 2020, would be decided in due course.

12. What is ANBC and how it is computed? A: ANBC means Adjusted Net Bank Credit. Net Bank Credit means

Bank Credit in India minus bills Rediscounted with RBI andother approved Financial Institutions.Adjusted Net Bank Credit is worked out as per table below:

* For the purpose of priority sector computation only. Banks should notdeduct / net any amount like provisions, accrued interest, etc. from NBC.It has been observed that some banks are subtracting prudential write offat Corporate/Head Office level while reporting Bank Credit as above. Insuch cases it must be ensured that bank credit to priority sector and allother sub-sectors so written off should also be subtracted categorywise from priority sector and sub-target achievement.

Bank Credit in India [As prescribed in item No.VI of Form ‘A’ under Section 42 (2) of the RBI Act, 1934].

I

Bills Rediscounted with RBI and other approved Financial Institutions

II

Net Bank Credit (NBC)* III (I-II)

Bonds/debentures in Non-SLR categories under HTM category+ other investments eligible to be treated as priority sector +Outstanding Deposits under RIDF and other eligible funds with NABARD, NHB and SIDBI on account of priority sector shortfall + outstanding PSLCs

IV

Eligible amount for exemptions on issuance of long-term bonds for infrastructure and affordable housing as per circular DBOD.BP.BC.No.25/08.12.014/2014-15 dated July 15, 2014.

V

Eligible advances extended in India against the incremental FCNR (B)/NRE deposits, qualifying for exemption from CRR/SLR requirements.

VI

ANBC III+IV-V, VI

8079 Model Test


All types of loans, investments or any other items which are treated aseligible for classification under priority sector target/sub-targetachievement should also form part of Adjusted Net Bank Credit. (RBI)13. What are the classifications of lending to agriculture?A: Agriculture lending now includes:

(a) Farm Credit (which will include short-term crop loans andmedium/long-termcredit tofarmers)(b) Agriculture Infrastructure and(c) Ancillary Activities.

14. What are the various types of farm credit to individual farmers,SHGs and JLGs that are classified as farm credit?

A: Loans to individual farmers [including Self Help Groups (SHGs) orJoint Liability Groups (JLGs), i.e. groups of individual farmers,provided banks maintain disaggregated data of such loans],directly engaged in Agriculture and Allied Activities, viz., dairy,fishery, animal husbandry, poultry, bee-keeping and sericulture.This will include:(i) Crop loans to farmers, which will include traditional/non-

traditional plantations and horticulture, and, loans for alliedactivities.

(ii) Medium and long-term loans to farmers for agriculture andallied activities (e.g. purchase of agricultural implements andmachinery, loans for irrigation and other developmentalactivities undertaken in the farm, and developmental loansfor allied activities.)

(iii) Loans to farmers for pre and post-harvest activities, viz.,spraying, weeding, harvesting, sorting, grading andtransporting of their own farm produce.

(iv) Loans to farmers up to Rs.50 lakh against pledge/hypothecation of agricultural produce (including warehousereceipts) for a period not exceeding 12 months.

(v) Loans to distressed farmers indebted to non-institutionallenders.

(vi) Loans to farmers under the Kisan Credit Card Scheme.(vii) Loans to small and marginal farmers for purchase of land for

agricultural purposes.15. What are the various types of farm credit to Corporate farmers, FPCs

of individual farmers, partnership firms and cooperatives that areclassified as farm credit?

A: All agriculture activities and Allied activities viz dairy, fishery,

animal husbandry, poultry, bee-keeping and sericulture up to anaggregate limit of Rs.2 cr per borrower. This will include:(i) Crop loans to farmers which will include traditional/non-

traditional plantations and horticulture, and, loans forallied activities.

(ii) Medium and long-term loans to farmers for agriculture andallied activities (e.g. purchase of agricultural implements andmachinery, loans for irrigation and other developmentalactivities undertaken in the farm, and developmental loansfor allied activities.)

(iii) Loans to farmers for pre and post-harvest activities, viz.,spraying, weeding, harvesting, sorting, grading andtransporting of their own farm produce.

(iv) Loans up to Rs.50 lakh against pledge/hypothecation ofagricultural produce (including warehouse receipts) for aperiod not exceeding 12 months.

16. What are the loans that are classified as agri infrastructure loans?A: i) Loans for construction of storage facilities (warehouses, market

yards, godowns and silos) including cold storage units/ coldstorage chains designed to store agriculture produce/products,irrespective of their location.

ii) Soil conservation and watershed development.iii) Plant tissue culture and agri-biotechnology, seed production,

production of bio- pesticides, bio-fertilizer, and vermicomposting.

17. What is the criterion for classifying loan as an agri infrastructureloan?

A: Aggregate sanctioned limit of Rs.100 cr per borrower from thebanking system will apply.

18. What are the loans for various ancillary activities that are classifiedas priority sector advance?

A: (i) Loans up to Rs.5 crore to co-operative societies of farmers fordisposing of the produce of members.

(ii) Loans for setting up of Agriclinics and Agribusiness Centres.(iii) Loans for Food and Agro-processing up to an aggregate

sanctioned limit of Rs.100 crore per borrower from the bankingsystem.

(iv) Bank loans to Primary Agricultural Credit Societies (PACS),Farmers’ Service Societies (FSS) and Large-sized AdivasiMulti-Purpose Societies (LAMPS) for on-lending to agriculture.

(v) Loans sanctioned by banks to MFIs for on-lending toagriculture sector subject conditions.

8281 Model Test


(vi) Outstanding deposits under RIDF and other eligible fundswith NABARD on account of priority sector shortfall.

19. Who are included in calculating the sub-target under agriculturelending?

A: Farmers with landholding of up to 1 hectare are considered as

Marginal Farmers. Farmers with a landholding of more than 1 hectare and upto 2

hectares are consideredas Small Farmers.

Landless agricultural labourers, tenant farmers, oral lessees andshare-croppers.

Loans to Self Help Groups (SHGs) or Joint Liability Groups (JLGs),i.e. groups of individual Small and Marginal farmers directlyengaged in Agriculture and Allied Activities, provided banksmaintain disaggregated data of such loans.

Loans to farmers’ producer companies of individual farmers, andco-operatives of farmers directly engaged in Agriculture and AlliedActivities, where the membership of Small and Marginal Farmers isnot less than 75 per cent by number and whose land-holding shareis also not less than 75 per cent of the total land-holding.

20. What is the investment criteria in plant & machinery formanufacturing sector enterprises?

A: Micro Enterprises Does not exceed twenty five lakh rupeesSmall Enterprises More than twenty five lakh rupees but

does not exceed five crore rupeesMedium Enterprises More than five crore rupees but

does not exceed ten crore rupees21. What is the investment criteria in equipment for service sector? A: Micro Enterprises Does not exceed ten lakh rupees

Small Enterprises More than ten lakh rupees but does notexceed two crore rupees

Medium Enterprises More than two crore rupees but doesnot exceed Five crore rupees

22. What is the criteria for classification of loans to Micro and Smalland Medium (Service) Enterprises as priority sector?

A: Bank loans up to Rs.5 cr to Micro and small enterprises and Rs.10 crto Medium Enterprises engaged in services as defined underMSMED Act, 2006.

23. Are advances to KVI sector units classified as eligible for the sub-target under Micro enterprises?

A: Yes.24. What are the other types of advances to MSMEs that are eligible for

classification as priority sector advances?A: (i) Loans to entities involved in assisting the decentralized sector

in the supply of inputs to and marketing of outputs of artisans,village and cottage industries.

(ii) Loans to co-operatives of producers in the decentralized sectorviz. artisans, village and cottage industries.

(iii) Loans sanctioned by banks to MFIs for on-lending to MSMEsector subject to conditions.

(iv) Credit outstanding under General Credit Cards (includingArtisan Credit Card, Laghu Udyami Card, Swarojgar CreditCard, and Weaver’s Card etc. in existence and catering to thenon-farm entrepreneurial credit needs of individuals).

(v) Outstanding deposits with SIDBI on account of priority sectorshortfall.

25. A small Manufacturing unit’s investment in plant and machinerycrosses the limit of Rs.5.00 cr as on 01.04.2015. Will the advance tothe unit continue to enjoy the priority sector status?

A: Yes. Up to 3 years from the date it crosses the limit.26. Is export credit a priority sector advance for a domestic bank?A: Yes, subject to the following. Incremental export credit over

corresponding date of the preceding year, up to 2 percent of ANBCor Credit Equivalent Amount of Off-Balance Sheet Exposure,whichever is higher, effective from April 1, 2015 subject to asanctioned limit of Rs.25 crore per borrower to units having turnoverof up to Rs.100 crore.

27. What is the present stipulation for foreign banks in respect of exportcredit?Foreign banks with 20 branches and above:

A: Incremental export credit over corresponding date of the precedingyear, up to 2 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, effective from April1, 2017 (As per their approved plans, foreign banks with 20 branchesand above are allowed to count certain percentage of export creditlimit as priority sector till March 2016).Foreign banks with less than 20 branches:Export credit will be allowed up to 32 percent of ANBC or CreditEquivalent Amount of Off-Balance Sheet Exposure, whichever ishigher.

28. Are educational loans classified as priority sector loans?A: Loans to individuals for educational purposes including vocational

8483 Model Test

courses up to Rs.10 lakh irrespective of the sanctioned amount willbe considered as eligible for priority sector.

29. What are the present stipulations for treating Home Loans underpriority sector?

A: (i) Loans to individuals up to Rs.28 lakh in metropolitan centres(with population of ten lakh and above) and loans up to Rs.20 lakhin other centres for purchase/construction of a dwelling unit perfamily provided the overall cost of the dwelling unit in themetropolitan centre and at other centres should not exceed Rs.35lakh and Rs.25 lakh respectively. The housing loans to banks’ ownemployees will be excluded.

30. Are advances for social infrastructure classified as priority sector?A: Bank loans up to a limit of Rs.5 crore per borrower for building

social infrastructure for activities namely schools, health carefacilities, drinking water facilities and sanitation facilities in Tier IIto Tier VI centres.

31. Are advances for renewal energy production classified as PS?A: Bank loans up to a limit of Rs.15 crore to borrowers for purposes

like solar based power generators, biomass based power generators,wind mills, micro-hydel plants and for nonconventional energybased public utilities viz. street lighting systems, and remote village

electrification. For individual households, the loan limit will beRs.10 lakh per borrower.

32. What are the criteria for classifying loans to SHG / JLG as PSadvance?

A: a) Loans up to Rs.50,000/- per borrower provided directly by banksto individuals and their SHG/JLG.b) The individual borrower’s household annual income in ruralareas does not exceed Rs.100,000/- and in non-rural areasRs.1,60,000/-.

33. Up to what limit loans to distressed formers is classified as PSadvance?

A: Up to Rs.1 lac per borrower to prepay their debt to non-institutionallenders.

34. What are the criteria for classifying loans under PMJDY as PSadvance?

A: a) Overdrafts extended by banks up to Rs.5,000/- under PradhanMantri Jan-Dhan Yojana (PMJDY) accounts.b) The borrowers’ household annual income does not exceed Rs.100,000/- for rural areas and Rs.1,60,000/- for non-rural areas.

35. How many types of advances are classified as weaker sectionadvances? What are they?

A: 12. They are:No. Category1. Small and Marginal Farmers2. Artisans, village and cottage industries where individual credit

limits do not exceed Rs.1 lakh3. Beneficiaries under Government Sponsored Schemes such as

National Rural Livelihoods Mission (NRLM), National UrbanLivelihood Mission (NULM) and Self Employment Scheme forRehabilitation of Manual Scavengers (SRMS)

4. Scheduled Castes and Scheduled Tribes5. Beneficiaries of Differential Rate of Interest (DRI) scheme6. Self Help Groups7. Distressed farmers indebted to non-institutional lenders8. Distressed persons other than farmers, with loan amount not

exceeding Rs.1 lakh per borrower to prepay their debt to non-institutional lenders

9. Individual women beneficiaries up to Rs.1 lakh per borrower10. Persons with disabilities11. Overdrafts up to Rs.5,000/- under Pradhan Mantri Jan-DhanYojana

Loan amount Cost of (Maximum) the dwelling unit i) Metropolitan Centres Rs.28 lacs Rs.35 lacs (pop: 10 lacs and above) ii) Other Centres Rs.20 lacs Rs.25 lacs a) Repairs to damaged Dwelling units Metropolitan Rs.5 lacs - Other centres Rs.2 lacs - b) Loans to Govt agency Rs.10 lacs per For construction of dwelling unit - Dwelling units / Slum clearance c) Housing projects exclusively Rs.10 lacs per for the purpose of houses for dwelling unit economically weaker sections / low income group (EWS means family income not exceeding Rs.2 lacs p a)

8685 Model Test JS Digest of Banking and Finance May15


(PMJDY) accounts, provided the borrowers’ household annualincome does not exceed Rs.100,000/- for rural areas andRs.1,60,000/- for non-rural areas

12. Minority communities as may be notified by Government of Indiafrom time to time

36. Are investments in securitised assets classified as PS advance? A: (i) Investments by banks in securitised assets, representing loans

to various categories of priority sector, except ‘others’ category,are eligible for classification under respective categories ofpriority sector depending on the underlying assets provided:

(a) the securitised assets are originated by banks and financialinstitutions and are eligible to be classified as priority sectoradvances prior to securitisation and fulfil the Reserve Bank ofIndia guidelines on securitisation.

(b) the all inclusive interest charged to the ultimate borrower bythe originating entity should not exceed the Base Rate of theinvesting bank plus 8 percent per annum.

The investments in securitised assets originated by MFIs, whichcomply with the guidelines in this regard are exempted from thisinterest cap as there are separate caps on margin and interest rate.(ii) Investments made by banks in securitised assets originated by

NBFCs, where the underlying assets are loans against goldjewellery, are not eligible for priority sector status.

37. A bank has acquired assets through Direct Assignment and Outrightpurchase? Are they classified as PS advance?

A: Assignments/Outright purchases of pool of assets by banksrepresenting loans under various categories of priority sector,except the ‘others’ category, will be eligible for classification underrespective categories of priority sector provided:(a) the assets are originated by banks and financial institutions

which are eligible to be classified as priority sector advancesprior to the purchase and fulfil the Reserve Bank of Indiaguidelines on outright purchase/assignment.

(b) the eligible loan assets so purchased should not be disposedof other than by way of repayment.

(c) the all inclusive interest charged to the ultimate borrower bythe originating entity should not exceed the Base Rate of thepurchasing bank plus 8 percent per annum.

The Assignments/Outright purchases of eligible priority sectorloans from MFIs, which comply with the guidelines in this regardare exempted from this interest rate cap as there are separate capson margin and interest rate.(ii) When the banks undertake outright purchase of loan assets

from banks/ financial institutions to be classified under prioritysector, they must report the nominal amount actuallydisbursed to end priority sector borrowers and not the premiumembedded amount paid to the sellers.

(iii) Purchase/ assignment/investment transactions undertakenby banks with NBFCs, where the underlying assets are loansagainst gold jewellery, are not eligible for priority sector status.

38. Are Inter Bank Participation certificates bought by banks classifiedas PS advance?

A: Inter Bank Participation Certificates (IBPCs) bought by banks, on arisk sharing basis, are eligible for classification under respectivecategories of priority sector, provided the underlying assets areeligible to be categorized under the respective categories of prioritysector and the banks fulfil the Reserve Bank of India guidelines onIBPCs.

No. Category 1. Small and Marginal Farmers 2. Artisans, village and cottage industries where individual

credit limits do not exceed Rs.1 lakh 3. Beneficiaries under Government Sponsored Schemes such as

National Rural Livelihoods Mission (NRLM), National Urban Livelihood Mission (NULM) and Self Employment Scheme for Rehabilitation of Manual Scavengers (SRMS)

4. Scheduled Castes and Scheduled Tribes 5. Beneficiaries of Differential Rate of Interest (DRI) scheme 6. Self Help Groups 7. Distressed farmers indebted to non-institutional lenders 8. Distressed persons other than farmers, with loan amount not

exceeding Rs.1 lakh per borrower to prepay their debt to non-institutional lenders

9. Individual women beneficiaries up to Rs.1 lakh per borrower 10. Persons with disabilities 11. Overdrafts up to Rs.5,000/- under Pradhan Mantri Jan-

DhanYojana (PMJDY) accounts, provided the borrowers’ household annual income does not exceed Rs.100,000/- for rural areas and Rs.1,60,000/- for non-rural areas

12. Minority communities as may be notified by Government of India from time to time

8887 Model Test


39. RBI has proposed that Priority Sector Lending Certificates may beissued by banks? Will these certificates be classified as PS advance?

A: The outstanding priority sector lending certificates (after theguidelines are issued in this regard by the Reserve Bank of India)bought by the banks will be eligible for classification underrespective categories of priority sector provided the assets areoriginated by banks, and are eligible to be classified as prioritysector advances and fulfil the Reserve Bank of India guidelines onpriority sector lending certificates.

40. Are bank loans to MFIs classified as PS advances?A: Yes.

(a) Bank credit to MFIs extended for on-lending to individualsand also to members of SHGs /JLGs will be eligible forcategorisation as priority sector advance under respectivecategories viz., Agriculture, Micro, Small and MediumEnterprises, and ‘Others’, as indirect finance, provided notless than 85 percent of total assets of MFI (other than cash,balances with banks and financial institutions, governmentsecurities and money market instruments) are in the nature of“qualifying assets”. In addition, aggregate amount of loan,extended for income generating activity, should be not lessthan 50 percent of the total loans given by MFIs.

(b) A “qualifying asset” shall mean a loan disbursed by MFI,which satisfies the following criteria:(i) The loan is to be extended to a borrower whose household

annual income in rural areas does not exceed‘ 1,00,000/- while for non-rural areas it should not exceed‘ 1,60,000/-.

(ii) Loan does not exceed ‘ 60,000/- in the first cycle and‘ 100,000/- in the subsequent cycles.

(iii) Total indebtedness of the borrower does not exceed‘ 1,00,000/-.

(iv) Tenure of loan is not less than 24 months when loanamount exceeds ‘ 15,000/- with right to borrower ofprepayment without penalty.

(v) The loan is without collateral.(vi) Loan is repayable by weekly, fortnightly or monthly

installments at the choice of the borrower.(c) Further, the banks have to ensure that MFIs comply with the

following caps on margin and interest rate as also other‘pricing guidelines’, to be eligible to classify these loans aspriority sector loans.

(i) Margin cap: The margin cap should not exceed 10 percentfor MFIs having loan portfolio exceeding ‘ 100 crore and12 percent for others. The interest cost is to be calculatedon average fortnightly balances of outstandingborrowings and interest income is to be calculated onaverage fortnightly balances of outstanding loanportfolio of qualifying assets.

(ii) Interest cap on individual loans: With effect from April 1,2014, interest rate on individual loans will be the averageBase Rate of five largest commercial banks by assetsmultiplied by 2.75 per annum or cost of funds plus margincap, whichever is less. The average of the Base Rate shallbe advised by Reserve Bank of India.

(iii) Only three components are to be included in pricing ofloans viz., (a) a processing fee notexceeding 1 percent ofthe gross loan amount, (b) the interest charge and (c) theinsurance premium.

(iv) The processing fee is not to be included in the margin capor the interest cap.

(v) Only the actual cost of insurance i.e. actual cost of groupinsurance for life, health and livestock for borrower andspouse can be recovered; administrative charges may berecovered as per IRDA guidelines.

(vi) There should not be any penalty for delayed payment.(vii) No Security Deposit/ Margin are to be taken.

(d) The banks should obtain from MFI, at the end of each quarter,a Chartered Accountant’s Certificate stating, inter-alia, thatthe criteria on (i) qualifying assets, (ii) the aggregate amount ofloan, extended for income generation activity, and (iii) pricingguidelines are followed.

41. What is the periodicity of monitoring of PS lending targets by RBI?A: Quarterly Hitherto, it was annual. Data on PS advances have to be

furnished by banks at quarterly and annual intervals to RBI.To ensure continuous flow of credit to priority sector, there will bemore frequent monitoring of priority sector lending compliance ofbanks on ‘quarterly’ basis instead of annual basis as of now.The data on priority sector advances have to be furnished by banksat quarterly and annual intervals as per revised reporting formats,the guidelines for which will be issued separately.

42. What are the stipulations of RBI if a bank does not achieve PS target?A: Scheduled Commercial Banks having any shortfall in lending to

priority sector shall be allocated amounts for contribution to the

9089 Model Test


Rural Infrastructure Development Fund (RIDF) established withNABARD and other Funds with NABARD/NHB/SIDBI, as decidedby the Reserve Bank from time to time.Non-achievement of priority sector targets and sub-targets will betaken into account while granting regulatory clearances/approvals for various purposes.

43. No service charge / inspection charge should be revised on PS loansup to Rs._______.

A: Rs.25,000/-44. Are contingent liabilities / off balance sheet items reckoned for PS

target achievement?A: Contingent liabilities/off-balance sheet items do not form part of

priority sector target achievement. However, foreign banks with lessthan 20 branches have an option to reckon the credit equivalent ofoff-balance sheet items, extended to borrowers for eligible prioritysector activities, along with priority sector loans for the purpose ofcomputation of priority sector target achievement. In that case, thecredit equivalent of all off-balance sheet items (both priority sectorand non-priority sector excluding interbank) should be added tothe ANBC in the denominator for computation of Priority SectorLending targets.

45. What items are included in the concept of all inclusive interest?A: The term “all inclusive interest” includes interest (effective annual

interest), processing fees and service charges.

Model Test-I (for STP aspirants)(MM II Confirmation Exam)

Time: 1½ hoursPart A: Objective Questions Marks: 100

Development Banking1. Scheme of financing SHG members in rural areas for on lending for

housing isa) Gruha Nivas b) Sahayog Nivas c) Apna Ghard) None of these

2. PMJDY Relates to :a) IRDP b) Deposit Mobilisation c) NRLMd) Financial Inclusion

3. Maximum finance for SHG credit card:a) Rs.1 lac b) Rs.5 lacsc) 4 times of the corpus of the SHG d) Rs.10 lacs

4. If a student has not completed his course within time, Educationloan can be extended by another ….. monthsa) 6 b) 12 c) 24 d) 36

5. Processing fees are not applicable to:a) SME loans b) Education Loans c) Car loansd) Corporate loans

6. Max amount in Artisan Credit Card is:a) Rs.2.00 lacs b) Rs.3 lacs c) Rs.4 lacsd) Rs. 5lacs

7. RENT Plus scheme in SME segment is replaced with……..a) SME Rent Plus b) Lease Rental Discounting Schemec) Advance rent d) None of the above

8. Which Committee recommended SHGs?(a)Kalia Committee (b) Ojha Committee(c) None of these

9. Which one of the following is TRUE regarding eligibility of DALMILL PLUS ?a) Units should be SB 9 and above b) Unit must be profit making

c) Margin for Term loan is 15% -25 % d) All the above10. CERSAI is established under which Act?

a) RBI Act b) BR Act c) SARFAESI Actd) Transfer of Property Act

11. Under Stree shakti tractor loan (SSTL) minimum agriculture landholding required is……….a) 5 Acres b) 4 Acres c) 3 Acres d) 2Acres

9291 Model Test


12. Nature of facility available under GCC is(a) W.C (b) T.L (c) a & b (d) None of these

13. In case of modified new Tractor loan scheme, acceptable DSCRis……….a) 1.33 b) 1.5 c) 1.75 d) 2

14. BSBA (Basics Savings Bank Accounts) under PMJDY are :a) Not KYC Compliant b) KYC Compliant

15. DSCR is calculated to find outa) Profitability of the unitb) Ascertain repaying capability of T/Lc) Assess Working Capital Requirement d) None of the above

16. BEP helps to arrive at:a) T/L instalments b) amount of T/L c) Moratorium periodd) None of these

17. Eligibility criteria for availing finance under SBI Fleet Finance schemeis..a) Must be having 10 vehicles b) Minimum amount should beRs. 50 lacsc) Must have National or State Permit d) All of these

18. For Education Loans Service area approach is ………….?a) Applicable b) Not applicable

19. Maximum amount of loan under SBI Collateral free loan is ?a) Rs. 25 lacs b) Rs.50 lacsc) Rs.75 lacsd) Rs.100 lacs, if the borrower is agreeable to pay the guarantee fee.

20. Which one of the following is correct regarding PMJDY?(a)If a person is already having a Bank A/C, he can open a newBank A/C in another Bank(b)Existing A/C will be converted into PMJDY A/ C(c) New A/C can’t be opened, but credit facilities and Rupay cardcan be given for the existing account

21. A small farmer is one who ownsa) up to 5 acres of dry land b) up to 2.5 acres of wet landc) More than 5 acres of dry land d) a or b.

22. Average Quarterly balance required in Power Pack A/C is Rs……..lacsa) Rs.2 b) 3 c) 5 d) 10

23. Satisfaction of charge has to be registered with the Registrar ofcompanies as per Companies Act 2013 through filing in formNo_______a) CHG - 1 b) CHG - 2 c) CHG – 4d) None of these

24. What is the capital subsidy eligible from NABARD under “SURYAKIRAN” scheme for financing purchase of solar photo voltaic homelighting system?a) 10% b) 20 % c) 30% d) 50%

25. PMJDY customers are protected by PAI up to an amount of Rs.a) 100,000 b) 1,50,000 c) 30,000d) None pf these

26. Guaranteed portion of CGTMSE guaranteed accounts would attracta risk weightage ofa) 50 % b) Zero c) 100%d) None of these

27. Under CGTMSE , the Lock in Period for submitting the claim isa) 24 months from the date of account becoming NPAb) 24 months from the date of sanctionc) 24 months from the date of joining the trustd) 18 months from the date of payment of guarantee fee

28. A Small Manufacturing Enterprise is one , wherein investment inPlant & Machinery isa) between Rs. 25 lacs and Rs. 5 Crb) between Rs. 10 lacs and Rs. 2 Crc) up to Rs. 10 Cr d) None of these

29. The penalty for delay in payment of bills to MSMEs for period beyond45 days is……a) 3 times the Bank rate b) 2 times the Bank Ratec) 20%P.A d) None of these

30. The family income limit for financing under the Scheme for financingSHGs of scheduled tribes isa)Rs.81,000 p.a in Rural Areasb) Rs.1,04,000 p.a in urban areasc) None of these d) both a & b

Technology:1. What is the expansion of IFM?2. ATM cards are issued to visually impaired persons as under:

a) Account to be opened in the joint names of the visually impairedcustomer and normal person and card is issued to the normalperson

b) Card is not issuedc) Card can be issued in the sole name of the visually impaired

customerd) None of the above

3. Disaster Recovery Plan and BCP to be approved by the controllerevery year by……

9493 Model Test


a) 10th of January b) 31st Januaryc) 31st December d) By 31st March4. Chief Information Security Officer (CISO) is stationed at

a) SBIICMb) GITC, Belapur c) Corporate Centre HQ d) Chennai5. CRA is maintained in ………………module.

a) CC/OD b) Loan Tracking c) DL/TL d) None of these6. Gift Card can be issued to:

a) Account holder b) Non Account holder c) either a or bd) None of these

7. SBI Classic debit card is valid fora) 5 years b) up to 2049 c) 20 years d) up to Nov 2022

8. Validity period of Virtual card is :a) 48 hours b) 24 hours c) 36 hoursd) None of the above

9. Pre-printed Kit (PPK) contains?a) User id b) Password c) Both a&b d) none of the these

10. Disaster recovery site of CTS system is at:a) Chennaib) Hyderabad c) Mumbai d) Kolkata

11. Letters of Credits are opened in which module?a) Loan Tracking Module b) Contingent Accounts Modulec) LoaCC/OD Module d) DL/TL Module

12. Automated Pass book printing facility of the Bank is known asa) Swayam b) Selfie c) Kiosk d) DBO

13. The Central server at CDC is known asa) Tandem b) Cyrus c) HP Super Domed) Param

14 . Capability depends ona)User Type b)Capability levelc) Transaction group d) All of these

15. Core activities of CBS are operations relating toa) Savings Bank/Current Accountsb) Issue & Payment of Drafts/Banker’s Chequec)Term deposits d) All of these

Personal Banking1. What is the product type of SBI FLEXI Deposit scheme?

a) TDR b) STDR c) RD d) None of these2. For opening an account RBI’s permission is NOT required for

nationals of which of the following countries?a) Sri Lanka b) Bangladesh c) Bhutan d) Nepale) All of these

3. If PAN is not furnished, TDS will be deducted at the rate ofa) 8% b) 10% c) 15% d) 20%

4. For verification of validity of TDS Certificate, which form can beavailable with I.TAX dept.?a) 24 AS b) 25 AS c) 26 ASd) 37 AS

5. Capital Gains A/Cs are regulated bya) RBI b) Sub Registrar c) IT Deptd) None of the above

6. In YUVA SB A/C free collection of one cheque can be done in amonth upto Rs.….(a)50,000 (b)40,000 (c)30,000 (d) 20, 000

7. Home Loan may be sanctioned for reimbursement of investmentmade by the borrower in house from own resources during thepreceding ……… months with minimum margin of 25%.(a) 12 (b)6 (c) 18 (d) 24

8. What is the MAX loan amount that can be sanctioned underXpress credit?a) Rs. 10 lacs b) Rs. 15 lacs c) Rs.20lacsd) Rs.25 lacs

9. What is the minimum balance required in Premium SavingsAccount?a) Rs.5000 b) Rs.10,000 c) Rs.25,000 d) Rs.50,000

10. What amount is loadable and reloadable in Foreign Travel card?a) USD100 b) USD150 c) USD200 d) USD250

11. Under Corporate Salary Account, what is the min gross monthlysalary per account?(a)5000 (b) NIL (c)2000 (d)1000

12. Limitation period starts in SB & CA A/Cs from which date?(a)Last Cr. (b)Last Dr. (c)last txn.(d) from the date of demand

13. While Opening SB Account Online KYC documents to be submittedwith in(a) 7 days (b) 15 days (c) 30 days (d) 45 days

14. How many accounts can be mapped through Mobile bankingservice?a) 3 b) 4 c) 5 d) 6

15. Under Scholar loan for admission in list A A colleges the loaneligibility without collateral security is Rs._____a)Rs. 10lacs b) Rs. 15lacs c) Rs,30lacs d) None of these

16. Branches can now transfer an SB account to another branch basedon a self-declaration from the account holder about his/her currentaddress and he / she has to submit proof of address within a period

9695 Model Test


ofa. 6months b) 3 months c) one month d) none of these

17. Number of Digits in PPK isa. 16 b) 14 c) 12 d) 10

18. The Green Remit Card (GRC) is meant for…………a) Home branch customers b) Non Home branch customersc) both a&b d) none of these

19. SBI MMID: (Mobile Money Identification) prefix isa) 9000 b) Rs9001 c) 9002 d) 9003

20. What documents are required for settlement of missing persons forminimum 1 year and claims up to Rs.1.00 lakh?a) FIR b) Non-traceable Report by Policec) Indemnity from the claimant d) All of these

21. RBI has recently increased the limit of Prepaid cards from Rs. 50,000to Rs………..a) 75,000 b) 100,000 c) 150,000 d) 200,000

22. Minimum NMI under ‘SBI Saral’ scheme isa) Rs.2500 b) Rs.3000 c) Rs.5000 d) Rs.10000

23. Max loan in Home Equity Scheme is ……. % of the valuation lesspresent o/s in home loana) 75 b)85 c) 90 d) 95

24. Who is the natural Guardian of Mohammedan boy, whose fatherhas expired?(a) mother (b)mother’s father (c)uncle(d) father’s father

25. While sanctioning a Car Loan, Minimum repayment period shouldbea) 3 years b) 2 years c)1 Yeard) None of these

26. After the death of the depositor in a E or S account whether a loancan be sanctioned against the deposit?a) Can not be sanctioned b) Can be sanctioned

27. The minimum loan amount under Housing loans to NRI’s isa)Rs. 1 lac b) Rs. 3 lacs c) Rs. 5 lacs d)Rs. 10 lacs

28. Cap on the balance in Phele Kadam /Udaan is……….for account &……for CIFa) Rs.2lacs & Rs. 5 lacs b) Rs. 5lacs & Rs. 5 lacsc) Rs. 5lacs & 10 lacs d) Rs. 5lacs & 15 lacs

29. Due diligence in respect of High risk account have to be done at theinterval ofa)10Years b)8 Years c)5 years d) 2 Years

30. Disbursement to legal heirs in respect of Deceased Accountssettlement can be made througha) draft b) Credit to Account c) RTGS/NEFTd) All of these

C&I Banking1. Recently Govt withdrew 20:80 scheme on import of ………………

a) Crude Oil b) Gold c) Silver d) None of these2. Allowing all credits and disallowing all debits with the freedom to

close the accounts is known asa) Freezingb) Partial freezing c) blocking d) None of these

3. Capital Goods in progress defined in Balance Sheet as(a) Current Asset (b) Fixed Asset (c) Non Current Asset(d) Tangible Asset

4. Stock Audit is entered through which module in CBS? a) Contingent Accounts Module b) CC/OD Module

c) Loan Tracking Module d) DL/TL Module5. Which Rating Ageny works under RBI?

a) CAMELS b) CAMEL c) ICRAd) None of these

6. Credit Rating Agencies are regulated by a) SIDBI b) RBI c) SEBI d) Finance Ministry

7. Under hire purchase system the buyer becomes the owner of goodsa)Immediately after deliveryb) Immediately after down paymentc) Immediately after the payment of last instalmentd) None of these

8. Special Mention Account in advances is when:a) The account is irregular for non payment of interest for 30 daysb) The interest and/or instalment has not been serviced beyond 30daysc) The account is not in default but has shown early warning signalsd) All of these

9. Minimum period for which WCDL can be sanctioned is……..a) 90 days b) 60 days c) 45 daysd) 30 days (except for oil cos)

10. Margin stipulated for working capital limit for software activitiesis…a) 25% b) 30% c) 35% d) None of these

11. Early sanction Review is required to be made for SME loans ofRs._______ cr to _______cra) Rs. 2 Cr to 5 Cr b) Rs. 5 Cr to 10 cr

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c) Rs. 10 Cr to 25 Cr d) Rs. 1 Cr to 5 cr12. Premium received on issue of shares is shown in …..

a) Liability side of B/S b) Asset side of B/Sc) Debit side of P&L

13. For Capital adequacy purposes all Guarantees attract Creditconversion factor as undera)100% for All Financial Guaranteesb) 50% for Performance Guaranteesc) Both a&b d) None of these

14. Simplified Model of CRA is applicable for units requiring creditlimitsa) between Rs. 25 lacs to 5 Crs b) between Rs. 25 lacs to 2 Crs

c)Up to Rs. 10 Cr d) None of these15. Under Credit Rating Assessment system Borrower rating is required

to be rateda) Half yearly b) Yearly c)Once in 2 Yearsd) None of these

General Banking :1. NGOs/NPOs promoted by UN come under which risk category

a) Low Risk b) High Risk c) Medium Risk2. Paid up capital for payment banks and small Banks is

a) Rs.500 Cr b) Rs. 200 Cr c) Rs.150 Cr d) Rs. 100 Cr3. Ea adhaar Card verification is done through….

a) PMO Sectt b) CDC c) UIDAI d) RBI site4. ECB proceeds can now be kept as Term deposit in AD-1 category

banks up to a max period ofa) 6months b) 9 months c) 12 months d) 24 months

5. Capital Market is controlled bya) RBI b) GOI c) SIDBI d) SEBI

6. Prohibition of creating charge on uncalled capital(No BankingCompany shall create any charge upon any uncalled capital) of thecompany is dealt undera) Sec 14 of BR Act b) Sec 37 of RBI ACtc) Companies Act d) None of the these

7. M3 is known asa) Broad Money b) Quick Money c) Short Moneyd) none of these

8. The Vigilance week , is observed in :.a) Ist week of November b) Ist week of Augustc)Last week of August d) Last week of November

9. Preventive Vigilance Committees are to be formed at brancheshaving staff strength of :a) 10 & more b) 20 & more c) 25 & More d) 50 & More

10. To disclose matters of ‘public interest’ suspected or allegedwrongdoing that affects more than the personal or private interestsof the person making the disclosure is known asa) PIL b) Ombudsman c) Solicitor d) Whistle blower

11. The testing of fugitive ink / water droplet test must be carriedbefore payment of cheques for value.. & above.a) Rs.100000 b) Rs.50,000 c) Rs.25,000 d) Rs.10,000

12. Max deposit permissible under SBI Tax Savings Scheme is(in2014-15)a) Rs.1,50,000 b) Rs.100,000 c) Rs.75,000 d) Rs.50,000

13. Duplicate branch keys, when withdrawn to be re-depositeda) whenever convenient b) with in 24 hoursc) Next day d) Same day before the closing of banking hours

14. For getting exemption from I.TAX form 15H/G should besubmitted to I. TAX dept. before …… of next montha) 30th b) 15th c) 10th d) 7th

15. FCNR (B) can be opened in how many currencies?a) 10 b) 8 c) 6 d) 4

16. eZ Card isa) Credit Card b) Debit Card c) Pre paid cardd) None of these

17. Senior Citizens get special interest rate in INB opened accounts aspera) Declaration from the customer b) DOB entered in CBSc) both a &b d) none of these

18. Max limit of SBI Scholar loan without collateral is Rs. …………lacs for ‘A’ listed colleges.a) 4 b) 7.5 c) 10 d) 20

19. Max period for which LC can be issued?a) 24 months b) 18 months c) 12 months d) none of thse

20. If payment through Western Union Money Transfer exceeds Rs.………., it should be credited to A/C.from:a) 100,000 b) Rs.75,000 c) Rs.50001 d) 50,000

21. Banking Ombudsman can award max compensation of :a) Rs.10 lacs b) Rs.20 lacs c) Rs.30 lacs d) Rs. 50 lacs

22. In PPF A/Cs how many instalments can be made in a finnacialyear?a) 6 b) 8 c) 10 d) 12

23. Customer day is celeberated every month on which date ?

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a) 5th & 25th b) 10th & 25th c) 15th & 25th

d) None of these24. NOFHC stands for25. Which among the following is not a profitability ratio?

a) GRR b) ROEc) ROA d) CAR

26. A power of Attorney Holder cana) Only operate the Locker b) Surrender the Locker c)Both a & bd) None of these

27. For Sole proprietary concerns KYC is required to be donea) KYC as Individual b) KYC as proprietorc) either a or b d)both a&b

28. In case of Defence employees the Home Loan documents can besigned bya) Power of Attorney Holder b) Spousec) either of parents d) None of these

29. Maximum Loan for a pensioners who are up to 72 years of age isa) Rs.5 lacs b) Rs.10 lacs c) Rs.14 lacs d) None of these

30. Fee payable to Home Loan counsellors for loans below Rs.50 lacsis_______.a) 0.30% of loan amount b) 0.25% of the loan amountc) 0.10% of the loan amount d) None of these

General Awareness:1. The national calendar is based on: :

a) Gregorian Calendar b) Julian Calendarc) Saka Samvat d) Vikram Samvat

2. Top up loan product for the existing home loan borrowers in StateBank of Hydrabad is:a) SBH money b) Financial Hubc) SBH Top Up d) SBH Home Cash

3. Banks maintain by way of cash, a percentage of demand and timeliability with RBI, it is known as…….a) SLR b) GRR c) CRR d) None of these

4. What is the entry level max age limit in critical illness insuranceof SBI General?(a)70 yr (b)65 yr (c)60 yr (d)55 yr

5. Which is not used by RBI to control liquidity?(a)Exchange Rate (b) SLR (c)Bank Rate (d)CRR

6. If another Bank sends us cheque for collection, what is the % shareof commission for us?(a) NIL (b) 10% (c)25% (d)50%

7. What is the total number of branches of SBI including foreign officesas on 31.12.2014?a) 16816 b) 16206 c) 15916d) 15902

8. What is the Paid up capital of State Bank of India as on 31.12.2014?a) Rs.671 crore b) Rs.746.57 Crore c) Rs.684 crored) Rs.694 crore

9. A contract that grants the holder the right to buy/sell but not theobligation:a) Option b) Contractc) Option Contract d) None of these

10. The vice-chairman of NITI-Ayog is ________(a) Arvind Subramanian (b) Arvind Panagariya(c) Rajiv Mehrishi (d) None of these

11. SBI has started General Insurance business with which of thefollowing foreign partner?a) IAG, Australia b) Cardiff SA of Francec) Aviva Insurance d) Lombard

12. What is the NIM of SBI as on 31.12.2014?a) 3.50%b) 3.85% c) 3.66% d) 3.33%

13. Who is the Chairman of IBA?a) S.S.Mundra b) K.R.Kamath c) T.M.Bhasind) Arundathi Bhattacharya

14. The Chairman of SEBI is:a) U.K. Sinha b) Aravind Panagaryac) Dr. Raghuram Rajan d)MontekSingh Ahluwalia

15. Who is the Chairman of IRDA?a) C.B.Bhave b) Yogesh Aggrawalc) Depak parekh d) T.S.Vijayan

16. SBI(Subsidiary Banks) Act was enacted in the Year:a) 1955 b) 1956 c) 1958 d) 1959

17. CRR is governed by which Act ?a) BR Act b) RBI Act c) NI Act d) None of these

18. Government of India’s stake in SBI is:a) 61.58% b) 58.60% c) 62.31% d) 63.31%

19. Rupay Card is developed by(a)CSDL (b)NSDL (c)NPCI (d) RBI

20. The transaction type R 41 in RTGS is what type of transaction?(a) C to C (b) Bto B (c) Cto B (d)B to C

21. PBBU does not cover the following business(a) Housing Loans (b) Car Loans (c) Personal Loans

(d) None of these

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22. What is the instrument used by RBI under Liquidity AdjustmentFacility (LAF)?a) Repo rate b) Reverse repo ratec) Bank Rate d) a & b

23. A financial term that describes a financial institution that does nothave a physical presence in the country where incorporated:a) Apex Bank b) Foreign Bank c) Shell Bank d) Core Bank

24. Limit of loan under 100 % earnest money deposit scheme of StateBank of India.

a) Rs.1 lac b) Rs.5lacs c) Rs. 15lacs d) Rs. 10 lacs25. Micro units development refinance agency, Mudra Bank is being

set up with a corpus of Rs…….a)20,000 Cr b) Rs.15,000 Cr c) Rs. 10,000Cr d) Rs. 50000 Cr

26. In respect of accounts becoming NPA after the lock in period claimis required to be submitted with in …………months from the date ofaccount becoming NPAa) 18 b)24 c) 30 d)36

27. Recovery Monitoring Committee of the Central Board is headed bya) RBI Nominee b) GOI Nomineec) Chairman d) MD(CBG)

28. SARB branches will report toa) DGM (B&O) b) GM(SAMRO) c) DGM SAM Brd) DGM(SARB at SAMRO)

29. Chief Economic Advisor to Prime Minister isa) Kaushik Basu b)Arvind Subramanian c)Arvind Panagariyad) Jagdish. Shettigar

30. Central Management Committee of the Bank comprises ofa) Chairman & MDs b) All the Bank’s DMDSc) All the DMDS who are heads of Business Groupsd) a & b

ANSWERS : Part A: Objective QuestionsDevelopment Banking:1b2 d3 c4 b5 b6 a7 b8 a9 d

10 c11 d12 c13 b14 b15 b16 c

17 d18 b19 d20 c21d22 c23 c

24 c25 a26 b27 d28 a29 a30 d

Technology:1 Integrated ForexModule2 c3 a4 b5 b6 c7 c8 a9 c10 b11 b12 a13 c14d15 d

Personal Banking:1 c2 e3 d4 c5 c6 d7 a8 b9 c10 c11 a12d13 c14 c

15 c16 a17 d18 b19 c20 d21b22 c23 a24 d25 d26 a27 b28 c29 d30 d

C&I Banking1 b2 b3 b4 d5 d6 c7 c8 d9 d10 c11 d12 a13 c14a15 b

General Banking

1 a2 d3 c

4 a5 d6 a7 a8 a9 a10 d11 c12 a13 d14 d15 c16 c17 b18 d19 c20 d21 a22 d23c24 Non-OperatingFinancial HoldingCompany25 d26 a27 c28 a29 c30 b

General Awareness1 c2 d3 c4 b5 a6 d7 b8 b

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9 c10 b11 a12 a13 c14 a15 d16 d

17 b18 b19 c20 a21 a22 d23 c24 d

25 a26 b27 c28 d29 b30d

J S INSTITUTE OF BANKING AND FINANCE, BANGALOREDESCRIPTIVE QUESTIONS:

I: Rationale:1. Cluster financing of SMEs should be given importance.2. Moratorium period is given for repayment of term loans.3. Current Ratio is considered as one of the important ratios.4. Expired L/C & BGs should be reversed.5. Balance in liberalised KYC accounts should not, at any point of

time exceed Rs.50,000/-.6. The Bank should focus on Net Interest Margin.7. Repo rate has been reduced in two stages from 8% to 7.5% by RBI.8. Vehicle financed by the Bank is insured in the name of the borrower

only.9. The Bank has introduced Krishi Kalyan Yojana.10. SME Asset Backed Loan has been introduced.

II. Situation Analysis:-1. A good customer of your bank has issued a cheque for the payment

of insurance premium for Rs.9417/-. Your bank wrongly dishonourshis cheque. The cheque was returned to the customer. But he is outof station. When he returned he is informed by the insurancecompany that his policy has expired. He files a case in the ConsumerForum and claims damages. The staff concerned is in for trouble.Are there any chances of rectification of the mistake? Discuss.

2. Mr. X is having a current account with temporary OD for the last 4years. Temporary OD facility has not been documented. Bankreturns a cheque of 5000/-, drawn by him without informing him.He threatens the Bank with legal action. Discuss.

3. Mrs. ‘X’ has a TDR for Rs. 10 lakhs. She has availed a Demand Loanon the TDR. She requests you to include the name of her son ‘M’who is a minor, in the TDR. Discuss how you will help her.

4. Mr. Bansal, a safe deposit locker customer went to a foreign country.The safe deposit locker is a joint account with his wife Mrs. Bansalwith E or S operation. The key has been lost by Mrs. Bansal and shehas approached the branch with a request to break open the lockerand give the ornaments to her because she has to attend a very closerelative’s marriage. What will you do?

III. Communication:1. Write a letter to your Regional Manager requesting posting of one

more award staff for your branch.

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JS Digest of Banking and Finance May15 107

IV. Comprehension:1. Cash Deposit Machine (CDM)As a part of enhancing customer convenience and providing a 24 x 7channel of customer service, Cash Deposit Machines (CDM) areintroduced by State Bank of India. Apart from enhancing customer comfort,this has also reduced deployment of branch resources on low value cashdeposit transactions and has enabled the Bank in utilizing the resourcesfor up-selling and cross-selling of other products.Cash Deposit Machine is a ‘cash-in’ kiosk that allows a customer todeposit loose bank notes. Bank’s customers who own any variant ofATM-cum-Debit Card and SME Insta Deposit Cards are allowed to depositthe cash to their mapped account(s). The deposit of Cash is through abunch of loose notes up to a maximum of 200 pieces at any one instance(50 pieces in case of certain CDMs). The machine scans for quality(genuineness) and quantity (counts Note piece by piece) of notesdeposited. Customer is allowed to deposit up to a maximum of Rs.49900/- per transaction. The machine accepts cash in denominations of Rs.1000/-, Rs.500/- and Rs.100/- notes only. The Cash deposited through thismachine is credited to the customer’s account immediately. The customerwill get an immediate response indicating the credit to the linked accountif the account to which the transaction is made is enabled with SMSfacility.CDMs work on the sensor4 technology. Cash deposited are counted,authenticated and the quantity and value are displayed to the customers.Once the customer confirms that the quantity and value are correct, thecash is sent to the vault / cash box, but if the customer cancels thetransaction, the cash is returned to him. The escrow facility providedallows the customer to cross check his transaction before the notes reachthe vault / cash box. Suspect notes are detected by the CDM and are notdeposited. These are held in the machine in a separate box. The brancheswill handle such notes as per extant instructions of the Bank in thisregard. Apart from depositing cash, the customers can also carry outother functions like Balance Enquiry. Mini Statement and PIN Change.The benefits of this initiative are being used as an USP for marketingBank’s liability products.The joint custodians of the branch will be provided with a password tooperate the safe of CDMs. The collected notes in the cassettes will betallied with the number of notes for their quantity and value as printedon the supervisory slip. As the customers accounts have been alreadycredited on a real time basis, the value of such cash will be debited to

branch cash balance account as in a normal manner. It is the responsibilityof the joint custodians to evacuate the cash at regular intervals duringthe day to avoid overflowing of the cassettes resulting in the stoppage ofCDMs. In addition to ensuring that all such notes are accounted for beforeEOD at the branch, the joint custodians should reconcile the physicalcash with supervisory slip and BGL account balance before accounting.If any difference is observed, the same should be dealt with immediately.If CDM detects any suspect note, the joint custodians will verify thegenuineness of the same. If in the process, any counterfeit note is found,branches are advised to follow meticulously the instructions issued byRBI on detection and impounding of counterfeit notes from time to time.The recent one of such instructions is available in RBI/2012-13/104 DCM(FNVD) No. G - /16.01.05/ 2012-13 dated July 2, 2012. In addition,branches also maintain the records of such suspect transactions in theregister with the following information: Date of transaction, Transactionreference number, Nature of suspect / remarks / action taken, Particularsof tenderer (Name, a/c number with contact details), Denomination /pieces / serial number. The Joint custodians will enter the above detailsunder their signature and the BM will initial.With a view to ensuring adequate security & safety the following measuresneed to be taken:a) Two built-in cameras are installed in the CDM, that record all the

transactions and the identity of the person doing the transaction.One is to record the customers and their movements and the other torecord the events in the cash box. This video can be used for resolvingany disputes at a future date.

b) The customer can be identified by his / her card number, time ofdeposit, record of rejection (denomination) in the transaction log,electronic Journal (eJ) report and the sequence in which such notesare placed in the reject bin. The reject bin will contain only suspectnotes. Customer identification can be done with the help of faceimage and hand movement which can be viewed in CDM.

c) All the CDMs are adequately insured for the value of the asset andalso their contents.

d) Cash verification is done every quarter and CDM Cash verificationcertificate is made as part of the quarterly / half yearly / yearlyclosing exercises.

Questions:1. What are the objectives of introducing CDMs in the Bank?2. Who can deposit Cash in a CDM?3. What are the limitations for depositing Cash?

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4. What is the process of depositing notes in a CDM?5. How the Cash deposited in a CDM is handled at the Branch?6. What Security measures have been incorporated for the safety &

security of the cash?

Answers to Descriptive Questions:Rationale:1. Will help in increased market penetration. Market share will go up

significantly. Management of such advances will be cost-effective.Units in a cluster are more stable and derive benefits of volume /services required for such units.

2. A unit requires adequate time for acquisition of land, constructionof factory building, erection of machinery and trial production. Itwill work above the BEL (Break Even Level) only when it achievescommercial production. Hence, during the construction period, norepayment should be stipulated. Otherwise, the unit’s workingcapital a/c will become irregular. The projects require generally 12to 24 months for achieving commercial level of operations. At thislevel only, it can make profit and the repayment can commence.

3. The unit’s ability to meet its commitments as and when they arisedepends on the liquidity of the unit. Hence a comfortable liquidityposition of the unit provides a safe cushion to the Bank’s workingcapital advances. A comfortable current ratio indicates sufficientcurrent assets with the unit to service its current liabilities; the unitcan carry on its commercial production smoothly in such a case; anideal current ratio would provide a good safety cushion for theworking capital advance.

4. i) If the expired guarantees are not removed from the books, itwill show inflated liability for the Bank.

ii) It is necessary to keep the contingent liability to the bearestminimum as capital adequacy norms are applicable for theguarantees.

iii) If the BG limit for a customer is exhausted on account of expiredBGs, the Bank will not be able to give further guarantees whichwill result in loss of fee-income and customer dissatisfaction.

5. i) The restriction will prevent the account being used for moneylaundering purposes by unscrupulous persons; also will curbunaccounted moneys being put through the account.

ii) Will enable the common man (under privileged) to availbanking facilities without much hassles, as their income willbe low and the ceiling will be sufficient to cover their needs.

iii) If customer needs higher balance, larger volume of transactionsthe a/c can be converted into a full KYC-Complaint a/c.

6. The Business volume/mix will change from year to year but theefficiency of operations will be judged by the Net Interest Margin inour efforts to optimize yield on advances and minimize cost ofdeposits for getting maximum margin. It will reveal theintermediation efficiency of the bank. Presently, the economy isexperiencing a downswing. Interest rates are getting softenedputting pressure on the margins.

7. Repo rate is the rate at which RBI lends to banks against governmentsecurities.Decrease in repo rate will result in reduced cost of borrowings forbanks from RBI and this would result in banks charging reducedinterest rates to borrowers which would spur the credit off-takefrom banks triggering the economic growth.

8. If the insurance is done in the joint names of the Bank and theborrower, third party claims may be made against the Bank as a co-owner in case of accidents. Also, the Bank Interest clauseincorporated in the policy is sufficient to protect the interest of theBank in case of damage to the vehicle.

9. a) To enable the farmer to get KCC and PML at one instance.b) To avoid multiple appraisal, frequent visits to branch, repetitive

loan sanction and documentation etc.c) To ensure smooth flow of credit at RACPCs / Branches to

farmers.10. It is a modification of SME Easy Loan Against Property; Drop-line

overdraft (combined OD & DL) facility is provided. The schemeprovides loans for those who are unable to furnish detailed financialdata, but are in a position to offer property as collateral. LTV ratio is60% up to loan of Rs.10 Cr; and 50% for loans above Rs.10 Cr.Earlier the loan was meant only for trading units and now it alsocovers units under Manufacturing & Services sector.

Situation Analysis:-1. The bank is liable for wrongful dishonour of the cheque. Hence, the

bank should immediately contact the insurance company preferablyby deputing an official to explore the possibilities of revival of thelapsed policy. Some Insurance companies offer such facilities. Thebank should bear the extra cost incurred for the purpose. After thepolicy is revived the Bank should advise the customer in the matterand persuade him to withdraw the case from the Consumer Forum.

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The bank should ascertain the lapses on the part of staff and initiatesuitable action as appropriate to avoid recurrence of such incidents.

2. In the first instance, the Bank should not have allowed the ODfacility, without a formal arrangement for 4 years. Having allowedoverdraft in the a/c during the past 4 years, the Bank has led thecustomer to presume that his cheque would be paid by the Bankeven if adequate balance is not there in the account.However, the Bank should not have stopped the facility abruptly. Itshould have put the customer on notice and avoided embarrassmentto him. As a mark of good customer service, the bank should haveadvised him in the matter. Even now the bank should advise thecustomer about its willingness to consider sanction of the limit onmerits.

3. She has to close the loan account inasmuch as inclusion of theMinor’s name in the TDR during the tenure of the loan would amountto granting a loan on minor’s deposit; also, it would amount toentering into a loan Contract with the minor, which is void ab initio.Alternatively, his name could be included as survivor by convertingthe TDR on Former or Survivor basis or she can be advised tonominate her minor son ‘M’ to the deposit.

4. The key has been lost and the locker has to be forced open. In suchcircumstances, the request of all the locker holders is to be obtainedin writing and the locker is forced open in the presence of all ofthem. Hence, a communication must be sent to Mr. Bansal about thematter seeking his confirmation by email / fax / telephone. Also thebreaking open must be arranged 2/3 days later so that there will betime for Mr. Bansal to confirm the arrangement, by email / fax. Inview of the urgency and after satisfying ourselves about thecircumstances as stated by Mrs. Bansal, the locker may be forcedopen by the locker supplier’s technical personnel. An indemnityhas to be obtained from Mrs. Bansal for permitting this. Also, aninventory of the contents has to be kept on record. A letter ratifyingthe action has to be obtained on Mr. Bansal’s return. We have tosatisfy ourselves beyond doubt about the standing/integrity ofparties and bonafides of the request of Mrs.Bansal. CA’s priorapproval has to be obtained.

Communication:-

The Regional ManagerState Bank of India,Regional Business Office,Region V,Zonal Office, Hubli

Br/28 9th May 2015

Dear Sir

Staff AWARDPosting of a Customer AssistantPlease refer to the discussions the undersigned had with you at therecently held review meeting at your office on the 16th Feb in the captionedsubject. As desired by you I am providing the business particulars of thebranch as under:

2. Recently the branch has added 2500 accounts under PMJDYscheme. The branch has anNPA level of Rs. 1.14 Cr. While all-outefforts are being made to bring down the NPAs , we are handicappedby shortage of staff at the branch . Apart from the Branch Manager,the staff component at the branch is as under:

a) Manager (Branch Operations) : 1b) Field officers : 2c) Senior Special Asst (CO) : 1d) Senior Assts : 2e) Sub Staff : 1

Address in Regional Language

Address in Hindi

State Bank of india, Chikkalagundi Mudhol Taluk, Karnataka Tel: 1345 Fax : 12345

Business Number of accounts

Business level

P segment deposits 7697 Rs. 5.30 Cr P Segment advances 2150 Rs. 1.56 Cr Agri Advances 3568 Rs. 55.68 Cr

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3. With this staff strength we are finding it increasingly difficult to improveour customer service further. There is lot of scope for giving gold loans,opening accounts under Pehle Udaan and Pehle Kadam, but we arefinding it estreemly difficult to go out and market the business and exploitthe potential due to shortage of man power.

4. Therefore I request you to kindly make arrangements to post at leastone senior Asst to tide over the situation and improve the businessand customer service at the branch.

Thanking You

Yours faithfully

(Sd) xxBranch ManagerName: xxx

Comprehension:1. The objectives of introducing CDMs are:

a) Enhancing customer convenience and providing a 24 x 7channel of customer services;

b) Reducing deployment of branch resources on low value cashdeposit transactions;

c) Utilising the resources for up-selling an cross-selling of otherproducts.

2. Bank’s customers who own any variant of ATM-cum-Debit Cardand SME Insta Deposit Cards are allowed to deposit the cash totheir mapped account(s).

3. The deposit of Cash is through a bunch of loose notes up to amaximum of 200 pieces at any one instance (50 pieces in case ofcertain CDMs). The machine scans for quality (genuineness) andquantity (counts Note piece by piece) of notes deposited. Customeris allowed to deposit up to a maximum of Rs.49900/- per transaction.The machine accepts cash in denominations of Rs.1000/-, Rs.500/- and Rs.100/- notes only.

4. CDMs work on the sensor technology. Cash deposited are counted,authenticated and the quantity and value are displayed to thecustomers. Once the customer confirms that the quantity and valueare correct, the cash is sent to the vault / cash box, but if the customercancels the transaction, the cash is returned to him. The escrow

facility provided allows the customer to cross check their transactionbefore the notes reach the vault / cash box. Suspect notes are detectedby the CDM and are not deposited. These are held in the machine ina separate box. The branches will handle such notes as per extantinstructions of the Bank in this regard.

5. The joint custodians of the branch will be provided with a passwordto operate the safe of CDMs. The collected notes in the cassettes willbe tailed with the number of notes for their quantity and value asprinted on the supervisory slip. As the customers accounts havebeen already credited on a real time basis, the value of such cashwill be credited to branch cash balance account as in a normalmanner. It is the responsibility of the joint custodians to evacuatethe cash at regular intervals during the day to avoid overflowing ofthe cassettes resulting in the stoppage of CDMs. In addition toensuring that all such notes are accounted for before EOD at thebranch, the joint custodians should reconcile the physical cash withsupervisory slip and BGL account balance before accounting. Ifany difference is observed, the same should be dealt withimmediately. If CDM detects any suspect note, the joint custodianswill verify the genuineness of the same. If in the process, anycounterfeit note is found, branches are advised to follow meticulouslythe instructions issued by RBI on Detection and impounding ofcounterfeit notes from to time.

6. With a view to ensuring adequate security & safety two build-incameras are installed in the CDM that record all the transactionsand the identity of the person doing the transaction. One to recordthe customers and their movements and the other to record the eventsin the cash box. The customer can be identified by his / her cardnumber, time of deposit, record of rejection (denomination) in thetransaction log, electronic journal (eJ) report and the sequence inwhich such notes are placed in the reject bin. Customer identificationcan be done with the help of face image and hand movement whichcan be viewed in CDM. CDMs are adequately insured for the valueof the asset and also their contents. Cash verification is done everyquarter and CDM Cash verification certificate is made as part of thequarterly / half yearly closing exercises.

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Good News for FreshersGood News for FreshersGOOD NEWS FOR FRESHERS

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We are accrcdited by the IIBF,Mumbai.

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RECOLLECTED QUESTIONSCOMPENDIUM

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Contains more than 3500 Questions

with Answers.

Aspirants will understand the types and

depth of questions asked.

Answers valid as at end Dec’15.

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Model Tests with up to date answers to

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The Digest is despatched through Bangalore P.SO. onthe 5th of every month. If you do not receive it before30th of the month please email us quoting your sub-scription number (JS.................................................)

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BANKING GUIDE(25th Edition, March’ 15)

Completely revised and updated. Treasure – house of information

1,35,000 + copies sold so far

A must for success as up to datedevelopments, Bank’s instructions,RBI directions covered.

Contains objective questions undereach subject and Model Essays forTOs.

A great reference book at branches.

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JS Digest of Banking and Finance May15 122121

AUDITED FINANCIAL RESULTS OF SBIFOR THE YEAR ENDED 31.03.2015

Highlights

Capital and Liabilities as at 31.03.2015(Audited) (Rs. cr)

Capital 746.57 Reserves & Surplus 127691.65 Deposits 1576793.25 Borrowings 205150.29 Other Liabilities and provisions 137698.04

Total Capital and Liabilities 2048079.80

Assets Cash and Balances with RBI 115883.84 Balances with Banks and money

at call and short notice 58977.46 Investments 495027.40 Advances 1300026.39 Fixed Assets 9329.16 Other Assets 68835.55

Total Assets 2048079.80

Total Income 48616 Cr Total Expenditure 36207 Cr Operating Profit 12409 Cr Provisions for NPA’s 4635 Cr Net Profit After Tax 3742 Cr Govt of India share holding 58.60 %

CAR BASEL II 12.79% BASEL III 12.00% Gross NPAs 4.25% Net NPAs 2.12% Return on Assets 0.76% Face value of shares Re.1/- (Reduced from

Rs.10 wef 22.11.2014)

Segment- Wise Revenue

Segment Revenue (Income) 31.03.2015 (Audited) Treasury Operations 11804.91 Corporate / Wholesale Banking

Operations 16072.75 Retail Banking Operations 19668.71 Insurance Business — Other Banking Operations — Add/(Less): Unallocated 1070.04

Total 48616.41

Segment Results (Profit before tax) Treasury Operations 2738.73 Corporate / Wholesale Banking

Operations -1209.54 Retail Banking Operations 4207.95 Insurance Business — Other Banking Operations —

Total 5737.14

Important aspects of Accounting During the year 2014-15:

Rate of depreciation on Fixed Assets has been changed to Straight LineMethod, which has resulted in higher value for fixed assets/profit.(Rs.420.76Cr)

During the year, the Bank aligned its method with regard to valuation ofplan assets (from book value to fair value) with Accounting Standard 15Issued by the ICAI. As a result of the change, the value of Plan Assets ofsuperannuation funds has increased by Rs.2,183 crores

Provision Coverage Ratio as on March 31,2015 works out to 69.13%(Previous year 62.86%)

The Central Board has declared a dividend of Rs.3.50 per share (@350%)for the year ended March 31, 2015.

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GOOD NEWS

Companion Volume for JAIIB exams.

IIBF has made changes in JAIIBsyllabus. Few topics have been addedin Principles of Banking and Legal andRegulatory Aspects of Banking. Sometopics have been deleted andoperational banking topics added inAccounting & Finance for Bankers.

Buy our CV for JAIIB.Pages: 150+ Price: Rs.80/-

Please send us Recolleted Questionsof JAIIB / CAIIB exams. Attractiveprizes for best recolleted questions.

The InstituteESTABLISHED in 1991 as J.S.Institute of Banking and Careers. It hasbeen renamed as J.S.Institute of Banking and Finance Pvt. Ltd. w.e.f1.4.2004. It essentially caters to ambitious bankers, guiding them throughall the promotional exams and processes in the banking hierarchy.Top class faculty and core competency have now entrenched JS Instituteas one of the premier centres of banking excellence in the country. Apartfrom conducting intensive coaching classes, the Institute publishes books,journals and guides that are indispensable for thousands of bankersacross India.The Institute was associated with ICICI Bank Ltd., Times BankLtd.,Karnataka Apex Co-operative Bank Ltd., Infosys Ltd., Valtech (I) Ltd., I-Flex Solutions Ltd. University of Agriculture Sciences, GKVK, B’lore, M.P.Birla Institute of Management, B’lore etc. in their training programmes.

It is also accredited to IIBF, Mumbai.

J. S. Publications• Banking Guide for SBI Group Promotion Exams• Banking Digest• MM Special Guide• Nationalised Banks (Objective Questions Digest)• Interview Mastermind• Objective Questions Digest: JAIIB / CAIIB Exams

J. S. ProgrammesIntensive classes for : TO, MM II to Scale V, JMG, STP for POs / TOs / JMGs,(Systems) Exams of SBI Group & Nationalised Banks and for JAIIB / CAIIBExams.

The EditorG.Subramanian, Director, JS Institute of Banking and Finance (Pvt) Ltd,has acquired valuable experience in different facets of banking during his22-year tenure with S.B.I. Joining the Bank as a Probationary Officer, hehas worked at branches, Zonal Office, Head Office and Corporate Centrecovering diverse fields as SSI financing, credit, foreign exchange, inspectionand audit. He was also a senior faculty member at the Bank’s Apex StaffCollege, Hyderabad, and later in his career did a stint as Training Officer,Zambia National Commercial Bank. He has authored books on ForeignExchange, Management Accounting and Finance for SSI.

Printed, Published and Edited by G. Subramanian, on behalf of J. S. Institute of Bankingand Finance Pvt. Ltd., Printed at Raja Printers, No. 59, Gangadharappa Block, 4th Cross,Lalbagh Road, K. S. Garden, Bangalore-560 027, and Published at J. S. Institute ofBanking and Finance Pvt. Ltd., Ramanashree Park View”, 2nd Floor, 2462, 24th CrossRoad, Banashankari 2nd Stage, Bangalore - 560 070. Editor: Mr.G.Subramanian.

Postal Regn. No. RNP / KA / BGS / 2107 / 2014–2016Posted at Bangalore PSO, Mysore Road, Bangalore-560 026 on 5th of every month

Licensed to Post without prepayment, License No.WPP-113Regd. with Registrar of Newspaper for India Under RNI No. KARENG / 2006 / 20140Pages : 124

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