Volume - XIII No.

07 July 2010
Rs.20 per copy • Annual Subscription Rs.200

B anking The
Journal of
Institute of Banking

Update
Career & Studies,
events

Chandigarh

Contents of this Issue

BANKING FEATURES : 2-11, 20
• Nepal Remittance Scheme
• Dealing with Dishonoured cheque
• Secondary Market
• Derivative Products
• Senior Citizens' Saving Scheme
• Liberalised Remittance Scheme
• National Saving Certificate
• Photograph Rules
• Non-Convertible Debentures

Diary of events - Jun, 2010: 13

• Policy, Economy
• Banking Developments
• Capital Markets & Insurance

General Awareness : 15
Those who win, are those, who think they can Multi-Option questions:16-18

BANKING POLICY : 19
Corporate & Distribution Office • Alteration
in Cheques
1008, Sector 45-B, Chandigarh
Phone 0172 2665 623 • Agriculture loans-Margin/Security
(Contact - Sh.SP Sharma / DS Rana) • Settlement of NPAs
eMail - banking.events.update @ gmail.com • KYC Clarifications
www.banking update
update.. com
bankingindiaupdate Data Bank : 20

Free Interview Class for Online Tests, log in

on our website. Just log in eLearning CDs
www . banking update
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bankingIndiaupdate Details- Page no.5 www.nstoorBankingonline.com

Editor - Ms Gurmeet Toor, Executive Editor - S. Chand Singh, Editor in Chief - Sh. N S Toor
2 ♦ Banking events updatE ♦ July 2010
Indo-Nepal Remittance Facility
Indo-Nepal Remittance Facility is a cross-border scheme to trans-
fer funds from India to Nepal, available under the NEFT system. A
separate Transaction Code (No. 51) has been allotted in the NEFT
system to facilitate the transfer of funds from India to Nepal. A
remitter can transfer funds up to Indian Rupees 50,000 from any of
the NEFT-enabled branches in India to Nepal. The beneficiary would
receive funds in Nepalese Rupees.
Account with a bank in India : This is not a mandatory requirement.
Under the Indo-Nepal Remittance Facility Scheme, even a walk-in
customer in India can deposit cash up to Rs.50,000 for transfer of
funds to the beneficiary in Nepal.
Account with a bank in Nepal : This is not mandatory. It would be
ideal if the beneficiary maintains an account with a bank branch in
Nepal to which the credit could be afforded. In Nepal, the Indo-
Nepal Remittance Facility Scheme is handled by Nepal SBI Ltd.
(NSBL). If the beneficiary resides in a locality or area in Nepal not
serviced by a bank branch, an arrangement has been entered into
by NSBL with a money transfer company in Nepal (called Prabhu
Money Transfer) who would make arrangements for delivery of cash
(in Nepalese Rupees) to the beneficiary.
Documents: If the remitting customer maintains an account with a
bank branch in India there is no need for any additional informa-
tion, documents or identification. Else, the remitter has to submit
documents for proof of identification such as Passport / Perma-
nent Account Number / Driving License / Telephone Bill / Certifi-
cate of Identification issued by his employer with photograph and
other details. The information will be captured in the NEFT system
as part of compliance with the Know Your Customer (KYC) require-
ments. Complete address and telephone / mobile number of the
beneficiary in Nepal will also be required.
Transactions flow from India to Nepal: Remittances can be origi-
nated from any of the NEFT-enabled branches in India. The trans-
actions from the originating bank branch flow in the NEFT system
to the designated branch of State Bank of India (SBI) in India. SBI
then consolidates all such remittance information received during
the day. At the end of the day, the remittance information is con-
veyed electronically in a secured mode to Nepal SBI Bank Ltd.
(NSBL). NSBL then makes arrangements for credit to the bank ac-
count of the beneficiary if the beneficiary account details are
available. Else, NSBL disburses funds in cash to the beneficiary
through the authorised money transfer company. The beneficiary
has to approach the local branch of the money transfer company,
furnish the UTR number (also called as the Unique Transaction
Reference number that uniquely identifies a transaction in the
NEFT system that can be obtained from the remitter), and pro-
duce a photo identity document (generally Nepal Citizenship Cer-
tificate) to prove his identity.
If the beneficiary does not approach the money transfer company
within a week from the date of the transaction, the money trans-
fer company would make arrangements for return of the remit-
tance to the originator.
Money not delivered : The amount of remittance will flow back to
the originating bank branch in India through the NEFT system and
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(COMPILATION- ARUNDEEP TOOR, in Sydney, Australia - on the basis of information available on RBI Website)
the bank branch would then communicate to
the remitter about return of the remittance. If
the remittance was originated by debit to an
account of the remitter with the bank branch,
the returned amount will be credited to the
account. If the remittance was by a walk-in
customer through a cash deposit, the remitter
has to produce evidence of proof of remittance
(counterfoil of the remittance application form)
for refund of the cash deposited.
Charges : As the facility is targeted at the mi-
grant Nepali workers in India, concessional
charges are envisaged for transfer of funds un-
der the Indo-Nepal remittance scheme. The
charges are as under –
a. Originating bank branch in India – Maximum
Rs. 5 per transaction.
b. State Bank of India in India – Rs. 20 per
transaction if the beneficiary maintains an
account with Nepal SBI Ltd. (NSBL).
c. State Bank of India shares this amount equally
with NSBL. NSBL would not charge any additional
amount for crediting the account of the
beneficiary.
d. In case the beneficiary does not maintain an
account with NSBL, an additional amount would
be charged @ Rs. 50 for remittances up to Rs.
5,000 and Rs. 75 for remittances above Rs. 5,000.
The charges would, thus, be a minimum of Rs.
25 or a maximum of Rs. 100 depending on the
value of transaction and the manner in which
credit is afforded to the beneficiary.
Originating bank branches have been advised
to recover the entire charges from the remitter
as per the structure detailed above and pass
on the appropriate amount to SBI after retaining
their share (of Rs. 5).
Number of remittance: An originator in India is
allowed to remit a maximum of 12 remittances
in a year under the scheme.
Redressal of grievances: In case of complaints
relating to non-credit or delay in credit to the
beneficiary account or for complaints of any
other nature, the NEFT Customer Facilitation
Centre (CFC) of the respective bank (the origi-
nating bank and / or SBI) can be contacted.
Details of NEFT Customer Facilitation Centres
of banks are available on the websites of the
respective banks.
If the issue is not resolved satisfactorily, the
NEFT Help Desk (or Customer Facilitation Cen-
tre of Reserve Bank of India) at National Clear-
ing Cell, Reserve Bank of India, Mumbai may be
contacted.
Song of the Youth
"As a young citizen of India, armed with technology, knowledge
and love for nation, I realise, small aim is a crime"
..................Dr. APJ Abdul Kalam, Former President of India
 Banking events updatE ♦ July 2010 ♦ 3

CORRESPONDENCE
Dealing with Dishonoured Cheque
As part of Customer Service guidelines, RBI has framed following Rules to be

COURSE
followed by banks, in case of dishonour of cheques:
Returning of dishonoured cheques: These instruments should be despatched
to the customer promptly without delay, in any case within 24 hours.
Procedure for return/ despatch of dishonoured cheques
(i) The paying bank should return such cheques presented through clearing
houses strictly as per the return discipline prescribed for respective clearing
PROMOTION EXAM
Based on latest trends of IBPS Exam
house in terms of Uniform Regulations And Rules for Bankers’ Clearing Houses. A large no. of bankers already succeeded by
(ii) In relation to cheques presented direct to the paying bank for settlement using the course material. If unable to attend
of transaction by way of transfer between two accounts with that bank, it class room program, this is the best option.
should return such dishonoured cheques to payees/ holders immediately. Course Kit : The course kit include:
(a) subject-wise basic study material,
(iii) Cheques dishonoured for want of funds in respect of all accounts should (b) assignment to improve retention
be returned along with a memo indicating therein the reason for dishonour (c) objective type practice exercise
as “insufficient funds.” (d) recalled questions
Information on dishonoured cheques (e) mock test papers.
Data in respect of each dishonoured cheque for amount of Rs.1 crore and Fee : Rs.1500 (may differ. - may be checked
above should be made part of bank’s MIS and concerned branches should before remittance). Fee to be paid in advance
by way of DD at Chandigarh in our favour OR
report such data to their respective controlling office / Head Office. be deposited in CBS a/c with PNB.
Data in respect of cheques drawn in favour of stock exchanges and How to enrol : To enrol, advise (a) name, (b)
dishonoured should be consolidated separately by banks irrespective of the address for correspondence (c) Email address,
value of such cheques as a part of their MIS relating to broker entities, and (d) bank name, (e) scale for which appearing,
be reported to their respective Head Offices / Central Offices. (f) phone / Cell number and (f) details of sub-
Dealing with incidence of frequent dishonour jects for the exam (relevant course material, other
than internal bank guidelines shall be sent).
(i) With a view to enforce financial discipline among the customers, banks
should introduce a condition for operation of accounts with cheque facility
that in the event of dishonour of a cheque valuing Rs.1 cr and above drawn
on a particular account of the drawer on 4 occasions during the financial
CAIIB/JAIIB
Course is based on exam pattern of IIB&F. A
year for want of sufficient funds in the account, no fresh cheque book large no. of candidate have succeeded in all 3
would be issued. Also, the bank may consider closing current account at its papers in first attempt with our study material.
discretion. However, in respect of advances accounts such as cash credit Course Kit : The course kit include:
(a) subject-wise basic study material,
or overdraft account, the need for continuance or otherwise of these (b) assignment to improve retention
credit facilities and the cheque facility relating to these accounts should (c) objective type practice exercise
be reviewed by appropriate authority higher than the sanctioning authority. (d) mock test papers.
(ii) For introduction of the condition mentioned at (i) above in relation to Fee : Rs.850 per subject. Fee payable in advance
operation of the existing accounts, banks may, at the time of issuing new by DD on Chandigarh or in cash across our
cheque book, issue a letter advising the constituents of the new condition. counter or credit to our PNB-CBS account.
How to enrol : To enrol, advise name, address
(iii) If a cheque is dishonoured for a 3rd time on a particular account of the
for correspondence, eMail id, mobile phone,
drawer during the financial year, banks should issue a cautionary advice to bank name, subjects for enrolment.
the customer drawing his attention to the condition and consequential
stoppage of cheque facility in the event of cheque being dishonoured on
4th occasion on the same account during the financial year. Similar cautionary
Free Website Class for
advice may be issued if a bank intends to close the account. PROMOTION INTERVIEW
General: (i) For the purpose of adducing evidence to prove the fact of If you have been called for a Promotion Interview
in your bank and you want to prepare your self
dishonour of cheque on behalf of a complainant (i.e. payee / holder of a to face various questions on latest banking
dishonoured cheque) in any proceeding relating to dishonoured cheque concepts, you can join our free internet class,
before a court, consumer forum or any other competent authority, banks while sitting in your office or at home, on our
should extend full co-operation, and should furnish him/her documentary website. For details you can contact us.
proof of fact of dishonour of cheques.
(ii) Banks should place before their Audit/ Management Committee, every NS TOOR's
quarter, consolidated data in respect of the matters referred to above.
Framing appropriate procedure for dealing with dishonoured cheques Institute of Banking
Banks have also been advised to adopt, appropriate procedure for dealing
with dishonoured cheques with inherent preventive measures and checks
Career & Studies
Office:SCO No.34, Sector 33-D,
to prevent any scope for collusion of the staff of the bank or any other Chandigarh 160 047
person, with the drawer of the cheque for causing delay in or withholding Phone: 0172-2665623, 093178-12720
the communication of the fact of dishonour of the cheque to the payee/ email - banking.events.update@gmail.com
www.banking update
update.. com
bankingindiaupdate
holder or the return of such dishonoured cheque to him.
•
4 ♦ Banking events updatE ♦ July 2010
Secondary Capital Market
Secondary Market refers to a market where securities
are traded after being initially offered to the public in
the primary market and/or listed on the Stock Exchange.
It comprises of equity markets and the debt markets.
Primary market and the secondary market
In the primary market, securities are offered to public
for subscription for raising capital. Secondary market
could be either auction or dealer market. While stock
exchange is the part of an auction market, Over-the-
Counter (OTC) is a part of the dealer market.
SEBI and its Role in the Secondary Market
The SEBI is the regulatory authority established under
Section 3 of SEBI Act 1992 to protect the interests of the
investors in securities and to promote the development
of, and to regulate, the securities market and for matters
connected therewith and incidental thereto.
Products available in the Secondary Market
Following are the main financial products/instruments
dealt in the secondary market:
Equity: The ownership interest in a company of holders
of its common and preferred stock. The various kinds of
equity shares are as follows:-
Equity Shares: An equity share, commonly referred to as
ordinary share also, represents the form of fractional
ownership in which a shareholder, as a fractional owner,
undertakes the maximum entrepreneurial risk associated
with a business venture. The holders of such shares are
members of the company and have voting rights.
• Rights Issue / Rights Shares: The issue of new securities
to existing shareholders at a ratio to those already held.
• Bonus Shares: Shares issued by the companies to their
shareholders free of cost by capitalization of accumulated
reserves from the profits earned in the earlier years.
• Preferred Stock / Preference shares: Owners of these
kinds of shares are entitled to a fixed dividend or dividend
calculated at a fixed rate to be paid regularly before
dividend can be paid in respect of equity share. They
also enjoy priority over the equity shareholders in payment
of surplus. But in the event of liquidation, their claims
rank below the claims of the company’s creditors,
bondholders / debenture holders.
• Cumulative Preference Shares: A type of preference
shares on which dividend accumulates if remains unpaid.
All arrears of preference dividend have to be paid out
before paying dividend on equity shares.
• Cumulative Convertible Preference Shares: A preference
shares where the dividend payable on the same
accumulates, if not paid. After a specified date, these
shares will be converted into company's equity capital.
• Participating Preference Share: The right of certain
preference shareholders to participate in profits after a
specified fixed dividend contracted for, is paid.
Participation right is linked with the quantum of dividend
paid on the equity shares over and above a particular
specified level.
Compilation : Arundeep Toor (Sydney - Australia).
BANKING FEATURES
• Security Receipts: Security receipt means a receipt or
other security, issued by a securitisation company or
reconstruction company to any qualified institutional
buyer pursuant to a scheme, evidencing the purchase or
acquisition by the holder thereof, of an undivided right,
title or interest in the financial asset involved in
securitisation.
• Government securities (G-Secs): These are sovereign
(credit risk-free) coupon bearing instruments which are
issued by the RBI on behalf of Govt of India, in lieu of the
Central Government’s market borrowing programme. These
securities have a fixed coupon that is paid on specific
dates on half-yearly basis. These securities are available
in wide range of maturity dates, from short dated (less
than one year) to long dated (up to 30 years).
• Debentures: Bonds issued by a company bearing a fixed
rate of interest usually payable half yearly on specific
dates and principal amount repayable on particular date
on redemption of the debentures. Debentures are
normally secured / charged against the asset of the
company in favour of debenture holder.
• Bond: A negotiable certificate evidencing indebtedness.
It is normally unsecured. A debt security is generally issued
by a company, municipality or government agency. A bond
investor lends money to the issuer and in exchange, the
issuer promises to repay the loan amount on a specified
maturity date. The issuer usually pays the bond holder
periodic interest payments over the life of the loan. The
various types of Bonds are as follows:
¾Zero Coupon Bond: Bond issued at a discount and repaid
at a face value. No periodic interest is paid. The difference
between the issue price and redemption price represents
the return to the holder. The buyer of these bonds
receives only one payment, at the maturity of the bond.
¾Convertible Bond: A bond giving investor, the option to
convert the bond into equity at a fixed conversion price.
• Commercial Paper: A short term promise to repay a fixed
amount that is placed on the market either directly or
through a specialized intermediary. It is usually issued by
companies with a high credit standing in the form of a
promissory note redeemable at par to the holder on
maturity and therefore, doesn’t require any guarantee.
Commercial paper is a money market instrument issued
normally for tenure of 90 days.
• Treasury Bills: Short-term (up to 91 days) bearer discount
security issued by the Government as a means of financing
its cash requirements.
Regulatory requirements specified by SEBI for corporate
debt securities: The Corporate Bonds includes all debt
securities issued by institutions such as Banks, Public
Sector Undertakings, Municipal Corporations, bodies
corporate and companies having a tenure of more than
365 days. Such an issue of bonds, if offered to the public
shall be required to comply with the SEBI (Disclosure and
Investor Protection Guidelines), 2000. Also, a private
placement of corporate bonds made by a listed company
shall be required to comply with provisions contained in
SEBI Circulars in this regard. •
BANKING FEATURES Banking events updatE ♦ July 2010 ♦ 5
Derivative Products in Capital Market
Derivatives : The term “Derivative” indicates that it has no independent value,
i.e. its value is entirely “derived” from the value of the underlying asset. The
eLearning
underlying asset can be securities, commodities, bullion, currency, live stock
or anything else. A derivative means a forward, future, option or any other
hybrid contract of pre-determined fixed duration, linked for the purpose of
Study Material
contract fulfillment to the value of a specified real or financial asset or to an
index of securities. Promotion Test
Futures Contract : Futures Contract means a legally binding agreement to buy
or sell the underlying security on a future date. Future contracts are the
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organized/standardized contracts in terms of quantity, quality (in case of
commodities), delivery time and place for settlement on any date in future.
The contract expires on a pre-specified date which is called the expiry date
• Improve understanding of what you prepare.
of the contract. On expiry, futures can be settled by delivery of the underlying
• Remove confusions occured while studying.
asset or cash. Cash settlement enables the settlement of obligations arising
• Improve time management in real exam.
out of the future/option contract in cash. • Test your preparation before Exam.
Option contract: Options Contract is a type of Derivatives Contract which gives • Practice on-line without use of internet.
the buyer/holder of the contract the right (but not the obligation) to buy/sell Special features : Explanation given for each
the underlying asset at a predetermined price within or at end of a specified questions for better understanding of the
mistakes made. This helps in better retention
period. The buyer / holder of the option purchases the right from the seller/
for a longer period.
writer for a consideration which is called the premium. • The questions are shuffled when used again.
• The seller/writer of an option is obligated to settle the option as per the • Set your own time to improve efficiency.
terms of the contract when the buyer/holder exercises his right. The underlying
asset could include securities, an index of prices of securities etc. Exam focussed study material
Quick Preparation
• An Option to buy is called Call option and option to sell is called Put option.
Further, if an option that is exercisable on or before the expiry date is called

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American option and one that is exercisable only on expiry date, is called
European option. Rs.300
• The price at which the option is to be exercised is called Strike price or
Exercise price.
• An option contracts can be settled by delivery of the underlying asset or
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Index Futures Contracts: Rs.150 each Financial Management
Economics - Mock Test CD
Futures contract based on an index i.e. the underlying asset is the index, are
known as Index Futures Contracts. For example, futures contract on NIFTY
Index and BSE-30 Index. These contracts derive their value from the value of
the underlying index. Book-Keeping Mock Test CD
Index Option Contracts:
The options contracts, which are based on some index, are known as Index for Online Tests, log in
options contract. Unlike Index Futures, the buyer of Index Option Contracts nstoorBankingonline.com
has only the right but not the obligation to buy / sell the underlying index on
expiry. Index Option Contracts are generally European Style options i.e. they
can be exercised / assigned only on the expiry date. New Recruitment in Banks
An index, in turn derives its value from the prices of securities that constitute
the index and is created to represent the sentiments of the market as a whole Coaching & Interview Classes
or of a particular sector of the economy. Indices that represent the whole Contact 09814 331 661
market are broad based indices and those that represent a particular sector
are sectoral indices.
NS TOOR's
Bond Index: A bond index is used to measure the performance of bond markets.
The index is used as a benchmark against which investment managers measure Institute of Banking
their performance. It is also used as a measure to compare the performance of
different asset classes. The government bond market is the most liquid segment Career & Studies
of the bond market. Office:SCO No.34, Sector 33-D,
Volatility Index : It is a measure of expected stock market volatility, over a Chandigarh 160 047
Phone: 0172-2665623, 093178-12720
specified time period, conveyed by the prices of stock / index options. It email - banking.events.update@gmail.com
depicts a collective sentiment of market on the implied future volatility.
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6 ♦ Banking events updatE ♦ July 2010
Senior Citizen's Saving Scheme 2004
The scheme provides assured return to Senior Citizens.
The salient features are:
Tenure : 5 years (can be extended by 3 more years).
Rate of interest : 9 per cent per annum. Frequency of
computing interest is Quarterly.
Taxability & TDS : Interest is fully taxable. Tax will be
deducted at source. Facility of submission of Form 15H or
15G is available to avail the exemption from TDS.
Investment limit: Max Rs. 15 lakh in multiple of Rs.1000.
Minimum eligible age for investment: 60 years (55 years
for those who have retired on superannuation or under a
voluntary or special voluntary scheme). The retired
personnel of Defence Services (excluding Civilian Defence
Employees) shall be eligible to invest irrespective of the
age limits (by fulfillment of other specified conditions).
Transferability and tradabilty : Not transferable to others
and not tradable also.
Modes of holding: Accounts can be held both in single
and joint holding modes. Joint holding is available only
with spouse.
Operation of the scheme: Post Offices, designated
branches of 24 public sector banks and 1 private bank.
Non resident Indians, Persons of Indian Origin and HUF
are not eligible to open an account under the scheme.
Transfer from one deposit office to another: Transfer of
account from one deposit office to another in case of
change of residence is permitted by submitting Form G. If
the deposit amount is Rs.1 lac or above, a transfer fee of
Rs.5 per lakh of deposit for the first transfer and Rs.10
per lakh of deposit for the second and subsequent transfers
shall be payable.
Loan : The facility of pledging the deposit / account under
the SCSS, 2004 for obtaining loans, has not been permitted.
Premature withdrawal of the deposits: It is available after
completion of 1 year from the date of opening of account
after deducting the penalty amount as given below :
(i) If the account is closed after 1 year but before expiry
of 2 years from the date of opening of the account, an
amount equal to 1.5% of deposit amount shall be deducted.
(ii) If the account is closed on or after the expiry from
the date of opening of the account, an amount equal to
1% of the deposit shall be deducted
Age of the spouse in case of a joint account : In case of a
joint account, the age of the first applicant / depositor
is the only factor to decide the eligibility to invest under
the scheme. There is no age bar/limit for the second
applicant / joint holder (i.e. spouse).
Share of the joint account holder in the deposit: The whole
amount of investment in an account under the scheme is
attributed to the first applicant / depositor only.
Both the spouses can open individual and / or joint
accounts with each other with the maximum deposits upto
Rs.15 lakh each, if both are individually eligible to invest.
Income tax rebate : No income tax / wealth tax rebate is
BANKING FEATURES
admissible under the scheme.
Minimum limit for deduction of tax at source : Tax is to be
deducted at source if the interest paid or payable exceeds
Rs.5000/- during the financial year. (GOI letter F. No.2/8/
2004/NS-II dated June 06, 2006).
Nomination : The depositor may nominate a person or
persons or change the nomination, on Form C. Nomination
can be made in joint account also. In such a case, the
joint holder will be the first person entitled to receive
the amount payable in the event of death of the depositor.
The nominee’s claim shall arise only after the death of
both the joint holders.
In case of a joint account, if the first holder / depositor
expires before the maturity of the account, the spouse
may continue the account on the same terms and
conditions as specified under the SCSS Rules. However, if
the second holder i.e. spouse has his / her own individual
account, the aggregate of his/her individual account and
the deposit amount in the joint account of the deceased
spouse should not be more than the prescribed maximum
limit. In case the maximum limit is breached, then the
remaining amount shall be refunded, so that the aggregate
of the individual account and deceased spouse’s joint
account is maintained at the maximum limit.
Retirement benefits for the purpose of SCSS Rules have
been defined as ‘any payment due to the depositor on
account of retirement whether on superannuation or
otherwise and includes Provident Fund dues, retirement
/ superannuation gratuity, commuted value of pension,
cash equivalent of leave, savings element of Group Savings
linked Insurance scheme payable by employer to the
employee on retirement, retirement-cum-withdrawal
benefit under the Employees’ Family Pension Scheme and
ex-gratia payments under a voluntary retirement scheme’
(Rule 2 (a) of the Senior Citizens Savings Scheme
(Amendment) Rules, 2004 notified on October 27, 2004)
In case an investor has attained the age of 60 years and
above, the source of amount being invested is immaterial.
However, if the investor is 55 years or above but below 60
years and has retired under a voluntary scheme or a special
voluntary scheme or has retired from the defence services,
only the retirement benefits can be invested in the SCSS.
Period prescribed for opening deposit account under the
SCSS scheme:
If the investor is 60 years and above, there is no time
period prescribed for opening the SCSS account(s).
However for those below 60 years, the time period
prescribed are :
(a) the persons who have attained the age of 55 years or
more but less than 60 years and who retired under a
voluntary retirement scheme or a special voluntary
retirement scheme on the date of opening of an account
under these rules, subject to the condition that the
account is opened by such individual within 3 months of
the date of retirement.
(b) the retired personnel of Defence Services (excluding
Civilian Defence Employees) shall be eligible to subscribe
under the scheme irrespective of the above age limits.
BANKING FEATURES Banking events updatE ♦ July 2010 ♦ 7
Indian Economy - Statistics Credit Risk Claims - Risk Weights for CAR
On May 31 , 2010, the Central Statistics Office (CSO),
st Assets/Claim Risk Weight
• Fund and non-fund based claims on Central Govt. 0%
Ministry of Statistics and Programme Implementation,
• Direct loans/credit exposure to State Govt. 0%
released the revised estimates of national income for the
• Loans guaranteed by State Govt. 20%
financial year 2009-10, both at constant (2004-05) and
• Claim on RBI, DICGC and CGTMSE 0%
current prices.
• Claims on ECGC 20%
At Constant Prices (2004-05) • Amount receivable from Govt. of India under Agr Debt 0%
Parameter 2009-10 2008-09 %chg Waiver Scheme 2008
GDP at factor cost 4464081 4154973 7.4%
Gross National Income 4439072 4138174 7.3% •Claimson Foreign govt : AAA, AA rating from S&P/Fitch 0%
Per Capita National income 33588 31821 5.6% (20% for A, 50% for BBB, 100% for BB and B, unrated 100%)
At current prices (2009-10) • Claims on foreign public sector enterprises: Same as in case of
GDP at factor cost 5868331 5228650 12.2% foreign govt.
Gross National Income 5835493 5207534 12.1%
• Claims on Bank for international Settlement, International
Per Capita National income 44345 40141 10.5%
Monetary Fund and Multi-lateral development banks (like IBRD,
Private final consumption exp 3571999 3218198
IFC, ADB etc.) 20%
Govt. final consumption exp 767409 653132
Gross Fixed capital formation 2018916 1839499 • Claims
(other than investments) on Domestic Banks with CAR of
Other important information: 9% or above - 20%
1. In the agriculture sector, the third advance estimates (50% for CAR of 6% to < 9%, 100% for CAR of 3% to < 6%,
of crop production released by the Ministry of Agriculture 150% for CAR of 0% to < 3% and 625% for negative CAR)
showed a growth rate of 0.2 per cent, as against the
growth rate of (-) 0.2 per cent in the Advance estimates. • Claims on foreign banks with AAA and AA rating from S&P 20%
2. In the case of ‘mining and quarrying’, the Index of (50% for A & BBB, 100% for BB and B, for unrated 50%)
Industrial Production of Mining (IIPMining) registered a
• Long term Claims on domestic corporate with AAA rating 20%
growth rate of 9.7 per cent during 2009-10, as against the (30% for AA, 50% for A, 100% for BBB and unrated 100%)
growth rate of 8.3 per cent during April-November, 2009,
which was used in the Advance Estimates. Due to this •Short term claims on domestic corporate with P1+ rating from

increase in the IIP-Mining, the growth rate in GDP is now CRISIL 20%
estimated at 10.6 per cent, as against the advance (30% for P1, 50% for P2, 100% for P3, 150% for P4 & P5)
estimate growth rate of 8.7 per cent. • Claim in regulatory retail portfolio including education loans
3. Similarly, the IIP of manufacturing registered a growth (loan amount up to Rs.5 cr) 75%
rate of 10.9 per cent during 2009-10, as against the growth
rate of 7.7 per cent during April-November, 2009. Due to • House loans with Loan to value ratio up to 75% for loan up to
Rs.30 lac 50%
this increase in the IIP, the GDP of ‘manufacturing’ sector
(for loan above Rs.30 lac – 75%
is now estimated at 10.8 per cent, as against the Advance
estimate growth rate of 8.9 per cent. • House loans with Loan to value ratio more than 75% 100%
4. The sectors which showed growth rates of 5 per cent • Commercial Real estate exposure 100%
or more, are ‘mining and quarrying’ (10.6 per cent), •CapitalMarket exposure, credit cards, personal loans,
‘manufacturing’ (10.8 per cent), ‘electricity, gas and water consumer loans 125%
supply’ (6.5 per cent) ‘construction’ (6.5 per cent), • Unsecured portion of NPA where provision is less than 20%
‘trade, hotels, transport and communication’ (9.3 per (if provision is at least 20% - 100% and if provision is at least
cent), ‘financing, insurance, real estate and business 50% - 50% 150%
services’ (9.7 per cent), and ‘community, social and • Claims on venture capital funds 150%
personal services’ (5.6 per cent). The ‘agriculture, forestry • Staff loans secured by mortgages or charge on superannuation
and fishing’ sector, however registered a growth rate of benefits 20%
0.2 per cent. • Other staff loans 75%
•
Most-used book Banking Problems Practice Sets For Banking infor- For all types of
by bankers 30th & Rationales 5th Mock Tests 10th mation in Hindi bank interviews
(2010) Edn Rs.300 (2010) Edn Rs.250 Edn Rs.165 7th Edn Rs.300 5th Edn Rs.250
OUR
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8 ♦ Banking events updatE ♦ July 2010 BANKING FEATURES
Liberalised Remittance Scheme Accounts of Foreign
RBI allowed (Feb 04, 2004) resident individuals to freely remit up to USD 25000 Nationals / Tourists
(raised to US $ 200000 later on) per financial year, including the remittances towards Who can open: Foreign tourists
gift and donation. during their short visit to India can open
a Non-Resident (Ordinary) Rupee
Eligibility: All resident individuals including minors, are eligible. The facility is not (NRO) account (Current / Savings) with
available to corporates, partnership firms, HUF, Trusts, etc. any AD bank dealing in foreign
Other features: exchange. Such account can be
opened up to a maximum period of 6
•Remittances under the facility can be consolidated in respect of family members months.
subject to individual family members complying with the terms and conditions of Documents : Passports and other
the Scheme. valid identification proofs are required
•For undertaking transactions under the Scheme, it is mandatory to have PAN for opening the accounts. AD banks
are also required to follow the Know
number to make remittances under the Scheme.
Your Customer norms while opening of
•Foreign currency accounts with a bank outside India can be opened, maintained the accounts.
and held without prior approval of RBI. These may be used for all transactions Credits to account: Funds remitted
connected with or arising from remittances eligible under this scheme. from outside India through banking
channel or those obtained by sale of
•The facility is in addition to those already available for private travel, business foreign exchange brought by the
travel, donations, studies, medical treatment etc. tourists to India can be credited to the
Purpose of remittance: For any current /capital account transactions or a NRO account.
combination of both such as: Debits: Tourists can freely make local
payments through the NRO account.
•for acquiring and holding immovable property or shares (of listed companies or All payments to residents exceeding
otherwise) or debt instruments or any other asset outside India. INR 50,000 can be made only by means
•for purchasing objects of art. of cheques / pay orders / demand
drafts.
•for remittance of funds for acquisition of ESOPs. The Scheme is in addition to Repatriate of the balance held in
acquisition of ESOPs linked to ADR / GDR and acquisition of qualification shares. their NRO account: AD banks have
•investment in units of Mutual Funds, Venture Funds, unrated debt securities, been allowed to convert the balance
promissory notes, etc. in the account for payment to the
account holder at the time of departure
•An individual who has availed of a loan abroad while as a non resident, can repay from India into foreign currency,
the same on return to India under the Scheme as a resident. provided the account has been
Mode of remittance: The Scheme can be used for outward remittance in the form maintained for a period not exceeding
of a DD either in the resident individual’s own name or in the name of beneficiary six months and the account has not
been credited with any local funds,
with whom he intends putting through the permissible transactions at the time of
other than interest accrued thereon.
private visit abroad, can be effected, against self declaration of the remitter in Account maintained for more
the format prescribed. than 6 months: In such cases,
Loan facility : Banks should not extend any kind of credit facilities to resident applications for repatriation of balance
individuals to facilitate remittances under the Scheme. may be made on plain paper to the
Foreign Exchange Department of the
Remittances not available underthe scheme: Regional Office concerned of RBI
i. Remittance for any purpose specifically prohibited under Schedule-I (like purchase through the AD bank maintaining the
of lottery/sweep stakes, tickets, prescribed magazines etc.) or item restricted account.
under Schedule II of FEMA (Current A/c Transactions) Rules, 2000. Foreign nationals resident in
India : Foreign nationals resident in
ii. Remittances made to Bhutan, Nepal, Mauritius or Pakistan. India can open and maintain a resident
iii. Remittances made to countries identified by the Financial Action Task Force Rupee account in India in terms of
(FATF) as “non co-operative countries and territories” as available on FATF website Notification No.5/2000-RB dated May
3, 2000 viz., Foreign Exchange
(viz Cook Islands, Egypt, Guatemala, Indonesia, Myanmar, Nauru, Nigeria, Philippines
Management (Deposit) Regulations,
and Ukraine) or as notified by RBI. 2000, as amended from time to time.
iv. Remittances to individuals and entities identified as posing significant risk of Remittance of proceeds of such
committing acts of terrorism as advised separately by RBI to the banks. accounts on closure:
Proceeds can be remiitted. But AD
Reporting of the transactions: The remittances made will be reported in the R- Category-I banks should ensure that
Return in the normal course. The ADs may also prepare and keep on record dummy the funds to be repatriated outside
Form A2, in respect of remittances exceeding USD 5000. India were either received from abroad
Beginning from April 2008, AD Category – I banks are required to furnish the or they are repatriable in nature or
information on a monthly basis, to RBI on or before 5th of the following month to permissible in terms of RBI notification
dated 3rd May 2000, as amended from
which it relates. This statement in the revised format should be forwarded through
Online Returns Filing System (ORFS).
time to time.
•
BANKING FEATURES
National Saving Certificate
NSCs are certificates issued by Deptt of Post, Govt of
India and are available at all post office counters. It is a
long term savings option for the investors. The scheme
combines growth in money with reductions in tax liability
as per the provisions of the Income Tax Act, 1961.
Features
Maturity: The duration of a NSC is 6 years.
Denomination: NSCs are issued in denominations of Rs
100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000.
Maximum amount of investment: There is no prescribed
upper limit on investment.
Who can purchase: Individuals, singly or jointly or on be-
half of minors. Trust and HUF cannot invest.
Nomination: One person can be nominated for certifi-
cates of denomination of Rs. 100. More than one person
can be nominated for higher denominations.
Transferability: The certificates are easily transferable
from one person to another through the post office. There
is a nominal fee for registering the transfer. They can also
be transferred from one post office to another.
Loan: A loan can be obtained against the security of NSC
by pledging it to a scheduled bank or a co-operative soci-
ety, a corporation or a government company, a housing
finance company approved by the National Housing Bank
etc with the permission of the concerned post master.
Premature encashment: Under sub-rule (1) of rule 16 it
is possible after the expiry of 3 years from the date of
purchase of certificate.
Tax benefits : Benefits are available on amounts invested
in NSC u/s 88, and exemption can be claimed u/s 80L for
interest accrued on the NSC. Interest accrued for any
year can be treated as fresh investment in NSC for that
year and tax benefits can be claimed under section 88.
Investment up to Rs. 1,00,000/- per annum qualifies for IT
Rebate under section 80C of IT Act.
Return : It is having an interest rate at 8% compounded
half yearly. Post maturity interest will be paid for a maxi-
mum period of 24 months at the rate applicable to indi-
vidual savings account. The maturity value of a Rs1000
certificate will Rs. 1601 on completion of 6 years.
Amount of Annual Interest for NSC Certificate of Rs 1000.
At the end of 1 year: Rs 81.60
At the end of 2 year: Rs 88.30
At the end of 3 year: Rs 95.50
At the end of 4 years: Rs103.30
At the end of 5 years: Rs 111.70
At the end of 6 years: Rs 120.80
Risk Management Financial Mgmt General Mgmt
4th Edn Rs.150 4th Edn Rs.125 4th Edn Rs150
JAIIB BOOKS
OUR CAIIB &
Banking events updatE ♦ July 2010 ♦ 9
Customer Photograph Rules
As per RBI guidelines on Customer Service, the Banks
should obtain and keep on record photographs of all
depositors/account holders in respect of accounts
opened by them subject to the following clarifications:
(i) The instructions cover all types of deposits including
fixed, recurring, cumulative, etc.
(ii) They apply to all categories of depositors, whether
resident or non-resident. Only banks, Local Authorities
and Government Departments (excluding public sector
undertakings or quasi-Government bodies) will be exempt
from the requirement of photographs.
(iii) The banks may not insist on photographs in case of
accounts of staff members only (Single/Joint).
(iv) The banks should obtain photographs of all persons
authorised to operate the accounts viz. Savings Bank and
Current accounts without exception
(v) The banks should also obtain photographs of the
‘Pardanishin’ women.
(vi) The banks may obtain 2 copies of photographs and
obtaining photocopies of driving licences/passport
containing photographs in place of photographs, would
not suffice.
(vii) The banks should not ordinarily insist on the presence
of account holder for making cash withdrawals in case of
‘self’ or ‘bearer’ cheques unless the circumstances so
warrant. The banks should pay ‘self’ or ‘bearer’ cheques
taking usual precautions.
(viii) Photographs cannot be a substitute for specimen
signatures.
(ix) Only one set of photographs need be obtained and
separate photographs should not be obtained for each
category of deposit. The applications for different types
of deposit accounts should be properly referenced.
(x) Fresh photographs need not be obtained when an
additional account is desired to be opened by the account
holder.
(xi) In the case of operative accounts, viz. Savings Bank
and Current accounts, photographs of persons authorised
to operate them should be obtained. In case of other
deposits, viz., Fixed, Recurring, Cumulative, etc.,
photographs of all depositors in whose names the deposit
receipt stands may be obtained except in the case of
deposits in the name of minors where guardians’
photographs should be obtained.
•
Accounting & Legal Aspects of Legal Aspects of
Finance 4th Edn Banking 4th Edn
Banking 4th Edn
10 ♦ Banking events updatE ♦ July 2010
Commercial Paper
Commercial Paper (CP), introduced in 1990, is an unsecured,
privately placed, money market instrument, issued in the form
of a promissory note.
Who can Issue Commercial Paper (CP):
Corporates, primary dealers (PDs) and the all-India financial
institutions (FIs) that have been permitted to raise short-term
resources under the umbrella limit fixed by RBI.
Eligibility criteria for a corporate: (a) Minimum tangible net worth
of Rs.4 crore, as per the latest audited balance sheet, (b)
company has been sanctioned working capital limit by bank/s
or financial institution/s; and (c) the borrowal account of the
company is classified as a Standard Asset.
Rating Requirement: All eligible participants shall obtain the
credit rating for issuance of Commercial Paper from either CRISIL
or ICRA or CARE) or FITCH Ratings India Pvt. Ltd. The minimum
credit rating shall be P-2 of CRISIL or such equivalent rating by
other agencies. The issuers shall ensure that at the time of
issuance of CP, the rating so obtained is current and has not
fallen due for review.
Maturity: CP can be issued for maturities between a minimum
of 7 days and a maximum up to one year from the date of issue.
The maturity date of the CP should not go beyond the date up
to which the credit rating of the issuer is valid.
Denominations: CP can be issued in denominations of Rs.5 lakh
or multiples thereof. Amount invested by a single investor should
not be less than Rs.5 lakh (face value).
Limits and the Amount of Issue of CP : CP can be issued as a
“stand alone” product. The aggregate amount of CP from an
issuer shall be, within the limit as approved by its Board of
Directors or the quantum indicated by the Credit Rating Agency
for the specified rating, whichever is lower. Banks and FIs will,
however, have the flexibility to fix working capital limits duly
taking into account the resource pattern of companies’ financing
including CPs.
Issue of CP by FIs: An FI can issue CP within the overall umbrella
limit fixed by the RBI, i.e., issue of CP together with other
instruments, viz., term money borrowings, term deposits,
certificates of deposit and inter-corporate deposits should not
exceed 100 per cent of its net owned funds, as per the latest
audited balance sheet.
Time limit: The total amount of CP proposed to be issued should
be raised within a period of 2 weeks from the date on which
the issuer opens the issue for subscription. CP may be issued
on a single date or in parts on different dates provided that in
the latter case, each CP shall have the same maturity date.
Every issue of CP, including renewal, should be treated as a
fresh issue.
Who can Act as Issuing and Paying Agent (IPA) : Only a
scheduled bank can act as an IPA for issuance of CP.
Investment in CP :CP may be issued to and held by individuals,
banking companies, other corporate bodies registered or
incorporated in India and unincorporated bodies, Non-Resident
Indians (NRIs) and Foreign Institutional Investors (FIIs). However,
investment by FIIs would be within the limits set for their
investments by Securities and Exchange Board of India (SEBI).
Mode of Issuance :1. CP can be issued either in the form of a
promissory note or in a dematerialised form through any of the
Source : Website of RBI
BANKING FEATURES
depositories approved by and registered with
SEBI.
2. CP will be issued at a discount to face value as
may be determined by the issuer.
3. No issuer shall have the issue of CP
underwritten or co-accepted.
Preference for Dematerialisation :While option
is available to both issuers and subscribers to
issue/hold CP in dematerialised or physical form,
issuers and subscribers are encouraged to prefer
exclusive reliance on dematerialised form of issue/
holding. Wef June 30, 2001, banks, FIs and PDs
are can make fresh investments and hold CP only
in dematerialised form.
Payment of CP : The initial investor in CP shall
pay the discounted value of the CP by means of a
crossed account payee cheque to the account
of the issuer through IPA. On maturity of CP, when
CP is held in physical form, the holder of CP shall
present the instrument for payment to the issuer
through the IPA. However, when CP is held in
demat form, the holder of CP will have to get it
redeemed through the depository and receive
payment from the IPA.
Stand-by Facility : In view of CP being a ‘stand
alone’ product, it would not be obligatory in any
manner on the part of the banks and FIs to provide
stand-by facility to the issuers of CP. Banks and
FIs have, however, the flexibility to provide for a
CP issue, credit enhancement by way of stand-
by assistance/credit, back-stop facility etc.
based on their commercial judgement.
Non-bank entities including corporates may also
provide unconditional and irrevocable guarantee
for credit enhancement for CP issue subject to
certain conditions.
Procedure for Issuance : Every issuer must
appoint an IPA for issuance of CP. The issuer should
disclose to the potential investors its financial
position as per the standard market practice. After
the exchange of deal confirmation between the
investor and the issuer, issuing company shall issue
physical certificates to the investor or arrange
for crediting the CP to the investor’s account
with a depository. Investors shall be given a copy
of IPA certificate to the effect that the issuer
has a valid agreement with the IPA and documents
are in order.
Role and responsibilities of IPA:
(i) IPA would ensure that issuer has the minimum
credit rating as stipulated by RBI and amount
mobilised through issuance of CP is within the
quantum indicated by CRA for the specified rating
or as approved by its Board of Directors,
whichever is lower.
(ii) Every CP issue should be reported to RBI.
(iii) IPAs should report the details of CP issue on
NDS platform within two days from the date of
completion of the issue. •
 Banking events updatE ♦ July 2010 ♦ 11

Credit Cards
USEFUL BOOKS
The credit card refers to a plastic card assigned to a cardholder, with a credit FOR BANKERS
limit, that can be used to purchase goods and services, on credit. Handbook on Banking : 300.00
Mechanism: Credit cards allow cardholders to pay for purchases made over a Information (30th Edn
period of time and to carry the balance from one billing cycle to the next. The Jan 2010) by N S Toor
payment for these purchases normally becomes due after a free credit period,
Bank Lending (Edn : 2003) : 500.00
during which no interest or finance charge is imposed. Interest is charged on the
by Arun Chatterjee
unpaid balance after the payment is due. Cardholders may pay the entire amount
due and save on the interest that would otherwise be charged. Model Test Papers for : 165.00
Bank Promotions Edn
Parties in Credit Card Scheme:
July 2010 by N S Toor
• Cardholders - persons who are authorized to use credit cards for the payment
of goods and services; Credit Management : 400.00
(2004) Arun Chatterjee
• Card issuers - institutions including banks, which issue credit cards;
• Merchants - entities which agree to accept credit cards for payment of goods Banking Problems/ : 250.00
and services; Rationales including
• Merchant acquirers – Banks/NBFCs which enter into agreements with merchants Situational Analysis(2010)
to process their credit card transactions; and by Arundeep/ N S Toor
• Credit card associations - organisations that license card issuers to issue credit Handbook for Bank : 275.00
cards under their trademark, e.g. Visa and MasterCard, and provide settlement Managers (2008) by LN
services for their members (i.e. card issuers and merchant acquirers). Kumar
Types of credit cards: Analysis of Balance
Credit cards can be broadly categorised into two categories (a) General purpose Sheet (7th Edition 2010) : 150.00
cards issued under the trademark of credit card associations (VISA and Mastercard) by N S Toor
and accepted by many merchants and (b) private label cards which are only
Credit Risk Management
accepted by specific retailers (e.g. a departmental store).
by Arundeep/ N S Toor : 225.00
Credit Card business by banks:
1. Banks in India can undertake credit card business either departmentally or Mannual of Foreign
Exchange : 250.00
through a subsidiary company set up for the purpose. They can also undertake
R S Arora (Edn - 2005)
domestic credit card business by entering into tie-up arrangement with one of
the banks already having arrangements for issue of credit cards. Book-Keeping & Eco-
2. Prior approval of RBI is not necessary for undertaking credit card business by nomics for Bankers (Edn : 150.00
banks where their networth is at least Rs.100 crore. 2005) by N S Toor
3. Most of the card issuing banks in India offer general purpose credit cards How to face Bank Inter-
categorised by banks as platinum, gold or classic to differentiate the services views? (Edition 2010) : 250.00
offered on each card and the income eligibility criteria. Banks may, at the request by N S Toor
of a cardholder, issue a supplementary card (also referred to as ‘add-on cards’) to
another individual who is usually an immediate family member of the cardholder. Hkkjrh; cSafdax &fof/k] ijEijk
Credit cards and KYC: The card issuing banks/NBFCs are solely responsible for ,oa Uk, vk;keu-l- rwj : 300.00
fulfillment of all KYC requirements. (8th Edition Aug 2010)

Interest rates and other charges: Banks are free to determine the rate of interest JAIIB/CAIIB BOOKS : NEW SYLLABUS
on credit card dues without reference to their BPLR. (Objective Type - 2009 Edition)
Wrongful billing: In case, a customer protests any bill, the bank/NBFC should
Principles of Banking : 150.00
provide explanation to the customer within a maximum period of 60 days.
Accouning & Finance : 125.00
Unsolicited cards :In case, an unsolicited card is issued and activated without the
written consent of the recipient and the latter is billed for the same, the issuing Legal Aspects of Banking : 125.00
bank shall not only reverse the charges forthwith, but also pay a penalty without General Bank Management : 150.00
demur to the recipient amounting to twice the value of the charges reversed. Financial Management : 125.00
Redressal of Grievances: A time limit of 60 days may be given to the customers for Risk Management 150.00
preferring their complaints / grievances. If a complainant does not get satisfactory All these books are by:
response from the bank/NBFC which is a subsidiary of a bank within a maximum Arundeep Toor & N S Toor
(For detailed studies enrol to
period of 30 days from the date of his lodging the complaint, he will have the our correspondence course)

B
option to approach the Banking Ombudsman for redressal of his grievance/s.
Fraud Control: With a view to reducing the instances of misuse of lost/stolen
You can order these books with us
cards, RBI has suggested that banks may consider issuing (i) cards with photographs
of the cardholder (ii) cards with PIN and (iii) signature laminated cards. OR
Right to impose penalty: RBI reserves the right to impose any penalty under the
provisions of the Banking Regulation Act, 1949/the Reserve Bank of India Act,
Skylark Publications
1/5, Bhagat Singh Lane, Gole Market,
1934, respectively for violation of any of the guidelines.
• New Delhi-110 001 (Ph- 011 2336 1966)
12 ♦ Banking events updatE ♦ July 2010
Banking Ombudsman Cases
Case-1 A cheque drawn by the EPF Department on the ABC Bank’s
Nasik branch for Rs.21.36 lakh was sent to XYZ Bank, New Delhi
for credit to the account of the complainant. The amount was
not credited to the complainant’s account advising that it had
not received the cheque. The complainant, however, obtained
the Proof of Delivery from Post Office in support of the claim that
it was delivered to the XYZ bank. It transpired that the XYZ bank
had actually misplaced the cheque before sending it for collection
to ABC Bank and it had already furnished an affidavit to the EPF
Department reporting the misplacement of the cheque and
requesting for a duplicate cheque. With the intervention of
Ombudsman, the bank credited an amount of Rs.18,894/- as interest
on the delayed payment since date of deposit of the cheque.
Case-2 : The complainant was holding a credit card of a foreign
bank. He complained that a caller from the bank persisted in
selling Medical Insurance Benefit Scheme to the card holder
though he as well as his family members did not require the same.
After a few days he received a policy in the name of his son and
daughter without taking his approval. When he called up the bank
in June 2006, he was assured that the policies would be cancelled
and later it was confirmed as well. But after a few days, he was
advised to send a cancellation request by fax. The statement
received showed unpaid balance. The complainant again sent two
faxes in August and September 2006 for cancellation of the policies.
In the conciliation meeting held by Ombudsman on 19 January
2009, the bank official stated that there was a recorded telephonic
conversation with an Insurance Company and the bank had debited
the account of the customer on the mandate received by the
Insurance Company. There was no written mandate with the bank
from the customer for debiting his account for premium of the
policies of the Insurance Company. The bank failed to resolve the
complaint for 2/3 years. However, with the intervention of
Ombudsman, the debits of Rs.23,246/- were reversed.
Case-3: The complainant maintaining an account at Bank A
attempted a withdrawal of Rs.25,000/- from Bank B’s ATM, but no
cash was dispensed. However, his account was debited. He
immediately complained to Bank A and then to Banking Ombudsman
subsequently. Bank A retrieved the JP log of 20.4.2008 from Bank
B, which was not legible and confirmed that the transaction was
successful. However, Ombudsman observed that the JP log
appeared to be of 20.1.2008 and not of 20.4.2008, the reply was
that actually the digit was 4 but appearing as 1 because of faulty
printing. As Ombudsman insisted for a legible copy of JP log, Bank
A informed after one month that they had received the amount
from Bank B and the complainant’s account had been credited. In
fact, Bank B had possibly misinformed Bank A.
Case-4: An employee of a PSU had availed a housing loan of Rs
385000/- from XYZ Bank, under the tie-up arrangement between
the bank and the PSU. The loan was offered at fixed rate of 7.5%.
The bank subsequently increased the rate of interest from 7.5%
to 8.5% and changed the EMI. When the matter was taken up with
the bank, he was informed that as per the terms and conditions
and the MOU, the fixed rate applicable for housing loan is ‘adjusted
interest rate’ on the date of the agreement. The ‘adjusted interest
rate’ was ‘quoted rate’ +/- changes in the BPLR of the bank on
the date of agreement between the bank and the employees of
the PSU. At the time of sanction of the loan, the BPLR was 11.50%
*Source : Website RBI.
P
ROBLEMS ON
RACTICAL BANKING
so the ‘adjusted interest rate’ would be 8.5% and
therefore the bank had charged the interest
accordingly which would be reset after 5 years
i.e. from 26.9.2006. As the bank’s response was
not convincing, he approached the Ombudsman.
On calling for their comments, the bank informed
that they were charging the interest in terms of
the MOU entered between the bank and the PSU
and that it was in sync with the terms and
conditions of the loan. Ombudsman advised the
bank to furnish copies of the sanction letter,
agreement with the complainant and copy of the
MOU. On scrutinizing the documents, it was
observed that the rate of interest mentioned in
the agreement at clause 7 was 8.5% (Fixed) and at
clause 6 which was applicable to Floating rate,
no entries were made. The sanction letter
indicated 8.5% at fixed rate for 5 years to be reset
after 5 years. Scrutiny of housing loan passbook
disclosed that the bank was charging 7.5 % fixed
interest from November 26, 2006 for 168 months
at an EMI of Rs 3710/-. The bank had not carried
out the documentation of the loan properly, as
there was a discrepancy in the housing loan
passbook and the agreement with respect to rate
of interest. The increase in EMI was not justifiable.
Therefore, Ombudsman passed the benefit of
doubt to the complainant and directed the bank
to consider the rate of interest at 7.5% fixed for
5 years and reset thereafter and refund the
excess EMI recovered.
Case-5: A complainant approached the
Ombudsman regarding return of her ECS payment
despite holding sufficient balance in her account.
Two banks were involved in the complaint. The
receiving bank maintained that the ECS was not
honoured by the complainant’s banker and
produced a copy of return memo. Subsequently,
on the complainant taking up the matter, the
complainant’s banker issued a certificate that
credit has been passed to the receiving bank.
However, the receiving bank denied having
received the credit. Because of the dispute
between the two banks, the complainant was left
high and dry. Ombudsman called the officials of
both the banks and held a meeting and advised
them to investigate the matter immediately. The
complainant’s banker at last located the credit
which was lying with their service branch. Thus,
it came to light that the bank had issued the
certificate without conducting adequate internal
enquiry. The complainant’s banker was, therefore,
advised to pay interest for the period of delay
besides tendering apology to the complainant for
misrepresentation of facts and inconvenience
caused to its customer (complainant).
 Banking events updatE ♦ July 2010 ♦13

• IT FIRMS CAN OUTSOURCE JOBS TO SEZs: IT Companies can outsource Diary of

their overseas jobs to units in Special Economic Zones. The Govt. has also allowed
employees of IT Units in SEZs to work from Home or off-site locations. Earlier this Events
relaxation was given only to “decapacitated” employees or those who were
new Banking licence.
travelling.
• FM FOR NEW METHOD FOR TAX REFUNDS:
• CME TO LAUNCH NIFTY FUTURS: The Chicago Mercantile Exchange (CME)
According to the Finance Ministry, Tax Payers will
and NSE, entered into an agreement during March 2010 for cross-listing
have to mention receipt Number of TDS Forms in
arrangements. This would be the second exchange after the Singapore Stock
the returns to claim refunds from this Fiscal. Tax
Exchange (SGX) to introduce trading on Nifty Futures.
payers will have to mention this number along
• CABINET NOD FOR GOVT. STAKE SALE IN PSUs: The Cabinet Committee on
with his Permanent Account Number (PAN) and
Economic Affairs (CCEA) gave its nod for a vital change in the process of shares
Tax Deduction Account number (TAN) of the
sale in state-run firms. The appointment of Merchant bankers and other
deductor, otherwise refunds may not be
intermediaries will now be taken up simultaneously with the process of seeking
considered.
CCEA approval as soon as the Minister-in-charge has approved the case.
• RBI TO HAVE CORE BANKING PLATFORM:
• RBI WARNS OF FICTITIOUS OFFERS FROM ABROAD: RBI has cautioned
Keeping in view the fact that all Commercial Banks
the Public against the fictitious offers for release of cheap funds claimed to have
are racing ahead to put all their operations on
been remitted by overseas entities to banks in India. Once contract is established,
the Core Banking Solution (CBS) Platform, RBI
the offer is followed by a request seeking of details of Bank Accounts and asking
too has decided to embark on the same path.
the recipients some amount to be remitted, as initial deposit or commission, so
RBI is planning to have its own CBS Platform
that the money, on offer could be transferred.
whereby there will be a Single General Ledger for
• O&M LAUNCHES ISLAMIC BRANDING PRACTICE: Ogilvi & Mother has
the entire Bank encompassing all departments
launched Ogilvi Noor, a first ever Multidisciplinary Global Islamic Branding Practice
and regional offices.
that aims to help brands better engage with Muslim Consumers Worldwide. It has
• RBI PROPOSES MODE FOR EFFECTIVE LOAN
also come up with an Index that reflects the appeal of certain brands to Muslim
SCREENING: RBI, in its draft guidelines for
Consumers.
Securitised Transactions by NBFCs, has asked
• SBI OFFERS ONE TIME SETTLEMENT OF NPA: SBI has come out with One Time
the originators or issuers of securitised products
Settlement Scheme for NPA of SME Sector. The scheme is for loans availed on or
to retain a portion of each securitised pool. This
after March 31,2009 and with outstanding up to Rs.1 Crore, for any reason
is a Mechanism to improve align incentives and
except cases involved fraud, malfeasance, willful default or cases already decreed
ensure more effective screening of loans.
by courts.
• INDIA NOT FOR GLOBAL BANK TAX: Cabinet
• UN BODY FORECASTS GROWTH: UN Department for Economic and Social
Finance Minister made it clear in the G20 Summit
Affairs predicted the Global economy to grow by 3% this year and then by
in Busan that India was not in favour of imposing
another 3.1% the following year in its 2010 World Economic Situation and
any special tax on Banks globally to build a corpus
Prospects report. India’s growth at 7.9% this fiscal has been predicted as against
to be used for bailing out banks in times of financial
slightly lower than 8.5% predicted by the Government.
crises. India would, instead favour a regulatory
• CENTRALISED TAX PROCESSING CENTRE: The Union Finance Minister has
mechanism for Banks as is being followed for
dedicated to the Nation the Income Tax Department’s “Centralised Processing
Indian Banks.
Centre (CPC) at Bangalore. The CPC will be used to process electronic tax returns
• PUBLIC HOLDING IN LISTED COMPANIES-
from all over the country as also the physical returns of Karnataka and Goa
AMENDMENT: The Government has amended
regions. CBDT has also announced plans to set up CPCs in Ahmedabad and
the Securities Contracts (Regulation) Rules to
Faridabad to improve taxpayer services.
increase the Non-promoter holdings in Indian
• RBI RAJBHASHA SHIELD FOR UBI: Union Bank of India has been awarded
Companies. As per amendment, the minimum
two First prizes under RBI Rajbhasha Shield Competition 2008-09, which is
threshold level of public holdings has been raised
introduced by RBI for promotional use of Hindi in Public Sector Banks and Financial
to 25% for all listed companies and requiring
Institutions.
• BIOMETRIC CARDS TO NREGA WORKERS: In an innovative move, Biometric
cards will be given to those working under NREGA to bring more transparency in
the implementation of the Centre’s Employment Programme, facing complaints of
gross irregularities and malpractices in many parts of the country.
Test yourself through
• HIGHER GARATUITY LIMIT: The Parliament in the recently concluded Budget
session passed the Payment of Gratuity (Amendment) Act, 2010 to hike the
gratuity payment limit to Rs.10 Lakh from existing limit of Rs.3.5 Lakh. The higher
Online Mock Tests
limit would be allowed for all gratuity payments made on or after May 24.
• GDP GROWTH BEATS FORECASTS FOR 2009-10: The strong 4th quarter
Log in our new website
performance by Industry and Services, coupled with upward revisions for July-
December, has led to overall GDP growth of 7.4% in 2009-10. This is higher than nstoorbankingonline.com
the Central Statistical Organisation’s (CSO) estimate of 7.2%.
• M & As IN BANKING OUT OF CCI AMBIT: The Corporate Affairs Ministry has You can undertake online tests on different banking
said that Mergers and Acquisitions (M&As) in the Banking Sector will be kept out subjects, including Economics, General Knowledge,
of the Competition Commission of India’s (CCI) ambit for the time being. One of Financial Awareness, Latest in Banking etc. by visiting
the objectives is to allow enough consolidation to take place in banking. us at website www.nstoorBankingOnile.com. Facility
• NO BANK LICENCE IF LOAN DEFAULT: Corporate Houses seeking Banking of online evaluation is available. You can understand
the subject better with these tests. To enter the web
Licences will come under the scrutiny of both RBI and the Finance Ministry, which
pages, you require a pass-word, that can be obtained
are keen to restrict the entry of players involved in the dubious transactions. The
from by sending us eMail at ns.toor@gmail.com. For
books and accounts of all Group Companies will be examined before granting the
details call us at 0172 2665623.
14 ♦ Banking events updatE ♦ July 2010
existing listed companies having less than 25% public holding to
reach the minimum 25% level by an annual addition of not less
than 5% to public holding.
• BANKS TO GET TECH SAVVY AS BIG STAFF EXIT: The
Government has said the Commercial banks should come up with
a strategy to leverage technology and business process
reengineering to make up to bridge the gap created by shortage
of staff. The Banks must build a pool of talent that can take up
Leadership positions.
• DIVIDEND DISCLOSURE IN RUPEE TERMS: SEBI has asked
Fund Houses to disclose their dividend payouts in rupee terms,
instead of %age. It also asked Mutual funds to benchmark returns
on investment against Sensex & Nifty instead of Sectoral Indices.
• CAPITAL INFUSION IN FOUR BANKS: The Government has
infused Rs.1500 Crore into four Public Sector banks as part of
their recapitalization package. Of the total, Vijaya Bank got Rs.700
Crore, UCO Bank Rs.300 Crore, Central bank of India and United
Bank of India received Rs.250 Crore each.
• AHEAD OF BASE RATE BANKS SEEK LEAGAL CHECK UP:
Fearing court cases after the implementation of the base rate
regime next month, Public sector Banks have decided to go for a
legal check on all loan documents signed by them. The Bankers
also decided that the borrowers needed to be familiarized with
the new regime as over the years they have got used to talking
in terms of “BPLR Minus” rates.
• IRDA TOUGH WITH CORPORATE AGENTS: IRDA has asked
Insurers to carry out inspections on their Corporate Agents to
curb irregularities. The process of inspections should be completed
by September 30 every year starting from 2010. The Insurers
should ensure that the policies were being sold only by Licensed
Agents or Specified persons and there should be no payments
other than permissible commissions.
• IRDA WITHDRAWS LICENCES OF CORPORATE AGENTS:
IRDA has said that 4261 Corporate Agents out of 7000 in the
country were not authorised to sell policies from March 31, 2010.
These Corporate Agencies were due for renewal on or before
March 31, 2010 but have not been renewed and so their licences
have been withdrawn. It cautioned the Insurers and General
public not to transact any insurance business through them.
• TAX AUTHORIY TO HIVE OFF E-PAYMENT SERVICES: The
Finance Minister has asked the CBDT to consider hiving off its
technology-driven taxpayer services to a Special Purpose Vehicle
(SPV) that could better deliver such services in the Public-Private-
Partnership (PPP) mode. Presently, the Income tax Department
is providing a slew of technology-related services including E-
filing of returns, E-payment of taxes.
• PUBLIC SECTOR BANKS TO RECRUIT MORE: Union Finance
Minister has said that Public Sector Banks will need to make large
recruitments of the right quality in the next few years to bridge
the gap that is likely to be caused by a large number of
retirements. The Banks have to strengthen institutional skill levels,
specially in the sales and marketing, service operations, risk
management and overall organisational performance ethics.
• FIN PANEL WANTS LISTED DEFAULTERS NAMED: the High
Level Coordination Committee on Financial Markets (HLCCFM) is
considering mandatory disclosure of loan defaults by listed
companies. The HLCCFM is a High-level Forum for interface among
financial sector regulators. The move aims to protect shareholders
interest and increase investor confidence.
• SUPREME COURT VERSION ON AMALGAMATED CO.: The
Supreme Court has ruled that a Company which has amalgamated
with another can evict a Tenant of the old firm from its premises
for bona fide requirement of the new Company which has come
into existence .
• ACCOUNTING FOR AGRICULTURE: Accounting for agriculture
will change radically when companies will formulate Accounting
Compilation : SP Sharma & Sapandeep Toor Source : Financial Newspapers, Financial News-Magazines & Financial and Institutional Web-sites
DIARY OF EVENTS
Policy consistent with IAS-41 equivalent Indian Accounting
Standard. IAS -41 requires that a biological asset should be
measured on initial recognition and at the end of each reporting
period at its fair valueless costs to sell. Similarly, agriculture
produce harvested from biological assets should be measured
fair value less costs to sell at the point of harvest.
• FITCH RAISES INDIA’S DEBT OUTLOOK: FITCH Ratings
revised the outlook on India’s long-term local currency issuer
default rating (IDR) to “Stable” from “Negative”. But FITCH
affirmed India’s Long Term Foreign and Local Currency IDR at
“BBB”, the Short Term foreign Currency IDR at “F3” and the
country ceiling at “BBB”.
• NEW TAX CODE TO CHECK HOT MONEY ENTRY: As per the
Revised Discussion Paper of the Direct Tax Code (DTC), Foreign
Institutional investors will have to classify income from the capital
market transactions as capital gains and not as business income.
This move would check hot money flow into Indian markets.
• NOD FOR SEZ UNIT MIGRATION: The Government has allowed
Industrial Units to shift from one Special economic Zones (SEZs)
to another after approval of the Apex Authority, the Board of
Approval (BOA). Allowing SEZ Units to shift base could help in
business consolidation as companies with several units in different
SEZs would have the option of bringing them under one roof.
• IRDA CLERIFIES RBI CIRCULAR: The pricing guidelines
pertaining to equity shares, compulsorily convertible preference
shares and equity instruments to be issued/ transferred to a
Resident outside India notified by RBI are not applicable to the
Insurance sector. The guidelines are applicable to an Indian
company in Sectors other than financial sector.
• NEW TAX GRIEVANCE REDRESSAL SYSTEM: The Income Tax
department will soon launch an Integrated-based Grievance
Redressal System for tax payers to lodge their complaints with
Taxman. The new Online Facility will also enable tax-payers to
register their complaints and put applications to the IT
Ombudsman present in 12 cities across the country.
• FARM LOANS OUTSIDE BASE RATE: RBI has assured the
bankers that it will keep agriculture loans outside the Base Rate
ambit, which means Banks will be allowed to extend these loans
at interest rates lower than the Base Rate. The Base Rate
guidelines have barred lending below the Rate. The Base Rate
regime comes into effect from July 1.
• TIME LIMIT EXTENSION FOR DUTY DRAWBACK: The Finance
Ministry has made certain amendments in the Duty Drawback
rules. Current rules mandated filing the drawback claim within 3
months from the date of “Let Export” order by the Customs. The
latest amendment allows a further period of 9 months for filing
the claim, subject to payment of a nominal fee.
• MORE SERVICES BY NPCI: National Payments Corporation of
India will be providing more services after obtaining RBI approvals.
ATM switching was the first service to be operational by NPCI.
The next in line is Cheque Truncation System at Chennai. NPCI is
the umbrella organisation for all retail payment systems in the
country owned and operated by Banks. All Public sector banks
are now part of the NFS network.
• RBI IMPOSES PENALTY ON BANK: RBI has imposed a monetary
penalty of Rs.5Lakh on the Postal and RMS Employees
Cooperative Bank Ltd. at Ambala Cantt, Haryana for violation of
RBI directives. It opened a Branch in New Delhi without obtaining
an Authorisation/Licence under Section 23 of the Banking
Regulation Act,1949.
• MORE TIME FOR NEW DEBT VALUATION NORMS: SEBI has
postponed the deadline for implementing new norms for valuation
of Mutual Fund Houses Debt and Money Market Instruments by
a month. The new rules call for these instruments to be valued
on Mark-to-Market basis. now the norms will come into effect
from August 1 instead of July 1.
•

GENERAL AWARENESS
• With the bearthing of the First Supramax Vessal
MV Malavikaat Hazira in District Surat, Essar
has become the Second largest Private Port
Operator in the country.
• According to the Study by International
Property Consultant C.B. Rechard Ellis, UK is
number one Destination for Retailers. India
has moved to the 39th position in 2009 from the
position of 44 in 2008.
• Mumbai-based Reliance Big Pictures’ adventure
film, Kites, is First Bollywood Film in US Top 10.
• US Mathematician John Torrence Tate, received
Norway’s Abel Prize worth 6 million
Kroner ($900,000) at a Ceremony in Oslo.
• Punjab became the First State in the
Country to launch Online National Permit for
Trucks and heavy Vehicles .
• Canara bank has informed the BSE that its
Equity shares would be delisted from the
Bangalore Stock Exchange Ltd. However its
Equity shares will continue to be listed with the
NSE & BSE which have nationwide trading
terminals.
• RBI has conferred upon Allahabad bank
the First prize for its in-house Magazine
Triveni Dhara among all Public Sector
Banks and Financial Institutions in the
Bilingual House Magazine Competition held for
the year 2008-09.
• Three US Scientists whose work helped map
the Universe are among the Recipients of the
One Million US Dollar Shaw Prize, known
as the “Asian Noble”.
• The World’s First Paperless Technology,
Entertainment and Design (TED) Event was
organised locally by authorised Licence Holders
on 31st May in Chandigarh.
• Allahabad Bank, the Corporate Agent of
LIC of India has been awarded “First
Position” in first premium growth rate,
based on its performance during 2009-10
amongst all the Channel Partner Public Sector
Banks of LIC.
• Mr. O.P Bhatt, CMD of State Bank of India
is set to take over as the new Chairman of the
Indian Bank Association.
• According to the Political and Economic Risk
Consultancy, India, Indonesia and
Philippines have Asia’s Most Inefficient
Bureaucracies, with Red Tape a constant blight
to citizens and deterrent to foreign investment.
• As per Study by Ernst & Young’s 2010,
Rankings of China & India are 66% and
61% respectively as the Most Attractive
Regions for FDI Projects in the next 3 years.
• India’s Fifth Ultra Mega Power Plant will
be set up at Sarguja District in Chattisgarh.
• RBI has constituted a Committee to be
headed by Mr. M. Damodaran, previous
Chairman of SEBI to look into the various
aspects of services rendered by Banks to Retail
and Small Customers.
Disclaimer : We have taken every care to provide information, we believe to be accurate
and reliable and do not assume responsibility of any kind nor shall be liable for losses &
consequence arising from use thereof. Since this information is based on the published
reports mostly, correctness or otherwise thereof may be verified by the user with the
original sources, in advance. .......................................................................Editor
Subscription - 1 yr: Rs.200, 2 yrs : Rs.380 & 3 yrs : Rs.560 Single Current Copy Rs.20 (Old Issues - Rs.25 per copy. For more than 2 copies add courier charges also)
• Mr. K.G.Balakrishnan, former Chief
Justice of India, has been appointed
as Chairperson of the National Human
Rights Commission.
• The US-India Business Council has
presented its Award for Global
Leadership to Mr. Y.C.Desheshwar ,
Chairman ITC Ltd. for his commitment
to empowering India’s Rural Agricultural
Community.
• India Toped the Consumer Greendex,
compiled by National Geographic which
studied 17000 consumers in 17 countries.
Indians are the Most Eco-friendly
people while Americans the Least.
• IDBI Bank opened its First Overseas
Branch at Dubai International Finance
Centre.
• The East India Company, which once
ruled over India and established in 1600
is one of the Most Recognised Brands
in the World and set to launch its First
Luxury Goods Store in Mayfair, London.
• The French Government is selling off
1700 properties including chateaux,
barracks and Parisian mansions, in part,
to cut the country’s $1.79 trillion debt.
• Labelling the Bhopal Gas Tragedy as the
World’s Worst Industrial Accident,
Global Media has censured the Indian
Govt. for a “Callous” and “Confused”
approach to corporate liability.
• Over two Lakh employees of State
Bank of India will undergo intensive
training at various levels in banking
technology, e-learning and other areas.
• Mr. C.S.Verma has taken over charge
as the Chairman of Steel Authority of
India Ltd.
• IT major, Tata Consultancy Services
(TCS) ranked Fifth Overall, and Toped
the List for IT Services in Bloomberg
Business week’s 12th Annual Tech 100, a
ranking of the World’s best performing
tech companies.
• Higher Education Regulator, UGC, has
issued a ban on offering Physiotherapy
courses in Distance Mode because this
course involves large component of
practical teaching and can not be properly
imparted in Distance Mode.
• Maharashtra accounts for nearly 45%
of the country’s tax revenue.
• The Top Five Indian IT Companies by
revenues are-TCS, Infosys, Wipro,
Cognizant and HCL.
• Although India has become synonymous
with outsourcing, Indian Companies
created nearly 60,000 jobs in the US
between 2004 and 2009 through
nearly 500 investment and acquisition deals
worth $26.5 billion.
• According to the IMF , with India and
China leading the way, the recent
Banking events updatE ♦ July 2010 ♦15
recession has underlined the emergence
of Asia as a Global Economic
Powerhouse.
• Microsoft Office 2010, latest version of
its popular office software went on sale
Worldwide.
• According to the 8th Biospectrum-able
Survey for 2009-10, Biocon is once again
the Country’s No.1 Biotechnology Company
by revenue, while Bangalore has lost the
Crown to Mumbai as “Biotech City” by a
revenue margin of Rs.200 Crore.
• The Union Cabinet has approved the
CSIR proposal to set up an Academy of
Scientific and Innovative Research
(AcSIR). Once the AcSIR is set up, it would
enable registration of Scientists pursuing
research.
• The 6th Economic Census set to take off
next year, will provide the Country with
a National Business Register (NBR) for
the First Time, containing the details of
every business establishment in the country.
• India on June 18th successfully test fired
the indigenously developed, nuclear-
capable, ballistic missile, Prithvi-II from
the Integrated Test Range at Chandipur off
the Orissa Coast.
• Haryana claimed to have become the First
State in the Country to have launched a web
Portal-based Centralised Public Grievance
Redress and Monitoring System.
• According to the Delhi’s Top Consumer
Court, the Bank is justified in closing the
account of a customer who fails to
provide PAN Card details.
• Bombay Stock Exchange (BSE) has
created a separate Company, called
Indian Clearing Corporation in order to
consolidate its clearing and settlement
business.
• Bhopal (MP) will be India’s First Risk-
averse Data Centre which can even
withstand an earthquake of seven on the
Richter scale for two minutes and remain intact
for a nuclear attack.
• Uttar Pradesh has excelled in a Central
Credit Scheme for the Self Employed in
the unorganized sector by achieving over
88% of the target.
• According to a Global Wealth Report, the
number of millionaires in India grew by
more than a 50% in 2009,after having
witnessed a sharp fall in 2008.
• IDRBT, Hyderabad has picked Karur Vyasa
Bank for the Best IT Infrastructure
Management 2009 Award.
• IDBI Bank has been awarded the ISO
9001:2008 Certification for all its
Currency Chests in the country.
• Mr. Rana kapoor, Founder & MD of YES
Bank has been given the “India Business
Leader of the Year” Award at the Global
Indian Business Meet in Madriad (Spain).
We strongly believe that the subscribers
are the best consultants, we have. Based
on their feed back, we keep on redesigning
and restructring this publication. Kindly
send your suggestions and views.
16 ♦ Banking events updatE ♦ July 2010
MOCK-TEST
PAPER
Questions based on Basel 2 – Capital
Fund Instruments
01 Which of the following instrument is
part of Tier-1 capital fund under Basel-
2 guidelines, in India:
a Redeemable non-cumulative
preference shares
b Subordinated Debts
c Innovative Perpetual Debt Instrument
d Revaluation Reserves
02 Total amount raised through Innovative
Perpetual Debt instruments should not
exceed ___, as per Basel-2 guidelines
in India:
a 15% of risk weighted assets
b 15% of capital fund
c 15% of Tier I
d 15% of Tier II
03 For Innovative Perpetual Debt
instruments, the call option is available
to ___ after___:
a investor after 10 years
b bank after 10 years
c investor after 15 years
d bank after 15 years
04 Which of the following statement is not
correct regarding Innovative Perpetual
Debt instruments:
a there is no ceiling on maximum amount,
which can be decided by Board of
Directors of the bank
b the call option can be used by the bank
with permission of Board of Directors
c rate of interest can be fixed or floating
d the step up option can be used but
cost will not be more than 100 basis
points.
05 Which of following risk is there to an
investor by investing in Innovative
Perpetual Debt instruments:
a bank shall pay interest at bank rate
instead of rate of interest offered in
the offer document, if CAR of the bank
falls below the minimum regulatory
requirement of RBI
b bank shall not be able to pay interest if
CAR of the bank falls below the minimum
regulatory requirement of RBI
c bank shall pay interest at repo rate
instead of rate of interest offered in
the offer document, if CAR of the bank
falls below the minimum regulatory
requirement of RBI
d bank shall pay interest at reverse repo
rate instead of rate of interest offered
in the offer document, if CAR of the
bank falls below the minimum regulatory
requirement of RBI
06 What the maximum amount of
Innovative Perpetual Debt Instrument
that can be issued on foreign
currency:
a 74% of the eligible amount
b 51% of the eligible amount
c 49% of the eligible amount
d no issue can be there in Foreign
Currency
07 Total amount of Perpetual non-
cumulative preference shares within
Tier I capital fund can be maximum:
a 15% of Tier I capital fund
b 40% of Tier I capital fund
c 40% of total capital fund.
d 40% of Tier I capital fund including
the amount of innovative perpetual
debt instruments
08 Perpetual non-cumulative preference
shares can be issued with (a) Put
option (b) Call option (c) step up
option.
a a to c all
b b and c only
c c only
d b only
09 If a Perpetual non-cumulative
preference shares is issued with call
option, it can be exercised :
a before 15 years
b after 5 years
c after 10 years
d cannot be issued with such option
10 On Perpetual non-cumulative
preference shares, which of the
following is correct regarding dividend
payment:
a dividend can be paid provided the
level of CAR is above the minimum
regulatory requirement of RBI
b dividend payment can be on
cumulative basis
c rate of dividend can be maximum 15%
d dividend can be paid even if there
are losses.
11 Which of the following statement
regarding investment in Perpetual
non-cumulative preference shares is
not correct:
a FII investment can be within overall
limit of 49%
b NRI investment can be within overall
limit of 24%
c Investment in each FII can be more
than 10%
d Investment in each NRI can be more
than 10%
12 Which of the following statement
regarding Perpetual non-cumulative
preference shares is correct (a) for
CRR purposes, the amount is included
in NDTL (b) for SLR purposes, the
amount is included in NTDL (c) Banks
can grant loan against security of
PNCPS.
a a to c all
b only b and c
c only a and b
d none of these is correct
13 The maximum amount of Upper Tier
II instruments can be ____:
a 15% of Tier I capital fund
b 40% of Tier I capital fund
c 100% of Tier I capital fund
d 100% of Tier I capital fund along with
other Tier II instrument
14 The maturity period of Upper Tier II
instruments can be ____:
a maximum 10 years
b minimum 10 years
c maximum 15 years
d minimum 15 years
15 The upper Tier II instruments can be
issued with which of the following
options (a) Put option (b) Step up
option (c) call option
a a and b only
b b and c only
c a and c only
d a to c all
16 The Upper Tier II instruments are
subject to discount when their maturity
period is less than 5 years. Which of
the following discount rate does
match:
a if remaining maturity is less than one
year – 100%
b if remaining maturity is more than one
year but less than two years – 80%
c if remaining maturity is more than two
years but less than three years – 50%
d if remaining maturity is more than
three years but less than four years
– 40%
17 Tier II capital instruments such as
Perpetual cumulative preference
shares or Redeemable non-
cumulative preference shares or
redeemable cumulative preference
shares are to be shown in ____ in the
balance sheet:
a Schedule 3, for deposits
b Schedule 4, for borrowing
c Schedule 5, for other liabilities
d Schedule 9, for loans and advances
18 Tier II capital instruments such as
Perpetual cumulative preference
shares or Redeemable non-
cumulative preference shares or
redeemable cumulative preference
shares can have maturity of:
a minimum 15 years
 Banking events updatE ♦ July 2010 ♦17
b minimum 10 years b banking book a Delta
c maximum 15 years c investment book b Alpha
d minimum 15 years d loans and investment book c Gamma
19 Total amount of Perpetual cumulative 24 The term core capital in the context d Rho
preference shares or Redeemable non- of Basel 2 represents which of the 30 The capital market instruments that
cumulative preference shares or following: combine certain characteristics of
redeemable cumulative preference a paid up capital and reserves equity and certain characteristics of
shares, alongwith other Tier II b Tier I capital funds debt, are called:
instruments can be: c Tier II capital funds a subordinated loans
a maximum 100% of capital fund d Total capital funds comprising Tier 1, b Debentures
b maximum 100% of Tier I capital Tier II and Tier III c hybrid debt capital instruments
c maximum 50% of Tier I capital 25 Unabsorbed depreciation and carry d bonds
d maximum 40% of capital fund forward of losses which can be set- 31 The _____or volatility of an interest
20 Subordinated debt with initial maturity off against future taxable income bearing security is its Macaulay
period of ___ or with a remaining which is considered as timing duration divided by one plus the
maturity period of ___ is not to be differences result in _____. coupon rate of the security.
included in Tier II capital: a Deferred liability a derivative
a less than 10 year, less than 5 years b Intangible assets b option
b less than 10 year, less than 1 years c Deferred tax assets c modified duration
c less than 5 year, less than 5 years d Contingent assets d simulation
d less than 5 year, less than 1 years 26 The ____ is the rate of change in the 32 To calculate Net NPA, which of the
21 If a subordinated debt bond is issued value of the option / portfolio with following is required to be deducted
in the last quarter of the financial year respect to change in the price of the from Gross NPA (a) balance in
i.e. between Jan 01 to Mar 31, its asset(s) underlying the option(s). suspense accounts (b) DICGC/ECGC
minimum tenure should be: a Delta claims received and held pending
a 84 months b Alpha adjustment (c) part payment received
b 75 months c Gamma and kept in suspense account (d)
c 63 months d Modified duration Total provisions held:
d 60 months 27 _____ measures the price volatility of a a to d all
22 In which of the following Tier I or Tier fixed income securities. b a, b and c only
II capital instruments, the call option a derivative c b, c and d only
can be exercised by the bank, after 5 b option d c and d only
year: c forward 33 The business activities of a bank that
a innovative perpetual debt instruments d duration generally do not involve booking
b perpetual cumulative preference 28 ____ is the net difference between assets (loans) and taking deposits, are
shares the amounts payable and amounts called:
c redeemable non-cumulative receivable in a particular instrument a merchant banking activities
preference shares or commodity. b portfolio management
d subordinated debt bonds a position c off-balance sheet exposure
Questions based on Terms used in b duration d contingent liabilities and assets
Basel 2 c option 34 A long position refers to a position
23 The _____ comprises assets and d derivative where ____ from a rise in the value of
liabilities which are contracted on 29 The ___ is the rate of change of the the underlying.
account of relationship or to be held option’s / portfolio’s delta with respect a losses arise
till maturity for earning of income: to the change in the price of the b losses decline
a trading book asset(s) underlying the option (s). c gains arise

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 18 ♦ Banking events updatE ♦ July 2010
d gains decline d innovative perpetual debt instruments d no such approval required. Bank can
35 ____ results from the existence of a 41 The ___refers to the assets that are continue the relationship
net long or net short position in the held primarily for generating profit on 47 As per KYC policy, the banks should
particular instrument or commodity. short-term differences in prices/yields. not allow opening and/or holding of
a over sold position a Banking Book an account on behalf of a client/s by
b over bought position b Asset Book professional intermediaries, like
c open position c Liability Book Lawyers and Chartered Accountants,
d all the above d Trading Book etc., :
36 ____ is the rate of change in the value 42 ____ is a method for calculating and a who are refuse to disclose true identity
of an option / portfolio with respect to controlling exposure to market risk. of the owner of the account/funds due
change in the level of interest rates. a simulation to any professional obligation of
a Theta b value at risk customer confidentiality.
b Alpha c duration b who are disclose true identity of the
c Gamma d modified duration owner of the account/funds due to
d Rho any professional obligation of
43 The ___ is the rate of change in the
customer confidentiality.
37 A short position refers to a position value of the option / portfolio with
where ____ from a decline in the value respect to volatility of the asset(s) c who are unable to disclose true
of the underlying. underlying the option(s) identity of the owner of the account/
funds due to any professional
a losses arise a Theta
obligation of customer confidentiality.
b losses decline b Alpha
d all the above
c gains arise c Vega
48 Alterations are not allowed on cheques
d gains decline d Rho under CTS-2010. The effective date
38 In the event of the bankruptcy or Questions based on latest policy of of implementation is:
liquidation of the debtor, ___only has RBI a April 01, 2011
a secondary claim on repayments, 44 Banks may waive margin/security b Dec 01, 2010
after other debt has been repaid. requirements for agricultural loans up c Oct 01, 2010
a unsecured loans to Rs. ___ d April 01, 2010
b subordinated debt a Rs.25000 49 While approving a compromise
c hybrid debt capital instruments b Rs.50000 proposal, what additional requirement
d redeemable cumulative preference c Rs.100000 out of the following is to be fulfilled:
shares d discretion of banks a controlling office has to add a
39 The ___ of an option / a portfolio of 45 What is RBI projection for GDP growth certificate that settlement has been
options is the rate of change in the for annual credit and monetary policy in conformity with the RBI guidelines.
value of the option / portfolio with for the year 2010-11: b next higher authority has to add a
respect to passage of time, with all certificate that settlement has been
a 7% with upside bias
else remaining the same. in conformity with the RBI guidelines.
b 8% with downside bias
c sanctioning authority has to add a
a Theta c 8% with upside bias certificate that settlement has been
b Alpha d 9% with upside bias in conformity with the RBI guidelines.
c Vega 46 In the event of an existing customer d any of the above authority has to add
d Rho or the beneficial owner of an existing
a certificate that settlement has been
40 The term supplementary capital in the account, subsequently becoming a
context of Basel 2 represents which PEP, banks should obtain ____ approval in conformity with the RBI guidelines.
of the following: to continue the business relationship
ANSWERS
a Tier I capital funds a senior management approval 01 c 02 c 03 b 04 b 05 b
b Tier II capital funds b Board approval 06 c 07 d 08 d 09 c 10 a
c Perpetual non-cumulative shares c Customer Service Committee approval 11 d 12 d 13 d 14 d 15 b
16 c 17 b 18 a 19 b 20 d
21 c 22 d 23 b 24 b 25 c
26 a 27 d 28 a 29 c 30 c
Name:____________________________________________________ 31 c 32 a 33 c 34 c 35 c
SUBSCRIPTION FORM

36 d 37 c 38 b 39 a 40 b
Address:__________________________________________________ 41 d 42 b 43 c 44 c 45 c
46 a 47 c 48 b 49 c
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B ANKING Alterations in Cheques
POLICY A few references were received by RBI from banks and
members of the public seeking certain clarifications on legal validity, effective
date of implementation, etc. RBI has clarified (June 22) that the prescription on
‘prohibiting alterations / corrections on cheques’ -
i.has been formulated on the basis of recommendations of a working group
constituted for examining the need for standardisation of cheque forms and
enhancement of security features therein and after consultations with banks;
ii.has been introduced to curtail cheque frauds on account of alterations in the
various fields of cheques and to give protection to customers as well as banks;
iii.will be applicable only for cheques cleared under the image-based Cheque
Truncation System (CTS). Collecting banks should ensure, ab initio, that such
cheques are not accepted for presentment in CTS.
iv.is not applicable to cheques cleared under other clearing arrangements such
as MICR clearing, non-MICR clearing, over the counter collection (for cash
payment) or direct collection of cheques outside the Clearing House arrangement.
This prescription will be effective from December 1, 2010. Banks have been
advised to ensure that adequate care is taken to educate the customers and to
create awareness among them so that the entire process is carried out in a
smooth manner.
Compromise/Negotiated/One Time settlement of NPAs
Of late, certain serious concerns have been expressed in different quarters and
by the Debt Recovery Tribunals over the manne,r the compromise settlements
have been effected by banks. One of the DRTs had also observed that banks
adopted different parameters to different borrowers, and agreed for a lesser
amount as against claimed amount, despite availability of ample securities and
by ignoring RBI guidelines.
In this connection, RBI has advised banks (June 21, 2010) that adequate care
should be taken to ensure that the compromise settlements are done in a fair
and transparent manner and in full compliance with RBI guidelines on the matter.
RBI has decided that henceforth, the officer/authority sanctioning a compro-
mise/one time settlement should append a certificate stating that the compro-
mise settlements are in conformity with the RBI guidelines.
Agricultural Loans – Waiver of Margin/Security Requirements
On the basis of representations received seeking enhancement of limits, RBI has
decided (June 18, 2010) that banks may waive margin/security requirements for
agricultural loans from the existing level of Rs. 50,000/- to Rs. 1,00,000/- with
immediate effect.
Know Your Customer (KYC) norms/Anti-Money Laundering (AML)
standards/Combating of Financing of Terrorism (CFT)/Obligation
of banks under Prevention of Money Laundering Act (PMLA), 2002.
RBI direction vide circular dated June 09, 2010:
Suspicion of money laundering/terrorist financing
Whenever there is suspicion of money laundering or terrorist financing or when
other factors give rise to a belief that the customer does not, in fact, pose a low
risk, banks should carry out full scale customer due diligence (CDD) before
opening an account.
Filing of STR
A bank should not open an account (or should consider closing an existing
account) when it is unable to apply appropriate CDD measures. It has been
further clarified that in the circumstances when a bank believes that it would no
longer be satisfied that it knows the true identity of the account holder, the bank
should also file an STR with FIU-IND.
Politically Exposed Persons (PEPs)
In the event of an existing customer or the beneficial owner of an existing
account, subsequently becoming a PEP, banks should obtain senior management
approval to continue the business relationship and subject the account to the
CDD measures as applicable to the customers of PEP category including en-
hanced monitoring on an ongoing basis. The instructions are also applicable to
accounts where a PEP is the ultimate beneficial owner. Further, in regard to PEP
accounts, RBI has reiterated that banks should have appropriate ongoing risk
management procedures for identifying and applying enhanced CDD to PEPs,
customers who are close relatives of PEPs, and accounts of which a PEP is the
Banking events updatE ♦ July 2010 ♦ 19
ultimate beneficial owner.
Principal Officer
The role and responsibilities of the Principal Officer
should include overseeing and ensuring overall com-
pliance with regulatory guidelines on KYC/AML/CFT
issued from time to time and obligations under the
Prevention of Money Laundering Act, 2002, rules
and regulations made thereunder, as amended form
time to time.
RBI direction vide circular dated June 10, 2010:
Client accounts opened by professional in-
termediaries
Banks should not allow opening and/or holding of an
account on behalf of a client/s by professional inter-
mediaries, like Lawyers and Chartered Accountants,
etc., who are unable to disclose true identity of the
owner of the account/funds due to any professional
obligation of customer confidentiality. Further, any
professional intermediary who is under any obliga-
tion that inhibits bank’s ability to know and verify the
true identity of the client on whose behalf the ac-
count is held or beneficial ownership of the account
or understand true nature and purpose of transac-
tion/s, should not be allowed to open an account on
behalf of a client.
RBI direction vide circular dated June 15, 2010:
Countries which do not or insufficiently apply
the FATF recommendations.
RBI has clarified that banks should also give special
attention to business relationships and transactions
with persons (including legal persons and other fi-
nancial institutions) from or in countries that do not
or insufficiently apply the FATF Recommendations
and jurisdictions included in FATF Statements.
Further, RBI advised that banks should examine the
background and purpose of transactions with per-
sons (including legal persons and other financial in-
stitutions) from jurisdictions included in FATF State-
ments and countries that do not or insufficiently ap-
ply the FATF Recommendations. Further, if the trans-
actions have no apparent economic or visible lawful
purpose, the background and purpose of such trans-
actions should, as far as possible be examined, and
written findings together with all documents should
be retained and made available to Reserve Bank/
other relevant authorities, on request.
Shell Banks
Banks should not enter into relationship with shell
banks and before establishing correspondent rela-
tionship with any foreign institution, banks should
take appropriate measures to satisfy themselves that
the foreign respondent institution does not permit its
accounts to be used by shell banks.
These guidelines have been issued under Section
35A of the Banking Regulation Act, 1949. Any
contravention thereof or non-compliance shall attract
penalties under Banking Regulation Act.
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 Registration RNI No. 67802/98 Postal Regn No.CHD / (0001) 2009-11
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Non-Convertible Debentures DATA COLUMN

Non-Convertible Debenture (NCD) means a debt instrument issued by a corporate Business of Banks
(including NBFCs) with original or initial maturity up to one year and issued by way of (Rs.in Cr) Mar31'09 Jun04'10
private placement. RBI issued the directions u/s 45K, 45L and 45W of RBI Act, 1934 for Aggregate deposits 4086865 4541302
Cash in hand/RBI 201249 303235
issue of NCDs to come into effect wef Aug 02, 2010.
Investments 1247820 1435703
Eligibility parameters for a corporate to issue NCDs: Bank Credit: 2771441 3288074
i. Minimum tangible net worth Rs.4 crore, as per the latest audited balance sheet; -Food 46750 52149
-Non-Food 2724691 3166974
ii. Sanctioned working capital limit or term loan by bank/s or financial institution/s; and Cash-Deposit Ratio 5.16 6.68
iii.the borrowal account is classified as a Standard Asset by bank/s or institution/s. Investment-Deposit 31.61
Rating Requirement : Credit rating may be obtained from CRISIL, ICRA, CARE, 32.11 Credit-Deposit 72.40
FITCH Ratings India Pvt. Ltd or such other agencies registered with SEBI. The minimum 71.55 Money Stock
(Rs.in Cr) Mar31'10 Jun04'10
credit rating shall be P-2 of CRISIL or such equivalent rating by other agencies. The
M3 (Out of which) 5579567 5688508
rating should be current and has not fallen due for review. (a) Currency with public 768048 826087
Maturity: (a) Min 90 days from the date of issue and maximum one year. (b) Demand deposits-Banks 714157 647344
(b) The exercise date of option (put/call), if any, attached to the NCDs shall not fall (c) Time Deposits - Banks 4093577 4211438
(d) Other deposits with RBI 3785 3639
within the period of 90 days from the date of issue. (c) The tenor of the NCDs shall not Sources of Money Supply
exceed the validity period of the credit rating of the instrument determined by the (a) Net Bank credit to Govt 1668258 1715934
rating agency. (b) Bank credit to Comrcl sector 3483253 3529930
Denomination : NCDs may be issued in denominations with a minimum of Rs.5 lakh (c) Net Forex assets of Banks 1275039 1280452
(face value) and in multiples of Rs.1 lakh. Important Banking Indicators
Bank rate 06.00% (29.04.2003)
Limits and the Amount of Issue of NCDs: 1. The aggregate amount of NCDs Statutory Liqdity Ratio 25.00% (07.11.2009)
issued by a corporate shall be within such limit as may be approved by the Board of Cash Reserve Ratio 06.00% (24.04.2010)
Directors of the corporate or the quantum indicated by the Credit Rating Agency for Prime Lending Rate 11.0-11.75% (Leading banks)
the rating granted, whichever is lower. Reverse Repo Rate 03.75% (20.04.2010)
Repo Rate 05.25% (20.04.2010)
2. The total amount of NCDs proposed to be issued shall be completed within a period Federal Reserve(US) rate: 1.00%
of 2 weeks from the date on which the corporate opens the issue for subscription. Bank of England Rate : 0.50%
Procedure for Issuance :1. The corporate shall disclose to the prospective inves- European Comm. Bank 1.00%
tors, its financial position as per the standard market practice. Capital & Money Market Indicators
Parameter end-May 10 A year back
2. The auditors of the corporate shall certify to the investors that all the eligibility
Call rates (percent) 3.75 3.50
conditions set forth in these directions for the issue of NCDs are met by the corporate. Dollar-spot TT (Rs.) 45.75 50.09
3. The requirements of all the provisions of the Companies Act, 1956 and the Securities Euro-spot TT (Rs.) 55.17 66.35
and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, BSE - Sensex (points) 16863 11403
or any other law, that may be applicable, shall be complied with by the corporate. NSE - Nifty(S&P CNX) 5067 3473
Foreign reserves(Million $) 273300 254207
4. The Debenture Certificate shall be issued within the period prescribed in the Compa-
nies Act, 1956 or any other law as in force at the time of issuance.
5. NCDs may be issued at face value carrying a coupon rate or at a discount to face INDIAN ECONOMY-IMPORTANT PARAMETERS
value as zero coupon instruments as determined by the corporate. RBI's growth estimate for 2010-11 : 8.0%
GDP growth-2009-10 (revised estimate) : 7.4%
Debenture Trustee :1. Every corporate issuing NCDs shall appoint a Debenture GDP at factor cost 2009-10 (cr) : 5868331
Trustee (DT) for each issuance of the NCDs. Share of service sector in GDP : 64.5%
2. Any entity that is registered as a DT with the SEBI under SEBI (Debenture Trustees) Share of manufacturing sector in GDP : 18.2%
Regulations, 1993, shall be eligible to act as DT for issue of the NCDs only subject to Share of agriculture sector in GDP : 17.3%
Current Inflation Rate (Wholesale) - Dec09: 7.03%
compliance with the requirement of these Directions.
Money Supply (M3) expansion Jun"10 : 14.6%
3. The DT shall submit to RBI such information as required by it from time to time. Exports during 2008-09 : 168.0 bn
Investment in NCD:1. NCDs may be issued to and held by individuals, banks, Primary Trade deficit (2007-08) : 80.6 Bn
Dealers (PDs), other corporate bodies including insurance companies and mutual funds Current Account position (Apr-Mar 08) : 17.4 Bn
registered or incorporated in India and unincorporated bodies, NRIs and FIIs. Export target for 2010-11 (in $) : 200 bn
GDP at factor cost (2009-10 Cr) : 4303654
2. Investments by Banks/PDs shall be subject to approval of the respective regulators. India's share in world merchandise export : 1.45%
3. Investments by the FIIs shall be within such limits as may be set forth in this regard Food grain production (2007-08) -Estimate : 227.3
from time to time by the SEBI. Poverty line ratio (2004-05) : 22%
India's currency rating (S&P) : BB Postv
Preference for Dematerialisation: While option is available to both issuers and
India's external debt (Dec 2009) US $ : 251.4 Bn
subscribers to issue/hold NCDs in dematerialised or physical form, they are encouraged Fiscal Deficit Target (2010-11) 5.5% of GDP : 381408 cr
to issue/ hold NCDs in dematerialised form. However, banks, FIs and PDs are required Revenue Deficit Target (2010-11) 4.% of GDP : 276512 cr
to make fresh investments in NCDs only in dematerialised form. Tax-GDP ratio (2008-09) : 11.2%
Reporting to RBI: (a) The DTs shall report, within 3 days from the date of completion Apr- Dec 2009:Export 147.57 bn Imports : 253.9 bn
Per capita Income 2009-10 (Rs.) : 44345
of the issue, the issuance details to RBI. (b) Further, the DTs should submit to RBI (on
Indian economy's ranking in world in PPP : 3rd
a quarterly basis) a report on the outstanding amount of NCDs of maturity up to year. Indian economy's ranking in world in value: 10th
(c) DTs are to report immediately, on occurrence, full particulars of defaults in repay-
ment of NCDs to RBI. OUR PUBLICATIONS : REFER PAGE 11
Sh. N S Toor can be reached by readers at ns.toor@gmail.com DATE OF DESPATCH - July 7 / 10, 2010

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