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GK POWERCAPSULE FOR SBI ASSOCIATE ASSISTANT EXAM 2015
Note: As on 30, Sept, 2014, RBI (Reserve Bank of India) in its
fourth bimonthly monetary policy statement kept the key policy rate
unchanged.
1. RBI issued guidelines for setting up a trading platform for
trade receivables
Medium Enterprises - MSME. The Trade Receivables Discounting
System equity capital of 25 crore rupees and non
2. RBI relaxed norms for Pre-paid Payment Instrumentsrupees.
Highlights of RBI norms on PPI i. The maximum validity of gift
cards has been enhanced from one year to three years. Other prwith
respect to gift cards will continue. ii. RBI also allowed issue of
multiple PPIs by banks from fullymembers. Only one card can be
issued to one beneficiary. The central badenominated PPIs for
visiting foreign nationals and NRIs.
3. RBI keeps interest rate unchanged i. RBI in its fifth
bi-monthly monetary policy statement kept the policy rates
unchanged.ii. The headline inflation has been receding steadily,
and current readings are below the January 2015 target of 8 per
cent as well as the January 2016 target of 6 per cent,'' the RBI
said.
4. RBI eased gold imports and scrapped 20:80gold and raise legal
shipments into India.
5. Government needs to infuse as much as Rs 2.4 lakh crore
($38.78 billion) into statemeet different kinds of capital
requirements including Basel III, provisioning fcentral bank Deputy
Governor SS Mundra
6. RBI tightens norms for NBFCs: Tightening norms for nonIndia
raised the capital adequacy requirement and the netrisks in the
sector. Note: i. At present, the net owned fund (NOF)required to
raise it to Rs.1 crore by March, 2016, and toiii. Also, NBFCs
primarily engaged in lending against gold jewellery, will have to
maintain a minimum Tier I capital (or equity capital) of 12 per
cent with effective from April 1 as against existing requirement
o
This GK Capsule has been prepared by
document consists of all important news and events of last
few
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GK POWERCAPSULE FOR SBI ASSOCIATE ASSISTANT EXAM 2015
Current RBI Policy & Reserve Rates:
Repo Rate 8% (Unchanged)
Reverse Repo 7% (Unchanged)
CRR 4% (Unchanged)
SLR 22% (Unchanged)
MSF 9% (Unchanged) Bank Rate 9% (Unchanged)
Note: As on 30, Sept, 2014, RBI (Reserve Bank of India) in its
fourth bimonthly monetary policy statement kept the
News related to RBI
RBI issued guidelines for setting up a trading platform for
trade receivables and bills of exchanges of Micro and Small and The
Trade Receivables Discounting System - TReDS should have a minimum
paid up
equity capital of 25 crore rupees and non-promoters would not
hold over 10 per cent of the equity capitaPayment Instruments
(PPIs) and doubled the limit to one lakh rupees
has been enhanced from one year to three years. Other pr
RBI also allowed issue of multiple PPIs by banks from fully-KYC
compliant bank accounts for dependent or family members. Only one
card can be issued to one beneficiary. The central bank also
permitted banks to issue rupee denominated PPIs for visiting
foreign nationals and NRIs.
monthly monetary policy statement kept the policy rates
unchanged.receding steadily, and current readings are below the
January 2015 target of 8 per cent
as well as the January 2016 target of 6 per cent,'' the RBI
said. 20:80 schemes. The decision to withdraw the 20:80 schemes
will c
gold and raise legal shipments into India. Government needs to
infuse as much as Rs 2.4 lakh crore ($38.78 billion) into
state-owned banks by endmeet different kinds of capital
requirements including Basel III, provisioning for asset quality,
and additional risks, said a central bank Deputy Governor SS
Mundra.
Tightening norms for non-banking financial companies (NBFCs),
the Reserve Bank of India raised the capital adequacy requirement
and the net owned fund limit, among others, with an objective to
mitigate
net owned fund (NOF) requirement is at Rs.25 lakh. In a phased
manner, the NBFCs would be required to raise it to Rs.1 crore by
March, 2016, and to further double it to Rs.2 crore by 2017.
Also, NBFCs primarily engaged in lending against gold jewellery,
will have to maintain a minimum Tier I capital (or equity capital)
of 12 per cent with effective from April 1 as against existing
requirement o
This GK Capsule has been prepared by Career Power Institute
Delhi (Formerly Known as Bank Power). This
document consists of all important news and events of last few
months which can come in
Assistant Exam.
www.careeradda.co.in 1
GK POWERCAPSULE FOR SBI ASSOCIATE ASSISTANT EXAM 2015
Note: As on 30, Sept, 2014, RBI (Reserve Bank of India) in its
fourth bimonthly monetary policy statement kept the
and bills of exchanges of Micro and Small and should have a
minimum paid up
promoters would not hold over 10 per cent of the equity capital
of TReDS. (PPIs) and doubled the limit to one lakh rupees from
50000
has been enhanced from one year to three years. Other provisions
of PPI guidelines
KYC compliant bank accounts for dependent or family nk also
permitted banks to issue rupee
monthly monetary policy statement kept the policy rates
unchanged. receding steadily, and current readings are below the
January 2015 target of 8 per cent
schemes. The decision to withdraw the 20:80 schemes will cut
smuggling of
owned banks by end-March 2019 to or asset quality, and
additional risks, said a
banking financial companies (NBFCs), the Reserve Bank of owned
fund limit, among others, with an objective to mitigate
requirement is at Rs.25 lakh. In a phased manner, the NBFCs
would be further double it to Rs.2 crore by 2017.
Also, NBFCs primarily engaged in lending against gold jewellery,
will have to maintain a minimum Tier I capital (or equity capital)
of 12 per cent with effective from April 1 as against existing
requirement of 10 per cent.
(Formerly Known as Bank Power). This
months which can come in SBI Associate
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2
iv. For deposit and non-deposit taking NBFCs, Capital to Risk
(Weighted) Assets Ratio or CRAR, which includes Tier I capital of
7.5 per cent, which have to be raise the Tier I capital to 8.5 per
cent by end of March 2016 and 10 per cent by March, 31, 2017.
7. The Reserve Bank has signed a pact with Central Bank of Kenya
for exchange of information and supervisory cooperation.
8. RBI Draft Guidelines for Licensing of New Banks in the
Private Sector Key points: i. Minimum capital requirement will be
Rs 500 crore. ii. Aggregate foreign shareholding in the new bank
should not exceed 49 per cent for the first five years. iii. The
new bank should open at least 25 per cent of its branches in
unbanked rural centres.
9. Non-Banking Financial Company (NBFC): A Non-Banking Financial
Company (NBFC) is a company registered under the Companies Act,
1956 are financial institutions that provide banking services
without meeting the legal definition of a bank, i.e. one that does
not hold abanking license. Difference between banks & NBFCs: i.
NBFC cannot accept demand deposits; ii. NBFCs do not form part of
the payment and settlement system and cannot issue cheques drawn on
itself; iii. deposit insurance facility of Deposit Insurance and
Credit Guarantee Corporation is not available to depositors of
NBFCs, unlike in case of banks. Key Points i. Minimum capital
requirement will be Rs 500 crore. ii. Aggregate foreign
shareholding in the new bank should not exceed 49 per cent for the
first five years. iii. The NBFCs are allowed to accept/renew public
deposits for a minimum period of 12 months and maximum period of 60
months. They cannot accept deposits repayable on demand. iv. NBFCs
cannot offer interest rates higher than the ceiling rate prescribed
by RBI from time to time. The present ceiling is 12.5 per cent per
annum. v. The deposits with NBFCs are not insured.
10. RBI Draft Guidelines for Licensing of Foreign Banks -
Foreign banks that want to set up operations in India will have to
do so through an independent subsidiary. This means they cannot
operate as a branch of the parent bank. Key Points: i. The initial
minimum capital for a WoS will be Rs. 500 crore. ii. RBI said that
the WoS (wholly-owned subsidiary) will be required to meet
Basel-III requirements (9 per cent Tier-I capital) right from Day
One. For the first three years, the WoS will have to maintain
Tier-I capital at 10 per cent. iii. The Priority Sector Lending
(PSL) requirement will be 40 per cent for WoSs, such as domestic
scheduled commercial banks iv. The new bank should open at least 25
per cent of its branches in unbanked rural centres.
11. Reserve Bank of India reduced free usage of other bank
automated teller machines (ATMs) to 3 per month from 5: Frequent
withdrawal of money from ATMs will become expensive from November,
with the RBI imposing a limit of 3 transactions per month from ATMs
of other banks and 5 from the same bank in six metropolitan cities.
Note: A customer will be required to pay a fee of up to Rs 20 for
using Automated Teller Machines (ATMs) beyond the permitted numbers
of transactions in Delhi, Mumbai, Chennai, Bangalore, Kolkata and
Hyderabad.
12. RBI issued two new categories of banksSmall and Payments
which can improve financial inclusion. Important Points: i. The
idea of small and payments banks was first proposed by the Nachiket
Mor committee on financial inclusion. ii. The minimum paid-up
capital requirement of both small banks and payments banks is Rs.
100 crore. iii. The payments bank will have to invest in government
securities with a maturity of up to one year. iv. Small banks will
offer both deposits as well as loan products. ii. Payments banks
will be used only for transaction and deposits purposes. Unlike
small banks, payments banks cant lend money to people.
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iii. Payments Banks cannot set up subsidiaries to undertakeiv.
Hence, payments banks will offer only a limited range of products
such as acceptance of demand deposits and remittance of funds. v.
Those eligible to set up a small bank include resident indfinance,
companies and societies, NBFCs, microfinance institutions and local
area banks. v. Of the minimum capital, the guidelines said, the
promoters' initial minimum contribution will be be locked in for a
period of 5 years. vi. The Reserve Bank of India has issued final
norms for payment banks and small finance banks that would allow
mobile firms and supermarket chains, to enter the banking arena to
cater to individuals and smvii. The move aims at deepening
financial inclusion and boost saving habits.Services, Magma Fincorp
and Muthoot Financesmall banks. viii. The Department of Posts,
Bharti Airtel, Vodafone India, Tata Teleservices, Western Union and
online digital payment players such as Paytm, Oxigen and
MobiKwikwill have to apply by January 16, 2015
Key activities i. The small bank will primarily undertake basic
banking activities of and under-served sections, including small
business units, small and margunorganised sector entities. ii.
Small banks will be required to maintain a minimum capital adequacy
ratio of 15 per cent of the loans on a continuous basis. iii. In
the draft guidelines, the RBI had suggested tcontiguous districts
in a homogenous States). However, in the final guidelines, these
restrictions have been removed. The small bank will be required to
extend 75 per cent of its credit tPayment Banks: i. Payments banks
can accept depositsentities but cannot provide loans. However, they
cannot accept non-resident Indian deposits. ii. The payment bank
will initially be restricted to holding a maximum balance of Rs1
lakh per individual customer.iii. While the bank can issue
ATM/debit cards, it cannot issue credit cards.It can contract
outside liabilities (deposits) but not exceeding 33.33 times
(against 20 times in the draft guidelines) its net worth.
13. RBI issues guidelines for NBFCs on lending against shares.
Note: According to the guidelines applicable to NBFCs with assetto
maintain a loan-to-value (of shares pledged) of 50 per cent and
accept only Grouploans of a value more than Rs. 5 lakh.
14. RBI notified the increase in deposit money under Public
Provident Fund, PPF15. The Reserve Bank of India (RBI) issued draft
guidelines for implementation of
an 'anytime anywhere' bill payment system: Note: i. Bharat Bill
Payment System is intended for the implementation of a unified bill
payment system acroscountry. This integrated bill payment system
will comprise of two entities:i. Entity operating at Bharat Bill
Payment System (BBPS) will be setting up the standards related to
payments, clearance and settlement process ii. Second entity would
be Bharat Bill Payment Operating Units (BBPOUs). It will be
carrying out the operations in adherence to the standards fixed by
BBPS.iii. Authorised entities such as agents, banks, service
providers, payment gateways would be the participants at the Bharat
Bill Payment System.
16. Raghuram Rajan, the Governor of the Reserve Bank of India
(RBI) announced in 2015 after field trials.
17. Reserve Bank of India (RBI) issued the guidelines to allow
the minors of age above 10 years toperate savings bank accounts and
use other facilities like ATM and cheque books.
SBI in news - SBI to raise Rs.4,000 cr for BPCL's petrochemical
plan
i. State-run Bharat Petroleum Corporation Ltd (BPCL) is planning
to raise Rs.refinery and to fund its petrochemicals venture, said
three banking sources aware of the development.
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cannot set up subsidiaries to undertake NBFC business. Hence,
payments banks will offer only a limited range of products such as
acceptance of demand deposits and
Those eligible to set up a small bank include resident
individuals with 10 years of experiencecompanies and societies,
NBFCs, microfinance institutions and local area banks.
Of the minimum capital, the guidelines said, the promoters'
initial minimum contribution will be
The Reserve Bank of India has issued final norms for payment
banks and small finance banks that would allow mobile firms and
supermarket chains, to enter the banking arena to cater to
individuals and sm
The move aims at deepening financial inclusion and boost saving
habits. Shriram Capital, Janalakshmi Financial Services, Magma
Fincorp and Muthoot Finance, among others, are expected to throw
their hats into the ring to set up
The Department of Posts, Bharti Airtel, Vodafone India, Tata
Teleservices, Western Union and online digital payment players such
as Paytm, Oxigen and MobiKwik have expressed interest in floating
payment banks. Companies
uary 16, 2015, for licences in both categories.
The small bank will primarily undertake basic banking activities
of acceptance of deposits and lending to un, including small
business units, small and marginal farmers, micro and small
industries and
Small banks will be required to maintain a minimum capital
adequacy ratio of 15 per cent of the loans on a continuous
In the draft guidelines, the RBI had suggested that small banks
would have a restricted area of operations (possibly contiguous
districts in a homogenous States). However, in the final
guidelines, these restrictions have been removed. The small bank
will be required to extend 75 per cent of its credit to the
priority sector
accept deposits current and savings bank from individuals, small
businesses and other loans. However, they cannot
nt bank will initially be restricted to holding a maximum
balance of Rs1 lakh per individual customer.
While the bank can issue ATM/debit cards, it cannot issue credit
cards.It can contract outside liabilities (deposits) but not
(against 20 times in the draft
for NBFCs on lending against shares. According to the guidelines
applicable to NBFCs with asset size of Rs. 100 crore and above
lue (of shares pledged) of 50 per cent and accept only Group
RBI notified the increase in deposit money under Public
Provident Fund, PPF to 1.5 lakh rupees from 1 lakh rupees.e Bank of
India (RBI) issued draft guidelines for implementation of Bharat
Bill Payment System (BPPS),
'anytime anywhere' bill payment system: Bharat Bill Payment
System is intended for the implementation of a unified bill payment
system acros
This integrated bill payment system will comprise of two
entities: Entity operating at Bharat Bill Payment System (BBPS)
will be setting up the standards related to payments, clearance
rat Bill Payment Operating Units (BBPOUs). It will be carrying
out the operations in adherence to the standards fixed by BBPS.
Authorised entities such as agents, banks, service providers,
payment gateways would be the participants at the Bharat
Raghuram Rajan, the Governor of the Reserve Bank of India (RBI)
announced that plastic currency notes will be launched
Reserve Bank of India (RBI) issued the guidelines to allow the
minors of age above 10 years toperate savings bank accounts and use
other facilities like ATM and cheque books.
SBI to raise Rs.4,000 cr for BPCL's petrochemical plan run
Bharat Petroleum Corporation Ltd (BPCL) is planning to raise
Rs.4,000crore for the expansion of its Kochi
refinery and to fund its petrochemicals venture, said three
banking sources aware of the development.
www.careeradda.co.in 3
Hence, payments banks will offer only a limited range of
products such as acceptance of demand deposits and
with 10 years of experience in banking and companies and
societies, NBFCs, microfinance institutions and local area
banks.
Of the minimum capital, the guidelines said, the promoters'
initial minimum contribution will be at least 40 per cent, to
The Reserve Bank of India has issued final norms for payment
banks and small finance banks that would allow mobile firms and
supermarket chains, to enter the banking arena to cater to
individuals and small businesses.
Shriram Capital, Janalakshmi Financial , among others, are
expected to throw their hats into the ring to set up
The Department of Posts, Bharti Airtel, Vodafone India, Tata
Teleservices, Western Union and online digital have expressed
interest in floating payment banks. Companies
acceptance of deposits and lending to un-served inal farmers,
micro and small industries and
Small banks will be required to maintain a minimum capital
adequacy ratio of 15 per cent of the loans on a continuous
hat small banks would have a restricted area of operations
(possibly contiguous districts in a homogenous States). However, in
the final guidelines, these restrictions have been removed. The
from individuals, small businesses and other
100 crore and above, the NBFCs have lue (of shares pledged) of
50 per cent and accept only Group 1 securities as collateral
for
to 1.5 lakh rupees from 1 lakh rupees. Bharat Bill Payment
System (BPPS),
Bharat Bill Payment System is intended for the implementation of
a unified bill payment system across the
Entity operating at Bharat Bill Payment System (BBPS) will be
setting up the standards related to payments, clearance
rat Bill Payment Operating Units (BBPOUs). It will be carrying
out the operations in
Authorised entities such as agents, banks, service providers,
payment gateways would be the participants at the Bharat
that plastic currency notes will be launched
Reserve Bank of India (RBI) issued the guidelines to allow the
minors of age above 10 years to independently open and
4,000crore for the expansion of its Kochi refinery and to fund
its petrochemicals venture, said three banking sources aware of the
development.
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Ii. BPCL is planning to diversify into downstream petrochemicals
with an investment of Rs.4,588crore by using pr State Bank of India
to launch Islamic equity fund
i. State-owned bank will launch an Islamic equity fund next
month aimed primarily at the country's 170 million Muslims.SEBI
recently allowed the governmentSharia funds. Note:India is only the
second country outside the Islamic world where a
stateSharia-compliant fund. The U.K. issued sovereign Islamic bonds
in June.
SBI launches first homegrown economicIndex that will primarily
track manufacturing activity and offer a forward
SBI Online were among the three most searched words on the
internet search engine in SBI signed 500 million dollar Line of
Credit with Export SBI, celebrated 150 years of its operations in
Sri Lanka SBI launches mPassBook facility on its smartphone
application anywhere' mobil SBI lend $ 1 billion to Adani Group to
build Australian coal mine which it aims to build by end
Group Gautam Adani. SBI Cards ties up with Future Group company
Fashion at Big Bazaar (FB
Styleup.
ICICI Bank was the first Indian Bank to provide
facility. ICICI Bank was the first Bank to provide Bank of
Baroda has the maximum number of overseas bra SBI (State Bank of
India) has the total number of maximum branches
and holds 2nd position in the world. India's first "talking"
Automated Teller Machine (ATM) launched by
was launched in Ahmedabad (Gujarat). RBI to issue Rs 10 plastic
currency notes in 5 cities:
Note: First plastic notes issued by Australia in 1988. RuPay is
an Indian domestic card scheme conceived and launched by the
National Payments
RuPay facilitates electronic payment at all Indian banks and
financial institutions, and competes with MasterCard and Visa in
India.
India's first non-bank owned ATM (White Label ATMs) opens in
Maharashtra: Solutions Ltd, a wholly owned subsidiary of Tata
Communications Ltd, opened first White Label ATM at Chandrapada in
Thane district, in Maharashtra.
Banking topics in news
NPAs (Non Performing Assets): i. A mortgage in default would be
considered nonii. The lender will force the borrower to liquidate
any assets that were pledged as part of the debt agreement. If no
assets werepledged, the lenders might write-off the asset as a
b
Debt recovery tribunal (DRT- A court for such cases) SARFAESI
ACT - In 2002, Govt. gave banks a lifeline called as
Financial Assets and Enforcement of security interest Act)i.
With this Act bank has the power to take possession of the owners
mortgaged property or can transfer this to some other
ownership.
What bank will do with the acquired propei. Bank can use this
for their own purpose like , opening a new branch on it, installing
of ATMs etc.ii. Bank can advertise in newspapers for the auction of
the property acquired and could auction them on any pre decided
day.iii.Bank can sell the property to ARC (Asset Reconstruction
Company), these are registsuch assets from banks and sell them at
higher prices to gain profits.
Goods and Services Tax - i. It is an indirect tax that will lead
to the abolition ofservice tax, and value-added tax (VAT). Both the
stateservices produced in India or imported into the coii. Exports
will not be subject to GST. Direct taxes, such as income tax,
corporate tax and capital gains
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Ii. BPCL is planning to diversify into downstream petrochemicals
with an investment of Rs.4,588crore by using prState Bank of India
to launch Islamic equity fund
owned bank will launch an Islamic equity fund next month aimed
primarily at the country's 170 million Muslims.SEBI recently
allowed the government-owned State Bank of India BSE 0.41 % and
India is only the second country outside the Islamic world where
a statecompliant fund. The U.K. issued sovereign Islamic bonds in
June.
SBI launches first homegrown economic indicator the SBI Monthly
Composite Indexthat will primarily track manufacturing activity and
offer a forward-looking economic trends.
SBI Online were among the three most searched words on the
internet search engine inSBI signed 500 million dollar Line of
Credit with Export-Import Bank of Korea (Korea Eximbank). SBI,
celebrated 150 years of its operations in Sri Lanka on
13/Sept/2014.
facility on its smartphone application anywhere' mobile
application, for its retail banking users.to Adani Group to build
Australian coal mine which it aims to build by end
company Fashion at Big Bazaar (FBB) to offer a co
Modern Banking Facts:
was the first Indian Bank to provide internet banking
was the first Bank to provide Mobile ATM. has the maximum number
of overseas branches.
SBI (State Bank of India) has the total number of maximum
branches
Teller Machine (ATM) launched by Union Bank of India
RBI to issue Rs 10 plastic currency notes in 5 cities: Kochi,
Mysore, Jaipur, Bhubhaneswar and Shimla.Australia in 1988.
is an Indian domestic card scheme conceived and launched by the
National Payments RuPay facilitates electronic payment at all
Indian banks and financial institutions, and competes with
MasterCard and Visa
bank owned ATM (White Label ATMs) opens in Maharashtra: Tata
CommunicationsSolutions Ltd, a wholly owned subsidiary of Tata
Communications Ltd, opened first White Label ATM at Chandrapada
in
idered non-performing, after a prolonged period of nonThe lender
will force the borrower to liquidate any assets that were pledged
as part of the debt agreement. If no assets were
off the asset as a bad debt and then sell it at a discount to a
collections agency.
A court for such cases) A person whose account is declared as
NPA
, Govt. gave banks a lifeline called as SARFAESI Act
(Securitization aFinancial Assets and Enforcement of security
interest Act)
With this Act bank has the power to take possession of the
owners mortgaged property or can transfer this to some
What bank will do with the acquired property? Bank can use this
for their own purpose like , opening a new branch on it, installing
of ATMs etc.Bank can advertise in newspapers for the auction of the
property acquired and could auction them on any pre decided
day.
(Asset Reconstruction Company), these are registered companies
under RBI, they such assets from banks and sell them at higher
prices to gain profits.
It is an indirect tax that will lead to the abolition of all
other taxes such as, central sales tax, stateadded tax (VAT). Both
the state and the central governments will impose GST on almost all
goods and
services produced in India or imported into the country. GST.
Direct taxes, such as income tax, corporate tax and capital
gains
www.careeradda.co.in 4
Ii. BPCL is planning to diversify into downstream petrochemicals
with an investment of Rs.4,588crore by using propylene.
owned bank will launch an Islamic equity fund next month aimed
primarily at the country's 170 million owned State Bank of India
BSE 0.41 % and three mutual funds to launch
India is only the second country outside the Islamic world where
a state-owned bank is offering a
SBI Monthly Composite Index and the SBI Yearly Composite looking
economic trends.
SBI Online were among the three most searched words on the
internet search engine in 2014. Import Bank of Korea (Korea
Eximbank).
e application, for its retail banking users. to Adani Group to
build Australian coal mine which it aims to build by end-2017.
Founder of Adani
B) to offer a co-branded CREDIT CARD,
Union Bank of India (UBI) for visually impaired
Kochi, Mysore, Jaipur, Bhubhaneswar and Shimla.
is an Indian domestic card scheme conceived and launched by the
National Payments Corporation of India (NPCI). RuPay facilitates
electronic payment at all Indian banks and financial institutions,
and competes with MasterCard and Visa
Tata Communications Payments Solutions Ltd, a wholly owned
subsidiary of Tata Communications Ltd, opened first White Label ATM
at Chandrapada in
performing, after a prolonged period of non-payment(90 days).
The lender will force the borrower to liquidate any assets that
were pledged as part of the debt agreement. If no assets were
ad debt and then sell it at a discount to a collections
agency.
A person whose account is declared as NPA
(Securitization and Reconstruction of
With this Act bank has the power to take possession of the
owners mortgaged property or can transfer this to some
Bank can use this for their own purpose like , opening a new
branch on it, installing of ATMs etc. Bank can advertise in
newspapers for the auction of the property acquired and could
auction them on any pre decided day.
ered companies under RBI, they buy
all other taxes such as, central sales tax, state-level sales
tax, excise duty, and the central governments will impose GST on
almost all goods and
GST. Direct taxes, such as income tax, corporate tax and capital
gains tax will not be affected.
-
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5
It will simplify India's tax structure, broaden the tax base,
and create a common market across states. This will lead to
increased compliance and increase India's tax-to-gross domestic
product ratio. iii. The highest rate of taxation under GST will be
around 15 per cent in the first year, and eventually come down to
12 per cent in the second year. By comparison, the current rate of
the various indirect taxes levied in India amounts to roughly 20
per cent. Goods deemed necessary or of basic importance will be
taxed at a lower rate. iv. The GST can be implemented only through
a Constitutional Amendment Bill, which means it needs to be
approved by not less than two-thirds of the members present and
voting in each House of Parliament. The GST must also be ratified
by the legislatures of at least one-half of the states. v. States
will get one-year time to implement the provisions of Goods and
Services Tax (GST) after introduction of the new indirect tax
regime from 1st April 2016.
Types of Bank Accounts in India (Deposit Accounts) Traditionally
banks in India have four types of deposit accounts, namely Saving
Banking Accounts, Current Accounts, Recurring Deposits and, Fixed
Deposits. 1. Saving Account - Saving accounts are opened to
encourage the people to save money and collect their savings. The
saving account holder is allowed to withdraw money from the account
as and when required. The interest on Saving Bank Accounts was
fixed by RBI and it was fixed at 4.00% on daily balance basis. RBI
has deregulated Saving Fund account interest rates and now banks
are free to decide the same within certain conditions imposed by
RBI. Features of Saving Accounts 1. There is no restriction on the
number and amount of deposits. However, in India, mandatory PAN
(Permanent Account
Number) details are required to be furnished for doing cash
transactions exceeding 50,000.
2. Withdrawals are allowed subject to certain restrictions. 3. A
minimum amount has to be kept on saving account to keep it
functioning. 2. Current Account - Current Accounts are basically
meant for businessmen and are never used for the purpose of
investment or savings. Features of Current Accounts (1) The main
objective of Current Account holders in opening these account is to
enable them (mostly businessmen) to conduct their business
transactions smoothly. (2) There are no restrictions on the number
of times deposit in cash / cheque can be made or the amount of such
deposits; (3) Usually banks do not pay any interest on such current
accounts. (4) The current accounts do not have any fixed maturity
as these are on continuous basis accounts. (5) Cheque book facility
is provided and the account holder can deposit all types of the
cheques and drafts in their name or endorsed in their favour by
third parties. 3. Recurring Desposit Account: Recurring Deposit is
a special kind of Term Deposit offered by banks in India popularly
known as RD accounts which help people with regular incomes to
deposit a fixed amount every month into their Recurring Deposit
account and earn interest at the rate applicable to Fixed Deposits.
Features of RD Accounts 1. Recurring Deposit accounts are normally
allowed for maturities ranging from 6 months to 120 months 2. These
accounts can be opened in single or joint names. Nomination
facility is also available. 3. Rate of Interest offered is similar
to that in Fixed Deposits. 4. Interest is compounded on quarterly
basis in recurring deposits. 4. Fixed Deposit Account (FD) - The
account which is opened for a particular fixed period (time) by
depositing particular amount (money) is known as Fixed (Term)
Deposit Account. The term 'fixed deposit' means that the deposit is
fixed and is repayable only after a specific period is over. Under
fixed deposit account, money is deposited for a fixed period say
six months, one year, five years or even ten years. The money
deposited in this account can not be withdrawn before the expiry of
period. Features of FD Accounts 1. The main purpose of fixed
deposit account is to enable the individuals to earn a higher rate
of interest on their surplus funds (extra money). 2. The amount can
be deposited only once. For further such deposits, separate
accounts need to be opened. 3. Fixed Deposit Account may be opened
for a minimum period of 7 days and maximum period of 10 years. 4.
The minimum amount required to open a Fixed Deposit is Rs.1000. 5.
Withdrawals are not allowed. However, in case of emergency, banks
allow to close the fixed account prior to maturity date. In such
cases, the bank deducts 1% (deduction percentage many vary) from
the interest payable as on that date.
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6
About (BASIC SAVING BANK DEPOSIT ACCOUNT): Under the guidelines
issued on August 10, 2012 by RBI: Any individual, including poor or
those from weaker section of the society, can open zero balance
account in any bank. BSBDA guidelines are applicable to "all
scheduled commercial banks in India, including foreign banks having
branches in India". ii. The aim of introducing 'Basic Savings Bank
Deposit Account' is very much part of the efforts of RBI for
furthering Financial Inclusion objectives.
Main Points of BSBDA-Small Accounts:
i. In BSBDA, banks are required to provide free of charge
minimum 4 withdrawals, through ATMs ii. Total credits in such
accounts should not exceed 1 lakh rupees in a year. iii. Maximum
balance in the account should not exceed 50,000 Rs at any time iv.
The total of debits by way of cash withdrawals and transfers will
not exceed 10,000 rupees in a month v. Foreign remittances cannot
be credited to Small Accounts without completing normal KYC
formalities v. Small accounts are valid for a period of 12 months
initially which may be extended by another 12 months if the person
provides proof of having applied for an Officially Valid
Document.
ATMs: (Automated Teller Machine): The ATM debit cards, credit
cards and prepaid cards (that permit cash withdrawal)
issued by banks can be used at ATMs for various transactions.
Use of ATMs of Other Banks:
i. 5 free transactions are permitted per month (inclusive of
financial and/or non-financial) at other bank ATMs for Savings Bank
Account holders. ii. For transaction beyond this minimum number of
transactions, banks charge maximum of Rs 20/ - per transaction.
iii. Reserve Bank of India reduced free usage of other bank
automated teller machines (ATMs) to 3 per month from 5 from
November, in six metropolitan cities - Delhi, Mumbai, Chennai,
Bangalore, Kolkata and Hyderabad.
WHITE Label ATMs: ATMs which are owned and operated by
non-banking companies are called White Label ATMs.
Note: RBI authorised four entities to operate as WLAs namely
Tata Communications Payment Solutions, Prizm Payment Services Pvt.
Ltd, Muthoot Finance Limited and Vakrangee Ltd.
Personal Identification Number (PIN) : A Personal Identification
Number is a secret numeric password shared between
user and a system that can be use to authenticate the user to
the system. IFSC (Indian Financial System Code):
Indian Financial System Code is an alpha-numeric code that
uniquely identifies a bank-branch participating in the NEFT system.
ii. This is an 11 digit code with the first 4 alpha characters
representing the bank, The 5th character is 0 (zero).and the last 6
characters representing the bank branch. iii. IFSC is used by the
NEFT system to identify the originating / destination banks /
branches and also to route the messages appropriately to the
concerned banks / branches. For ex: SBIN0015986 : i. First 4
character SBIN refers to State Bank of India. ii. 0 is a control
number. iii. last six characters (015986) represents the SBI branch
Jail Road, Hari Nagar New Delhi.
MICR (Magnetic Ink Character Recognition): MICR stands for
Magnetic Ink Character Recognition. MICR Code is a 9 numeric digit
code which uniquely identifies a bank branch participating in the
ECS Credit scheme. MICR code consists of 9 digits e.g 400229128 i.
First 3 digits represent the city (400) ii. Next 3 digits represent
the bank (229) iii. Last 3 digits represent the branch (128) Note:
The MICR Code allotted to a bank branch is printed on the MICR band
of cheque leaves issued by bank branches.
Cheque Truncation: i. Truncation is the process of stopping the
flow of the physical cheque issued by a drawer at some point with
the presenting bank en-route to
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the drawee bank branch. ii. In its place an electronic image of
the cheque is transmitted to the drawee branch byrelevant
information like data on the MICR band, date of presentation,
presenting bank, etc.iii. Cheque Truncation speeds up the process
of collection of cheques resulting in better service to customers,
reduces the scope for clearing-related frauds or loss of
instruments in transit, lowers the cost of collection of cheques,
and removes reconciliation-related and logistics-related problems,
thus benefitting the system as a whole.
Bancassurance: The sale of insurance situations; for example,
when a bank requirescould purchase the insurance directly from the
bank.
Banking Ombudsman Scheme 2006: i. The Banking Ombudsman Scheme
enables an expeditious and inexpensive forum to bank customers for
resolution of complaints relating to certain services rendered by
banks.ii. The Banking Ombudsman is a senior official appointed by
the Reserve Baagainst deficiency in certain banking services.iii.
All Scheduled Commercial Banks, Regional Rural Banks and Scheduled
Primary Cothe Scheme. Other Important Points:
The Banking Ombudsman does not charge any fee The amount, if
any, to be paid by the bank to the complainant by way of
compensation for any loss suffered by the
complainant is limited to the amount arising directly out
olower.
The Banking Ombudsman may award compensation complaints relating
to credit card operations for mental agony and harassment.
If a complaint is not settled by an agreement within a period
pass an award. Before passing an award, the Banking Ombudsman
provides reasonable opportunity to the complainant and the bank, to
present their case.
If one is not satisfied with the decision passed by the Banking
Ombudsman, one can approach the appellate authority against the
Banking Ombudsmens decision. Appellate Authority is vested with
a
If one is aggrieved by the decision, one before the appellate
authority.
Deposit insurance and credit guarantee corporation (DICGC)
All commercial banks including branches of foreign banks
finsured by the DICGC. Note: Primary cooperative societies
Maximum deposit amount insured by the DICGC (Rupees One
Lakh).
Credit Information Bureau (India) Limited: CIBIL collects and
maintains records of an individuals payments pertaining to loans
and credit cards.Headquarter Mumbai
Coins: The Government of India has the sole right to mint
coinsDenominations: Coins in India are presently being issued in
denominations of one rupee, two rupees, five rupees and ten
rupees.
Currency: Banknotes in India are currently being issued in the
denomination ofand Rs1000. These notes are called banknotes as
they
Bank Notes in IndiaContemporary Currency notes have 15
languageswhich appear on the reverse of the note. Soiled Notes:
Soiled notes are those which have become dirty
and slightly cut. Mutilated Notes: Notes which are in pieces
and/or of which
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In its place an electronic image of the cheque is transmitted to
the drawee branch byrelevant information like data on the MICR
band, date of presentation, presenting bank, etc.
Cheque Truncation speeds up the process of collection of cheques
resulting in better service to customers, reduces the related
frauds or loss of instruments in transit, lowers the cost of
collection of cheques, and removes
related problems, thus benefitting the system as a whole.
and other similar products through a bank. This can help
therequires life insurance for those receiving a mortgagefrom the
bank.
The Banking Ombudsman Scheme enables an expeditious and
inexpensive forum to bank customers for resolution of
complaints relating to certain services rendered by banks. . The
Banking Ombudsman is a senior official appointed by the Reserve
Bank of India to redress customer complaints
against deficiency in certain banking services. . All Scheduled
Commercial Banks, Regional Rural Banks and Scheduled Primary
Co-operative Banks are covered under
does not charge any fee for filing and resolving customers
complaints.The amount, if any, to be paid by the bank to the
complainant by way of compensation for any loss suffered by the
complainant is limited to the amount arising directly out of the
act or omission of the bank or Rs 10 lakhs
The Banking Ombudsman may award compensation not exceeding Rs 1
lakh to the complainant only in the case of complaints relating to
credit card operations for mental agony and harassment. If a
complaint is not settled by an agreement within a period of one
month, the Banking Ombudsman proceeds further to pass an award.
Before passing an award, the Banking Ombudsman provides reasonable
opportunity to the complainant
If one is not satisfied with the decision passed by the Banking
Ombudsman, one can approach the appellate authority against the
Banking Ombudsmens decision. Appellate Authority is vested with a
Deputy Governor of the RBI.
may, within 30 days of the date of receipt of the award, appeal
against the award
Deposit insurance and credit guarantee corporation (DICGC)
All commercial banks including branches of foreign banks
functioning in India, local area banks and regional rural banks are
Primary cooperative societies are not insured by the DICGC.
Maximum deposit amount insured by the DICGC - Each depositor in
a bank is insured upto a maximum of
Credit Information Bureau (India) Limited: is Indias first
Credit Information Company (CIC) founded in August 2000. CIBIL
collects and maintains records of an individuals payments
pertaining to loans and credit cards.
Coins in India
sole right to mint coins. Coins in India are presently being
issued in denominations of one rupee, two rupees, five rupees and
ten
Currency in India Banknotes in India are currently being issued
in the denomination of Rs 10, Rs 20,
Rs1000. These notes are called banknotes as they are issued by
the Reserve Bank of India
Bank Notes in India 15 languages on the panel
Soiled notes are those which have become dirty
Notes which are in pieces and/or of which
www.careeradda.co.in 7
In its place an electronic image of the cheque is transmitted to
the drawee branch by the clearing house, along with relevant
information like data on the MICR band, date of presentation,
presenting bank, etc.
Cheque Truncation speeds up the process of collection of cheques
resulting in better service to customers, reduces the related
frauds or loss of instruments in transit, lowers the cost of
collection of cheques, and removes
related problems, thus benefitting the system as a whole.
. This can help the consumer in some mortgage loan the
consumer
The Banking Ombudsman Scheme enables an expeditious and
inexpensive forum to bank customers for resolution of
nk of India to redress customer complaints
operative Banks are covered under
for filing and resolving customers complaints. The amount, if
any, to be paid by the bank to the complainant by way of
compensation for any loss suffered by the
of the bank or Rs 10 lakhs, whichever is
to the complainant only in the case of
, the Banking Ombudsman proceeds further to pass an award.
Before passing an award, the Banking Ombudsman provides reasonable
opportunity to the complainant
If one is not satisfied with the decision passed by the Banking
Ombudsman, one can approach the appellate authority Deputy Governor
of the RBI.
of the date of receipt of the award, appeal against the
award
Deposit insurance and credit guarantee corporation (DICGC)
unctioning in India, local area banks and regional rural banks
are
Each depositor in a bank is insured upto a maximum of
Rs.1,00,000
is Indias first Credit Information Company (CIC) founded in
August 2000. CIBIL collects and maintains records of an individuals
payments pertaining to loans and credit cards.
Coins in India are presently being issued in denominations of
one rupee, two rupees, five rupees and ten
Rs 20, Rs 50, Rs 100, Rs500, are issued by the Reserve Bank of
India (Reserve Bank).
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8
the essential portions are missing can also be exchanged.
Imperfect banknotes: Imperfect banknote means any banknote, which
is wholly or partially, obliterated, shrunk, washed,
altered or indecipherable but does not include a mutilated
banknote. The deadline for exchanging pre-2005 currency notes of
various denominations, including Rs 500 and Rs 1,000, has been
extended by another six months till June, 30, 2015. i. The
Reserve Bank of India has stated that the public can do so till
June 30, 2015. Earlier in March 2014, it had set the last date for
public to exchange these notes was January 1, 2015. ii. Post-2005
notes have added security features and help in curbing the menace
of fake currency.
Security Features of Indian Banknotes Watermark Security Thread
Latent Image Microlettering Intaglio Identification Mark
Fluorescence Optically Variable Ink See through Register Legal
provisions against counterfeiting
Important Banking Terminology:
1. Basis points: It is the increase in interest rates in
percentage terms. For instance, if the interest rate increases by
50 basis
points (bsp), then it means that interest rate has been increase
by 0.50%. One percentage point is broken down into 100 basis
points. Therefore, an increase from 2% to 3% is an increase of one
percentage point or 100 basis points.
2. Bank Rate: Bank Rate is the rate at which central bank of the
country (in India it is RBI) allows finance to commercial banks.
Bank Rate is a tool, which central bank uses for short-term
purposes. Any upward revision in Bank Rate by central bank is an
indication that banks should also increase deposit rates as well as
Base Rate / Benchmark Prime Lending Rate. Thus any revision in the
Bank rate indicates that it is likely that interest rates on your
deposits are likely to either go up or go down, and it can also
indicate an increase or decrease in your EMI.
3. Liquidity adjustment facility (LAF) is a monetary policy tool
which allows banks to borrow money through repurchase agreements.
LAF is used to aid banks in adjusting the day to day mismatches in
liquidity. LAF consists of repo and reverse repo operations.
4. Repo Rate: Whenever the banks have any shortage of funds they
can borrow it form RBI. Repo rate is the rate at which commercial
banks borrows rupees from RBI. A reduction in the repo rate will
help banks to get money at cheaper rate. When the repo rate
increases borrowing form RBI becomes more expensive.
5. Reverse Repo Rate: Reverse Repo rate is the rate at which RBI
borrows money from commercial banks. Banks are always happy to lend
money to RBI since their money is in the safe hands with a good
interest. An increase in reverse repo rate can cause the banks to
transfer more funds to RBI due to this attractive interest rates.
One factor which encourages an organisation to enter into reverse
repo is that it earns some extra income on its otherwise idle
cash.
6. CRR (Cash Reverse Ratio): CRR is the amount of funds that the
banks have to keep with RBI. If RBI increases CRR, the available
amount with the banks comes down. RBI is using this method
(increase of CRR), to drain out the excessive money from the
banks.
7. SLR (Statutory Liquidity Ratio): SLR is the amount a
commercial banks needs to maintain in the form of cash, or gold, or
govt. approved securities (Bonds) before providing credit to its
customers. SLR rate is determined and maintained by RBI in order to
control the expansion of the bank credit. Need of SLR: With the
SLR, the RBI can ensure the solvency of a commercial banks. It is
also helpful to control the expansion of the Bank credits. By
changing SLR rates, RBI can increase or decrease bank credit
expansion. Also through SLR, RBI compels the commercial banks to
invest in the government securities like govt. bonds. Main use of
SLR: SLR is used to control inflation and propel growth. Through
SLR rate the money supply in the system can be controlled
effectively.
8. Marginal Standing Facility (MSF): MSF rate is the rate at
which banks borrow funds overnight from the Reserve Bank of India
(RBI) against approved government securities.
9. NEFT (National Electronic Fund Transfer): NEFT enables funds
transfer from one bank to another but works a bit differently than
RTGS. NEFT is slower than RTGS. The transfer is not direct and RBI
acts as the service provider to transfer the money from one account
to another. You can transfer any amount through NEFT, even a
rupee.
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Note: Rs 50,000 is a limit in a NEFT to 10. RTGS (Real time
gross settlement ): RTGS system is funds transfer systems where
transfer of money or sec
place from one bank to another on a "real time" and on "gross"
basis. Settlement in "real time" means payment transaction is not
subjected to any waiting period. The transactions are settled as
soon as they are processed. Minimum & Maximum L
11. Fiscal Deficit: A deficit in the government budget of a
country and represents the excess of expenditure over income. So
this is the amount of borrowed funds require by the government to
meet its expenditures comple
12. Direct Tax: A direct tax is that which is paid directly by
someone to taxing authority. Income tax and property tax are an
examples of direct tax. They are not shifted to somebody else.
13. Indirect Tax: This type of tax is not paid by someone to the
auof increased cost. They are levied on goods and services produced
or purchased. Excise Tax, Sales Tax, Vat, Entertainment tax are
indirect taxes.
14. Foreign Exchange Market : Foreign exchange macome and
exchange the currencies in a defined manner and set rates. In forex
market the deals of currencies are done and in turn it defines the
value of one currency in comparison toforeign currency in
India.
15. NOSTRO Account: A Nostro account is maintained by an Indian
Bank in the foreign countries.16. VOSTRO Account: A Vostro account
is maintained by a foreign bank in India17. SDR (Special Drawing
Rights): SDR are new form of International reserve assets, created
by the International Monetary
Fund in 1967. The value of SDR is based on the portfolio of
widely used countries and they are maintained entries and not as
hard currency or physical assets like Gold.
18. BOND: Publicly traded ling term debt securities issued by
corporations and governments, whereby the issuer agrees to pay a
fixed amount of interest over a specified period of time
19. CRAR(Capital to Risk Weighted Assets Ratio): the bank with
aggregated risk weighted assets for credit risk, market risk and
o
20. Non Performing Assets (NPA): An asset (loan), including a
leased asset, becomes non performing when it stops generatig income
for the bank. Note: Once the borrower has failed to make interest
or principle payments considered to be a non-performing asset.
21. Inflation: inflation is a rise in the generalthe general
price level rises, each unit ofreduction in the purchasing power
per unit of money within the economy.
22. GDP - An estimated value of the total worth of a countrys
production and services,and foreigners, calculated over the course
on one year.Note: GDP = consumption + investment + (government
spending) + (exports produced within the territorial boundary o
23. GNP - An estimated value of the total worth of production
and services, by citizens of a country, on its land or on foreign
land, calculated over the course on one year.Note: GNP = GDP + NR
(Net income inflow from assets abroad or Net Incomeforeign assets).
Total value of Goods and Services produced by all nationals of a
country (whether within or outside the country).
Indian credit rating industry mainly comprises CRISIL - Credit
Rating Information Services of India Limited, Headquarter ICRA -
Investment information and credit rating agency CARE - Credit
Analysis and Research Headquarters ONICRA - Headquarter - Gurgaon,
India SMERA - Headquarters Mumbai Fitch (India Ratings &
Research) - Headquarters Note: CRISIL is the largest credit rating
agency in India, with a market share of g
Leading Credit Rating Agency in World
1. Standard & Poor's (S&P) Headquarter 2. Moody's
Headquarter - New York, US 3. Fitch - Headquarter - New York,
US
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is a limit in a NEFT to NEPAL in a single day. ): RTGS system is
funds transfer systems where transfer of money or sec
place from one bank to another on a "real time" and on "gross"
basis. Settlement in "real time" means payment transaction is not
subjected to any waiting period. The transactions are settled
as
Minimum & Maximum Limit of RTGS: 2 lakh and no upper limit.A
deficit in the government budget of a country and represents the
excess of expenditure over income. So
this is the amount of borrowed funds require by the government
to meet its expenditures compleA direct tax is that which is paid
directly by someone to taxing authority. Income tax and property
tax are an
examples of direct tax. They are not shifted to somebody else.
This type of tax is not paid by someone to the authorities and it
is actually passed on to the other in the form
of increased cost. They are levied on goods and services
produced or purchased. Excise Tax, Sales Tax, Vat,
Entertainment
: Foreign exchange market is the place where the financial
institutions of different countries come and exchange the
currencies in a defined manner and set rates. In forex market the
deals of currencies are done and in turn it defines the value of
one currency in comparison to the other. A foreign investor (FII or
FDI) is a major source of
A Nostro account is maintained by an Indian Bank in the foreign
countries.A Vostro account is maintained by a foreign bank in India
with their corresponding bank.
SDR are new form of International reserve assets, created by the
International Monetary Fund in 1967. The value of SDR is based on
the portfolio of widely used countries and they are maintained
entries and not as hard currency or physical assets like Gold.
: Publicly traded ling term debt securities issued by
corporations and governments, whereby the issuer agrees to pay a
fixed amount of interest over a specified period of time and to
repay a fixed amount of principal maturity.CRAR(Capital to Risk
Weighted Assets Ratio): Capital to risk weighted assets ratio is
arrived at by dividing the capital of the bank with aggregated risk
weighted assets for credit risk, market risk and operational
risk.
An asset (loan), including a leased asset, becomes non
performing when it stops generatig : Once the borrower has failed
to make interest or principle payments
performing asset. is a rise in the general level of prices of
goods and services in an economy
the general price level rises, each unit of currency buys fewer
goods and services. Consequently, inflation reflects a per unit of
money a loss of real value in the medium of exchange and unit of
account
An estimated value of the total worth of a countrys production
and services, within its boundary, by its nationals and foreigners,
calculated over the course on one year.
GDP = consumption + investment + (government spending) +
(exports imports). Total value of products & Services produced
within the territorial boundary of a country.
An estimated value of the total worth of production and
services, by citizens of a country, on its land or on foreign land,
calculated over the course on one year.
GNP = GDP + NR (Net income inflow from assets abroad or Net
Income Receipts) foreign assets). Total value of Goods and Services
produced by all nationals of a country (whether within or outside
the
Credit Rating Agency in India & World
Indian credit rating industry mainly comprises of CRISIL, ICRA,
CARE, ONICRA, FITCH (India Ratings & Research) &
SMERA.Credit Rating Information Services of India Limited,
Headquarter Mumbai
Investment information and credit rating agency Headquarter -
Gurgaon, India t Analysis and Research Headquarters Mumbai
India
Headquarters Mumbai is the largest credit rating agency in
India, with a market share of greater than 60%.
New York, US
www.careeradda.co.in 9
): RTGS system is funds transfer systems where transfer of money
or securities takes
Settlement in "real time" means payment transaction is not
subjected to any waiting period. The transactions are settled as
imit of RTGS: 2 lakh and no upper limit.
A deficit in the government budget of a country and represents
the excess of expenditure over income. So this is the amount of
borrowed funds require by the government to meet its expenditures
completely.
A direct tax is that which is paid directly by someone to taxing
authority. Income tax and property tax are an
thorities and it is actually passed on to the other in the form
of increased cost. They are levied on goods and services produced
or purchased. Excise Tax, Sales Tax, Vat, Entertainment
rket is the place where the financial institutions of different
countries come and exchange the currencies in a defined manner and
set rates. In forex market the deals of currencies are done and
the other. A foreign investor (FII or FDI) is a major source
of
A Nostro account is maintained by an Indian Bank in the foreign
countries. with their corresponding bank.
SDR are new form of International reserve assets, created by the
International Monetary Fund in 1967. The value of SDR is based on
the portfolio of widely used countries and they are maintained as
accounting
: Publicly traded ling term debt securities issued by
corporations and governments, whereby the issuer agrees to and to
repay a fixed amount of principal maturity.
Capital to risk weighted assets ratio is arrived at by dividing
the capital of perational risk.
An asset (loan), including a leased asset, becomes non
performing when it stops generatig : Once the borrower has failed
to make interest or principle payments for 90 days the loan is
economy over a period of time. When equently, inflation reflects
a
a loss of real value in the medium of exchange and unit of
account
within its boundary, by its nationals
imports). Total value of products & Services
An estimated value of the total worth of production and
services, by citizens of a country, on its land or on foreign
Receipts) - NP (Net payment outflow to foreign assets). Total
value of Goods and Services produced by all nationals of a country
(whether within or outside the
(India Ratings & Research) & SMERA.
reater than 60%.
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10
Regulators in India:
Regulator Sectors Chairman Headquarter
Reserve Bank of India (RBI) Financial system and monetary
policy, Money Market Raghuram Rajan
Mumbai
Securities and Exchange Board of India (SEBI)
Security & Capital Market, stock broking & Merchant
Banking, Nidhis, Chit Fund Companies
U.K. Sinha Mumbai
Insurance Regulatory and Development Authority (IRDA)
Insurance industry T. S. Vijayan Hyderabad
Telecom Regulatory Authority of India (TRAI)
Telecommunication Industry Rahul Khullar New Delhi
Forward Markets Commission Commodity Market Ramesh Abhishek
Mumbai
Pension Fund Regulatory and Development Authority (PFRDA)
Pension sector Hemant Contractor
New Delhi
Money Market in India
Money Market: Money Market is the part of financial market where
instruments with high liquidity and very short-term maturities are
traded. It's the place where large financial institutions, dealers
and government participate and meet out their short-term cash
needs. Due to highly liquid nature of securities and their
short-term maturities, money market is treated as safe place. Role
of Reserve Bank of India:The Reserve Bank of India (RBI) plays a
key role of regulator and controller of money
market. The intervention of RBI is varied curbing crisis
situations by reducing key policy rates or curbing inflationary
situations by rising key policy rates such as Repo, Reverse Repo,
CRR etc.
Short Term Deposit: In deposit terminology, the term Short Term
Deposit refers to an amount of money placed in a bank
or financial institution for a term no longer than one year. A
Short Term Deposit will usually earn a fixed rate of interest.
Note: Short Term Deposits are also known as time or term deposits,
with perhaps the most popular name being short term certificates of
deposit or CDs.
Call Money: Call Money is the borrowing or lending of funds for
1day. Notice Money: Money borrowed or lend for period between 2
days and 14
days it is known as Notice Money Term Money: Term Money refers
to borrowing/lending of funds for
period exceeding 14 days
Money Market Instruments: Money Market Instruments provide the
tools by which one can operate in the money market. Money market
instrument meets short term requirements of the borrowers and
provides liquidity to the lenders. The most common money market
instruments are Treasury Bills, Certificate of Deposits, Commercial
Papers, Repurchase Agreements and Banker's Acceptance.
1. Treasury Bills (T-Bills): Treasury Bills are one of the
safest money market instruments as they are issued by Central
Government. At present, the Government of India issues three types
of treasury bills through auctions, namely, 91-day, 182-day and
364-day. There are no treasury bills issued by State Governments.
Amount: Treasury bills are available for a minimum amount of
Rs.25,000 and in multiples of Rs. 25,000. Treasury bills are issued
at a discount and are redeemed at par
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2. Commercial Paper (CP) - Commercial Paper (CP) is an unsecured
money market instrument issued in the form of a promissory note.
Who can issue CP - Corporates, primary dealers (PDs) and the
All-India Financial Institutions (FIs) are eligible to issue
CP.Minimum and maximum period of maturity for CP: be issued for
maturities between a minimum of 7 days and a maximum of up to one
year from the date of issue. However,to which the credit rating of
the issuer is valid.In what denominations a CP that can be issued:
Who can invest in CP: Individuals, banking companies,
otunincorporated bodies, Non-Resident Indians (NRIs) and Foreign
Institutional Investors (FIIs) etc. can invest in CPs.
3. Certificate of Deposit (CD) is a negotiable money market
instrumentPromissory Note against funds deposited at a bank or
other eligible financial institution for a specified time
period.Who can issue CD: CDs can be issued by (i) scheduled
commercial banks {excluding Regional RuraBanks}; and (ii) select
All-India Financial Institutions (FIs) that have been permitted by
RBI to raise shortwithin the umbrella limit fixed by RBI. Minimum
and maximum period of maturity for CD: 7 days and not more than one
year, from the date of issue.Note: The FIs (Financial Institutions)
can issue CDs for a period not less than 1 year and not exceeding 3
years from the date of issue. Minimum Size of Issue and
Denominations: that could be accepted from a single subscriber
should not be less than Rs.1 lakh, and in multiples of Rs. 1 lakh
thereafter.
4. Repurchase Agreements (Repo): Repurchase Agreements which are
also called asloans that buyers and sellers agree upon for selling
and repurchasing. Repo or Reverse Repo transactions can be done
only between the parties approved by RBI and allowed onlygovernment
securities, T-Bills, PSU bonds and corporate bonds. They are
usually used for overnight borrowing.
5. Banker's Acceptance: Banker's Acceptance is like a short term
investment plan created bguarantee from the bank. It's like a bill
of exchange stating a buyer's promise to pay to the seller a
certain specified amouat a certain date. And, the bank guarantees
that the buyer will pay the seller at a future datcan draw such
bill. These securities come with the maturities between 30 and 180
days and the most common term for these instruments is 90 days.
Capital market deals with medium term and long terborrowing and
lending term funds (medium term and long term). The demand for long
term funds comes from private business corporations, public
corporations and the government. The sinstitutional investors,
banks and special industrial financial institutions and Government.
Capital market is classified in two ways: 1. Gilt Edged Market
refers to the market for government and semiinterest. RBI plays an
important role in this market.2. Industrial Securities Market: It
deals with equities and debentures in which shares and debentures
of existing companies are traded and shares and debentures of new
companies are bought and sold.3. Development Financial Institutions
(DFIs): Development financial institutions were set up to meet the
medium and longterm requirements of industry, trade and
agriculture. These are IFCI, ICICI, IDBI, SIDBI,institutions have
been called Public Sector Financial Institutions.4. Financial
intermediaries: Financial Intermediaries include merchant banks,
Mutual Fund, Leasing companies etc. they help in mobilizing savings
and supplying funds to capital market. The Second way in which
capital market is classified is as follows :1. Primary market:
Primary market is the new issue market of shares, preference shares
and debentures of nonpublic limited companies and issue of public
sector bonds.2. Secondary market: This refers to old or already
issued securities. It is composed of industrial security market or
stock exchange market and gilt-edged market. Banks and Their Tag
Lines -
1. SBI - With you all the way,
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Commercial Paper (CP) is an instrument issued in the form of
a
Corporates, primary dealers (PDs) and the Financial Institutions
(FIs) are eligible to issue CP.
Minimum and maximum period of maturity for CP: CP can be issued
for maturities between a minimum of 7 days and a maximum of up to
one year from the date of issue. However, the maturity date of the
CP to which the credit rating of the issuer is valid. In what
denominations a CP that can be issued: CP can be issued in
denominations of Rs.5 lakh or multiples thereof.
Individuals, banking companies, other corporate bodies
(registered or incorporated in India) and Resident Indians (NRIs)
and Foreign Institutional Investors (FIIs) etc. can invest in
CPs.is a negotiable money market instrument and issued in
dematerialised form or as a Usance
Promissory Note against funds deposited at a bank or other
eligible financial institution for a specified time period.CDs can
be issued by (i) scheduled commercial banks {excluding Regional
Rura
India Financial Institutions (FIs) that have been permitted by
RBI to raise short
Minimum and maximum period of maturity for CD: The maturity
period of CDs issued by banks should not be less than , from the
date of issue.
The FIs (Financial Institutions) can issue CDs for a period not
less than 1 year and not exceeding 3 years from the
of Issue and Denominations: Minimum amount of a CD should be
Rs.1 lakh, i.ethat could be accepted from a single subscriber
should not be less than Rs.1 lakh, and in multiples of Rs. 1 lakh
thereafter.
epurchase Agreements which are also called as Repoloans that
buyers and sellers agree upon for selling and repurchasing. Repo or
Reverse Repo transactions can be done only between the parties
approved by RBI and allowed only between RBI-approved securities
such as state and central
Bills, PSU bonds and corporate bonds. They are usually used for
overnight borrowing.Banker's Acceptance is like a short term
investment plan created b
guarantee from the bank. It's like a bill of exchange stating a
buyer's promise to pay to the seller a certain specified amouat a
certain date. And, the bank guarantees that the buyer will pay the
seller at a future datcan draw such bill. These securities come
with the maturities between 30 and 180 days and the most common
term for
Capital Market in India: medium term and long term funds. It
refers to all facilities and the institutional arrangements for
borrowing and lending term funds (medium term and long term).
The demand for long term funds comes from private business
corporations, public corporations and the government. The supply of
funds comes largely from individual and institutional investors,
banks and special industrial financial institutions and
Government.
Capital market is classified in two ways: refers to the market
for government and semi-government securities, which carry fixed
rates of
interest. RBI plays an important role in this market. Market: It
deals with equities and debentures in which shares and debentures
of existing companies
entures of new companies are bought and sold. (DFIs):
Development financial institutions were set up to meet the medium
and long
term requirements of industry, trade and agriculture. These are
IFCI, ICICI, IDBI, SIDBI, IRBI, UTI, LIC, GIC etc. All These
institutions have been called Public Sector Financial
Institutions.
: Financial Intermediaries include merchant banks, Mutual Fund,
Leasing companies etc. they pplying funds to capital market.
The Second way in which capital market is classified is as
follows :- : Primary market is the new issue market of shares,
preference shares and debentures of non
ue of public sector bonds. : This refers to old or already
issued securities. It is composed of industrial security market or
stock
With you all the way, Pure Banking Nothing Else, The Nations
banks on us
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the maturity date of the CP should not go beyond the date up
CP can be issued in denominations of Rs.5 lakh or multiples
thereof. her corporate bodies (registered or incorporated in India)
and
Resident Indians (NRIs) and Foreign Institutional Investors
(FIIs) etc. can invest in CPs. ued in dematerialised form or as a
Usance
Promissory Note against funds deposited at a bank or other
eligible financial institution for a specified time period. CDs can
be issued by (i) scheduled commercial banks {excluding Regional
Rural Banks and Local Area
India Financial Institutions (FIs) that have been permitted by
RBI to raise short-term resources
of CDs issued by banks should not be less than
The FIs (Financial Institutions) can issue CDs for a period not
less than 1 year and not exceeding 3 years from the
be Rs.1 lakh, i.e., the minimum deposit that could be accepted
from a single subscriber should not be less than Rs.1 lakh, and in
multiples of Rs. 1 lakh thereafter.
Repo or Reverse Repo are short term loans that buyers and
sellers agree upon for selling and repurchasing. Repo or Reverse
Repo transactions can be done only
approved securities such as state and central Bills, PSU bonds
and corporate bonds. They are usually used for overnight
borrowing.
Banker's Acceptance is like a short term investment plan created
by non-financial firm, backed by a guarantee from the bank. It's
like a bill of exchange stating a buyer's promise to pay to the
seller a certain specified amount at a certain date. And, the bank
guarantees that the buyer will pay the seller at a future date.
Firm with strong credit rating can draw such bill. These securities
come with the maturities between 30 and 180 days and the most
common term for
. It refers to all facilities and the institutional arrangements
for borrowing and lending term funds (medium term and long term).
The demand for long term funds comes from private
upply of funds comes largely from individual and
vernment securities, which carry fixed rates of
Market: It deals with equities and debentures in which shares
and debentures of existing companies
(DFIs): Development financial institutions were set up to meet
the medium and long-IRBI, UTI, LIC, GIC etc. All These
: Financial Intermediaries include merchant banks, Mutual Fund,
Leasing companies etc. they
: Primary market is the new issue market of shares, preference
shares and debentures of non-government
: This refers to old or already issued securities. It is
composed of industrial security market or stock
Pure Banking Nothing Else, The Nations banks on us
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2. State Bank of Hyderabad You can always bank on us.3. State
Bank of Mysore - Working for a better tomorrow4. State Bank of
Patiala Blending Modernity with Tradition5. State Bank of
Travancore - A lo6. Allahabad Bank - A Tradition of Trust7. Andhra
Bank Where India Banks8. Bank of Baroda - Indias International
Bank9. Bank of India - Relationship beyond banking10. Bhartiya
Mahila Bank Empowering Women11. Bank of Maharashtra - One family
one bank12. Canara Bank Together We Can13. Central Bank of India
Central To you Since 191114. Corporation Bank A Premier Public
Sector Bank15. Dena Bank - Trusted Family Bank16. ECGC Bank You
focus on exports. We cover the risks17. IDBI Bank Banking For All,
Aao Sochein Bada18. Indian Bank Your Tech19. Indian Overseas Bank
Good people to grow with20. Punjab National Bank - The name you can
bank upon21. Punjab & Sind Bank Where service is a way of
life22. Oriental Bank of Commerce Where every individual is
committed23. UCO Bank Honours Your Trust24. Union Bank of India
Good People to Bank with25. United Bank of India The Bank that
begins with U26. Vijaya Bank - A friend you can bank on27. Axis
Bank Badhti Ka naa28. ICICI Bank Hum Hai Na, Khyal Apka29. HDFC
Bank - We understand your world indeed30. Yes Bank Experience our
Expertise31. HSBC - The worlds local bank
Headquarters of Nationalised & Public Sectors Bank in India
1. SBI Mumbai 2. State Bank of Bikaner and Jaipur Jaipur3. State
Bank of Travancore Thiruvananthapuram4. State Bank of Mysore
Bangalore5. State Bank of Patiala Patiala6. State Bank of Hyderabad
Hyderabad7. Union Bank of India Mumbai8. Bank of India Mumbai9.
Central Bank of India Mumbai10. Dena Bank Mumbai11. IDBI Bank
Mumbai12. Allahabad Bank Kolkata13. UCO Bank Kolkata14. United Bank
of India Kolkata15. Punjab National Bank New Delhi16. Oriental Bank
of Commerce New Delhi17. Punjab and Sind Bank New Delhi18. Bhartiya
Mahila Bank New Delhi19. Canara Bank Bangalore20. Vijaya Bank
Bangalore21. Indian Bank Chennai22. Indian Overseas Bank Chenna23.
Bank of Baroda Vadodara24. Syndicate Bank Manipal(Karnataka)25.
Corporation Bank Mangalore26. Andhra Bank Hyd27. Bank of
Maharashtra Pune
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You can always bank on us. Working for a better tomorrow
Blending Modernity with Tradition A long Tradition of Trust A
Tradition of Trust Where India Banks Indias International Bank
Relationship beyond banking Empowering Women One family one bank
Together We Can Central To you Since 1911 A Premier Public Sector
Bank Trusted Family Bank You focus on exports. We cover the risks
Banking For All, Aao Sochein Bada Your Tech- Friendly Bank Good
people to grow with The name you can bank upon Where service is a
way of life Where every individual is committed Honours Your Trust
Good People to Bank with The Bank that begins with U A friend you
can bank on Badhti Ka naam Zindagi Hum Hai Na, Khyal Apka We
understand your world indeed Experience our Expertise The worlds
local bank
Headquarters of Nationalised & Public Sectors Bank in
India
Jaipur Thiruvananthapuram Bangalore Patiala Hyderabad Mumbai
Mumbai Mumbai Mumbai Mumbai Kolkata Kolkata Kolkata New Delhi New
Delhi New Delhi New Delhi Bangalore Bangalore Chennai Chennai
Vadodara Manipal(Karnataka) Mangalore Hyderabad Pune
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13
Note: There are a total of 27 PSBs in India [21 Nationalised
banks + 6 State bank group (SBI + 5 associates) ] ii. At present
there are 23 Private Banks functioning in India iii. At present
there are 56 RRBs (Regional Rural Banks ) functioning in India. iv.
At present there are 41 Foreign Banks functioning in India
FDI Limits
List of Limits in Various Sectors (In %)
1. Defence 49
2. Pension 49
3. Insurance 49
4. Print Media 26
5. Civil Aviation 49
6. Public Sec. Banks 20 7. Private Sec. Banks 74
8. Multi Brand 51
9. Single Brand 100
10. Tourism 100 Indias GDP Forecast: India's economic growth has
declined to 5.3 per cent during July to September, from the
previous quarter's 5.7 per cent. Fitch expects real GDP growth to
pick up to 5.6 per cent in FY15 and 6.5 per cent in FY16 Domestic
ratings agency India Ratings revised down its economic growth
estimate for 2014-15 fiscal to 5.6 per cent. Organisation for
Economic Co-operation and Development, OECD has projected 5.4
percent growth for the Indian
economy for 2014 -15 year. RBI pegged 2014-15 GDP growth at a
central estimate of 5.5 % will improve to 6.3 per cent in 2015-16.
World Bank estimates 5.6% growth for current fiscal i.e. 2014-15
and 6.4 per cent in 2015-16 and 7 per cent in 2016-17. IMF
projected GDP growth for India in 2014-15 at - 5.6 % & 6.4 % in
2015 ADB pegs India GDP growth rate for 2014-15 at 5.5 % & 6.3
% in 2015 JP Morgan cut India 2014-15 growth forecast to 5.1
percent from 5.3 percent Economic and Social Commission for Asia
and the Pacific,(ESCAP) - Indian economy to grow at 5.5 percent in
current
fiscal Moody (Credit Rating Agency) projected India growth rate
expected to accelerate to 5.2 % in 2014 and 6.5 % by end of
2015. FICCIs Economic Outlook Survey estimated Indias GDP growth
rate at
5.6 percent in 2014-15 According to a UN report Indian economy
expected to grow by 5.5% in
current fiscal. According to United Nations Conference on Trade
and Development
(UNCTAD) Indian economy will grow at a rate of 5.6 per cent in
2014 India ranking in different Indexes: 1. Transparency
International India (TII) Corruption Index India ranked
85th among 175(Denmark topped) 2. World Bank - Ease of Doing
Business" report - India ranked 142 among
the 189 countries (Singapore top) 3. Political empowerment sub
index 15 (Iceland top the list, US ranked
20) 4. World Economic 5. Forum's 2014 Gender gap index 114
(Iceland top the list followed by
Finland & Norway) 6. Global Hunger Index Report 2014: 55
(Mauritius top followed by
Thailand and Albania) 7. Human Development Index 2014 135
(Norway top followed by
Australia). 8. Global Environment Performance Index 2014 155
(Switzerland
followed by Luxembourg, Australia) 9. Intellectual property (IP)
environment 2014 25 (US ranked on the top
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14
followed by UK and France) 10. World Press Freedom Index 2014 -
140 in the list of 180 countries 11. World's best countries for
doing business 2014 134 12. Global Peace Index 2014 143 (Iceland
top the list while Syria the most violent place) 13. Global
Innovation Index 2014 - 76 14. Global Competitiveness Index 2014
-71 (Switzerland is the most competitive economy, followed by
Singapore).
Index/Reports Issued by different organizations in World:
1. World Economic Outlook is published by: International
Monetary Fund (IMF). 2. Global Hunger Index is issued by:
International Food Policy Research Institute 3. Global Peace Index
is issued by: Institute for Economics and Peace 4. Global
Corruption Index is issued by: Transparency International 5. Global
Competitiveness Index is issued by: World Economic Forum 6. Human
Development Report is issued by: United Nations Development
Programme (UNDP) 7. Gender Inequality Index is issued by: United
Nations Development Programme (UNDP)
News Related to Banking & Finance
1. Anil Ambani led Reliance Group has sold its multiplex
business to South India-based Carnival Group in the largest
ever
deal in this space. 2. Wholesale inflation hits zero, lowest in
over 5 years.The Wholesale Price Index (WPI) based inflation was at
1.77 per
cent in October and 7.52 per cent in November 2013. 3. Indias
Forex reserves down $1.64 billion.The value of special drawing
rights (SDRs) was lower by $21.6 million at
$4.20 billion.Gold reserves for the week under review were down
by $753.2 million at $18.98 billion. 4. ONGC declares interim
dividend, notifies 3 discoveries in Krishan Godavari Basin and
Mumbai offshore and it will pay
its shareholders an interim dividend of 100 per cent. 5. Delhi
HC banned Xiaomi to sell phones in India over patent issue with
Ericcson. 6. Tata Power acquired 540 MW thermal power plant for
3000 crore rupees in Maharashtra.With this deal, Tata Power
aimed to increase its total capacity to 8885 MW. 7. India forex
reserves up $ 1.432 billion to $ 316.311 billion 8. i. India's
forex reserves surged by 1.432 billion US dollar to 316.311 billion
dollar in the week ended 28th November.The
country's gold reserves remained unchanged at 19.738 billion
dollar. The Special Drawing Rights increased by 6.4 million dollar
to 4.229 billion dollar, while the country's reserve position with
the IMF also rose by 2.5 million dollar to 1.521 billion dollar
during the week.
9. Mandatory for PSUs from 1st April, 2015 to procure 20 percent
of products manufactured by MSME: Govt. 10. Kotak Mahindra Bank
launches savings bank account for customers of 55 years and above.
According to the release,
customers will earn 6 per cent pa on savings balance of over Rs
1 lakh and 5 per cent on balances up to Rs 1 lakh.To earn higher
return on their balances, they can sign up for the Kotak ActivMoney
facility, which converts savings account balance above a certain
amount into term deposits.
11. ICICI Bank ties up with price comparison app Zopper for
offline and online. 12. ICICI Bank sells Russian subsidiary - ICICI
Bank Eurasia to Sovcombank. 13. PSU bank ATMs will be able to print
in Hindi soon. 14. Central Bank to raise Rs. 626.23 cr from
preferential issue to LIC.The capital raising committee of the
board approved
raising of additional equity capital by issuance of up to 8.28
crore shares at Rs. 75.55 a equity, Central Bank of India said in a
statement.
15. Punjab National Bank (PNB) on Wednesday said it will
continue giving free transactions to all saving bank account
cardholders using PNB ATMs, irrespective of the number of
transactions.
16. Canara Bank has signed a memorandum of understanding with
Micro Energy Credits Corporation to finance bank customers buying
energy efficient green products such as cook stoves, solar home
systems, biogas digestors and water purifiers.The partnership has
identified Chitradurga district in Karnataka to promote such green
products on a pilot basis.
17. Kotak Mahindra Bank is the first bank to fully own an
insurance business i. Kotak Mahindra Bank BSE 0.07 % on Tuesday
became the first bank to get the Reserve Bank of India's (RBI's)
permission to set up a wholly-owned non-life insurance company. ii.
The bank is already the promoter of a life insurance company in
partnership with Old Mutual of South Africa. Note: i. RBI
guidelines allow a bank to hold max 50 per cent in insurance joint
venture. However, RBI allowed some exceptions, like SBI and ICICI
Bank. In both these partnerships, the banks hold 74 per cent.ii.
Kotak General Insurance will be the 29th non-life company in the
country. The last non-life insurer to get permission from the
regulator was Cigna TTK a health insurance company.ii. The last
company to set up a full-fledged general insurance business was
Liberty Videocon General Insurance.
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18. China beats India in November FII inflows: HSBCi. According
to the global financial services major, after two consecutive
months of sell-offs, FIIs have warmeequities and all markets have
received positive flows in November as the region recorded net
inflows of $5.3 billion, out of which India attracted $1.4
billion.ii. Among Asian economies, China regained the topas the
most loved market, pushing India down to second position in the
region, while Thailand was placed at the third spot.
19. GMR Infrastructure has received the Securities and Exchange
Board of India approval to raise up tothrough rights issue. Note -
In a rights issue, shares are issued to existing investors as per
their holding at a pre
20. E-retailing firm Snapdeal.com launched the online Agri
storelaunched on the occasion of National Farmer's Day (24i. The
Agri Store aims to offer wide variety of farm items from seeds to
fertilisers, farming tools and irrigatio