21st year of publication

B anking
Registration RNI No.67802/98
Volume - XXI No.12 : December 2018

Update
events

Contents of this Issue

BANKING POLICY : 2 & 3
• ECB Policy Review
• NBFC-Securitization transactions
• ECB-Hedging provisions
• Legal Entity Identifier
• RTGS-positive confirmation
• NSFR - Implementation

BANKING FEATURES : 4-8, 20

• Interest Equalization-Export Loans
• Group of 20 (G-20)
• RBI's bi-monthly Credit Policy
• Value Free Transfers-Govt. Securities
• One-person companies
• Global Monetary Authorities

Those who win, are those, who think they can DIARY OF EVENTS : Nov-2018: 9
• Policy, Economy
Corporate & Distribution Office
• Banking Developments
1008, Sector 45-B, Chandigarh
Phone 0172 2665 623 • Capital Markets & Insurance
eMail - bankingupdate123 @ gmail.com
General Awareness : 13-14

www.banking update
update.. com
bankingindiaupdate Multi-Option questions:15-18
Data Bank : 20

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

2 ♦ Banking events updatE ♦ December 2018

B ANKING ECB Policy Review

POLICY RBI reviewed the extant provisions of External
Commercial Borrowing (ECB) framework on 06.11.18 and made
used in areas relating to banking, securities
market, credit rating, market supervision, etc.
The LEI system has been implemented in a
following amendments: phased manner for participants (other than
individuals) in the over-the-counter markets for
i. Minimum average maturity: Reduced the minimum average
rupee interest rate derivatives, foreign currency
maturity requirement for ECBs in the infrastructure space raised
derivatives and credit derivatives in India in
by eligible borrowers, from 5 years to 3 years; and
terms of RBI circulars dated 01.06.17 and for
ii. Hedging requirements: Reduced the average maturity large corporate borrowers of banks as per
requirement from extant 10 years to 5 years for exemption from circular dated 02.11.17.
mandatory hedging provision applicable to ECBs raised by eligible
In RBI Monetary Policy of April 2018, it was
borrowers. Accordingly, the ECBs with minimum average maturity
proposed to implement the LEI mechanism for
period of 3 to 5 years in the infrastructure space will have to
all financial market transactions undertaken by
meet 100% mandatory hedging requirement. ECBs falling under
non-individuals in interest rate, currency or
these provision raised prior to date of RBI circular (06.11.18)
credit markets regulated by RBI. Based on draft
will not be required to mandatorily roll-over their existing hedges.
directions and comments received during the
Relaxation to NBFCs on securitisation transactions consultation, the directions on requirement of
In order to encourage NBFCs to securitise/assign their eligible LEI Code for participation in non-derivative
assets, RBI decided on 29.11.18, to relax the Minimum Holding markets have been finalized by RBI on
Period (MHP) requirement for originating NBFCs, in respect of 29.11.18. Summary is provided as under:
loans of original maturity above 5 years, to receipt of repayment All participants, other than individuals,
of six monthly instalments or two quarterly instalments (as undertaking transactions in the markets
applicable), subject to the following prudential requirement: regulated by RBI viz., Government securities
Minimum Retention Requirement (MRR) for such securitisation/ markets, money markets (markets for any
assignment transactions shall be 20% of the book value of the instrument with a maturity of one year or less)
loans being securitised/20% of the cash flows from the assets and non-derivative forex markets (transactions
assigned. that settle on or before the spot date) shall obtain
This shall be applicable to securitisation/assignment transactions Legal Entity Identifier (LEI) codes by the due
carried out during a period of six months from the date of issuance date indicated in the schedule below. Only those
of RBI circular dated 29.11.18. Other terms and conditions of entities that obtain an LEI code on or before the
the above referred Directions remain the same. due dates applicable to them shall be able to
ECB Policy – Review of Hedging Provision undertake transactions in these financial markets
after the due date, either as an issuer or as an
RBI reviewed its ECB framework on 26.11.18 and decided, in investor or as a seller / buyer. Transactions
consultation with the Government of India, to reduce the undertaken on recognized stock exchanges are
mandatory hedge coverage from 100 per cent to 70 per cent for outside the purview of the LEI requirement.
ECBs raised under Track I of the ECB framework by eligible
borrowers for a maturity period between 3 and 5 years. Further, In case of non-derivative forex transactions,
it also clarified that ECBs falling within the aforesaid scope but while all inter-bank transactions shall be subject
raised prior to the date of RBI circular (26.11.18) will be required to LEI requirement, client transactions shall
to mandatorily roll-over their existing hedge(s) only to the extent require LEI code for transactions involving an
of 70 per cent of outstanding ECB exposure. amount equivalent to or exceeding USD one
million or equivalent thereof in other currencies.
Legal Entity Identifier Code for participation in non-
derivative markets Non-resident entities undertaking financial
transactions in the relevant markets shall also
The Legal Entity Identifier (LEI) code has been conceived of as a require LEI code. Such entities that are not legal
key measure to improve the quality and accuracy of financial entities in their country of incorporation (e.g.,
data systems for better risk management post the Global Financial funds operated by a non-resident parent/
Crisis. The LEI is a 20-character unique identity code assigned management company that are each registered
to entities who are parties to a financial transaction. Globally, use as an FPI) shall use the LEI code of the parent/
of LEI has expanded beyond derivative reporting and it is being management company.
(COMPILATION- SAPANDEEP TOOR & MANJOT TOOR, - on the basis of information available on RBI Website)
 Banking events updatE ♦ December 2018 ♦ 3
Entities responsible for executing transactions, reporting or for depository
functions in these markets shall capture the LEI code of the transacting
participants in their systems.
CORRESPONDENCE
Entities can obtain LEI from any of the Local Operating Units (LOUs) COURSE
PROMOTION EXAM
accredited by the Global Legal Entity Identifier Foundation (GLEIF). In
India LEI code may be obtained from Legal Entity Identifier India Ltd.
Entities undertaking financial transactions shall ensure that their LEI code Based on latest trends of IBPS exam. A large
is considered current under rules of Global LEI System. Lapsed LEI codes no. of bankers already succeeded by using
shall be deemed invalid for transactions in markets regulated by RBI. the course material. If unable to attend class
room program, this is the best option.
Schedule for Implementation of LEI in the Money market, G-sec market
Course Kit : The course kit include:
and Forex market
(a) subject-wise basic study material,
Phase Net Worth of Entities Proposed deadline (b) assignment to improve retention
Phase I above Rs.10000 million April 30, 2019 (c) objective type practice exercise
(d) recalled questions
Phase II between Rs.2000 million and Rs 10000 million August 31, 2019
(e) mock test papers.
Phase III up to Rs.2000 million March 31, 2020 Fee : May differ from bank to bank. May be
Basel-III Net Stable Funding Ratio (NSFR) – Final Guidelines checked before remittance). Fee to be paid
in advance.
Vide its circular dated 17.05.18, RBI had circulated the details of final Net
How to enrol : To enrol, advise (a) name,
Stable Funding Ratio (NSFR) guidelines. However, its implementation was (b) address for correspondence (c) Email
kept pending. RBI decided (29.11.18) that the NSFR guidelines will come address, (d) bank name, (e) scale for which
into effect from April 1, 2020. appearing, (f) phone / Cell number and (f)
details of subjects for the exam (relevant
RTGS System - Implementation of Positive Confirmation course material, other than internal bank
Presently, the National Electronic Funds Transfer (NEFT) system provides guidelines shall be sent).
for sending a positive confirmation to the remitter of the funds regarding
completion of the funds transfer, thus giving an assurance to the remitter
that the funds have been successfully credited to the beneficiary account. CAIIB/
RBI decided on 15.11.18 that banks will provide the same facility to the
remitter of funds under the RTGS system as well. JAIIB
Initially, the positive confirmation feature in RTGS would be available for
member banks wherein both remitter and beneficiary banks access RTGS Course is based on exam pattern of IIB&F. A
large no. of candidate have succeeded in all 3
through thick client interface / SFMS member interface. Member banks papers in first attempt with our study material.
are expected to communicate the same to their customers. The positive Course Kit : The course kit include:
confirmation feature would be subsequently enabled for member banks (a) subject-wise basic study material,
accessing RTGS through other channels as well. (c) objective type practice exercise
In this connection, a new message format (camt.059) has been introduced (d) mock test papers.
to communicate an acknowledgement to the remitting bank containing the Fee : Fee differs for different papers. Fee
date and time of credit to beneficiary account. This message would flow payable in advance, for which details may be
obtained by calling 01722665623 .
from the beneficiary bank to the remitter bank through the SFMS. After
How to enrol : To enrol, advise name,
receiving the positive confirmation from the beneficiary bank, the remitter address for correspondence, eMail id, mobile
bank shall initiate an SMS and / or generate an e-mail to the remitter. phone, bank name, subjects for enrolment.
Accordingly, all banks are required to put in place systems to ensure straight-
through-processing (STP) based confirmation processing. The beneficiary
bank shall ensure that such confirmation message is sent as soon as the
amount is credited to the beneficiary account in CBS while the confirmation DS Institute of Banking
message from the remitting bank shall be necessarily sent on a real time
basis and in any case not beyond one hour after receipt of credit message Office:SCO No.32, Sector 33-D,
Chandigarh 160 020
from the beneficiary bank. Phone: 0172-2665623, 09988221167
The system of sending positive confirmation to the customers is to be email - [email protected]
operationalised by banks at the earliest but not later than two months from
the date of RBI circular dated 15.11.18. • www.banking update
update.. com
bankingindiaupdate
4 ♦ Banking events updatE ♦ December 2018 BANKING FEATURES
Interest Equalization Scheme on Pre-ship- number) certifying that the claim for interest equalisation
ment and Post-shipment Export Credit of Rupees…………….. for the month ended …………..
During 2015, Govt. approved the Interest Equalisation has been verified and found to be strictly in accordance
Scheme for Pre and Post Shipment Rupee Export Credit with the provisions of the Government scheme.
with effect from 1st April, 2015 for 5 years. The claims may be submitted to RBI.
The details of the Scheme are as follows:
(a) The rate of interest equalisation @ 3% per annum XBRL Implementation at RBI
will be available on Pre Shipment Rupee Export Credit As part of the regulatory and supervisory functions
and Post Shipment Rupee Export Credit. bestowed on it, RBI collects data in fixed formats (called
Government of India decided to increase w.e.f. ‘Returns’) from commercial banks, financial institutions,
November 02, 2018 Interest Equalisation rate from 3% authorised foreign exchange dealers and non-banking
to 5% in respect of exports by the Micro, Small & financial institutions.
Medium Enterprises (MSME) sector manufacturers With a view to adopting better technology solutions in
under the Interest Equalisation Scheme on Pre and Post reporting, RBI took the eXtensible Business Reporting
Shipment Rupee Export Credit. Language (XBRL) in the year 2008.
(b) The scheme would be applicable w.e.f 01.04.2015 Under the XBRL project, a no. of returns and reports
for 5 years. have been developed by RBI. These returns pertain to:
(c) The scheme is available to all exports under 416 tariff i. Financial accounts of the banks;
lines [at ITC (HS) code of 4 digit] and exports made by
ii. Regulatory monitoring like, Cash Reserve Ratio,
Micro, Small & Medium Enterprises (MSMEs) across
Statutory Liquidity Ratio, Unclaimed Deposits, Gap,
all ITC(HS) codes.
Positions and Balances (GPB), Capital
(d) Scheme is not available to merchant exporters. Adequacy(designed as per Basel II guidelines) etc.
(e) Banks are required to completely pass on the benefit
iii. Supervisory monitoring like Off-Site Monitoring and
of interest equalisation, as applicable, to the eligible
Surveillance System, Fraud Monitoring System.
exporters upfront and submit the claims to RBI for
reimbursement, duly certified by the external auditor. While XBRL reporting was introduced initially for
Scheduled Commercial Banks, over time it has been
(f) Ministry of Commerce and Industry places funds in
extended to Urban Co-operative Banks, Financial
advance with RBI for a requirement of one month and
Institutions (non-bank), and Primary Dealers.
reimbursement is to be made on a monthly basis through
a revolving fund system. As part of the Supervisory initiative, a Central Repository
(g) All eligible exports under the scheme would have to of Information on Large Credits (CRILC), has been
meet the criteria of minimum processing for the goods created by the Reserve Bank. The database has been
to be called as Originating from India and would be developed under the XBRL framework and the same is
governed by provision of Handbook of Procedures of shared with the banks. It has helped in tracking and
Foreign Trade Policy 2015-2020. reviewing exposures/impairment of large borrowers
more effectively across banking institutions and initiate
Operational aspects for banks:
timely remedial measures.
The interest equalisation benefit will be available from
Important Gains from Implementing XBRL at RBI:
the date of disbursement up to the date of repayment or
up to the date beyond which the outstanding export credit i. Provides comprehensive information on each data
becomes overdue. However, the interest equalisation will element with definitions, hierarchy and metadata
be available to the eligible exporters only during the period ii. Ensures data consistency (within return) through
the scheme is in force. proper validations
The sector-wise consolidated monthly reimbursement iii. Enables rationalisation of returns by removing
claim for interest equalisation should be submitted in duplicate items
original within 15 days from the end of the respective During February 2016, the XBRL International, the
month, with bank’s seal and signed by authorised person. global custodian of the eXtensible Business Reporting
The claims should be accompanied by an External Language (XBRL) standard awarded the ‘XBRL
Auditor’s Certificate (with stamp and membership International Award for Excellence’ to RBI.
Summary edited by : Arundeep Toor - Source different Websites.
BANKING FEATURES Banking events updatE ♦ December 2018 ♦ 5
RBI’s bi-monthly Monetary Policy Statement to market participants on the very next day. Accordingly,
In its bi-monthly review on 05.12.18, RBI notified the the daily Money Market Operations press release will
following provisions: contain the CRR figure for the previous day, with effect
from December 6, 2018.
1. External Benchmarking of New Floating Rate
Loans by Banks 4. Ombudsman Scheme for Digital Transactions
All new floating rate personal or retail loans (housing, With the digital mode for financial transactions gaining
auto, etc.) and floating rate loans to Micro and Small traction in the country, there is an emerging need for a
Enterprises extended by banks from April 1, 2019 shall dedicated, cost-free and expeditious grievance redressal
be benchmarked to one of the following: mechanism for strengthening consumer confidence in
this channel. It has therefore been decided to implement
a) Reserve Bank of India policy repo rate, or
an ‘Ombudsman Scheme for Digital Transactions’
b) Government of India 91 days Treasury Bill yield covering services provided by entities falling under
produced by the Financial Benchmarks India Private Ltd Reserve Bank’s regulatory jurisdiction. The Scheme will
(FBIL), or be notified by the end of January 2019.
c) Government of India 182 days Treasury Bill yield 5. Framework for Limiting Customer Liability in
produced by the FBIL, or respect of Unauthorised Electronic Payment
d) Any other benchmark market interest rate produced Transactions involving Prepaid Payment
by the FBIL. Instruments
2. Aligning Statutory Liquidity Ratio with Liquidity The Reserve Bank has issued instructions on limiting
Coverage Ratio customer liability in respect of unauthorised electronic
As per the existing roadmap, scheduled commercial banks transactions involving banks and credit card issuing non-
have to reach the minimum Liquidity Coverage Ratio banking financial companies (NBFCs). As a measure of
(LCR) of 100 per cent by January 1, 2019. Presently, consumer protection, it has been decided to bring all
Statutory Liquidity Ratio (SLR) is 19.5 per cent of Net customers up to the same level with regard to electronic
Demand and Time Liabilities (NDTL). Further, the assets transactions made by them and extend the benefit of
allowed to be reckoned as Level 1 High Quality Liquid limiting customer liability for unauthorised electronic
Assets (HQLAs) for the purpose of computing the LCR transactions involving Prepaid Payment Instruments
of banks, inter alia, include (a) Government securities in (PPIs) issued by other entities not covered by the extant
excess of the minimum SLR requirement; and (b) within guidelines on the subject. The guidelines will be issued
the mandatory SLR requirement, Government securities by the end of December 2018.
to the extent allowed by RBI under (i) Marginal Standing 6. Expert Committee on Micro, Small and Medium
Facility (MSF) [presently 2 per cent of the bank’s NDTL] Enterprises
and (ii) Facility to Avail Liquidity for Liquidity Coverage Micro, Small and Medium Enterprises (MSMEs)
Ratio (FALLCR) [presently 13 per cent of the bank’s contribute significantly to employment, entrepreneurship
NDTL]. In order to align the SLR with the LCR and growth in the economy. They remain, by their
requirement, it is proposed to reduce the SLR by 25 predominantly informal nature, vulnerable to structural
basis points every calendar quarter until the SLR reaches and cyclical shocks, at times with persistent effects. It
18 per cent of NDTL. The first reduction of 25 basis is important to understand the economic forces and
points will take effect in the quarter commencing January transactions costs affecting the performance of the
2019. MSMEs, while often the rehabilitation approach to the
3. Measures to Improve Liquidity Management MSMEs stress has focused on deploying favourable
Currently, the Cash Reserve Ratio (CRR) balance of credit terms and regulatory forbearances. To this end,
banks at the end of the day is being disclosed with a lag an Expert Committee will be constituted by the Reserve
of 2-3 days, while the details of the currency in Bank of India to identify causes and propose long-term
circulation are being released with a lag of one week. In solutions for the economic and financial sustainability
order to enable banks to forecast their liquidity of the MSME sector. The composition of the Committee
requirements with a greater degree of precision, it has and its Terms of Reference will be finalised by the end
been decided that the Reserve Bank will provide of December 2018 and the report will be submitted by
information on daily CRR balance of the banking system the end of June 2019.
6 ♦ Banking events updatE ♦ December 2018 BANKING FEATURES
Group of Twenty (G-20) issues, such as monetary, fiscal and exchange rate
The Group of Twenty (G20) is a leading forum of the policies, infrastructure investment, financial regulation,
world’s major economies that seeks to develop global financial inclusion and international taxation.
policies to address most pressing current challenges. ·The Sherpa track focuses on broader issues such
The G20 is made up of 19 countries and the European as political engagement, anti-corruption, development,
Union. The 19 countries are Argentina, Australia, Brazil, trade, energy and climate change, gender equality, among
Canada, China, Germany, France, India, Indonesia, Italy, others.
Japan, Mexico, Russia, Saudi Arabia, South Africa, What impact does the G20 have?
South Korea, Turkey, the United Kingdom and the United The G20 is one of the most important international
States. forums for collaboration on the global economy. Its
Spain is a permanent invited guest to G20 meetings. meetings address the world’s most pressing challenges
Every year, the country which holds the G20 presidency, and coordinate appropriate global policy responses. In
can invite other countries to attend, at its own discretion. today’s evolving geopolitical context, international
Origin collaboration is crucial, making the G20 all the more
relevant. The G20 also ensures that developing countries
The G20 was born out of a meeting of G7 Finance
have a greater impact on global affairs.
Ministers and Central Bank Governors in 1999 to address
the world’s financial challenges in the aftermath of 1997 The prime achievements of the G20 to date include: the
Asian crisis. Later, the G7 invited leading markets – quick deployment of emergency funding during the 2008
both developed and emerging – to form a new global financial crisis, reforms for international financial
Ministerial-level Forum, the G20. institutions, improving oversight of national financial
institutions, bolstering the quality of financial regulatory
Since 2008 (global financial crisis period) the G20
bodies in markets whose fiscal and monetary policies
summits have been attended by Heads of State or
have led to crisis, and creating a global security network
Government. G20 was instrumental in stabilizing the
to fight the spread of such crises in the future.
world economy. Since then, its agenda has expanded to
include additional issues affecting financial markets, G20 presidency :
trade and development. One country is chosen by the G20 members to hold the
How does G-20 work? presidency over the group for one year. The presiding
country organizes and hosts the meetings, sets the
Every year, when a new country takes on the presidency,
agenda priorities to discuss and invites additional
it works hand-in-hand with the previous presidency and
attendees at its discretion. As the G20 has no permanent
the following presidency in what is collectively known
secretariat, the role of the presiding country is critical to
as the troika. This is to ensure the consistency and
the forum’s effectiveness.
continuity of the group’s agenda.
In 2018, Argentina hosted the summit on 30 November
The presidency of the G20 rotates annually between
and 1 December in Buenos Aires to wrap up the G20’s
the group’s 19 member countries.
work in 2018. Japan in 2019 and Saudi Arabia in 2020
G20 has no headquarters or permanent staff and the and India will host the summit in 2022, 75th year of
country which holds the G20 presidency, hosts the Independence.
meetings and plays a leading role in setting the agenda and (Source of information : https://www.g20.org/en/g20)
building consensus among members. Board of Management in Primary (Urban) Co-
What do the G20 members collectively represent? operative Banks (UCBs)
Collectively, the G20 members make up 85% of the Expert Committee on licensing of new Urban Co-operative Banks
world’s economic output, 66% of its population, 75% (2010) had recommended that a Board of Management (BoM) be
constituted in every Primary (Urban) Co-operative Bank (UCB),
of international trade and 80% of global investments in in addition to the Board of Directors (BoD) to strengthening
research and development. governance in the UCBs. In draft guidelines (25.06.18), RBI
The work of G20 is generally divided into two tracks: proposed to require UCBs to make a provision in their bye laws
for setting up a BoM. It is propose that regulatory approvals
· The Finance track comprises all meetings with G20 such as expansion of area of operation and opening of new
finance ministers and central bank governors, and their branches may be allowed only for UCBs that have made such a
deputies. They focus on financial and economic provision in their bye laws. RBI shall issue final guidelines by the
end of December 2018.

Compilation : Sapandeep Toor (Source G20 website).

BANKING FEATURES Banking events updatE ♦ December 2018 ♦ 7

Practical Problems based on Banking Ombudsman Decisions

1) The complainant who was enjoying Cash Credit and Bank Guarantee facility,
eLearning
alleged that the bank had levied charges of Rs.10,53,400 towards processing
fees, service tax and Cess for renewal of the facility though he had not
Study Material
requested for renewal. As per sanction letter the facility was valid till Jan 31,
2016. The bank submitted that BG was valid till June 10, 2016 as part of MOCK TEST - CDs
original sanction letter. Hence it extended full facility till June 10, 2016. On Features of CDs
Feb 16, 2016, bank had received a letter from another bank for takeover of • Explanation for each question/answer.
the facility. On takeover of loan facility by another bank, prepayment charges • Improve understanding and retention.
were debited to complainant’s account as per terms of sanction letter. • Remove confusions. .
The relevant documents submitted by both were examined. It was observed • Improve time management. Set your own
time during practice.
that after receipt of letter from taking over bank on Feb 16, 2016,
• Test your preparation before Exam.
complainant’s bank had sent a letter to the complainant requesting for
• Practice on-line without use of internet.
submission of renewal proposal as the facility had already expired.
• Questions are shuffled when used again.
BO observed that the bank had extended the facility till June 10, 2016 for • Large no. of questions based on latest
which no letter was issued but bank had deducted prepayment charges/ guidelines and memory recalled questions.
processing fees along with Service Tax and Cess on takeover of the facility
by other bank. Considering these aspects, BO advised the bank to refund the
amount along with compensation @ 8%. Bank Promotion Exam - Rs.300
Bank Promotion Interview - Rs.300
2) A retired school teacher drawing a monthly pension of Rs.21,000 visited
Banking Ready Recknor - Rs.300
a bank to invest the gratuity amount in fixed deposits. However, he was
CAIIB (New Syllabus)
misguided and sold an insurance product involving payment of annual
premium of Rs.7 lakh. Though he was told that the premium was to be paid • Bank Financial Mgmt - Rs.300
initially only once, he received demand notice in the second year and had to • Advanced Bank Mgmt - Rs.300
pay it with great difficulty by selling personal belongings. When he received • Retail Banking - Rs.300
the demand notice third time he approached the OBO. • Risk Management - Rs.300
CAIIB (Case Studies)
In the conciliation meeting the bank agreed that the complainant was sold a
• Advanced Bank Mgmt -Rs.300
third party product which was not suitable for him and hence it was in
• Bank Financial Mgmt -Rs.300
violation of commitment given under BCSBI Code. It was agreed upon by
JAIIB - All three papers Rs.300 (each)
both that the amount contributed by complainant be converted to respective
Economics Mock Test - Rs.150
fund values as on the date of conversion and placed as fixed deposits @ 8%
Book-Keeping Mock Test - Rs.150
interest on cumulative basis till maturity of insurance policies. The bank was
also directed to ensure that the maturity proceeds of the fixed deposits be
credited to the customer’s account on the date of maturity of the policies. Online Mock Tests
3) The complainant who wanted to invest in a fixed deposit of a bank was Promotion,CAIIB/JAIIB, log in
persuaded to buy an insurance policy with maturity proceeds of Rs.4.50 nstoorBankingonline.com
lakh after payment of annual premium of Rs.25,000 for 10 year. The bank
later informed that maturity amount would be Rs.2.92 lakh. The exit route
provided that the policy could be surrendered after payment of 3 yearly
instalments and surrender value would be Rs.21,826 only. bank maintained
IBPS Bank PO / ClerK Exam
that the complainant was explained in detail before selling the policy and a Score High with Latest Study Kits
verification call was made to the customer where all details regarding the
policy including the closure after three years were explained over telephone. Anywhere Anytime Learning
E-Books CDs, Videos
In the conciliation meeting the bank officials admitted that there could have
been some misunderstanding on their part in explaining the details of the
policy to the complainant. It was agreed upon by the complainant and the Contact
officials of the bank that the complainant would surrender the policy document 09814 331 661
for cancellation and the insurance premium paid by the complainant would 01722665623
be refunded without any interest to the complainant. •
8 ♦ Banking events updatE ♦ December 2018 BANKING FEATURES
Value Free Transfer (VFT) of Govt. Securities amalgamations;
It its circular dated 05.09.11, RBI had stipulated the v. Transfer of securities on account of change of
eligibility criteria and operational guidelines for Subsidiary custodians by Foreign Portfolio Investors, subject to
General Ledger (SGL) / Constituent Subsidiary General approval by SEBI
Ledger (CSGL)/ accounts(as amended thereafter). Under vi. Own account transfer of securities from SGL/CSGL
this, Value Free Transfers (VFT) of Government accounts to CSGL of depositories, where there is no
securities from one SGL/CSGL account to another SGL/ change in beneficiary ownership;
CSGL account were allowed by the Reserve Bank. vii. Transfer of Gilt Account Holder’s(GAH) securities
The SGL/CSGL Guidelines have been revised by RBI on from one CSGL account to another CSGL account, in
29.10.2018. case a GAH decides to close his gilt account with one
RBI issued separate guidelines on 16.11.18, for VFT to CSGL account holder and open a new gilt account with
enable more efficient operations in the Government another CSGL account holder.
securities market. Value Free Transfers between SGL/ viii. Transfer of securities pertaining to margin
CSGL accounts not covered by this circular would require requirement/collateral posting in the following cases:
specific approval of the Reserve Bank. 1. Transfer of margin/collateral between Clearing
Meaning of VFT: VFT of the government securities Corporation of India Ltd (CCIL) and members of CCIL.
shall mean transfer of securities from one SGL/CSGL 2. Transfer of margin /collateral under the Credit Support
to another SGL/CSGL account, without consideration. Annexes (CSA) and the Global Master Repurchase
Such transfers could be on account of posting of Agreement (GMRA)
margins, inter-depository transfers of government Provided that the margin/collateral should be kept in a
securities arising from trades in exchanges between demat separate CSGL account opened with RBI’s specific
account holders of different depositories, gift/inheritance permission for the purpose. All such transactions should
and change of custodians etc. VFT would also be required have an RBI regulated entity at least on one side of the
in the case of distribution of securities to the beneficiary transaction and should be subjected to concurrent and
de-mat/gilt accounts on allotment after participation in management audit. Appropriate documentation should
the non-competitive segment of the primary auction. be maintained.
Permitted Transactions : The following transactions 3. Posting of Government securities as margin /collateral
shall be eligible for VFT of government securities: in all segments of the recognised stock exchanges - VFT
i. Transfers on account of gifts and inheritance, between of G-Sec will be permitted for margin/margin reversal
one CSGL account to another. movements between the Foreign Portfolio Investors
ii. Inter-depository transfers (between CSGL accounts (FPIs) and their clearing members with whom they have
of depositories) arising out of the following: a Gilt Account, for offering G-Secs as collateral to the
a) own account transfer of securities by investors/ recognized stock exchanges in India for their eligible
brokers holding accounts in more than one depository. transactions in recognized stock exchanges. The CSGL
b) trades in exchanges between de-mat account holders account holders shall obtain a specific request along with
of different depositories. In such cases, depositories shall an undertaking from the concerned FPI and their clearing
put in place suitable mechanisms to ensure, the bonafide members that the transactions are non-trade and only
nature of these transfers before effecting the VFT. This for margin/collateral purpose. Clearing members would
will entail suitably advising the Depository Participants, be required to put in place a robust system for clear
to ensure that board approved risk management segregation of their proprietary securities and securities
processes and audit oversight are applied before held as margin /collateral on behalf of their FPI clients.
transactions in Government securities are accepted at 4. Posting of margin /collateral as above for domestic
their level and to confirm the same to the Depositories; participants in recognized stock exchanges.
iii. Transfer from CSGL accounts of clearing corporations 5. The eligible entities can initiate VFT through RBI’s
to the CSGL account of the depositories or to other Core Banking System viz., e-Kuber for the transactions
CSGL holders for onward transfer to clients for mentioned at i. to viii. above.
distribution of securities allotted during primary auction Reporting : The details of the VFT effected as above
settlement; are to be reported by entities effecting the VFT on a
iv. Transfer of securities on account of mergers and weekly basis to RBI.

Compilation : Manjot Kaur Toor (RBI website).

 Banking events updatE ♦ December 2018 ♦ 9

• NOD FOR OPENING SOLAR ALLIANCE TO ALL UN Financial

MEMBER-NATIONS: The Union Cabinet gave its approval Events
for moving a resolution in the first Assembly of the International
14.4 tonnes of gold was mobilised since
Alliance (ISA) to amend the framework agreement of the
its launch on November 5, 2015.
alliance to open up membership to all UN Countries. The decision
has been taken to put solar energy on the global agenda with the • SUPREME COURT RULING ON
universal appeal for developing and deploying solar energy. DEBTOR’S RIGHT UNDER
SARFAESI: (Case- Hindon Forge Ltd.
• CABINET APPROVES ORDINANCE TO AMEND
VS. State) The issue was whether a
COMPANY ACT: The Union Cabinet gave its approval for
borrower can move the DRT even before
promulgation of an ordinance to bring amendments to the
physical possession of assets is taken by
Companies Act 2013. The amendments are largely in line with
banks/financial institutions in the exercise
the recommendations of a Panel headed by Corporate Affairs
of their powers under the Act. Supreme
Secretary Injeti Srinivas. The ordinance will cover provisions to
Court has ruled that a debtor can
decriminalize several offences, cap independent director’s
approach the DRT under the SARFAESI
remuneration, bring measures to curb shell companies besides
Act at the stage of possession notice by
help de-clog the National Law Tribunal. It has also suggested a
the secured creditor.
reduction in the time limit for filing documents related to creation,
modification and satisfaction of charges and stringent penal • SUPREME COURT RULNG ON
provisions for non-reporting. ARBITRATION UNDER
CONSORTIUM: (Case- L&T VS.
• SEBI TO INTRODUCE UPI AS ALTERNATIVE FOR
Mumbai Metro) Supreme has ruled that
RETAIL IPO INVESTORS: SEBI will launch Unified
when there is consortium between an
Payments Interface (UPI) as an alternative payment option for
Indian Company and a foreign entity, a
retail investors, buying shares in a public issue in a phased manner
claim can be filed only in the name of
from January 1 next year which will also cut the listing time for
consortium and not separately.
an IPO to three days from six at present. The new mechanism
will increase the efficiency of the existing system and curtail the • GOVT. INVOKED SECTION 7 OF
need for manual intervention. Currently, retail investors either RBI ACT: The Government has invoked
invest in IPO through bank ASBA or through broker does the hitherto unused Section 7 of RBI Act to
bidding and hands over the application form to the investor’s initiate consultations on around a dozen
bank. Now SEBI will ensure complete and smooth transition to issues, after RBI failed to act on any of
the UPI Payment Mechanism. them. The Government had been in
discussions with RBI on most of these
• GOVT. TO RELAUNCH GOLD MONETISATION
subjects –largely aimed at easing liquidity
SCHEME: The Government is likely to announce the Gold
and promoting credit off-take to spur
Monetisation Scheme with some changes therein. The re-launch
growth for a long time but the
will identify 40-50 cities where the banks will push the scheme
Government received no response. RBI
and there will be one designated branch for accepting gold
has not acted on any of these issues and
deposits, which will be based on the certificate provided by the
even not taken on its Board.
collecting centre. SBI is expected to identify at least 10 branches
for this. The scheme will offer interest on idle gold. Last time, • INDIA TO DEVELOP GLOBAL PAY

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10 ♦ Banking events updatE ♦ December 2018 Financial Events
NORMS: The Payment Card Industry Security Standards have asked life insurance companies to
Council (PCI SSC) has set up a presence in India. The Council, provide a search facility on their website
which sets the standards for payment systems security globally, so that the policy holder or their nominees
expects that India will be among the top markets for digital could find out about the unclaimed amount
payments and that Indian players will continue to development by citing their Aadhar or PAN.
of global standards. PCI SSC, which mandates data security • SEBI TO TIGHTEN LIQUID MF
standards, was originally set up by Card Companies in the US RULES: SEBI is considering a proposal
in 2016. While the Council does not ensure compliance, it sets to tighten rules for liquid mutual funds to
out things that need to be done to ensure security. curb volatility in flows following the
• SEBI LAYS DOWN NORMS FOR TRANSFER OF challenges facing finance companies in the
PHYSICAL SHARES: SEBI has put in place a standard wake of IL&FS. SEBI is planning a lock-
framework for transfer of securities in physical mode, in a bid in period for investments in liquid funds in
to address the difficulties faced by investors in transmission which, investors mostly large companies –
of such shares. SEBI has allowed transfer deeds executed park idle cash. SEBI may also make it
prior to December 1, 2015 to be registered with or without the mandatory for liquid funds to mark to
PAN of the transferor after it noticed that many transfer deeds market the value of more bonds and allow
executed prior to that date have not been registered due to segregation of debt instruments in mutual
non-availability of PAN of the transferor. In case of any fund portfolios that are in trouble.
mismatch of name in PAN card vis-à-vis name on share • SUPREME COURT VERSION ON
certificate or transfer deed, transfer will be registered on CURRENCIES IN ARBITRAL
submission of any four documents- Passport, Marriage AWARD: (Case- Vedanta VS. Shenzhen
Certificate, Aadhar Card and copy of gazette notification Shandong Nuclear Power Construction
regarding change in name. Co.) When an arbitral Tribunal passes its
• GOVT. TO START TRADE VIA “NAM”: The Agriculture award specifying interest rates in different
Ministry will run a pilot project for Interstate Mandi through currencies, it should coordinate the choice
the Electronic National Agriculture Market (e-NAM). This of currency with the interest rate. This
will enable a trader with unified licence from one state to bid must be kept in mind when the parties do
online for and procure commodities from another state. not operate in the same currency. It is
Currently, seven states are working on the modalities to necessary to consider the complications
establish interstate trade. It will enhance the competition among caused by different interest rates. Hence
the trade and lead to better prices for farmers. Supreme Court observed that a uniform
• GOVT. WANTS RBI FOR SURPLUS NORMS interest rate for Indian rupees and Euros
FRAMEWORK: The Government, on board Meeting of would not be justified.
November 19, wants the RBI to clear its intent for fixing norms • SUPREME COURT RULING ON
for the Surplus Reserves to be maintained by it. The Global ARBITRATION CONTRACT: (Case-
norm is to have reserves of 14% of total assets, while at Caravel Shipping services VS. Premier
present, the RBI has 27%. There need to be some norms for Sea foods Exim) Supreme Court has ruled
how much RBI can keep. According to the RBI Annual report, that an arbitration agreement need not be
surplus reserves as on June30, 2018 were about Rs.9.63-Lakh signed, though it must be in writing. In this
Crore. case the Bill of Lading, which attached
• IRDAI FOR UNCLAIMED AMOUNTS OF POLICY printed forms, was not signed by the
HOLDERS: With over Rs.15, 000 Crore of unclaimed parties. The courts below agreed with it
deposits lying idle with insurers, IRDAI is working on a but on appeal, the Apex Court noted that
mechanism to return them to policy holders or their the bill of lading specified that when
beneficiaries. For amounts stuck in pension schemes, the accepting it, the merchant agreed to be
Regulator has asked Life Insurers to repay them as lumpsome bound by “all terms, conditions-whether
payments to policyholders or their beneficiaries. Further IRDAI typed, printed or otherwise”.
 Banking events updatE ♦ December 2018 ♦ 11

• SUPREME COURT RULING ON “SHORT ABSENCE”: • SUPREME COURT RULING ON

(Case- Shriramnarayan Mills VS. Textile Workers Union) LIMITAION LAW: (Case- BK
Supreme Court has ruled in this case that a clause in the standing educational Services ltd. VS. Parag
orders of an industrial unit which treats absence of a worker Gupta Associates) The NCLAT had
even for a half day “Break in service” is illegal . In this case the ruled in several cases that the Limitation
Union had appealed to the Apex Court and said that such a clause Act is not applicable for initiating CIRP
could be misused by the management by arbitrarily imposing and that a stale claim of dues three years
punishment. The rule would deprive the employee of his right to old without explanation normally should
gratuity as the Act is applied when there is continued service. not be entertained. Disagreeing with the
• PAPERLESS PROCESSING OF EXPORTS : The Revenue view the Supreme Court stated that
Department has decided to extend the facility of uploading digitally Limitation Act covered them. The Apex
signed documents for all types of exports under the Indian Customs Court ruled that the Limitation Act
EDI System (ICES) with a view to improve ease of doing business covers applications filed for initiating
and promote paperless processing. The ICES is operational at Corporate Insolvency Resolution
134 major customs locations handling nearly 98% of India’s Process (CIRP) under IBC from its
international trade in terms of import and export consignments. inception in 2016.
• SEBI TIGHTENS REVIEW NORMS FOR CRAs: SEBI • SUPREME COURT RULING ON
has tightened the review norms of the Credit Rating Agencies EQUAL PAY FOR TEMPORARY
(CRAs). SEBI has asked the Rating Agencies to include a specific STAFF: (Case- Sabha Shankar VS.
section on liquidity, highlighting parameters unutilised credit lines Divisional Forest Officer) Supreme
and adequacy of cash flows for servicing maturing debt obligations Court stated in this case citing an earlier
in the rating reports. This is to help investors understand the liquidity judgment that “any act of paying less
situation of an insurer. While carrying out monitoring repayment wages as compared to others similarly
schedules, CRAs shall analyse the deterioration in the liquidity situated constitutes an act of exploitative
conditions of the issuer and also take into account any asset- enslavement, emerging out of a
liability mismatch. domineering position”. The Apex Court
ruled that temporary employees are
• GOVT. NOTIFIES NFRA RULES: The Government has
entitled to wages the minimum of the
notified the National Financial Reporting Authority (NFRA) rules,
pay scales which are applicable to the
taking away the CA Institute’s monitoring and disciplinary powers
regular employees holding the same
over auditors of listed entities and large unlisted companies besides
post.
banks and insurance companies. As per the notified rules, the
NFRA will have the power to monitor and enforce compliance • SEBI SEEKS ROC STAMP FOR
with accounting standards and auditing standards, oversee the IPO PROSPECTUS: In a bid to cut
quality of service and undertake investigation of the auditors of down the time taken for listing of shares
listed entities. Unlisted entities should have with paid up capital via an Initial Public Offering (IPO) SEBI
of not less than Rs.500 Crore or annual turnover of over Rs.1000 has asked Ministry of Corporate Affairs
Crore or those having aggregate loans, debentures or deposits of to make it mandatory for the Registrar
not less than Rs.500 Crore as of March 31 of the preceding financial of Companies (ROC) to approve or
year. reject the prospectus filed by companies

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12 ♦ Banking events updatE ♦ December 2018

within a specific time period. Currently, the ROC weighted assets ratio, which is the amount of capital
is not required to issue an approval or denial when banks need to hold for making loans and absorbing
a company files for listing of shares. But it can possible losses has been retained at 9%.
raise objections at a later stage, which SEBI feels • ISSUE OF SOVEREIGN RATING AND RBI
can delay the whole process. SEBI wants to RATING: The proposed Committee to be constituted
reduce the time taken for in listing of shares from to look into Economic Capital Framework would have
six days to three days after an IPO is concluded. to address the issue whether RBI’ Rating be Higher
• PSBS’ LOSSES WIDEN THREE-HALF than India’s Credit Rating. According to the RBI
TIMES: State-owned banks saw their presentation, RBI should have a “Triple-A” rating, while
cumulative losses nearly three-and –a-half times according to Rating Agency S&P, India’s Sovereign
to Rs.14, 716 Crore in July-September quarter Rating stands at Lowest Investment Grade. According
of the current fiscal due to mounting bad loans. to RBI, since India has no reserve currency and has to
These 21 public sector banks had posted a net fund its current account deficit, RBI’s Balance Sheet
loss of Rs.4284 Crore in September quarter. On should be robust enough to attract the top rating.
a quarterly basis, however their performance was • MCX TO OFFER DELIVERY SETTLEMENT
somewhat better as they narrowed down their FOR BASE METALS: India’s commodity market is
losses by about Rs.2000 Crore in the last quarter set to reduce its dependence on international exchanges,
from Rs.16, 615 Crore in April-June quarter 2018. mainly in the US and Europe, for price discovery. The
Higher provisioning towards NPA had impacted MCX, a monopoly in trading base metal derivative
the balance sheets of PSBs. contracts in India, is gearing up for delivery-based
• RBI BOARD DECISIONS ON ECF AND settlement verses the current cash system. This means
PCA: After a marathon meeting, RBI Board took traders can ask for actual goods than cash for closing
the middle ground in a bid to defuse rising tension the contract. The MCX may initially, move Zink and
between the Government and RBI. The Board Nickel to delivery from April 2019. The Exchange is
decided to set up a Committee to review the mulling to propose ports near Mumbai for delivering
Economic Capital Framework (ECF). The goods to settle contracts on its platform.
Committee is to determine the level of reserves • CREDIT GUARANTEE NORMS FOR MSE
the RBI should hold vis-à-vis its assets so that TWEAKED: The Credit Guarantee Fund Trust for
the excess can be transferred to the Government. Micro and Small Enterprises (CGTMSE) jointly set up
With regard to banks under Prompt Corrective by the Government and SIDBI, has tweaked norms to
Action (PCA), which restricts banks’ ability to improve credit guarantee process for MSEs from
lend and expand operations, the Board decided December 1, 2018. The CGTMSE was set up to
that the matter would be examined by the Board improve fund flow to MSEs that are often unable to
for Financial Supervision (BFS) of the RBI. provide adequate collateral for taking loans from banks
• RBI BOARD TO EASE CAPITAL and other lending institutions. The financial data with
PRESSURE ON BANKS: The RBI Board regard to the slabs above Rs.10 Lakh has been made
decided to ease capital pressure on banks by mandatory. However, providing data with regard to the
allowing them one more year to meet the Capital slab between Rs.1 Lakh and Rs.10 Lakh is optional.
Conservation Buffer (CCB). This buffer is aimed • GOVT. MAKES JUTE PACKAGING
at ensuring banks build-up capital during non- MANDATORY: The Cabinet Committee of Economic
stress periods so they can drawn down when Affairs (CCEA) has approved a proposal to make jute
losses are incurred. The Board decided to extend packaging “Mandatory” for all foodgrains. The CCEA
the transition period to implement the last tranche approved that 100% of foodgrains and 20% of sugar
of 0.625% under the CCB by one year up to shall be packed in diversified jute bags. Earlier, it was
March 31, 2020. By March-end 2020, banks can compulsory to pack 90% of the foodgrains.
now achieve a CCB of 2.5% of their risk-
weighted assets. However, the capital to risk-
 Banking events updatE ♦ December 2018 ♦13

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14 ♦ Banking events updatE ♦ December 2018 DIARY OF EVENTS
• PM Modi inaugurated Cargo Vessel on Ganga in Varanasi- Lifetime Achievement ET Award.
India’s First Inland cargo Vessel. • Reliance Industries Ltd. plans to boost its
• Virender Singh, 33-year old “Deaf and Mute Wrestler” , an oil-refining capacity and will be able to
Arjuna Awardee, has been selected by the Govt. for- This produce 30 million tonnes of crude a year
Year’s National Award “Best Sports Person with at Jamnagar- World’s Largest Oil-
Disability”. refining Complex.
• Country whose Supreme Court has overturned President’s • London Stock Exchange will move its
dissolution of Parliament and ordered a halt for Snap Elections European Government Bond Trading from
on January 5, 2019- Sri Lanka. London to Italy before- Britain’s Exit from
• Bank which has opened its’ First-ever Digital Branch in the European Union.
country in Bengaluru- Karnataka Bank. • Delhi’s Centre for Science and
• Banks which have been penalised with Rs.3 Crore each for Environment (CSE) has been awarded
non-compliance of various norms including asset-classification for its work in environmental education
and KYC- Deutsche Bank and J&K Bank. and protection- Indira Gandhi Prize for
• Global Standards Body which proposed “One-Year Delay to Peace, Disarmament and
implement its New Accounting Rules” in how Insurers earn Development.
money- International Accounting Standards Board. • Elephant Hospital has been established on
• Rating Agency FITCH has retained India’s Credit Rating the Banks of Yamuna River (UP) which
Unchanged for 12 th Year in a row at- “BBB”-Lowest is close to “Elephant Conservation and
Investment Grade with Stable Outlook. Care Centre”- India’s First Elephant
Hospital.
• State which Tops in RERA Registrations in the Country-
Maharashtra. • 76-year old Amitabh Bachchan is the
Most Influential Celebrity in India-
• Govt. is planning for Gold Jewellery sold in the country to
YouGov’s influencer Index 2018.
make- Hallmarking Mandatory.
• Authority which said that “Father’s
• Nepal’s First Robot Waiter who is ready for orders- Ginger.
Name not Mandatory in PAN Application
• City which still contributes most of IT Collections in India- Forms”- CBDT.
Mumbai.
• While India slips two places to 53rd
• NITI Aayog , to ensure sustainable development of the Position, Switzerland has got the Top
Himalayan region, constituted “Himalayan State Regional Position- Global Talent Ranking.
Council” to be headed by- VK Saraswat, Member NITI
• Indian Professor SP Ganguli has been
Aayog.
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• Award for which ESAF Small Finance Bank, has been chosen Eagle- Highest Civilian Honour given
as Runner-up on the Theme “Financial Inclusion through to a Foreigner by Mexico.
Technology- European Microfinance Award 2018.
• Country’s Largest Gold Refiner with
• Bank which is to issue Five Crore Shares up to Rs.250 which the World Gold Council is to set up
Crore to its Employees under “Employee Share Purchase Precious Metals Assay and Training
Scheme”- OBC. Institute in Mumbai- MMTC-PAMP
• Company which pips TCS to become Most Valued company India.
in terms of Market capitalisation- Reliance Industries • Bank which has celebrated its 113th
Ltd. Founders Day on 19.11.2018-Canara
• Sanjeev Bajaj of Bajaj Group received – Business Leader Bank.
of the ET Year Award. • Sunil Arora has been appointed by the
• HUL’s Sanjeev Mehta has been the Winner of- Corporate Government as- Chief Election
Citizen of ET Award. Commissioner.
• 76-year old Chairman Adi Godrej of Godrej group received-
Compilation : SP Sharma & Sapandeep Toor Source : Financial Newspapers, Financial News-Magazines & Financial and Institutional Web-sites
 Banking events updatE ♦ December 2018 ♦15
MOCK-TEST the intermediaries are required to c Transaction with consideration
PAPER obtain Legal Entity Identifier by d Free transaction
____, if the net worth of entity 10 Details of value free transfers is
Questions on RBI Policy
is below Rs.200 cr (2000 to be sent to RBI on:
01 As per RBI ECB policy for million)
infrastructure space, what is the a half-yearly basis
a 30.04.19 b quarterly basis
min average maturity period?
b 31.08.19 c monthly basis
a 10 years
c 31.12.19 d weekly basis
b 7 years
d 30.04.20 Memory Recalled Questions
c 5 years
06 Net stable funding ratio 11 Bank has allowed a loan of Rs.4
d 3 years
guidelines issued by RBI during lac to a firm, as cash credit
02 As per RBI ECB policy for May 2018, shall come into
infrastructure space, there is which is running regular. The
operation wef: firm also has a term deposit of
mandatory 100% hedging when
a 01.01.19 Rs.5 lac and there is an
the minimum average maturity
b 01.04.19 attachment order on the term
period is:
c 01.01.20 deposit:
a 3 to 5 years
d 01.04.20 a the term deposit would be
b 5 to 7 years
07 A positive confirmation is attached
c 7 to 10 years
required to be sent to remitter b the term deposit would be
d above 10 years attached after recovering the
of funds that amount has been
03 For operating in money market, credited in beneficiaries outstanding balance in the cash
G-Sec market and forex markets, account, in case of? credit account
the intermediaries are required to c the amount of term deposit above
a ECS and NEFT
obtain Legal Entity Identifier by Rs.4 lac would be attached
b NEFT and RTGS
____, if the net worth of entity is
c NEFT, RTGS and ECS d the term deposit cannot be
above Rs.1000 cr (Rs.10000
d all attached as long as bank loan
million)
08 Under Interest Equalization outstands
a 30.04.19
Scheme of Govt. of India, the 12 Attachment order is applicable,
b 31.08.19 where the relationship between
eligible MSME exporter banks
c 31.12.19 the customer and the bank is that
receive interest subvention of
d 30.04.10 of:
___% so as to pass on the benefit
04 For operating in money market, to MSME exporters. a lessor and lessee
G-Sec market and forex markets, b trustee and beneficiary
a 2%
the intermediaries are required to c debtor and creditor
b 3%
obtain Legal Entity Identifier by
c 4% d creditor and debtor
____, if the net worth of entity is
between Rs.200 cr to Rs.1000 cr d 5% 13 Bank account of which of the
: 09 Transfer of govt. securities from following is covered in the low
one SGL / CSGL account to risk category of customers:
a 30.04.19
another SGL / CSGL account a a public limited company
b 31.08.19
without any consideration is b a high net worth individual
c 31.12.19
called: c a salaried employee
d 30.04.10
a Value free transfer d a non-resident Indian
05 For operating in money market,
b Value free transaction 14 Under which section of Banking
G-Sec market and forex markets,

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16 ♦ Banking events updatE ♦ December 2018
Regulation Act 1949, a banking exporter on equal basis been conveyed incorrectly in an
company is prohibited to grant a 19 On rent payment, TDS is to be RTGS transaction, who will be
loan or an advance against deducted when the amount of responsible:
security of its own shares: total payment in a financial year: a customer, if he has conveyed the
a 19(2) b 20(1) a is Rs.180000 or more incorrect details
c 17(2) d 24 (3) b is more than Rs.180000 b customer, irrespective of the fact
e 22 (1) c is Rs.120000 or more whether he has conveyed the
15 For acknowledgment of debt, the d is more than Rs.120000 correct details or not, if
Central govt. has prescribed the indemnity has been obtained
20 What is not true of the following
payment of stamp-duty at which in connection with the payment c concerned bank in all
of the following rates? to DICGC for deposit insurance: circumstances
a Re.0.50 b Re.1.0 a it is payable half yearly d the settlement authority
c Rs.2.0 d Rs.5.0 b premium is 10 paise p.a. for 25 An administrator is:
e none of the above Rs.100 of deposit a A person appointed by court,
16 Exposure ceiling for c insurance is obtained on when a person dies without a will.
infrastructure projects in case of mandatory basis b A person appointed by share
single and group are___ of capital d deposits of govt. departments are holders at the time of winding up
fund not to be got insured a Compa-ny
a 15%, 40% e max eligible amount of deposit c A person appointed at the time
b 20%, 45% for insurance is restricted to Rs.1 of insolvency of a firm
c 20%, 50% lac. d a and b
d 25%, 55% 21 When the no. of directors in 26 In a trust, one of the trustees
17 Which of the following is not public limited company is more who is singly authorised to
correct in respect of PPF than ____, shareholders’ operate the account has been
account: approval is required: declared insolvent. Your branch
a 8 b 10 receives a cheque drawn by him
a scheme is operated by public
for payment.
sector banks and private sector c 12 d 15
banks a You can return the cheque
22 Interest in agriculture advances
b minimum amount of deposit per is to be charged on: b You can pay the cheque
annum is Rs.500 a monthly basis c You can pay if other trustees
c maximum amount of deposit per confirm it
b quarterly basis
annum is Rs.100000 d a and b
c half-yearly basis
d account is opened for 15 years. 27 Which of the following qualifies
d yearly basis
18 A micro enterprise dealing with to be the business of financial
e any of the above as per discretion
your branch has received an services as per RBI guidelines
of the bank
export order on FOB terms. In under Banking Regulation Act
23 The quarterly return on Form 1949:
this case 26Q, of TDS is to be submitted
a the cost of insurance is to be a business of credit information
a within 31 days, but for March companies
borne by the exporter by May 31
b the cost of freight is to be borne b operations of a depository under
b within 15 days, but for March Depositories Act
by the exporter by May 31
c the cost of goods and also the c business of a credit rating agency
c within 30 days, but for March
insurance and freight is to the d all the above
by May 15
account of exporter 28 Which of the following falls in
d within 30 days, but for March
d cost of insurance and freight is the category of Non-bank
by May 31
to be borne by the importer financial company: (a) asset
24 If the account number, to which finance company (b) investment
e cost of insurance and freight is an amount is to be credited, has
to borne by the importer and company (c) loan company (d)
 Banking events updatE ♦ December 2018 ♦17
infrastructure finance company c both with bank Mr. Sarwan Lal:
(e) core investment company (f) d both with borrower a Conditional endorsement
infrastructure debt fund NBFC 31 On the information that the draft b Facultative endorsement
(g) NBFC-micro finance has been lost, a duplicate has been c Sans recourse endorsement
institution: issued after taking indemnity d Partial endorsement
a a to g all bond. The original and duplicate e Blank endorsement
b a to e only are presented for payment
34 What is the minimum capital
c a to d only through clearing, by two
requirement under Basel 3 as per
d a, c, d, e and f only different banks on the same day.
Bank for International Settlement,
29 A corporate shall be eligible to Both the drafts have been branded
prescription:
issue Non-Convertible with the stamp payee’s account
a 6% b 8%
Debentures if it fulfills the credited. The bank:
c 9% d 10%
following criteria (which one is a Will pay the duplicate
35 In case of currency chest
not correct): b Will pay the original
transactions, penal interest
a the corporate has a tangible net c Will return both
charged by RBI is:
worth of not less than Rs.4 crore, d both will have to be paid
a 2% over BPLR of the bank
as per the latest audited balance 32 According to Banking
b 2% over the prevailing Bank Rate
sheet; Companies Nomination Rules
c 3% over the bank rate
b the corporate has been sanctioned 1985, nomination in favour of a
working capital limit or term loan non-resident person: d 6% flat
by bank/s or all-India financial a Is allowed with RBI permission 36 A customer of a current account
institutions for minimum amount has deposited two cheques worth
b Is not allowed
of Rs.5 cr; Rs.15000 which have been sent
c Is allowed.
c the borrowal account of the in clearing and have been
d a and c credited, but the time for
corporate is classified as a
33 A usance bill of exchange is returning of the clearing has yet
Standard Asset by the financing
presented by the payee to its not expired. Meanwhile a
bank/s or institution/s.
drawee Mr. Narayan Dutt who garnishee order is received in the
d none of the above accepts the same. It is endorsed account:
30 When a bank grants a loan to a by the payee Mr. Sarwan Lal to a order will be applicable on the
borrower on the basis of Mr. Ramesh Kumar, who is a amount of cheques.
hypothecation of the assets, with handicap. Looking into this fact,
whom does the possession and b order will not be applicable on the
Mr. Sarwan Lal also writes that
ownership remain? amount of cheques
in case of dishonour, he may not
a possession with borrower & c order will be applied after seeking
be given notice and would
ownership with bank confirmation from paying banker
continue to be liable. Which of
b possession with bank and the following kinds of d order will become applicable
ownership with borrower endorsement has been made by from next day if cheques have

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18 ♦ Banking events updatE ♦ December 2018
not been returned unpaid robbery all e the loan cannot be recovered from
37 What is the limitation period 42 Housing loan (per family) for the company as it is ultra-vires
available to a holder of cheque purchase or construction of the company due to non-inclusion
dishonoured due to insufficiency house, can sanctioned in of activity of road construction
of funds, to file suit u/s 138 of metropolitan centres with as permissible objective in the
NI Act? population of 10 lac and above Memorandum of Association
a 3 years from date of demand for classification as priority 45 Presently, the star series bank
b 3 years from date of non- sector, where the overall cost of notes are printed in the following
payment after expiry of the notice such house is restricted to: denominations:
period a Rs.30 lac a Rs.10, 20, 50, 100, 500
c one month from date of refusal b Rs.35 lac b Rs.10 and Rs.20
by the drawer c Rs.25 lac c Rs.10, 20, 50 and 100
d one month from date of cause of d Rs.20 lac d Rs.10, 20, 50, 100 and Rs.500
action 43 What will be the due date of 46 Housing loan (per family) for
e 15 days from date of non- payment for a promissory note purchase or construction of
payment dated 1.2.2017 payable one house, can sanctioned in centres
38 For which among the following month after its presentment, other than metropolitan centres
instruments, the amount of stamp which is 12.2. 2017: (population below 10 lac) for
duty can be different in different a 12.03. 2017 classification as priority sector,
States: b 15.03. 2017 where the overall cost of such
a promissory note c 04.03. 2017 house is restricted to:
b bill of exchange d 12.04. 2017 a Rs.35 lac b Rs.30 lac
c money receipt 44 Corporate Bank is approached by c Rs.20 lac d Rs.25 lac
d guarantee deed M/s Delhi Enterprises Limited to 47 In which of the following cases,
e all the above sanction to them a term loan of the population-group wise
Rs.50 lac for road construction classification of a particular
39 A fixed deposit receipt is maturing
machinery along with a cash centre as per RBI, does not
for payment on Sunday. It shall
credit limit of Rs.20 lac as they match:
be deemed to be payable with
interest on: have received a contract for a Rural : population up to 10000
a succeeding day i.e. Monday construction of road. The b Semi-urban : 10000 to 99999
objective clause in the c Urban : 100000 to 999999
b same day
Memorandum of Association d Metro : 10 lac and above
c preceding day i.e. Saturday
states the objectives of the 48 A company has been sanctioned
d any day after that company as manufacturing and a term loan of Rs.60 cr by the
e a or d trading in goods and any other bank and its credit rating is A.
40 The foreign shareholding in a new activity undertaken by the What is the risk weight for capital
private universal bank, in the company. The loan is granted and adequacy ratio purpose:
form of FDI, can be __ of paid subsequently turns out to be sub-
a 20% b 30%
up capital: standard asset. What options are
c 50% d 100%
a max 74% b max 51% available to the bank to recover
Answers
c max 26% d max 24% this loan?
01 d 02 a 03 a 04 b 05 d
41 Which of the following case a to enforce its securities through
06 d 07 b 08 d 09 a 10 d
would not require a report to RBI, a normal court of law 11 a 12 d 13 c 14 b 15 e
as a fraud b to take possession of the 16 c 17 c 18 d 19 b 20 e
a theft, burglary only securities under the Securitisation 21 d 22 d 23 a 24 a 25 a
b theft, robbery only Act and sell the same 26 b 27 d 28 a 29 b 30 d
c to file a suit in DRT having 31 a 32 c 33 b 34 b 35 b
c burglary, dacoity and robbery
territorial jurisdiction 36 b 37 d 38 d 39 a 40 a
only
41 d 42 b 43 b 44 e 45 a
d theft, burglary, dacoity and d any of a to c 46 d 47 a 48 c
 Banking events updatE ♦ December 2018 ♦ 19
One Person Companies (OPC) OPC cannot get itself converted into
a public/private company for 2 years,
According to section 2 (62) of the Companies Act, 2013, ‘One Person
from date of incorporation.
Company (OPC)’ means a company which has only one person as a member.
For such conversion, OPC shall alter
No. of Persons Required for formation of OPC: An OPC company can
its MOA/AOA within 6 months and
be formed with just 1 Director and 1 member and he/she should be a natural
give notice to Registrar within 60
person.
days for such conversion.
Further, the words ‘‘One Person Company’’ shall be mentioned in brackets
Provisions of Companies Act, 2013
below the name of such company, wherever its name is printed, affixed or
which are not applicable to a OPC
engraved.
: Provisions related to calling of
Nominee extraordinary general meeting, notice
The subscriber to Memorandum of Association (MOA) shall nominate a of meeting, statement to be annexed
natural person (after obtaining written consent of such natural person). In to notice, quorum for meetings,
the event of subscriber’s death or incapacity to contract, the nominee shall chairman of meetings, proxies,
become the member. The name of such nominee shall be mentioned in restriction on voting rights, voting by
MOA. show of hands, voting through
Such nominee may, withdraw his consent by giving a notice in writing. In electronic means, demand for poll,
that event, the sole member shall nominate another person as nominee, within postal ballot, circulation of members’
15 days and shall send an intimation to the Company, along with the written resolution are not applicable.
consent of such other person. The company shall within 30 days, file with Business at board meeting : Where
the Registrar of Companies (ROC), a notice of such withdrawal of consent there is only one director on the Board
and the intimation of the name of another person nominated by the sole of Director of OPC, any business
member. which is required to be transacted at
Management the meeting of the Board of Directors
· Minimum one director is required. of a company, it shall be sufficient
if, in case of such One Person
· First director shall be the person whose name is mentioned in Articles of Company, the resolution by such
Association. director is entered in the minutes-
· The first director shall hold the office until the holding of general meeting. book required to be maintained and
However, the first director can be re-appointed or another person can signed and dated by such director and
appointed on that meeting. such date shall be deemed to be the
· The OPC may have a maximum number of 15 directors. date of the meeting of the Board of
Financial Statement s: The Financial statement of OPC includes (1) balance Directors for all the purposes under
sheet, (2) profit and loss account and (3) statement of changes in equity this Act.
(cash flow statement requirement is not mandatory).
Access for Non-Residents
The OPC has to file the copy of financial statement within 180 days with to the Interest Rate
ROC, from the closure of the financial year. Derivatives Market
The annual return shall be signed by the company secretary, or where there The draft directions propose
is no company secretary, by the director of the company. allowing non-residents to hedge
their rupee interest rate risk flexibly
Meetings using any available IRD instrument.
The provision of holding of Annual General Meeting is not applicable to Non-residents will also be permitted
OPC. OPC has to hold minimum two Board meetings during a calendar year to participate in the Overnight
and one meeting in each half. The gap between two meetings should not be Indexed Swap (OIS) market for non-
hedging purposes, subject to a
more than 90 days. macro-prudential limit on exposure
Where an OPC has only one director, it need not to hold Board Meeting. of all non-residents in terms of the
Conversion of OPC into Private/Public Company : Conversion is interest rate risk undertaken
(measured as PV01). Draft directions
mandatory if (1) Paid-up share capital exceeds Rupees 50,00,000 (2) Average are being issued for public
Annual Turnover exceeds Rupees 2,00,00,000. feedback.
 Banking events updatE ♦ December 2018 ♦ 20 Registration RNI No. 67802/98 Postal Regn No.CHD /0001/2015-17
RA Important Global Monetary Authorities and Banking Regulator DATA COLUMN
In India, Reserve Bank of India discharges the functions of Monetary Business of Banks
(Rs.in cr) Mar31'18 Nov09'18
Authority and also regulates the banking system. Similarly, Central banks Aggregate deposits 10805150 11825770
across the globe perform differents types of roles and responsibilities Cash in hand/RBI 570490 553910
Investments 3043660 3443130
depending on their mandate. In this write-up, brief of 4 central banks Bank Credit: 7881890 9111500
operating in different parts of world, is provided. -Food 53930 60550
-Non-Food 7827960 9050950
BANK OF ENGLAND (Governor - Mark Carney) Cash-Deposit Ratio 5.27 4.66
It has 5 executive members from bank and up to 9 non-executive members. Investment-Deposit 28.14 28.81
Credit-Deposit 72.95 77.11
All members of court (i.e. board) are appointed by the Crown. One of the Money Stock
non-executive members is selected by the chancellor to chair the court. (Rs.in cr) Mar31'18 Nov09'18
M3 (Out of which) 13962590 14544750
It regulates banks as Prudential Regulatory Authority. The Bank’s Court (a) Currency with public 1759710 1938830
of Directors acts as a unitary board, setting the organisation’s strategy (b) Demand deposits-Banks 1483710
(c) Time Deposits - Banks 10695260
1330000
11251190
and budget and taking key decisions on resourcing and appointments. (d) Other deposits with RBI 23910 23910
They are required to meet a minimum 7 times a year. The governor serves Sources of Money Supply
(a) Net Bank credit to Govt 4001400 4379610
on court for 8 years, the deputy governors for 5 years, and the non- (b) Bank credit to Comrcl sector 9213720 9702990
executive members for up to 4 years. (c) Net Forex assets of Banks 2922300 2980930
Important Banking Indicators
FEDERAL RESERVE (Fed Chief - Jerome Powell) Statutory Liquidity Ratio 19.50% (10.10.2017)
The Board of Governors, located in Washington, D.C., is the governing Cash Reserve Ratio
Overnight LAF (of NDTL)
04.00% (15.02.2013)
0.25%
body. 7 members or governors are nominated by the President of the 14-days term Repo(of NDTL)0.75%
Reverse Repo Rate 06.25% (02.08.2018)
United States and confirmed in their positions by the US Senate. Repo Rate 06.50% (02.08.2018)
Federal Reserve Board is also responsible for banking regulation and MSF Rate 06.75% (02.08.2018)
Bank Rate 06.75% (02.08.2018)
supervision in addition to being a monetary authority. Small Savings Interest Rates
Board of Governors guide the operation of the Federal Reserve System P P F 8.0% (01.10.2018)
NSC 8.0% (01.10.2018)
to promote the goals and fulfill the responsibilities given to the Federal Sukanya Smridhi 8.5% (01.10.2018)
Reserve by the Federal Reserve Act. The Board oversees the operations Senior Citizen Saving 8.7% (01.10.2018)
of 12 Reserve Banks and shares with them the responsibility for supervising Capital & Money Market Indicators
Parameter end-Nov17 end-Nov18
and regulating certain financial institutions and activities. All members of Dollar-spot TT (Rs.) 64.46 70.91
the board serve on the FOMC, which is the body within the Federal BSE - Sensex (points) 32832 35312
NSE - Nifty(S&P CNX) 10122 10601
Reserve that sets the monetary policy. Foreign reserves (Million $) 400742 392785
Gold /Oz in USD) 1274 1234
BANK OF JAPAN (Governor- Kuroda)
The policy board is established as the bank’s highest decision-making INDIAN ECONOMY-IMPORTANT PARAMETERS
body. There are 9 members including the governor, 2 deputy governors RBI's growth estimate for 2018-19 : 7.4%
and 6 members of the policy board. GDP growth-2016-17 (revised estimate) : 6.7%

Financial Services Agency of Japan regulates banking while Bank of Japan GDP@constant mkt prices (cr)2017.18 : 12985363
GVA@2011-12 basic prices (cr) 2017-18 : 11871321
is the monetary authority. BoJ determines the guideline for currency and GDP projected by Govt. for 2018-19 : 18722302
monetary control, sets the basic principles for carrying out the bank’s Fiscal Deficit Target (2018-19) 3.3% of GDP : 624276 cr
Revenue Deficit Target (2018-19) 2.2.% of GDP : 416034 cr
operations, and oversees the fulfilment of the duties of the bank’s officers, Wholesale Price Index : 3.2%
excluding auditors and counsellors. Money Supply (M3) expansion : 13.4%
EUROPEAN CENTRAL BANK -ECB (President - Mario Draghi) Exports during 2016-17 : 274.0 bn
Imports during (2016-17) : 379.6 Bn
ECB is an official EU institution at the heart of the Eurosystem and the Export target - 2017-18 (in $) : 310 bn
single supervisory mechanism. All members are appointed by the European India's share in world merchandise export : 1.70%
Council, acting by a qualified majority. The executive board consists of India's currency rating (S&P) : BB Postv
India's external debt (Jun 2018) US $ : 514.4 Bn
the President, the Vice-president and 4 other members. Tax-GDP ratio (2014-15) : 9.93%
ECB is also responsible : Apr- Oct 18:Export $ 191.0bn$ Imports : 302.5 bn
• To implement monetary policy for the euro area. Per capita Income 2017-18 (Rs.) : 111782

• To manage the day-to-day business of the ECB with the support of the Indian economy's ranking in PPP terms : 3rd
Indian economy's ranking in world in value: 6th
chief services officer
• To exercise certain powers delegated to it by the governing council. OUR PUBLICATIONS : REFER PAGE 9,11
These include some of a regulatory nature. • DATE OF DESPATCH - Dec 7 / 10, 2018
Published by Chand Singh at 1008, Sector 45-B, Chandigarh - Printed by Chand Singh at Golden Graphics 'n' Printers, Industrial Area, Ram Darbar, Chandigarh Editor - Chand Singh