INTERVIEW – STUDY MATERIAL

FOR
JIBO/IBO 2019-20

PREPARED BY

STATE BANK INSTITUTE OF LEARNING AND DEVELOPMENT

NUNGAMBAKKAM
 IMPORTANT TOPICS – BRIEF NOTES
1. BREXIT
The European Union - often known as the EU - is an economic and political partnership
involving 28 European countries. It began after World War Two to foster economic co-
operation, with the idea that countries which trade together were more likely to avoid going
to war with each other.It has since grown to become a "single market" allowing goods and
people to move around, basically as if the member states were one country. It has its own
currency, the euro, which is used by 19 of the member countries, its own parliament and it
now sets rules in a wide range of areas including on the environment, transport, consumer
rights and even things such as mobile phone charges.

Brexit is derived from two words: Britain and Exit indicating the exit of Britain from European
Union. In June 2016, Britain voted in favour of a referendum to exit the European Union.For
the UK to leave the EU it had to invoke Article 50 of the Lisbon Treaty which gives the two
sides two years to agree the terms of the split. Theresa May triggered this process on 29
March, 2017, meaning the UK is scheduled to leave at 11pm UK time on Friday, 29 March
2019.

The main point of having a deal between the UK and the EU is to ensure as smooth as
possible an exit from the EU for businesses and individuals - and to allow time for the two
sides to hammer out a permanent trading relationship. If no deal is finalized, it will be called
no-deal Brexit.
2. INSOLVENCY AND BANKRUPTCY CODE 2016
The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India which
seeks to consolidate the existing framework by creating a single law for insolvency and
bankruptcy. The Insolvency and Bankruptcy Code, 2015 was introduced in Lok Sabha in
December 2015. It was passed by Lok Sabha on 5 May 2016. The Code received the
assent of the President of India on 28 May 2016. Certain provisions of the Act have come
into force from 5 August and 19 August 2016. The bankruptcy code is a one stop solution
for resolving insolvencies which at present is a long process and does not offer an
economically viable arrangement. A strong insolvency framework where the cost and the
time incurred is minimised in attaining liquidation has been long overdue in India. The code
will be able to protect the interests of small investors and make the process of doing
business a less cumbersome process.

Stakeholders
• Regulatory authority (The Insolvency and Bankruptcy Board of India (“IBBI”))
• Adjudicating authority (NCLT/DRT)
• Appellate authority (NCLAT/DRAT)
• Insolvency professional agencies
• Insolvency professional
• Insolvency Professional Entities
• Information Utilities (storehouse)

Who can initiate CIRP

• Financial Creditors
• Operational Creditors
• Corporate Applicant

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3. INTERIM BUDGET 2019
• No income tax for earnings upto Rs.5.00 lakhs
• TDS threshold raised form Rs.10000/- to Rs.40000/-
• IT Processing of returns to be done in 24 hours.
• One lac digital villages planned in the next 5 years.
• 22nd AIMS to come up in Haryana
• Gratuity limit increased from Rs.10 lakhs to Rs.30 lakhs

4. SBI DEC 18 RESULTS

• Operating profit: Rs.12,625 Cr
• Net profit Rs.3,955.00 Cr
• Deposits Rs 28,60,149.93 Cr
• Advances Rs.20,87,825.70 Cr
• Gross NPA: Rs.1,87,765 Cr (8.71%)
• Net NPA: 3.95%
• Provision coverage ratio: 74.63%
• Overall capital adequacy ratio 12.77%
• Share of transactions through alternate channels: 87.75%
• The Leadership position of the Bank in Debit Card: 30.16%
5. PROMPT CORRECTIVE ACTION
PCA is process or mechanism to ensure that banks don’t go bust. Under it, RBI has put in
place some trigger points to assess, monitor, control and take corrective actions on banks
which are weak and troubled. It was first introduced after global economy incurred huge
losses due to failure of financial institutions during 1980s-90s.

Reserve Bank of India (RBI) has issued a Prompt Corrective Action (PCA) framework to
maintain sound financial health of banks. It facilitates banks in breach of risk thresholds for
identified areas of monitoring, viz., capital, asset quality (which is tracked in terms of the
net Non-Performing Assets ratio) and profitability, to take corrective measures in a timely
manner, to restore their financial health. Thus, it is intended to encourage banks to eschew
certain riskier activities, improve operational efficiency and focus on conserving capital to
strengthen them. The framework is not intended to constrain the performance of normal
operations of the banks for the general public. The following restrictions are imposed on the
banks.

• Restriction on dividend distribution/remittance of profits

• Requirement on promoters/owners/parents to bring in more capital
• Restrictions on branch expansion
• Higher provisioning requirement
• Restrictions on management compensation.

RBI had placed eleven PSBs, viz., Dena Bank, Central Bank of India, Bank of Maharashtra,
UCO Bank, IDBI Bank, Oriental Bank of Commerce, Indian Overseas Bank, Corporation
Bank, Bank of India, Allahabad Bank and United Bank of India under the PCA framework.

Bank of India (BoI), Bank of Maharashtra (BoM) and Oriental Bank of Commerce out of the
Prompt Corrective Action (PCA) framework following improvements in their capital position
and asset quality in the December 2018 quarter.

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6. GDP- CONCEPTS AND STATISTICS

Gross domestic product (GDP) is a monetary measure of the market value of all the final
goods and services produced in a period of time
GDP can be determined in three ways, all of which should, in principle, give the same result.
They are the production (or output or value added) approach, the income approach, or the
speculated expenditure approach.

When GDP declines for two consecutive quarters or more, by definition, the economy is in
a recession. Meanwhile, when GDP grows too quickly and fears of inflation arise.
After the 1991 economic liberalisation, India achieved 6-7% average GDP growth annually.
Since 2014 with the exception of 2017, India's economy has been the world's fastest
growing major economy, surpassing China.The Indian economy advanced 7.1 percent
year-on-year in the third quarter of 2018, well below 8.2 percent in the previous period and
market expectations of 7.4 percent.

7. ABHIVYAKTI – EMPLOYEES SURVEY

However big an organization becomes; all organizations keep evolving. To ensure that we
keep evolving, it is important for them to “give an ear to the voice of the people”. Therefore,
this survey named as “Abhivyakti” which means “expression”. SBI believes that its
employees are not only its bestassets but also valuable “asset creators”. Hence, the need
for an employee engagement survey to understand the perception of our employees on
various aspects of our organizational culture.

The objective of this survey is to understand the factors affecting the happiness and
productivity of our people so that we can convert them into actionable outcomes. The
objective feeds into our vision of being “The Bank of Choice for a Transforming India” with
a strong belief in our values of “Service, Transparency, Ethics, Politeness and
Sustainability”. The bank aims to create a culture wherein we enjoy our work while achieving
challenging targets.

Once the survey is completed, based on these findings and recommendations, a detailed
action plan across various demographics of SBI employee force will be created. Thereafter,
the bank will embark on a phased implementation of such actions/recommendations.

8. JET AIRLINES – PURCHASE OF STAKE BY SBI

Jet airways has a debt of Rs.8000 Cr as on Sep 2018 and has failed to pay money to pilots,
lessors, banks and vendors. In an attempt to safeguard its 23000 jobs, Jet Airways plans
to convert some debt to equity to help the carrier remain afloat.

Abu Dhabi based Etihad Airways which currently holds 24% stake in the airline, is expected
to infuse additional funds to take its holding to more than 40%.State Bank of India, the
country's largest lender, is likely to own at least 15 per cent in debt laden Jet Airways (India)
if Naresh Goyal-owned airline gets approval to convert a part of its loan into equity as part
of a restructuring package. As a result, founder and Chairman Shri.Naresh Goyal’s stake is
expected to fall below 20% from the existing 51%.

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9. NEW TRAI RULE FOR DTH OPERATORS
“Pay for what you watch”. That seems to be the motto of the new framework, DTH, cable,
MSO subscribers under which subscribers can individually select and pay for channels
which they want to watch per month. The new rules were notified in March 2017, re-notified
in July 2018 fixing 28th December 2018 as deadline which was subsequently extended to
31st January 2019.

The salient features of the new guidelines are

• Basic package of 100 free-to-air channels at a price of Rs.130 + GST
• Pay channels will be offered on a-la-carte basis.
• Bouquet of channels if offered should not exceed Rs.19/-
• Restrictions of the way in which the bouquet of channels should be offered. E.g. High
definition and standard channels should not be offered in the same bouquet.

10. NEW E-COMMERCE GUIDELINES

The Government announced new e-commerce rules restricting players from selling the
products of companies in which they have a stake, and capping the percentage of inventory
that a vendor can sell through a marketplace entity (IT platform of an e-commerce entity)
or its group companies. To curb the practice of deep discounts, the Government said they
cannot directly or indirectly influence the price of goods and services, and also brought in a
new set of rules that bar the sale of products exclusively in one marketplace.

From February 1, 2019, e-commerce companies running marketplace platformssuch as

Amazon and Flipkart, cannot sell products through companies, and of companies, in which
they hold equity stake. While foreign direct investment is not permitted in the inventory-
based model of e-commerce, the clarification put a cap of 25% on the inventory that a
marketplace entity or its group companies can buy from a vendor.

11. ICICI BANK-VIDEOCON ISSUE

In 2016, a whistle blower had flagged serious concern regarding the declining profits of
ICICI Ltd. In 2008, Shri Deepak Kochar, spouse of Ms.Chanda Kochar and Shri. Venugopal
Dhoot of Videocon group had set up a company Nupower Renewables P Ltd(NRPL) with
50% stake each for Mr.Kochar & his family and Mr.Dhoot & his family. Subsequently
thorough a maze of transactions, Supreme Energy P Ltd, company floated by
Shri.Venugopal Dhoot acquired 94.99% shares of NRPL while Shri.Deepak Kochar
retained 4.99%.

In 2012, ICICI Bank had sanctioned a loan of Rs.3250 Cr to Videocon. Ms.Kochar was part
of the committee which sanctioned the said loan. Considering the ties between Mr.Kochar
and Mr.Dhoot, questions were raised regarding the conflict of interest pertaining to the loan.
Ms.Kochar has since been sacked and CBI enquiry has been initiated.

12. RECENTLY CONCLUDED ELECTION IN BANGLADESH

General elections were held in Bangladesh on 30 December 2018 to elect members of
the National Parliament (Jatiya Sangsad).The result was a landslide victory for the Awami
League led by Sheikh Hasina. The elections were marred by violence and claims of vote
rigging. Opposition leader Kamal Hossain rejected the results, calling it "farcical" and
demanding fresh elections to be held under a neutral Government. The Bangladesh
Election Commission said it would investigate reported vote-rigging allegations from

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 "across the country." The election saw the use of electronic voting machines for the first
time.
13. REPO RATE/REVERSE REPO RATE/BANK RATE/MARGINAL STANDING
FACILITY/LIQUIDITY ADJUSTMENT FACILITY
Repo rate, also called repurchase rate, is the rate of interest that banks pay when they
borrow money from the Reserve Bank of India to meet their short-term fund requirements.
This is called repurchase rate because when they borrow money from the RBI, they keep
Government securities with the central bank as collateral

Reverse Repo rate is the short term borrowing rate at which RBI borrows money from
banks. The Reserve bank uses this tool when it feels there is too much money floating in
the banking system

Bank rate is the rate of interest which a central bank charges on the loans and advances
that it extends to commercial banks and other financial intermediaries. RBI uses this tool to
control the money supply.

Liquidity Adjustment Facility(LAF) is a facility extended by the Reserve Bank of India to

the scheduled commercial banks (excluding RRBs) and primary dealers to avail of liquidity
in case of requirement or park excess funds with the RBI in case of excess liquidity on an
overnight basis against the collateral of Government securities including State Government
securities.

Marginal Standing Facility (MSF) is a new scheme announced by the Reserve Bank of
India (RBI) in its Monetary Policy (2011-12) and refers to the penal rate at which banks can
borrow money from the central bank over and above what is available to them through the
LAF window.

14. GOODS AND SERVICES TAX – LATEST UPDATES

GST was launched on 01.07.2017. All decisions pertaining to GST is taken by the GST
council.
The Goods and Services Tax or GST can be divided into 4 broad categories based on the
tax collecting authority and the status of its geographical application. They can be listed as
follows:
1. CGST: The CGST or Central Goods and Services Tax is applicable in terms of intra-
state sales, i.e. sales taking place within the geographical boundaries of a state. This
is collected by the Central Government.
2. SGST: The SGST or State Goods and Services Tax is applicable in terms of intra-
state sales, i.e. sales taking place within the geographical boundaries of a state. This
is collected by the respective State Governments.
3. IGST: The IGST or Integrated Goods and Services Tax is applicable in terms of
inter-state sales, i.e. sales taking place within the geographical boundaries
of different states. This is collected by the Central Governments.
4. UTGST or UGST: The UTGST or UGST stands for Union Territory Goods and
Services Tax. It is applicable for transactions taking place in a Union Territory (UT).
It is collected by the respective Union Territory Governments.

Presently the following items are outside the purview of GST

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 • Petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural
gas & aviation turbine fuel.
• Alcohol for human consumption
• Tobacco
• Entertainment tax levied by local bodies
There are four slabs in GST : 5%, 12%, 18% and 28%

15. GENERAL ELECTION 2019

General elections are due to be held in India between April and May 2019 to constitute the
17th Lok Sabha. Legislative Assembly elections in the states of Andhra Pradesh, Arunachal
Pradesh, Haryana, Odisha, Sikkim and Jammu &Kashmir are expected to be held
simultaneously with the general elections. The previous general election was held for 16th
Lok Sabha in Apr-May month of 2014 which was won by NDA led by BJP under the
leadership of the current PM Narendra Modi by defeating the UPA led by Congress. The
First Lok Sabha election of India was held in the year of 1951-52.

16. SRILANKAN CRISIS

In October 2018, Sri Lankan President Maithripala Sirisena withdrew his faction from the
ruling coalition and replaced Prime Minister RanilWickremesinghe with former President
Mahinda Rajapaksa. A day later, by the President’s move to suspend Parliament till
November 16. It had plunged the country into a political crisis. Subsequently, the Supreme
Court unanimously declared that the dissolution of Parliament by Sirisena was "illegal".
Following the judgement, Shri.Rajpaksa resigned paving way for Mr.Wickremesinghe to
take over the Prime Minister of the Island nation.Most of the countries had not recognised
Rajapaksa's Government. The global credit rating agencies -- the Fitch, the Standard &
Poor's and the Moody's -- had also downgraded Sri Lanka's rating owing to the current
political crisis.

17. FDI – FOREX RESERVE – BALANCE OF PAYMENTS IN THE CONTEXT OF PSB

Foreign direct investment (FDI) in India is a major monetary source for economic
development in India. Foreign companies invest directly in fast growing private Indian
businesses to take benefits of cheaper wages and changing business environment of
India.Presently the cap on FDI in Public Sectors banks is 29% and in Private sector banks
is 74%. Proposal is on to increase the cap to 74% and 100% respectively.

Higher FDI limits could be of greater significance once the need for capital increases, as
banks move to Basel-IIIcapital adequacy norms, and with transition to IndAS (Indian
Accounting Standards) accounting norms. However, given the sensitivity of the sector,
Reserve Bank of India’s comfort will be a major factor in opening the sector.

18. ECONOMIC CAPITAL FRAMEWORK COMMITTEE

Reserve Bank of India (RBI) in Dec 2018 has set up a committee of experts headed by
former RBI governor Bimal Jalan to decide what was the adequate level of reserve the
central bank needs to maintain of the current Rs 9.59 lakh crore (June 2018) and whether
some surplus could be transferred to the Government.The expert committee under Jalan
will have five more members -- former RBI deputy governor Rakesh Mohan (vice-
chairman), Economic Affairs Secretary Subhash Chandra Garg, RBI central board
members Bharat Doshi and Sudhir Mankad, and RBI deputy governor NS Vishwanathan.

19. STATUE OF UNITY

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 It is a statue of Iron Man of India Sardar Vallabhai Patel located on the banks of Narmada
River, Sardar Sarovar Dam, Kevadiya Village.The statue has been dubbed as the tallest
statue on the world at 182 m.

The foundation stone for the project was laid on 31stOctober 2010 by the then Gujarat Chief
Minister, Shri.Narendra Modi. The statue was dedicated to the nation on 31st October 2018
by the Prime Minister Shri.Narendra Modi, both the dates coinciding with Shri.Patel’s birth
anniversary.The construction of the statue had its share of controversies regarding
acquisition of land from the local tribals for development of tourism infrastructure.

20. NAYI DISHA

It is a mass communication program which is aimed reorienting all the staff members
towards at the following
• The need to change
• Manage change
• Strengthening our Brand
• Commitment to collaborate

Addressing customer emotions through our Values (STEPS)

• Service
• Transparency
• Ethics
• Politeness
• Sustainability

21. YONO

SBI’s Digital initiative to become India’s leading Digital player. A one stop shop to deliver
both Banking and Lifestyle products.

The app is supported by 4 pillars.

• Digital Banking (banking transactions)
• Financial Super Store (Cross sell partner products)
• Online Market Place (shopping portal)
• E2e Digitisation (of liability and loan processes)

Advantages:
• Better customer experience
• Paper-less and branch-less processes
• Lower time and effort for staff
• Increased branch business.

22. CUSTOMER SERVICE

To take leverage of the existing customer base and attract new customers, our bank has
introduced many simplified measures with the help of technology like YONO, CRM etc. The
idea is to make the customer have a delightful experience.

CUSTOMER RIGHTS POLICY 2018

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 The Policy enshrines basic rights of the customers of the Banks regulated by the Reserve
Bank of India. It spells out the rights of the customer and the responsibilities of the Bank.

The Policy applies to all products and services offered by the Bank or its agents, whether
provided across the counter, over phone, by post through interactive electronic devices on
internet or by any other method.

➢ Right to Fair Treatment

➢ Right to Transparency, Fair and Honest Dealing
➢ Right to Suitability
➢ Right to Privacy
➢ Right to Grievance Redressal and Compensation

23. SPARC – HRD

Scheme for Promotion of Academic and Research Collaboration (SPARC) launched by

HRD ministry in August 2018.

IIT Kharagpur is the National Coordinating Institute.

Facilitates academic and research collaborations between Indian Institutions and best
institutions in the world.

This scheme is expected to have a major impact in providing the best international expertise
to address major national problems and improve the international ranking of Indian
Institutes apart from benefits to the researchers.

24. VEDANTA – STERLITE ISSUE

➢ Vedanta’s Sterlite Copper Unit has a smelter which can produce 400,000 tonnes of
copper cathode a year.
➢ The company planned to double the capacity to 800,000 tonnes per year.
➢ Pollution Control Board rejected Vedanta’s licence to operate the smelter.
➢ Sterlite challenged the step.
➢ The National Green Tribunal set aside the TN Govt’s order paving way for its
reopening. The court had asked Vedanta to spend Rs.100 crores within a period of
3 years for the welfare of the inhabitants in the area.

25. CRYPTO CURRENCY / BITCOIN

➢ A cryptocurrency is a digital asset designed to work as a medium of exchange that
uses cryptography to secure its transactions, to control the creation of additional
units, and to verify the transfer of assets.

➢ Though it is yet to be popular in India, globally, organizations and countries are

slowly adopting cryptocurrencies as an acceptable means of commerce. It is being
touted as NEXTGEN currency after plastic money like Credit and Debit cards.

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 ➢ Bitcoin is a cryptocurrency, a form of electronic cash. It is a decentralized digital
currency without a central bank or single administrator that can be sent from user-
to-user on the peer-to-peer bitcoin network without the need for intermediaries.

26. CONSOLIDATION OF PSBs

➢ Furnished way back in 1990s by the suggestion of Narasimham Committee Report
in 1991 (NC-I), and it was reiterated in Narasimham Committee Report in 1998
(NC-II).

➢ May address
✓ Stressed assets resolutions
✓ Balance sheet management
✓ Risk management
✓ Technological advancements
✓ Human resource issues

➢ Challenges are
✓ Integration of technology
✓ Determining the value of the target banks
✓ Opposition of employees
✓ Human Resources Challenges

➢ With a view to fast-track the process of mergers, the Union Cabinet on August 23,
2017 approved the setting up of an alternative mechanism, or a panel of Ministers,
to decide on consolidation proposals for State-run banks.

➢ Approval for merging Bank of Baroda, Dena Bank and Vijaya Bank accorded and
modalities being worked out.

27. WORK LIFE BALANCE

➢ Know the priorities and devote full attention to just one priority at a time.

➢ Work and personal life conflict occurs when the liability, obligations and household
tasks of work and family roles become mismatched.

➢ A better Work Life Balance (WLB) can have a dual effect to the organisation as well
as on an individual.

➢ A balanced lifestyle improves the sense of responsibility and ownership

28. FRDI Bill 2016

➢ Proposed in 2016-17 Budget

➢ Aims at facilitating smooth resolution of insolvent financial intermediaries and laying

down standards of financial discipline

➢ The proposed resolution Corporation will ensure continuous monitoring of financial

intermediaries to prevent them from insolvency. There is no such mechanism in the
country as of now

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 ➢ The Bail-in clause in the FRDI Bill, which has been interpreted as infringement upon
the rights of depositors, has faced the wrath of all. However, its reality check
indicates otherwise i.e. The concerns about depositor’s insurance of Rs. 1 Lac going
away are totally unfounded as the Resolution Corporation, after taking over DICGC,
is most likely to revise the insurance amount upward from the current level of Rs. 1
Lac. This limit was set about 25 years ago, in 1993 and once the Bill is finalised this
limit may also get a final value.

➢ The concerns about various sections of the Bill need to be addressed properly by
the Government before it becomes a law.

29. INFORMATION SECURITY

➢ Information Security is all about ensuring Confidentiality, Integrity and Availability of
Data & Services.

➢ Reserve Bank of India in its circular issued in April’2011 has categorically defined
the Roles and Responsibilities of end user.

➢ The responsibilities include –

- Maintaining confidentiality of log-in password(s)
- Ensuring security of information entrusted to their care
- Using bank business assets and information resources for management approved
purposes only
- Adhering to all information security policies, procedures, standards and guidelines
- Promptly reporting security incidents to management.

30. RERA 2016

➢ The Real Estate (Regulation and Development) Act, 2016 (came into effect from
May 1, 2016)

➢ 28 States and UTs have been notified under RERA upto October 2018.

➢ RERA is aimed to promote real estate sector and protect the interest of consumers
in the sector

➢ The Act provides that a promoter cannot advertise, market, book, sell or offer for
sale, without registering the real estate project with the RERA Authority

➢ The act reads that 70 per cent of the amounts realised from the allottees, from time
to time, shall be deposited in a separate account that is to be maintained in a
scheduled bank to cover the cost of construction and the land cost that will be used
only for that project

➢ It also says that the promoter will remain responsible for any structural defect, even
after the execution of conveyance deed.

31. TRADE BASED MONEY LAUNDERING

➢ Trade Based Money Laundering is one of the main methods used by criminal
organisations and terrorist financiers to move money for the purpose of disguising
the actual sources

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 ➢ As much as 80 percent of illicit financial flows from developing countries are now
channelled through TBML methods

➢ FATF, based on studies and information gathered from various jurisdictions has
made available red flags to competent authorities and financial institutions for
guidance, so as to foster the capacity to combat TBML

There are three main methods by which criminal organisations and terrorism financiers
move money for disguising its origin and integrating it into the formal economy.
➢ First - using the financial system
➢ Second - involves the physical movement of money (e.g. using cash couriers);
➢ Third - through the physical movement of goods using the trade system, also known
as Trade Based Money Laundering (TBML)

32. SUSTAINABILITY

➢ Sustainability is the ability to continue a defined behaviour indefinitely.

➢ Three pillars of sustainability are Environmental, Economic and Social.
➢ Sustainable Banking is the pursuit of environmental and social responsibility in a
Bank’s operations.
➢ Sustainability is achieved by integrating environmental and social considerations into
a Bank’s core businesses
➢ Sustainable Banking performs by decreasing exposure to environmental liability and
improve risk management
➢ Key drivers for sustainable banking are Lender’s liability, Borrower’s liability, growing
environmental concerns, Business opportunities and Changing paradigm
➢ SBI is committed to Sustainable Banking

33. VISION MISSION VALUES

Vision – Be the bank of choice for a transforming India

Mission – Committed to Providing Simple, Responsive and Innovative Financial

Solutions
Values - Service – to develop empathy for customers
Transparency – it builds trust amongst customers
Ethics - it gives confidence to the customers that we are straight forward
Politeness – by displaying our respect for the customers
Sustainability – optimum utilization of the available resources and
ensuring Green environment

34. EASE OF DOING BUSINESS

➢ The World Bank’s Doing Business Report 2018 ranked India 77th place out of the
190 countries surveyed
➢ India is one of the top five reformers, improving its score in six out of ten criteria used
by the World Bank for measuring the ease of doing business
➢ Despite India’s phenomenal progress, its ranking comes below most of its fellow BRICS
countries

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35. RISING FRAUDS – HOW TO AVERT

➢ Risk Control and Self-Assessment (RCSA) to be done.

➢ Preventive Vigilance Committee Meetings to be conducted regularly to discuss

probable risks and near miss events.

➢ Entries in Risk Register to cover the near miss events and losses occurred.

➢ Banks need to focus on the aspects relating to prevention, early detection and
prompt reporting of fraud cases to the RBI and the investigative agencies.

➢ Timely initiation of the staff accountability proceedings is also required while

ensuring that the normal conduct of the banks_ business is not affected.

The early detection of Fraud and the necessary corrective action are important to reduce
the quantum of loss.

36. MAKE IN INDIA

➢ Launched by GOI on 25th September 2014 to transform India into a global design
and manufacturing hub.

➢ To encourage companies to manufacture their products in India and increase their

investment.

➢ Covers 25 sectors of the economy eg. Automobiles,Aviation, Bio-technology etc.

100% FDI permitted in all 25 sectors except for Space Industry (74%), defence
industry (49%) and Media (26%).

➢ Four Pillars of Make in India (Vision of Make in India)

✓ New Processes
✓ New Infrastructure
✓ New Sectors
✓ New Mindset

37. MUDRA
➢ Micro Units Development and Refinance Agency Bank (MUDRA Bank)

➢ Launched on 8th April 2015 under Pradhan Mantri MUDRA Yojana Scheme.

➢ It provides loans at low rates to micro-finance institutions and non-banking financial

institutions which then provide credit to MSMEs.

➢ Mudra Scheme – Shishu – Loans UptoRs.50,000/-

Kishore – Loans Upto Rs.5.00 lakhs
Tarun – Loans upto Rs.10.00 lakhs

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38. HEALTH INSURANCE BY CENTRAL GOVERNMENT
➢ Ayushman Bharat, a National Health Protection Mission
➢ Increased benefit cover to nearly 40% of the population (the poorest & the
vulnerable)
➢ Covering almost all secondary and many tertiary hospitalizations (except a negative
list)
➢ Coverage of 5 lakh for each family (no restriction on family size)
➢ Premium payment will be shared between Central and State Governments in
specified ratio as per Ministry of Finance Guidelines.
➢ To Target about 10.74 crore poor, deprived rural families and identified occupational
category of urban worker’s families as per the latest Socio-Economic Caste Census
(SECC) data covering both rural and urban.

39. SHELL COMPANIES

➢ A Shell company is a company without active business operations / significant assets

and is normally used to disguise business ownership from Law Enforcement
Agencies.
➢ Like any other company, incorporated under the Companies Act.
➢ Possess status of artificial judicial person under the eyes of the law.
➢ No active business operations / no significant assets / no sizeable workforce.
➢ No physical presence other than the mailing address.
➢ Established to disguise the business ownership from the Law Enforcement
Agencies.
➢ Normally, their actual controllers and directors are different persons.
➢ Actual controllers (BO) do not come out in front.
➢ Company works on paper only under the name of dummy directors.
➢ Multiple Shell companies are found to share common registered address.
➢ Serves as a vehicle for fictitious business transactions.
➢ Sole objective is to convert unaccounted money into accounted for disguising the
source i.e. for laundering the illegally earned money & for tax evasion.

40. EXTERNAL COMMERCIAL BORROWINGS (ECB) NORMS

➢ ECBs are commercial loans raised by eligible resident entities from recognised non-
resident entities and should conform to parameters such as minimum maturity,
permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc. The
parameters apply in totality and not on a standalone basis.

➢ Eligible borrowers are all entities eligible to receive FDI. Further, the following entities
are also eligible to raise ECB:
a) Port Trusts;
b) Units in SEZ;
c) SIDBI;
d) EXIM Bank; and
e) Registered entities engaged in micro-finance activities, viz., registered Not
for Profit companies, registered societies/trusts/cooperatives and Non-
Government Organisations (permitted only to raise INR ECB).

➢ All-in-cost ceiling per annum Benchmark rate plus 450 bps spread.

14 | P a g e
 ➢ The negative list, for which the ECB proceeds cannot be utilised, would include
the following:
a) Real estate activities.
b) Investment in capital market.
c) Equity investment.
d) Working capital purposes except from foreign equity holder.
e) General corporate purposes except from foreign equity holder.
f) Repayment of Rupee loans except from foreign equity holder.
g) On-lending to entities for the above activities.

➢ All eligible borrowers can raise ECB up to USD 750 million or equivalent per financial
year under auto route.

41. LOAN POLICY GUIDELINES

Exempted list
a. Public sector undertakings (PSUs) under central Government.
b. Loans under PER segment.
c. Schematic lending such as LRD / ABL/ ABL (CRE) & e-DFS.

Take over norms

1.CRA requirements: * External credit rating ( ECR) is mandatory only exposures above
Rs.50.00 crores. Exposure level
Rs.25 lacs to <10crs CRA SB 07 and better
Rs.10 crs to Rs.50 crs ECR not available :
CRA SB 07 and better, Min . 75% collateral security must.
ECR available:-
CRA SB 09 or better and ECR should be BBB or better.
>Rs.50crs ECR not available :
CRA SB 05 and better.
ECR available:-
CRA SB 09 or better and ECR should be BBB + or better.

Substantial exposure limit

With a view to mitigate credit concentration risk, the Bank has fixed substantial exposure
limits on ‘Single Borrower’ and ‘Group’ within the regulatory prudential exposure norms

. Types of Substantial Exposure Stipulation (in excess of)

i) Exposure to any Single Borrower 10% of Capital Funds
ii) Exposure to any Single Borrower with additional 15% of Capital Funds
exposure to Infra
iii) Exposure to any Borrower Group 25% of Capital Funds
Iv )Exposure to any Borrower Group with additional 30% of Capital Funds
exposure to Infra
v) Aggregate of Substantial Exposures to Single 300% of Capital Funds
Borrowers
vi) Aggregate of Substantial Exposures to Single 600% of Capital Funds
Borrowers and Borrower Groups

15 | P a g e
 Prudential Exposure norms: Exposure includes both credit and investments
Nature of borrower / exposure Cap on exposure (prudential norms)
Single borrower 15% of banks capital funds, plus additional
5% for credit to infrastructure.
Exposure on single NBFC 10% of capital funds, plus additional 5% for
credit to infrastructure.
Exposure to infrastructure 15% of banks capital funds.
Aggregate exposure to the capital 40% of banks net worth
markets
Factoring services 10% of banks total advances
Group of borrowers 40% of banks capital funds , plus additional
10% for credit to infrastructure.
Large borrowers 10% of capital funds.
Constitution Maximum ceiling
Individual as borrower Maximum aggregate of Rs.50.00 crores, for
ship breaking industries Rs. 100.00 crores.
Non-corporate Maximum aggregate exposure Rs.100.00
cores.
Renewable energy: Rs.50.00 crs
Ship breaking : Rs.200.00 crs
Corporate’s As per prudential norms.
42. ALM/MCLR
Asset – Liability Management philosophy of State Bank of India is aimed at managing the
liquidity and interest rate risks.

Liquidity risk is the potential inability to meet the bank’s liabilities as they become due.

Interest Rate risks are defined as the loss that may accrue on account of adverse changes
in interest rates.

The basic principles are

✓ Preserving the Market Value of the Balance Sheet
✓ Balance Sheet Planning
✓ Manage Short-term Liquidity Mismatches

The ALM Policy will be operated through the Asset Liability Management Committee
(ALCO) headed by Chairman

ALCO will periodically monitor and control the risks and returns, funding and deployment
setting
✓ Bank’s Benchmark Lending Rates (Base Rate/MCLR and BPLR etc.)
✓ Card Rates for Deposits
✓ Directing the investment activities of the Bank in consonance with other
related policies

MARKET RELATED FUND TRANSFER PRICING (MRFTP) introduced from 01.10.2018 to

sync with market practices based on matched maturity and market linked benchmarks.

16 | P a g e
 MARGINAL COST OF FUNDS BASED LENDING RATE (MCLR) introduced w.e.f.
01.04.2016 as per RBI Directives.

Following categories of loans are exempted from being linked to MCLR as the
benchmark for determining interest rate:
i. Loans covered by schemes specially formulated by Government of India where under
banks are required to charge interest rates as per the scheme.
ii. Working Capital Term Loan (WCTL), Funded Interest Term Loan (FITL), etc. granted
as part of rectification/restructuring packages.
iii. Loans granted under various refinance schemes formulated by Government of India
or any Government Undertakings wherein banks charge interest at the rates prescribed
under the schemes to the extent refinance is available. However, interest rate charged
on the part not covered under refinance should adhere to the MCLR guidelines.
iv. The following categories of loans can be priced without being linked to MCLR as the
benchmark for determining interest rate:
(a) Advances to banks’ depositors against their own deposits.
(b) Advances to banks’ own employees including retired employees.
(c) Advances granted to the Chief Executive Officer / Whole Time Directors.
(d) Loans linked to a market determined external benchmark.
(e) Fixed rate loans granted by banks. However, in case of hybrid loans where the
interest rates are partly fixed and partly floating, interest rate on the floating portion
should adhere to the MCLR guidelines.

ICAAP – Internal Capital Adequacy Assessment Process

Bank should have a process for assessing their overall capital adequacy in relation to their
risk profile and a strategy for maintaining their capital level (ICAAP).

43. CAG/CCGRO/SAMG – STRUCTURE

Criteria for selection in CAG is based on quality (external or internal rating) of the account,
the potential to do business, and the client’s reputation or strategic importance in addition
to the size of the account. Hence, credit risk of customer is expected to be minimal with
almost zero default expectations.

CAG accounts will be classified as

(i) CAG group accounts – conglomerates with multiple companies and presence
across geographies and sectors and
(ii) CAG Non-group accounts – stand-alone entities. To start with, 29 Group and
66 Non-Group entities have been identified for CAG relationships.

These accounts will be located in and served from 4 dedicated CAG branches – 2 in
Mumbai, and 1 each in New Delhi, and Chennai. This has been done to ensure that the
quality of service for these prioritized relationships can be maintained as best in class. All
branches will be headed by GMs.

All Corporate banking relationships apart from CAG relationships will be part of the
Commercial Clients Group. CCG will be organized geographically and will retain the
existing branch structure.

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Commercial Clients Group (CCG):

All Corporate banking relationships apart from CAG relationships will be part of the
Commercial Clients Group. CCG will be organized geographically and will retain the
existing branch structure. It is proposed that CCG will have 2 DMDs to handle the large
amount of exposure and number of accounts. DMD (CCG-1) will look at the West and East
region while DMD (CCG-2) will look at the North and South region. Each DMD will have 2
CGMs reporting to her/ him.

The larger CCG branches will be headed by GMs and report directly to the CGM. While the
smaller CCG branches will be headed by DGMs and will report to GM CCGRO – Controller
(GMs, similar to present MCROs), who will report to the CGM.

SAMG

As a strategic move, Stressed Assets Management Group (SAMG) has been created to
have better focus for speedy resolution of high value domestic NPAs of the bank with dues
of Rs. 10 lacs and above. This Group controls 20 SAMBs and 62 SARBS all over India
exclusively set up for restructuring/ rehabilitation and/or recovery of such NPAs/ AUCAs.
The control of such branches under the DMD(SAMG) in Corporate Centre has enabled the
bank to impart the necessary impetus for quicker and more effective resolution of
NPAs/AUCAs.

18 | P a g e
 TERMINOLOGIES IN FOREIGN EXCHANGE MARKET

TERM DEFINITION EXAMPLE/REMARKS

Cash date or The date of the transaction, say If today is 04-02-2019, then
Trade date “today” Cash date is 04-02-2019

Tom date Tom is short for “tomorrow” and is If today is 04-02-2019, then
the next working day from the Tom date is 05-02-2019
Cash date

Spot date Second working day from the If today is 04-02-2019, then
Cash date, or day after tomorrow spot date 06-02-2019

Spot Rate The rate quoted and transacted All the forex transactions gets
today for settlement (debit/ credit) settled on spot by default
on the Spot date unless specified as cash or tom.

Cash Rate The rate applicable for settlement This is usually lower than the
(debit/ credit) today itself, on the Spot Rate. The difference
Cash date between the two rates is known
as the Cash-Spot rate or Cash-
Spot difference.
Tom Rate The rate quoted and transacted This is lower than the Spot
today for settlement (debit/ credit) Rate, but higher than the Cash
tomorrow, on the Tom date Rate.

OTC A decentralized market, without a OTC markets are primarily used

(Over central physical location, where to trade bonds, currencies,
the counter) market participants trade with one derivatives and structured
another through various products.
communication modes such as
the telephone, email and
proprietary electronic trading
systems.
Bid rate Buying rate USD/INR = 71.67/69, 71.67
buying rate
Ask rate Selling rate USD/INR = 71.67/69, 71.69 is
/Offer rate selling rate
Spread The difference between the bid USD/INR = 65.01/03,
rate and the ask rate Spread is 0.02 paise

19 | P a g e
S.NO TERMINOLOGY EXPLANATION
1. Nostro account It refers to an account that a bank holds in a foreign
currency with another bank. This account is used to
facilitate foreign exchange and trade transactions. E.g SBI,
FD, maintaining an account with SBI, New York or Citi Bank
New York.
2. Vostro account It is an account a correspondent bank holds on behalf of
another bank. These accounts are an essential aspect of
correspondent banking in which bank holding the funds acts
a custodian for or manages the account of a foreign
counterpart
3. Derivatives It is a financial instrument whose value is derived from the
value of another asset, which is known as the underlying.
When the price of the underlying changes, the value of the
derivative also changes.
This underlying can be an asset, index or interest rate
4. Uses of derivatives It can be used for a number of purposes, including insuring
against price movements, increasing exposure to price
movements for speculation or getting access to otherwise
hard to trade assets or markets.
Examples of derivatives: Forwards, Futures, Options,
Swaps
5. Forward contract It is a customized contract between two parties to buy or
sell an asset at a specified price on a future date.
Forward contract can be customized to any amount and any
delivery date or delivery period, which is provided at the
initiation of a forward contract. (Such option period of
delivery shall not extend beyond one month).
In such an arrangement the risk of loss which might accrue
on account of adverse movement in the rate of exchange is
sought to be removed. It helps the exporter to crystallize the
amount realizable in terms of his own currency. Similarly,
the importer is also able to determine the cost of imports in
terms of his own currency. Similarly it renders debtors and
creditors free from the risk arising through fluctuations in the
exchange rate
6. Futures It is a standardized forward contract, a legal agreement to
buy or sell something at a predetermined price at a
specified time in the future, between parties not known to
each other
7. Options It is an agreement between a buyer and seller that gives the
purchaser of the option the right to buy or sell a
particular asset at a pre determined price on a specified
date or period.
The advantage of buying an option is the opportunity of the
unlimited profit. And the opportunity loss is limited to the
premium paid.

20 | P a g e
S.NO TERMINOLOGY EXPLANATION
8. Swaps It is a derivative contract through which two
parties exchange financial instruments. These
instruments can be almost anything, but most swaps
involve cash flows based on a notional principal
amount that both parties agree to. Usually, the principal
does not change hands. Each cash flow comprises of
one leg of the swap. One cash flow is generally fixed,
while the other is variable, that is, based on a benchmark
interest rate, floating currency exchange rate, or index
price.
9. Interest rate swap It is a contractual agreement between two parties to
exchange interest payments.
10. Foreign Currency It Is an agreement to exchange currency between two
Swap foreign parties. The agreement consists of swapping
principal and interest payments on a loan made in one
currency for principal and interest payments of a loan of
equal value in another currency.
11. Credit Exposure It is the sum total of Current Credit Exposure (CCE) and
Limit Potential Future Exposure (PFE).
A common credit exposure limits (CEL) to be sanctioned
for booking forward contracts or derivatives. It needs to
be assessed and sanctioned along with regular credit
limits as part of regular appraisal. As per RBI guidelines,
the exposure under derivatives and forwards is
categorized under off-balance sheet exposures for capital
adequacy norms and will form part of total indebtedness
of the customer. CEL should be grouped under Non find
based limits as other off balance sheet exposure such as
LC and BG. A separate limit needs to be calculated for
imports and exports. A single limit to be sanctioned for
both Contracted (documentary evidence) and probable
exposures (past performances)
Current Credit Exposures (CCE) : Sum of negative MTMs
(Mark to Market) of the customer of the outstanding
contracts
Potential Future Exposure (PFE) : Notional principal times
CCF (Credit Conversion Factor) based on nature of
instrument and residual maturity
Mark to Market : It is an accounting method that records
the value of an asset according to its current market price.

12. Foreign currency To provide access to the international markets to the

loan and its types Indian exporters, for making the exports competitive,
Reserve Bank of India has introduced this loan facility of
financing the Working Capital and Term Loan
requirements by way of Foreign Currency Loans through
deployment of FCNRB funds of the commercial Banks.
FCNRB(DL) / FCNRB(TL) can be availed in USD, GBP,
EURO and YEN, subject to availability of funds

21 | P a g e
 FCNRB(DL) – For working capital purposes
FCNRB(TL) – For capital expenditure

13. Buyer’s credit It is a short term credit available to an importer from

overseas lenders for financing their imports.
The overseas banks usually lend the importer based on
the letter of comfort issued by the importer’s Bank.
14. Supplier’s credit It relates to credit for imports into India extended by the
overseas suppliers.
15. External It is basically a loan availed by an Indian entity from a
commercial nonresident lender in foreign currency.
borrowing
Benefits: The cost of funds is usually cheaper from
external sources if borrowed from economies with a lower
rate of interest.

Routes available for raising ECB : Automatic and

Approval
Methods of availing ECB

Track I Medium term foreign currency denominated

ECB with min. average maturity of 3/5 years
Track II Long term foreign currency denominated
ECB with min. average maturity of 10 years
Track III INR denominated ECB with min. average
maturity of 3/5 years

ECB - End uses falling under Negative List

• Investment in Real Estate
• Purchase of Land
• Investment in capital market

16. Foreign Currency It is a type of convertible bond issued in a currency other

convertible bond- than the issuer’s domestic currency. In other words, the
FCCB money being raised by the issuing company is in the form
of a foreign currency. A convertible bond is a mix between
debt and equity instrument. The bonds also give the
option to bondholder to convert the bond into stock.
Advantages of FCCB
• FCCB issuance allows companies to raise money
outside the home country thereby enabling tapping
of new markets for investment options
• FCCBs aare generally issued by companies in the
currency of those countries where interest rates
are usually lower than the home country.
• FCCB holder may choose to convert the bonds into
equity to benefit out of the equity price appreciation
that may have taken place.

22 | P a g e
 • FCCB holder enjoy the safety of guaranteed
payments on the bond and may opt to continue
with the bond if equity conversion is not beneficial.
17. “All in cost” in It includes arranger fee, upfront fee, management fee,
Trade credits handling/processing charges, out of pocket and legal
expenses if any. In trade credit the ceiling is 6 M LIBOR
plus 350 basis points as advised by RBI
18. American It is a security issued by a bank or a depository in United
Depository Receipt States of America against underlying rupee shares of a
(ADR) company incorporated in India.
19. Global Depository It is a security issued by a bank or a depository outside
Receipt (GDR) India against underlying rupee shares of a company
incorporated in India.
20. Foreign Direct It is the investment through capital instruments by a
Investment (FDI) person resident outside India (a) in an unlisted Indian
company; or (b) in 10 percent or more of the post issue
paid-up equity capital on a fully diluted basis of a listed
Indian company.
21. Foreign Portfolio It is any investment made by a person resident outside
Investment (FPI) India in capital instruments where such investment is (a)
less than 10 percent of the post issue paid-up equity
capital on a fully diluted basis of a listed Indian company
or (b) less than 10 percent of the paid up value of each
series of capital instruments of a listed Indian company.
22. Joint Venture (JV)/ It means a foreign entity formed, registered or
Wholly Owned incorporated in accordance with the laws and regulations
Subsidiary (WOS) of the host country in which the Indian party makes a
direct investment.
A foreign entity is termed as JV of the Indian Party when
there are other foreign promoters holding the stake along
with the Indian Party. In case of WOS entire capital is held
by the one or more Indian Company.
23. Escrow account It is a third party account. It is a separate bank account to
hold money which belongs to others and where the
money parked will be released only under fulfillment of
certain conditions of a contract. It is a temporary pass
through account as it operates until the completion of a
transaction process, which is implemented after all the
conditions between buyer and the seller are settled. An
escrow account is an arrangement for safeguarding the
seller against its buyer from the payment risk for the
goods or services sold by the seller to buyer. This is done
by removing the control over cash flows from the hands
of the buyer to an independent agent. The independent
agent, i.e the holder of the escrow account would ensure
that the appropriation of cash flows is as per the agreed
terms and condition between the transaction parties. In
India, it is widely used in Public partnership projects in
infrastructure. RBI has also permitted banks to open
escrow accounts on behalf of Nonresident corporate for

23 | P a g e
 acquisition/ transfer of shares/convertible shares of an
Indian company
24. Factoring It is a financial transaction in which an exporter sells its
accounts receivable ( i.e invoices) to a third party( called
a factor) at a discount. Factoring involves the selling of all
the accounts receivable to an outside agency (Factor). A
business will sometimes factor its receivable assets to
meet its present immediate cash needs. It is a short term
financing of receivables upto 90 days.

Benefits of Factoring
• A non recourse factor will assume the risk of bad
debt.
• Factoring is not a loan and therefore no debt
obligation on the exporter
• Improved cash flow enhances the productivity.

25. Forfeiting It is a method of export financing in which the forfeiter

purchase an exporter’s receivables at a discount price
and takes all the risk of non-payment of the importer.
Forfeiting is a buying a long term long term receivables.
Benefits to Exporter
• 100% Financing without recourse and bank credit
limits are freed to that extent.
• Receivables becomes current cash and improves
financial status of the exporter.
• The exporter can save his cost of administration
and management of the receivables.
26. Bond It is a debt instrument in which an investor loans money
to any entity(typically corporate or Government) which
borrows the funds for a defined period of time at a variable
or fixed interest rate.
Owners of bonds are debt holders or creditors of the
issuer.
27. Government It is a tradeable instrument issued by the Central
Security Government or the State Governments. It acknowledge
(G-Sec) the Government’s debt obligation. Such securities are
short term (usually called treasury bills with original
maturities of less than one year) or long term (usually
called Government bonds or dated securities with original
maturities maturity of one year or more). In India, the
Central Government issues both, treasury bills and bonds
or dated securities while the State Government issue only
bonds or dated securities, which are called the State
Development Loans (SDLs). G-Secs carry practically no
risk of default and hence are called risk free gilt edged
instruments.
28. Treasury Bills (T- They are money market instruments, are short term debt
Bills) instruments issued by the Government of India and are

24 | P a g e
 presently issued in three tenors, namely 91 day, 182 day
and 364 day. Treasury bills are zero coupon securities
and pay no interest. They are issued at a discount and
redeemed at the face value at maturity.
29. Packing credit It is a loan/advance granted to an exporter for financing
the purchase, processing, manufacturing and/or packing
of goods prior to shipment.
30. Packing credit in Preshipment/Packing Credit granted in a foreign currency
foreign currency is called PCFC. The aim is to provide the access of credit
(PCFC) to exporters at internationally competitive rates.
31. Bills Discounting It is a facility where bank pays the amount of the bill to the
drawer in advance. These instruments are in the nature
of usance or time bills or in other words there are also bills
drawn with a credit period (usance) which are payable
after the credit period. They become due on a specified
date say 60 or 90 days from the date of drawing, after
which sales proceeds are realised from the drawee. The
interest for the usance period is deducted up-front while
creating a loan.
32. Bill Purchase It refers to demand bills which are paid immediately by the
bank in advance before realisation of proceeds. This is
typically the case with sight bills, where fixed maturity is
not known. The loan will be created for the full value of
the draft and the interest will be recovered when the
actual payment comes. If a bank lends against such bills
receivable, it is called as bill purchase.
33. Bill Negotiation Negotiation of bill happens if shipment is under LC terms,
the bank verifies and satisfies all necessary terms and
conditions under letter of credit and negotiate thee export
bills. The invoice amount under the said shipment is
credited to exporters account. After realization of the
export proceeds from the overseas buyer, the bank
deducts the necessary bank interest from the negotiation
date till realization.

TERMINOLOGIES USED IN OPTIONS

Term Definition Example/Remarks
Strike price The strike price is the price at Strike price is also known as
which a buyer of a call option can exercise price. Option holder is
buy the security (Foreign currency) the buyer of call option/put
while for put options it is the price option. Option holder has the
at which the security (Foreign right but not the obligation.
currency) can be sold (Put option).
The strike price is fixed in the
contract and does not fluctuate
with any change in the underlying
security.

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Option style An option contract can be either American style option
American style or European style Delivery period e.g
American style options can be 1 Mar till 31 Mar, 18 Feb to 17
exercised any time before Mar, etc
expiration while European style
options can only be exercise on European Style( Fixed date)
expiration date itself 1 Jan, 15 Feb, 23 Mar etc
Underlying The underlying asset is the financial
asset instrument (such as stock, futures,
a commodity, a currency or an
index) on which a derivative's price
is based
Premium In exchange for the rights conferred This can be related to an
by the option, the option buyer has insurance premium where the
to pay the option seller (usually a buyer of the option has to pay for
bank) a premium for carrying on the having the right but not the
risk that comes with the obligation. obligation.
The option premium depends on
the strike price, volatility, as well as
the time remaining to expiration. (In
simple terms, amount paid for
buying the option)
Buy Call Buying a call option gives the right Call option Strike Price
to the buyer and not the obligation USDINR=72.00
to buy the currency at the strike Market Scenario(Spot price) on
price. due date
USD/INR=71
USD/INR=72
USD/INR=73
@71, buyer will not exercise the
call option and will go to the forex
market to buy dollars at spot
price at $ 71 which is less than
strike price of $72.(option is not
exercised)
@73, buyer will exercise the
option to buy the dollars from
bank at 72(strike price-option
exercised)
@ 72, no impact( the holder may
not exercise option, the
maximum loss is the premium
paid for buying the call option)

Buy Put Buying a put option gives the right Put option Strike Price
to the buyer and not the obligation USDINR=72.00
to sell the currency at the strike Market Scenario(Spot price) on
price. due date
USDINR=71
USDINR=72

26 | P a g e
 USDINR=73
@71, buyer will exercise the put
option and will sell dollars at
strike price(Right)
@73, buyer will not exercise the
option, and will sell the dollars in
the market at spot price( no
obligation)
@ 72, no impact

ATM(At the At the money is a situation where an Strike Price

money) option's strike price is identical to USDINR=72.00
spot price. Both call and put options Market Scenario (Spot price) on
are simultaneously at the money due date
(Call option (Spot-Strike Price =0) USDINR=72
Put option (Spot-Strike price=0)
Call option
72-72=0
Put option
72-72=0
ITM(In the ITM is term used to describe a call Strike Price
money) option with a strike price that is USDINR=72.00
lower than the market price of the Market Scenario(Spot price) on
underlying asset, or a put due date
option with a strike price that is USDINR=73
higher than the market price of Call option( in the money)
the underlying asset. 73-72=>0
Call option, Spot-Strike price>0 Put option
Put option, Spot – strike price<0 71-72<0( in the money)
OTM( out of the Out of the money (OTM) is term Strike Price
money) used to describe a call option with USDINR=72.00
a strike price that is lower than Market Scenario(Spot price) on
the market price of the underlying due date
asset, or a put option with a strike USDINR=71
price that is higher than the market USDINR=72
price of the underlying asset where USDINR=73
the option goes unexercised. Call option-OTM when market
price is USD/INR=72 as 71<72
Call option, Spot-Strike price<0 Put option- OTM when market
Put option, Spot – strike price>0 rate USD/INR =73 as 73>72
73-72>0

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 FINANCIAL PERFORMANCE OF STATE BANK OF INDIA
PARAMETER Q3 2018- Q2 2018-19 Q1 2018-19 As on
19 31.03.2018
Deposits (lac crs) Rs. 28.31 Rs. 28.07 Rs. 27.47 Rs.27.06

Advances ( laccrs) Rs. 21.55 Rs. 20.08 Rs. 19.90 Rs.20.48

Net profit ( Rs. In crs) Rs.3955.00 945.00 -4876.00 -6547.00

Gross NPA % 8.71 9.95 10.69 10.91

Net NPA % 3.95 4.84 5.29 5.73

NIM % 2.97 2.88 2.95 2.67

PCR % 56.89 53.95 53.38 50.38

CASA ratio % 45.23 45.27 45.07 44.29

CAR % 12.77 12.61 12.83 12.60

AS ON 31.12.2018
PARAMETER LEVEL
Average cost of deposit 5.09%
Average cost of advances 8.48%
Digital transactions level 87.75%
ROA % 0.45 ( Q3 ) / 0.001 ( For 9 month
period)
ROE % 0.02 ( For 9 month period)
Earning per share ( Rs.) 17.58 ( Q3) / ( 0.04 for 9 month period)
Business per employee Rs.19.12 crores

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 PROMPT CORRECTIVE ACTION (PCA)

Trigger points

Indicator Risk threshold 1 Risk threshold 2 Risk threshold 3

CRAR 7.75 to 10.25% 6.25 to 7.75% <6.625

(9% min capital +

1.25%
CCB)=10.25%

And or

CET 1 + CCB <6.75 to > 5.125% <5.125% o 3.625% <3.625

(5.50%+1.25)=6.75%

Net NPA % >6.00 upto 9 % >9.00% upto 12.00 >12.00%

ROA -ve for 2 consecutive -ve for 3 consecutive -ve for 4

years years consecutive years

Leverage Leverage is over 25 28.60 times of the

times of tier 1 capital tier 1 capital

LOAN POLICY GUIDELINES- SME –FINANCIAL RATIOS

Desired level Acceptable level

Current Ratio (manufacturing) >=1.33 >=1.00 (min)
Current Ratio (T &S) >=1.20 >=1.00 (min)
TOL / Adjusted TNW (manufacturing) <=4.00 <=5.00 (max)
TOL / Adjusted TNW (others) <=5.00 <=7.00 (max)
Long Term Debt / EBITDA (manufacturing) <=3.60 <=4.50 (max)
Long Term Debt / EBITDA (others) <=4.00 <=6.00 (max)
Gross DSCR >=1.50 >=1.20 (min)
FACR 1.25 1.25
Interest coverage ratio>= 2.60 ( Manufacturing/ >= 2.00( Minimum)
Service)

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 TYPES OF AUDITS
Type of Audit Threshold level
Credit Audit Rs. 20.00 crores and above

Legal Audit Rs. 5.00 crores and above

Stock & Receivable Audit Rs.10.00 crores and above for Standard assets
Rs. 5.00 crores and above for Sub standard assets

Early review of Sanction ( ERS ) ERS ( Small Loan ) - > 0.50 lacs to Rs.5.00 crores
ERS ( Large loans) - > Rs.5.00 crores
Financial Follow up report ( FFR ) Rs. 10.00 lacs and above

CRA Rs. 50.00 lacs and above

ECR Rs. 5.00 crores and above

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 PROBABLE QUESTIONS
PROFILE: RMME

1. Portfolio mix in terms of products, specific mention about risk mitigated products.
2. Industry mix in the portfolio and the industry scenario pertaining to the same
3. Strategies adopted to generate leads.
4. Issues being faced while marketing/takeover of accounts: like deficiency in
product feature, unfavourable interest rates etc.
5. Any industrial cluster in your area of operation where we have opportunity to
market our dealer financing/vendor financing products.
6. Credit audit accounts if any and performance.
7. Do you contribute to the Retail Segment also?
8. How does IBC help us to recover NPAs?
9. How do you ensure end use of funds?
10. What is your outlook for non-fund based business?

PROFILE: BRANCH MANAGERS

1. Branch data
2. What is the staff mix in your branch?
3. What is the potential available in your area of operations? Deposit
intensive/advance incentive/any special requirements.
4. Last RFIA performance
5. How do you handle competition?
6. How do you handle an aggrieved customer?
7. Tell us about how you rectify errors in RADAR.
8. Do you have any pre-LCPC AOFs pending?
9. How do you know that your customer is satisfied?
10. Tell us about your Cross-selling initiatives.

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PROFILE: HR
1. How does our HR Policy help us to achieve our goals? Does it require revamping?
2. What is your opinion about CDS?
3. How do you think bank can retain the millennials?
4. Bank is doing lateral recruitment for certain posts. Your opinion about that.
5. Do you think Artificial Intelligence will hinder HR growth in SBI?

COMMON QUESTIONS
1. Talk about yourself.
2. How long you are in the present assignment/Any special achievements?
3. Questions pertaining to previous assignment/special achievements.
4. Knowledge about the working of foreign offices like what are the business
undertaken, kind of foreign office, presence across the globe etc.
5. Knowledge of foreign language, if any. Few words/sentences may be prepared.
6. Questions regarding subject in graduation?
7. Any interesting aspects about the present place of posting?
8. Any specific choice of country/region for posting?
9. How will you be able to contribute to our foreign office?
10. How do you manage work-life balance?
11. Latest CRR/SLR/Repo/Reverse Repo/Bank rates

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SUGGESTED QUESTIONS & ANSWERS:
RMME/ BRANCH MANAGERS :
1.Recent changes in the credit delivery Model?
- Abolishing of RCC / ZCC and formation of Circle Credit Department and Circle
credit committees and other areas.

- Abolishing of CCC II & I and creation of RCCC &CCCC , creation of CRD (

Credit review department) .
2. Contactless lending platform ( CLP ) ?
- Also called as 59 minute loan platform. All SME loans upto Rs. 1.00 crores
renewal or new must be entered in the portal for processing.
3.Recent Campaigns in Bank?
a. MSME- challenge” for onboarding new customers from 5th Feb to 31st march 2019.

b. NAYA KHATA NAYA NATA”

- Campaign for New Regular Savings Account Opening 01 s t February 2019

to 31 s t March 2019

c.YONO – PAI “HIGH FIVE - II” CAMPAIGN FROM: 01/02/2019 to 15/03/2019

d.“POOCHKE TO DEKHO VER 2.00” PERIOD: 18.01.2019 TO 28.02.2019,

home loan and home top up loan take over campaign.

e. ‘Chhoo Lo Aasman’ – Housing and real estate product campaign.

4. Reasons for India’s improvement in “Ease of doing business “ranking?

- IBC 2016 b.
- GST main reasons.

5.Are loan policy guidelines applicable for foreign offices?

Generally, it is applicable to overseas lending also, but country specific laws also
there.

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