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J.S. DIGEST OF
BANKING AND FINANCE
CONTENTS
From the Editors Pen...
Vol. - IX
Monthly Magazine
Vol.-IX
May-15
Issue-9
Annual Subscription-Rs. 660/-
BANKING & FINANCE

May 2015
We have pleasure in placing

before our readers May 2015
SBI:
Rupay Platinum Debit Card ............... 7
Deals with E-Commerce
Companies ................................................. 7
New Cards ................................................. 7
Online Overdraft Facility ...................... 7
Results ........................................................ 7
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The issue contains the

latest
developments
Banking,
Finance
RBI:
3 Banks Penalised ................................... 8
Liberalised Branch Authorisation
Policy ........................................................... 8
NBFCs Selling MFs ................................. 8
Funds for Start-ups ................................ 8
AFA Relaxed for Small
Value Transactions ................................. 8
Resolution Period for Stressed
Assets .......................................................... 8
Internal Ombudsman ............................ 9
RBI on FDI Inflows ................................. 9
Swap Transactions ................................. 9
Resilience against Outflows ................. 9
Trade Transaction Limit ....................... 9
in
and
Economy, Recent Banking

Developments,
Brief,
Concept
Priority Sector
Lending and Model Tests.
Banking/Other Banks:
Micro ATMs Withdrawal
Limits .......................................................... 9
Panel for Selecting Chairmen
in PSBs ........................................................ 9
Ping Pay ....................................................1 0
Switching Fee ...........................................1 0
Insurance Schemes of
Government ..............................................1 0
Chequebook App ....................................1 0
HDFC Banks SmartBuy ...................... 1 0
ATM Transactions Decline .................. 1 0
Credit Cards .............................................1 0
SC Notice for Hiring of
Top Executives in PSBs ........................1 0
Voice Recognition Software ................ 1 1
We are sure these will be

found immensely useful by
the readers. We wish success
This issue consists of total

124 pages including cover.
Editor
G. Subramanian
for our readers in the ensuing

exams and interviews.
Finance, SE:
LICs Market Share ................................1 1
Gold Monetisation Scheme .................. 1 1
- Editor
JS Digest of Banking and Finance May15
May-15
Contents
Issue - 9
Insurance Policies in Rural

Sectors ........................................................1 1
2-Wheeler Insurance ..............................1 2
Privatisation of ITDC Hotels ............. 1 2
Insurance Schemes .................................1 2
Corporates:
Capgeminis Acquisition of
iGate ............................................................1 2
Future-Bharti Pact .................................1 3
Investment in India ................................1 3
Nestles Maggi Unsafe ..........................1 3
Economy:
Divestment ...............................................1 3
Growth Forecast ......................................1 3
Bad Loans .................................................1 3
Table of Key Statistics ..........................1 3
National:
Salman Khan Convicted ....................... 1 4
Indias Largest Power Plant ............... 1 4
Earthquake in Andaman ...................... 1 4
Social Security Schemes ....................... 1 4
MoUs in Chhattisgarh ...........................1 4
SC on Photos of Politicians ................. 1 5
Black Money Bill .....................................1 5
Urea Policy ...............................................1 5
Credit to Mongolia .................................1 5
Farmer Suicide .........................................1 5
Cabinet clears Land Boundary
Bill ................................................................1 5
Lok Sabha Clears GST Bill .................. 1 5
Tamil Nadus Chief Minister .............. 1 6
Raju Out on Bail .....................................1 6
Proposed GST Council .........................1 6
Elections in Bihar ....................................1 6
Environmental Clearance for
Mining Auctions .....................................1 6
Pollution Violations ...............................1 6
Heat Wave in AP, Telangana ............. 1 6
AAP-LG Conflict in Delhi ................... 1 6
International:
Indian-Americans Median
Income ........................................................1 7
UK PM ........................................................1 7
ADB Loan for Water

Resource management ......................... 1 7
Human Capital Index .......................... 1 7
Pakistan Helicopter Crash ................. 1 7
Sentence for Malala Attack ................ 1 7
India-Japan Pact ................................... 1 7
Kazakhstan President .......................... 1 7
Disaster Losses ...................................... 1 7
Morsis Death Sentence ........................ 1 8
Air Pollution ............................................ 1 8
FT Top 50 Executive Education
Schools ...................................................... 1 8
Nepal Earthquake ................................. 1 8
Banks Fined ............................................. 1 8
US Economy ............................................ 1 8
Japans Economy ................................... 1 8
Kazakhstan Elections ........................... 1 8
Japans Plan for Asian
Infrastructure .......................................... 1 9
Technology:
Motorola Patent Penalty ..................... 1 9
Flipkarts Acquisition of
Appiterate ................................................ 1 9
Verizons Acquisition of AOL .......... 1 9
Cognizant Results ................................. 1 9
Job Cuts .................................................... 1 9
Producer Companies (FPCs) .............. 2 2

C & I Business:
Industry Specific Benchmarks:
Change in Loan Policy ............................ 2 4
For eign Exchange:
Digitization of clearances
External Commercial Borrowings
(ECB) and Trade Credit ............................. 2 5
Foreign Exchange Management
At, 1999Import of Goods into India ... 2 5
Delay in utilization of advance received
for Exports .................................................. 2 5
Risk Management and Inter Bank
Dealings: Foreign Currency (FCY)
INR Swaps .................................................... 2 6
Foreign Investment in India by
Foreign Portfolio Investors ..................... 2 6
Human Re source s:
Project Gratuity Automation:
Payment of Gratuity in HRMS ................ 2 7
G e n e r al :
Gold Banking Import of Gold:
Review / Restart of Gold Banking
Activities ...................................................... 2 7
Guidelines on Import of Gold by
Nominated Banks/Agencies ...................... 2 8
Multiple Banking Arrangement ......... 3 9

Advances:
Metal Gold Loan (MGL) and
Sale of Gold ..............................................4 0
Foreign Exchange:
Acquisition / transfer of
immovable property ..............................4 1
NRI Services .............................................4 1
Mandatory use of Structured
Financial Messaging System
(SFMS) .......................................................4 3
Human Resources:
Payment of Family Pension ................ 4 3
Ge ne ra l:
Western Union Remittances ................ 4 4
PPF A/C: ..................................................4 4
Service Tax ................................................4 4
Recent Banking DevelopmentsApril15
P B Business:
Providing key fact statement to
personal and education loan
borrowers ....................................................4 5
Car Loans ...................................................4 5
Home Loan above Rs.10 lacs ................ 4 5
Campaign for opening of savings
bank accounts with non-personalised
welcome kits ..............................................4 5
SME Business:. ......................................4 6
Rice Mill Plus .............................................4 7
Loans without CGTMSE cover ............. 4 7
Ag ri Business:
Interest Subvention Scheme (ISS) ......... 4 8
Mandatory use of AGRI LOS .............. 4 8
RuPay (DEBIT) card to FI
customers ....................................................4 8
Financial Inclusion ...................................4 9
Advanc es:
Non-Cooperative Borrowers .................. 4 9
Modification in Provisioning norms ... 5 0
Collection and Dissemination of
Information on Wilful Defaulters ......... 5 1
Online Loan against shares .................... 5 2
Follow up of Loan Accounts .................. 5 5
For eign Exchange:
Risk Management and Inter-bank
Dealings ......................................................5 5
KYC Documents for opening of NRE /
NRO / FCNR (B) and RFC Accounts .... 5 6
Export of Goods and Services
Recent Banking DevelopmentsDates, Anniversaries:. ....................... 1 9 Mar1 5

P B Business:
Personalities:. ..........................................
Personal Banking Advances ................. 2 9
19
Real Estate, Habitat &
Sports:. ..................................................... 2 0 Housing Development ............................ 2 9
SBI Scholar Loan Scheme .................
30
Awards/Recognitions:. ....................... 2 0
Central Government Salary Package
Appointments: . ................................... 2 0 (CGSP) ...................................................
31
Agri Business:
Recent Banking DevelopmentsFinancial Inclusion:
Feb15
Business Correspondents (BCs) .....
32
P B Business:
Interest subvention scheme ..............
32
Xpress Credit .......................................... 2 1 Educational Loan Scheme:
The empl oyees of reputed priva te Obtaining Aadhaar details of
schools and colleges are now included borrowers ...............................................
33
under Xpress Credit Loan Scheme on the Pradhan Mantri Jan-Dhan Yojana
34
undernoted terms and conditions: ... 2 1 (PMJDY) .................................................
Agri Business-SBI Special OTS for
Agri Business:
36
Wa rehouse Receipt Financ ing wi th Tractor Loans 2014 -15 .....................
colla teral Management serv ices: SME Business:
Improvement in Ma rgin, Colla teral SMECCC has bee renamed as
Security and Rate of Interest: ............ 2 1 SME Centre ............................................. 39
C & I Business:
Financing Agri Value Chain: New
Lending under Consortium /
Scheme for Financing Farmers
Contents
Project Exports ........................................5 7

G e n e r al :
Safe keeping of vouchers/
retrieval/destruction of records ............. 5 7
Cross Selling SBI Life: .........................5 8
Fund Transfer using ATM ....................... 5 8
Time of Credit ...........................................5 9
Solvency Certificate ................................5 9
RFIA / Credit Audit ...................................5 9
Composite Rating Introduced ................ 6 0
Recent Banking DevelopmentsApril and May15
Human Re source s:
Mandatory Leave for Employees ......... 6 2
Fo re x:
Merchanting Trade to Nepal and
Bhutan Foreign Currency
(Non-Resident) Account .........................6 2
Foreign Currency(Non-Resident)
Account (Banks)(FCNR(B)) Scheme ... 6 3
Depo sits:
Rights of transgender persons ................ 6 4
Advanc es:
Loan frauds in banks ................................6 5
Early Warning Signals (EWS) and
Red Flagged Accounts (RFA) .................. 6 5
Te chno lo gy:
Security and Risk mitigation Measures
for Card Present and Electronic
Pa yment Transa ctions ............................6 7
G e n e r al :
Dispension with No Du e Certificate
(NDC) for lending by Banks .................. 6 7
Simplified procedure for opening
of Currency Chests ...................................6 8
Calendar of Reviews .................................6 9
Critical themes in board deliberations .. 6 9
Card Payments - Relaxation .................. 7 0
Mandatory issue of acknowledgement
to Pensioners .............................................7 1
CONCEPT BRIEF - Indian
Economy Roundup May 2015 ...........7 2
MODEL TEST (BASED ON MAY
2015 INFORMATION) .........................7 6
PRIORITY SECTOR
ADVANCES (ChangesApril
2015) Model Test II ............................7 8
Model Test-I (for STP aspirants)
(MM II Confirmation Exam) .............. 9 2
SBI Results (2014-15) ......................... 12 1
BANKING & FINANCEMay 2015

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

Platinum debit card along with National Payment Corporation
of India (NPCI). This card may be used at ATMs and Point of
Sale (PoS) or merchant terminals as well as for e-commerce
transactions. It also offers other benefits like 5% cash back on
utility bills, complimentary airport lounge access, personal
accident death and permanent total disability insurance cover
of Rs.2 lakh.
Deals with E-Commerce Companies: SBI has signed an MoU
with American e-commerce company Amazon to offer payment
solutions to its customers. It has also tied up with Indias ecommerce company Snapdeal to enable sellers on the site to get
assistance in raising collateral-free loans with favourable interest
rates. Snapdeals data analytics will also help it gauge the
creditworthiness of sellers. It has also entered a pact with
American online payment system company PayPal to facilitate
international trade and overseas funding for the GOIs initiatives
like Swachh Bharat and Clean Ganga. Customers will also have
access to PayPals secure payment solutions as well as be able to
use it to make payments for purchases made from overseas
websites.
New Cards: SBI has launched two new cards SBI INTOUCH
contactless Debit Card and SBI Signature Contactless Credit Card.
Contactless cards use Near Field Communication (NFC)
technology; customers may make payments by merely waving
the card near the contactless reader. Since the card does not have
to be swiped, it is more secure.
Online Overdraft Facility: SBI has started an online overdraft
facility against fixed deposits (FD), wherein customers can avail
of an overdraft against fixed deposits, held in a single name, up
to 90% of the FD amount. Special interest rate for the introductory
period: 0.5% above the TDR rate.
Results: State Bank of India (SBI)s net profit for the year ended
Mar15 increased by 23% to Rs.3,742 crore as compared to the
previous year. Gross Non-Performing Assets (GNPAs) were
4.25%, down from 4.95% in the previous year while Net NonPerforming Assets (NNPA) reduced from 2.57% to 2.12%. It has
restructured advances of Rs.71,229 crore in total.
RBI:
3 Banks Penalised: RBI has fined Dena Bank, Bank of
Maharashtra and Oriental Bank of Commerce (OBC) Rs.1.5 crore
each for not complying with regulatory guidelines that led to the
fixed deposits fraud case. Fraudsters forged Fixed Deposit receipts
of these banks and availed of cash credit based on those receipts.
Further, the central bank has cautioned some other banks namely
Central Bank of India, Bank of India, Punjab and Sind Bank,
Punjab National Bank, State Bank of Bikaner & Jaipur, UCO Bank,
Union Bank of India and Vijaya Bank, in this regard.
Liberalised Branch Authorisation Policy: As part of its policy
stance to relax norms for opening branches, RBI has now stated
that banks need not report disputes in relation to leased premises
on a periodic basis. But they must ensure that the leased premises
are not illegal. Also, commercial banks except Regional Rural
Banks (RRBs) need not seek RBIs approval each time they open
branches anywhere in the country.
NBFCs Selling MFs: RBI has allowed all Non-Banking Finance
Companies (NBFCs) to sell Mutual Funds (MFs) there are no
minimum eligibility criteria or approvals required from the apex
bank. Earlier, NBFCs needed to have net owned funds of Rs.100
crore and less than 3% net bad loans.
Funds for Start-ups: RBI has allocated Rs.10,000 crore to Small
Industries Development Bank of India (SIDBI) to set up a Venture
Capital (VC) fund. This is to attract private capital for start-ups
by making available equity and other forms of risk capital.
AFA Relaxed for Small Value Transactions: To increase
customer convenience, RBI has done away with the Additional
Factor of Authentication (AFA) for small value card present
transactions i.e. of value lesser than Rs.2,000 across all
merchant categories. Banks may decide how often customers
can undertake such transactions. RBI has also stated that from
September 2015, all banks must issue only Europay MasterCard
Visa (EMV) chip or PIN-enabled credit and debit cards to reduce
the chance of fraud. RBI has also asked banks to put in place
early warning systems for accounts over Rs.50 crore. Accounts
that have suspicious activity like bounced high value cheques
or raid by tax officials may become Red Flagged Accounts (RFA).
Banks are required to make full provision for the amount of the
fraud once detected.
Resolution Period for Stressed Assets: RBI has extended the
resolution period for Asset Reconstruction Companies (ARCs)
8
Banking & Finance
to restructure stressed assets to beyond 8 years.

Internal Ombudsman: RBI has directed all Public Sector Banks
(PSBs) and some private and foreign banks, based on their asset
size and business mix (ICICI Bank Ltd., HDFC Bank Ltd., Axis
Bank Ltd., Kotak Mahindra Bank Ltd., IndusInd Bank Ltd.,
Standard Chartered Bank, Citi Bank N.A. and HSBC Ltd.) to
appoint an internal ombudsman a Chief Customer Service
Officer (CCSO). This is to ensure that customers grievances are
given due priority and attention.
RBI on FDI Inflows: RBI has issued a clarification that Foreign
Direct Investment (FDI) inflow does not require its approval at
any stage. FDI may flow into an Indian company through the
automatic route and the approval route. In the former, no
approval is required for FDI inflow while the approval of the
Foreign Investment Promotion Board (FIPB) is required in the
latter.
Swap Transactions: To enable foreign lenders to lend in Rupees
to Indian entities, RBI has allowed them to enter into swap
transactions with their overseas banks; these banks will then
enter into back-to-back swap transactions with Indian banks.
Resilience against Outflows: RBI Governor Raghuram Rajan
has expressed confidence in Indias ability to withstand sudden
capital outflow because of its improved economic fundamentals
like foreign exchange reserves (US$ 353.87 billion as of May 15
2015) and Current Account Deficit (CAD).
Trade Transaction Limit: RBI has increased the trade
transactions limit under the Rupee Drawing Agreement from
Rs.5 lakh to Rs.15 lakh per transaction.
panel that will select non-executive Chairmen in Public Sector

Banks (PSBs); the panel will set rules regarding eligibility criteria
and age limits.
Ping Pay: Axis Banks mobile-based application Ping Pay will
enable customers to make payments using different platforms
such as WhatsApp, Facebook, Twitter, email and SMS.
Switching Fee: The National Payments Corporation of India
(NPCI) has reduced the switching fee by 10% to 45 paise for
ATM transactions effective May 1, 2015.
Insurance Schemes of Government: Central Bank of India (CBI)
has signed an MoU with The New India Assurance Co. Ltd. to
offer the Pradhan Mantri Suraksha Bima Yojana (PMSBY). This
was announced in the Union Budget 2015-16.
Chequebook App: ICICI Bank has launched eftCheque mobile
application. This will help customers, who are not conversant
with electronic modes of payment, transfer funds to beneficiaries
whose bank details are not required. The app replicates the look
and feel of a cheque.
HDFC Banks SmartBuy: HDFC Bank plans to allow customers
to buy products like groceries, clothes and other retail goods
through a platform called SmartBuy; customers will get discounts
and facilities as a one-stop shop. This is to earn fee income by
partnering with various e-tailers to offer these products and
services.
ATM Transactions Decline: According to the Confederation of
ATM Industry (CATMI), the number of average daily ATM
transactions have declined from 137 to 108 between December
2012 and December 2014. In this period, the number of ATMs
went up from 1.05 lakhs to 1.76 lakhs and the number of debit
cards also increased from 314.4 million to 500 million. The decline
has been attributed to the limited number of free transactions in
ATMs as well as the Direct Benefit Transfer (DBT) scheme not
taking off as anticipated.
Credit Cards: The number of outstanding credit cards at the end
of December was 20.29 million, according to data from RBI.
SC Notice for Hiring of Top Executives in PSBs: The Supreme
Court has issued a notice to the Union Government based on a
Public Interest petition that claims that the top posts in Public
Sector Banks (PSBs) must be filled from the pool of executives
serving in the banks rather than from other private banks. The
Government had issued an advertisement seeking candidates
for the posts of Managing Director (MD) and Chief Executive
Banking/Other Banks:
Micro ATMs Withdrawal Limits: Banks have fixed the
withdrawal limit for micro ATMs at Rs.10,000. Up to Rs.2,000,
there will be an interchange fee of Rs.2 per financial transaction
while between Rs.5,000 and Rs.10,000, it will increase to Rs.15
per transaction. Non-financial transactions will not be charged.
Switching fees have been exempted till December 2015. A micro
ATM is a hand-held device that Business Correspondents (BCs)
use to accept deposits and dispense cash. They are less expensive
than ordinary ATMs. Of the 124,000 micro ATMs in the market,
54,000 are Aadhaar-enabled and 8,000 Rupay card-enabled.
Panel for Selecting Chairmen in PSBs: The Government has
appointed RBI Governor Raghuram Rajan as the head of a new
10
Banking & Finance
18% in the 6th and 7th year

19% in the 8th and 9th year
20% between the 10th to the 15th years and
25% from the 16th financial year onwards
General insurers have to ensure that they sell:
2% of the total gross premium income written direct in
the 1st financial year
3% in the 2nd year
5% between the 3rd and 7th years
6% in the 8th year
7% in the 9th year.
The rural obligations of stand-alone health insurers is half of the
general insurers obligations. In the social sector, for all insurers
the rural obligation begins at 0.5% in the 1st year and goes up to
5% from the 19th year onwards. It is a percentage of the total
business in the preceding financial year.
2-Wheeler Insurance: The Insurance Regulatory Development
Authority (IRDA) has stated that almost 75% of two-wheelers in
India do not have insurance. The Supreme Court has set up a
committee on road safety to make a report with methods to identify
these vehicles in 3 months.
Privatisation of ITDC Hotels: The GOI has plans to privatise
half of the 16 India Tourism Development Corporation (ITDC)
hotels that are not performing well. This is part of the GOIs
plans to offload sick units.
Insurance Schemes: The Union Budget had announced 2
insurance schemes to provide social security to all Indians. This
is valid for the period between June 1 2015 and May 31 2016 and
has to be renewed annually. Customers need not get a medical
check-up done.
PMJBY (Pradhan Mantri Jeevan Jyoti Bima Yojana) - This
provides a life insurance cover of Rs.2 lakh for an annual
premium of Rs.330 for those between 18 and 50 years of
age.
PMSBY (Pradhan Mantri Suraksha Bima Yojana) - This
provides an accident insurance cover of Rs.2 lakh for an
annual premium of Rs.12/- for those between 18 and 70
years of age.
Officer (CEO) of Bank of Baroda (BoB), Bank of India (BoI), Canara

Bank, IDBI Bank and Punjab National Bank (PNB). The petition
has stated that seeking candidates from outside is against
banking regulations.
Voice Recognition Software: ICICI Bank has introduced a voice
recognition software at its call centres. Customers no longer need
to validate their identities by typing in their card numbers or
PINs as the technology will recognise their voice and authenticate
them; this is for the special convenience of those who use smart
phones.
Finance, SE:
LICs Market Share: The market share of Life Insurance
Corporation of India (LIC), in terms of first-year premium income,
has reduced to 69.21% from 75% as a result of new regulations
wherein it had to stop selling ULIP products.
Gold Monetisation Scheme: The Government has released a
draft gold monetisation scheme. This seeks to optimally utilise
the idle gold reserves held by banks. Some of the proposals
include:
o Interest earned on gold deposits will be exempted from all
forms of taxation.
o The minimum gold that can be deposited in gold schemes
will be 30 grams, down from 500 grams.
o Interest to the depositors will be valued in gold. Depositors
may also receive the maturity amount in gold.
o Banks may use the deposited gold for lending to jewellers,
selling to customers and generating foreign currency.
o There will be 350 hallmarking centres that will test the purity
of the gold. These centres will also issue purity and weight
certificates.
Insurance Policies in Rural Sectors: The Insurance Regulatory
Development Authority of India (IRDAI) has stated that insurers
must increase the number of policies sold to rural sectors. As per
recently released draft guidelines, life insurers have to ensure
that they sell:
7% of the total policies written direct to rural areas in
the first financial year,
9% in the second financial year,
12% in the 3rd year
14% in the 4th year
16% in the 5th year
11
Corporates:
o Capgeminis Acquisition of iGate: France-based software
company Capgemini has acquired US-based software company
12
Banking & Finance
o
o
iGate for US$ 4 billion. Its employee base will increase to 90,000
post acquisition.
Future-Bharti Pact: Future Retail and Bharti Retail have decided
to merge their operations; the joint venture will have a turnover
of Rs.15,000 crore with 570 stores in 243 cities.
Investment in India: US automobile company Ford Motors plans
to invest Rs.5,000 crore in its R&D centre in Chennai.
Nestles Maggi Unsafe: Authorities in Uttar Pradesh have
detected a higher- than-permissible limit of lead and monosodium
glutamate in Nestles Maggie noodles. While further
investigations are underway, Nestle has refuted the claims that
its product is unsafe for consumption.
Economy:
Divestment: The Cabinet has approved a 10% stake sale for
Indian Oil and 5% sale for National Thermal Power Corporation
(NTPC) and expects to garner an aggregate revenue of over
Rs.13,500 crore.
Growth Forecast: A UN World Economic Situation and Prospects
(WESP) update expects India to grow by 7.6% in 2015 and 7.7%
in 2016; it expects China to grow by 7% in 2015 and 6.8% in
2016.
Bad Loans: According to data from RBI, there has been an increase
of 90% in the restructured loans that have been classified as
failed to Rs.56,995 crore as of March 31 2015 compared to the
year-ago period. The total value of restructured loans as of March
31 2015 was Rs.2.86 lakh crore.
Table of Key Statistics:
CRR
4%
SLR
21.5%
REPO
7.5%
REVERSE REPO
6.5%
MSF
8.5%
BANK RATE
8.5%
INFLATION (WPI)*
-2.65%
FDI**
US$ 28.81 bn
FII *** (into equity)
US$ 17.2 bn
SENSEX@
27564
NIFTY@
8334
RS/$@
64.01
GOLD/10 g@
26,875
13
SILVER/kg @
Forex Reserves#
Current Account Deficit as
a % of GDP^
Industrial Output^^
38,320
US$ 353.87 bn
1.6
2.1%
* April 2015
** April 2014 to February 2015
*** FY 2014-15 up to mid-March 2015
@ As on May 27 2015
# As on May 15 2015
^ October-December 2014
^^ March 2015
National:
Salman Khan Convicted: Hindi film actor and producer Salman
Khan has been convicted for culpable homicide not amounting
to murder for driving under the influence of alcohol and killing
1 person and injuring 4 others in 2002. He has received a sentence
of 5 years Rigorous Imprisonment (RI). Currently, he is out on
bail pending appeal.
Indias Largest Power Plant: National Thermal Power
Corporation (NTPC) plans to set up a power plant with
Jharkhand State Electricity Board with a generation capacity of
6,400 megawatt (mw) annually. This will be Indias largest power
plant.
Earthquake in Andaman: An earthquake measuring 5.4 on the
Richter scale hit Andaman and Nicobar Islands without any
casualties.
Social Security Schemes: Prime Minister Narendra Modi has
launched 3 social security schemes - Pradhan Mantri Suraksha
Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana
(PMJJBY) and Atal Pension Yojana (APY) with the objective of
providing social security protection, insurance cover and old
age income needs to all. He said that in the week since its launch,
55 million people have been covered by these schemes.
MoUs in Chhattisgarh: On a visit to Chhattisgarh, PM Narendra
Modi signed 4 MoUs for infrastructure development in the state
announcing investments worth Rs.24,000 crore including
Rs.18,000 crore for a steel plant. Chhattisgarh has been beset
with Naxalite issues - Naxalites held 300 farmers hostage during
PMs visit but released them later; however, one person was killed.
14
Banking & Finance
SC on Photos of Politicians: The Supreme Court (SC) has stated

that the photos of politicians must not be used in media
advertisements connecting them to Government policy with the
exception of those of the Prime Minister, President and the Chief
Justice of India.
Black Money Bill: The Parliament has passed the Black Money
(Undisclosed Foreign Income and Assets) and Imposition of Tax
Bill, 2015.
o The Government has opened a compliance window for
offenders with undeclared taxable income to come forward
and state their overseas assets/income and pay tax plus
penalty of 60%.
o This will be applicable to residents and not non-residents
and professionals working abroad; it is meant to unearth
foreign assets of residents.
o In 2017, the automatic global information exchange will
come into effect.
o Those with amounts equivalent to Rs.5 lakh in bank accounts
abroad will not be targeted as they could be students.
o The penalty for non-disclosure will be 120% tax plus penalty
and 10 years imprisonment.
Urea Policy: The Cabinet has passed a new urea policy effective
from 2015-16 for 4 years; this will incentivise domestic
manufacturers based on their annual consumption of energy
and allow free transportation of phosphorous and potassium
fertilisers.
Credit to Mongolia: India has extended a line of credit of US$ 1
billion to Mongolia for infrastructure development. Indian Prime
Minister Narendra Modi was on a 2-day visit there.
Farmer Suicide: Gajendra, a farmer committed suicide at an AAP
rally allegedly to protest against the Land Bill he was unable to
meet loans due to a failed crop season caused by unseasonal
rains. His death became a political hot potato as the Chief
Minister of Delhi and AAPs head, Arvind Kejriwal even issued
an apology for continuing with his rally after the unfortunate
event occurred.
Cabinet clears Land Boundary Bill The Cabinet has passed
the Land Boundary Bill that covers area that will be transferred
to Bangladesh from the states of Assam, Tripura and West Bengal
and vice versa.
Lok Sabha Clears GST Bill: The Goods and Services Tax (GST)
15
16
Bill has been passed by the Lok Sabha. Needs to go through the
Rajya Sabha.
Tamil Nadus Chief Minister: Tamil Nadus former Chief
Minister J Jayalalithaa has replaced O Panneerselvam as CM
after the Karnataka High Court found her not guilty of possessing
assets disproportionate to her income. The case has been in court
for 19 years. She had resigned her post as CM 7 months ago, after
a Bengaluru special court convicted and sentenced her to 4 years
in prison and fined her Rs.100 crore.
Raju Out on Bail: Satyams Ramalinga Raju and 9 others are out
of prison on bail as his 7-year sentence has been suspended.
They were convicted and sentenced for manipulating Satyams
books of accounts to the tune of Rs.7,000 crore.
Proposed GST Council: The Union Finance Minister, Arun Jaitley
will be the Chairman of the Goods and Services Tax (GST)
Council. The other members will include the Union Minister of
State for Finance and other state finance ministers or tax ministers
nominated by the states. The Council will take calls on tax rates,
exemption and threshold limits. According to the proposed GST
council, the Centre will have one-third voting rights while the
states will have two-thirds voting rights. Regardless of their size,
all states will have an equal vote. Any proposal needs 75% votes
to be passed.
Elections in Bihar: Bihar will have assembly elections in
September-October 2015, according to Chief Election
Commissioner (CEC) Nasim Zaidi.
Environmental Clearance for Mining Auctions: The Centre has
stated that states need not get environmental clearance before
they auction mining projects. States had argued that the Central
Government or the mining company must obtain these clearances.
It is still not clear as to who will be responsible for obtaining
these clearances.
Pollution Violations: A 5-star hotel in Haridwar, Radisson Blu
has been closed for not conforming to rules as set by the National
Green Tribunal; it has allegedly released untreated sewage water
into the Ganga.
Heat Wave in AP, Telangana: The severe heat wave in Andhra
Pradesh (AP) and Telangana has led to the death of 500 people
in a matter of days. Other cities across the country also registered
record high temperatures.
AAP-LG Conflict in Delhi: There has been a conflict regarding
posting and transfer of bureaucrats in Delhi between the Delhi
Banking & Finance
Government and the Lieutenant General (LG) Najeeb Jung. Both

parties have applied to the President seeking a resolution to their
claims that they should have such powers. The Centre has issued
a notification stating that the LG has the final powers.
annually due to disasters occurring because more than 58% of

land in India is prone to earthquakes and 8.5% of land is prone
to cyclones.
Morsis Death Sentence: Egypts former President Mohammed
Morsi and over 100 others were sentenced to death for the mass
prison break uprising in 2011. He was the first freely-elected
head of state of Egypt. Morsi was ousted from power in 2013 by
the military. He has been succeeded by Abdel-Fattah el-Sisi, the
military chief who also won the elections last year.
Air Pollution: According to a report by the World Health
Organisation (WHO), air pollution has led to 4 times more deaths
in the last 10 years around the world. India and China accounted
for two-thirds of the 4.3 million deaths due to indoor air pollution
- 1.5 million deaths were in China and 1.3 million in India.
FT Top 50 Executive Education Schools: The Indian Institute of
Management, Bangalore (IIMB) has been ranked 48th on the
Financial Times (FT) Executive Education 2-15 Top 50 schools;
it is the only Indian business school on the list.
Nepal Earthquake: Nepals Prime Minister (PM) Sushil Koirala
has estimated that the death toll from the 7.6 on the Richter scale
strong earthquake that hit the country may cross 10,000. The
official toll is at over 6,000. 22 Mount Everest climbers died while
many others went missing; the toll in India rose to 62. India
extended its support airlifting the needy from Nepal during this
time. Another earthquake measuring 7.3 on the Richter scale
struck Nepal again 76 people were killed while thousands
were injured. There was also an earthquake in Afghanistan that
added to the aftershocks that India suffered.
Banks Fined: 4 major global banks US banks JPMorgan Chase
and Citigroup, British banks Barclays Plc and Royal Bank of
Scotland (RBS) have pleaded guilty to US criminal charges of
manipulating foreign exchange rates. They have, in all, been fined
US$ 5.7 billion. Swiss bank UBS is also expected to plead guilty
to similar charges.
US Economy: The US economy grew by 0.2% in the JanuaryMarch 2015 quarter; in the year-ago period, it contracted by 2.1%.
In the December 2014 quarter, it grew by 2.2%.
Japans Economy: Japans economy grew by 2.4% annualised
rate in the March 2015 quarter and by 0.6% Quarter-on-Quarter
(QoQ); in the December 2014 quarter, it increased by 1.5% QoQ.
Kazakhstan Elections: Nazarbayev has won the elections to
International:
Indian-Americans Median Income: According to the US Census
Bureau, the median household income of Indian Americans is
over US$ 100,000 as compared to the national median income of
US$ 51,000 per annum. This is even higher than the median
income of white, native-born Americans.
UK PM: David Cameron has been re-elected as the Prime Minister
(PM) of United Kingdom (UK). This is the first time a Conservative
Government has won a majority in 20 years. India-born Priti
Patel has become minister of state for employment. Conservative
Party Member of Parliament (MP), British-Indian Rishi Sunak,
son-in-law of Infosys co-founder Narayana Murthy, also won
from his constituency.
ADB Loan for Water Resource management: Asian
Development Bank (ADB) has given a loan of US$ 31 million to
Karnataka to enhance water availability in its river basins and
improve irrigation.
Human Capital Index: India has been ranked 100 out of 124
nations in the Human Capital Index compiled by the World
Economic Forum (WEF). Finland was ranked first. The index
measures how well human capital is developed and deployed.
Pakistan Helicopter Crash: A military helicopter in Pakistan
was allegedly shot down by the Taliban. 2 foreign ambassadors
were among the 7 that died.
Sentence for Malala Attack: 10 persons, held responsible for
attacking Pakistani Nobel Peace prize awardee Malala
Yousafzai, have been sentenced to life imprisonment by a
Pakistan court.
India-Japan Pact: India and Japan have signed an agreement to
double Japans investment in India over the next 5 years as well
as to boost bilateral trade. The investment is for developing
townships in India and for other projects in infrastructure
development.
Kazakhstan President: Nursultan Nazarbayev won the
Kazakhstan presidential elections.
Disaster Losses: According to a report by the United Nations
Office for Disaster Risk Reduction, India loses US$ 9.8 billion
17
18
Banking & Finance
continue his term as President of Kazakhstan; he has been in

power since 1989.
Japans Plan for Asian Infrastructure: Japan will invest US$
110 billion over the next 5 years in developing infrastructure in
Asia. The Asian Infrastructure Investment Bank (AIIB), that has
57 nations on board, is also expected to have a capital base of
US$ 100 billion.
Technology:
Motorola Patent Penalty: Motorola Mobility, a US mobile device
subsidiary of Chinese technology company Lenovo, has been
penalised US$ 10.2 million by a US jury for using technology,
patented by Japans Fujifilm Corp, in its phone.
Flipkarts Acquisition of Appiterate: E-commerce company
Flipkart has acquired mobile engagement and marketing
automation company Appiterate to strengthen its mobile
offerings.
Verizons Acquisition of AOL: US-based wireless provider
Verizon Communications plans to acquire US mass media
company AOL for US$ 4.4 billion.
Cognizant Results: Cognizant Technology Solutions (CTS)s
net profits increased by 9.7% to US$ 382.9 million in the March
2015 quarter as compared to the year-ago period.
Job Cuts: Engineering company Siemens plans to cut 4,500 jobs
this year. It has already announced that 7,400 jobs will be cut out
of 340,000 employees worldwide.
Dates, Anniversaries:
May 3 - World Laughter Day
May 9 - Victory Day - 70th Anniversary of victory over the Nazis
Personalities:
o Dave Goldberg: The Chief Executive Officer (CEO) of poll-taking
company SurveyMonkey has passed away after an accident at a
gymnasium. He was the husband of Facebook Chief Operating
Officer (COO), Sheryl Sandberg.
o Alexandre Lamfalussy (86): One of the founding fathers of the
Euro currency as a single currency for Europe has passed away.
He was an economist and the first president of the European
Monetary Institute, predecessor of the European Central Bank
(ECB).
o Mrinal Datta Chaudhuri (82): The economist and former director
of the Delhi School of Economics has passed away; he was also
19
a visiting professor at the universities of Harvard and Minnesota.

He was awarded Padma Bhushan in 2005 in the field of trade
and industry.
John Nash (86): The Economics Nobel Prize winning American
mathematician has passed away in a car crash. He won the
Nobel prize in 1994 for his various contributions to economic
science - game theory, Nash equilibrium and Nash embedding
theorems. Oscar award-winning movie A Beautiful Mind was
based on his life.
Sports:
Boxing: American professional boxer, Floyd Mayweather beat
Filipino Manny Pacquiao in boxings most expensive fight taking
his record of unbeaten fights to 48. He has won 11 world titles so
far.
Tennis: Indias Rohan Bopanna and Romanias Florin Mergea
have won the Madrid Open Mens Doubles title, an ATP 1000
Masters Series event.
Shooting: Indian shooter Gagan Narang won a bronze medal in
the ISSF World Cup in the US in the 50 m Rifle Prone Event. With
this, he has earned a quota place in the 2016 Olympics to be held
in Rio de Janeiro.
Formula One: Nico Rosberg, of Germany, driving the Mercedes
won the 2015 Spanish and Monaco Grand Prix.
Cricket: Mumbai Indians beat Chennai Super Kings to become
the champions of Indian Premier League (IPL) 8.
Awards/Recognitions:
Jnanpith Award: Marathi litterateur Bhalchandra Nemade
received the 50th Jnanpith Award for 2014. He has written books
such as Hindu and Kosala.
Appointments:
BRICS Bank Chief: K V Kamath, Chairman of ICICI Bank, has
been appointed the first President of New Development Bank
(NDB), the new bank of the BRICS (Brazil, Russia, India, China
and South Africa) nations.
Chief Statistician: T C A Anants term as the Chief Statistician
and principal secretary of the Ministry of Statistics and
Programme Implementation has been extended till January 2016.
20
Banking & Finance
RECENT BANKING DEVELOPMENTS Feb 2015

PB Business:
Xpress Credit:
Presently only employees of State / Central Govt-run schools/colleges,
by virtue of being State/Central Govt. employees, are eligible for Express
Credit Loans. The employees of Educational Institutions of National
Repute (defined as Institutions covered under SBI Scholar Loan Scheme)
are also eligible under the scheme.
The employees of reputed private schools and colleges are now included
under Xpress Credit Loan Scheme on the undernoted terms and
conditions:
i)
These Private Schools and Colleges should not be government aided.
ii) They should be at least 15 years old and should be affiliated to
CBSE/ICSE/UGC/AICTE etc.
iii) They must have 5 years of Banking Relationship with us.
iv) The number of employees (teaching and non-teaching) of such
Institutes should not be less than 50.
v) There should not be any default in contribution towards EPFO
pertaining to the employees.
vi) The Xpress Credit Loans will be sanctioned and disbursed through
only one Branch where the Salary accounts of the employees are
maintained for proper monitoring and follow up.
Agri Business:
Warehouse Receipt Financing with collateral Management services:
Improvement in Margin, Collateral Security and Rate of Interest:
Now, improvement in margin, collateral security and rate of interest has
been made when services of Collateral Managers are utilized for lending.
Improvements are:
i) Margin:
Category
Existing
Revised
A
40%
25% Of the Market Value Lower of
the:
a) Current Market Price of the
commodity
b) Price prevailing at the time of harvest
of the commodity
B
40%
20% Of Minimum Support Price
Wherever declared
Higher of the A or B above.
21
ii) Collateral Security: No Collateral Security

Existing
Up to Rs.10 lac
Revised
Up to Rs.50 lac
iii) Rate of Interest: For loans up to Rs.50 lac per farmer.

Tenure of loan
Up to 6 months
Above 6 months
& up to 1 year
Existing
200 bps to 400 bps
Above BR (Card Rate)
200 bps to 400 bps
above BR (Card Rate)
Revised
50 bps above BREffective Rate: 10.50%
75 bps above BR
Effective 10.75%
Stipulations:
i)
The improvement in margin, collateral security and rate of interest
will be applicable only for the loans granted against warehouse
receipts under Produce Marketing Loan scheme where stocks are
managed by banks approved Collateral Managers.
ii) Important roles of Collateral Managers under the scheme are as
under:
- Do sampling, testing, grading, assaying and certification of the
commodities.
- Perform storage/preservation (like pest control, insurance,
fidelity etc)
- Provide MIS on market-related value movement of the
commodities.
- Place requests for margin top-up to the borrowers in case of need.
- Provide sale and settlement support in case of default in the
loan.
- Facilitate periodical inspection and verification of the stock.
The margin, collateral security and rate of interest for loans granted
against warehouse receipts under Produce Marketing Loan scheme issued
by Private Warehouses remain unchanged.
Financing Agri Value Chain: New Scheme for Financing Farmers
Producer Companies (FPCs):
Farmer Producer Company (FPC) is a legal entity established under
Section-581 of the Companies Act, 1956. These companies were
established to overcome the constraints face by the small size of farmers
landholding to leverage collective strength and bargaining power to
access financial and non-financial input, services and appropriate
22
technologies, reduce transaction costs, tap high value markets and enter
into partnerships with private entities on more equitable terms. The
efficiency is achieved with professional management, aggregation and
economy of scale. These entities, improve return by produce modification,
quality control and capability of price negotiation. Producer companies
are presently being established in cotton, pulses, dairy/poultry, seed
production and similar value chains.
Now, Small Farmers Agri Consortium (SFAC), a Govt of India
Organization has introduced a Guarantee Scheme for covering financing
to Farmer Producer Companies, to cover Collateral free loans up to Rs.1
crore. The cover is available to the extent of 85%. The Bank has signed an
MOU with SFAC.
The salient features of the revised scheme for financing FPCs are:
Sl No. Parameters
Brief Details
1.
Product
Financing Farmer Producer Companies
2.
Company
Incorporated as a Farmer Producer
Company under section 581 of Indian
Companies Act.
3.
CRA Rating
Trading / Non-trading model, as
applicable (new or existing) to be used.
Threshold: SB10
4.
Concession in
Interest Rate
a) 50 bps on the card rate, if covered
under Credit Guarantee Scheme of SFAC.
b) 100 bps on the card rate, if financed
under tie-up with forward linkage,
deposit of sale proceeds through loan
accounts.
c) Maximum Interest Concession will not
exceed 100 bps under (i) and (ii) above.
5.
Relaxation in
DER: 4:1; TOL/TNW: 5:1, DSCR Gross
Quantitative Aspect (minimum): 1.75:1, DSCR Net
Acceptable levels
(minimum): 1.5:1, Minimum Current
Ratio: 1.20, Promoters Contribution:
20% of Equity.
6.
Primary Security
Creation of charge on the assets created
with banks finance.
7.
Collateral Security
a) Where Guarantee Cover from SFAC is
obtained:
23
No collateral security to be obtained other

than charge on other movable/
immovable assets of the company.
b) Where Guarantee Cover from SFAC is
not obtained:
Collateral security, as applicable, to be
obtained other than charge on other
movable / immovable assets of the
company.
c) Personal guarantee of key Director/
adequate security in the shape of pledge/
mortgage of other assets of members to be
obtained wherever feasible, when Credit
Guarantee Cover from SFAC is not
obtained.
C & I Business:
Industry Specific Benchmarks: Change in Loan Policy:
RBI has asked the Bank to lay down industry specific benchmarks for
industries with large exposures.
Hence, separate benchmarks for TOL/Adj TNW and Current Ratio have
been fixed for 5 industries.
a) Hydrocarbon b) Power c) Iron and Steel d) Textiles and e) Electrical
Equipment
These benchmarks would replace the existing benchmarks for TOL/TNW
and Current Ratio for these 5 industries only.
Desired level of TOL/Adj TNW and Current Ratio for each industry has
been prescribed.
Maximum acceptable deviation range of up to 25% is also given. If values
of TOL/Adj TNW or Current Ratio exceeds the acceptable range of 25%
from desired level they would be treated as deviation and approval is
required to be obtained.
Industry Specific Benchmarks for TOL / Adj TNW are as under:
Industry
Desired Level
Maximum Acceptable Level
Hydrocarbon
<=4.00
<=5.00
Power
<=4.80
<=6.00
Iron and Steel
<=4.00
<=5.00
Textiles
<=4.00
<=5.00
Electrical Equipments <=4.00
<=5.00
Industry Specific Benchmarks for Current Ratio are given below:
24
Industry
Desired Level
Hydrocarbon
<=1.00
Power
<=0.60
Iron and Steel
<=1.00
Textiles
<=1.00
Electrical Equipments <=1.00
Maximum Acceptable Level

>=0.75
>=0.45
>=0.75
>=0.75
>=0.75
indicating details of such cases may be forwarded to the concerned

Regional Offices of RBI within 21 days from the end of each quarter.
Foreign Exchange:
Digitization of clearances External Commercial Borrowings (ECB)
and Trade Credit:
With effect from Feb 01, 2015, Authorized Dealer Category-I banks should
route all applications received from their constituents for ECBs / Trade
Credit only through ATS. The supporting documents should also be
uploaded on ATS along with the application.
Foreign Exchange Management At, 1999 Import of Goods into India:
Hitherto, applications by persons, firms and companies for making
payments exceeding USD 5,000 or its equivalent towards imports into
India must be made in Form A-1.
To further liberalize and simplify the procedure, it has been decided by
RBI to dispense with the requirement of submitting request in Form A-1
for making payments towards imports into India. AD Category-I bank
may however, obtain all the requisite details from the importers and satisfy
itself about the bonafides of the transactions before effecting the
remittance.
Delay in utilization of advance received for Exports:
An exporter receiving an advance payment for exports (with or without
interest) from a buyer outside India shall be under an obligation to ensure
that the shipment of goods is made within the stipulated period from the
date of receipt of advance payment.
It has been observed by RBI that there is substantial increase in the number
and amount of advances received for exports remaining outstanding
beyond the stipulated period on account of non-performance of such
exports (shipments in case of exports of goods), AD Category-I banks are
advised to efficiently follow up with the concerned exporters in order to
ensure that export performance (shipments in case of export of goods)
are completed within the stipulated time period.
It is further reiterated by RBI that AD category I banks should exercise
proper due diligence and ensure compliance with KYC and AML
guidelines so that only bonafide export advances flow into India. Doubtful
cases as also instances of chronic defaulters may be referred to Directorate
of Enforcement (DoE) for further investigation. A quarterly statement
25
Risk Management and Inter Bank Dealings: Foreign Currency (FCY)

INR Swaps:
Presently, eligible residents can enter into FCY-INR swaps to hedge
exchange rate and / or interest rate risk exposure arising out of longterm foreign currency borrowing or to transform long-term INR borrowing
into foreign currency liability, subject to specific terms and conditions.
Also, swap transactions, once cancelled, shall not be rebooked or reentered, by whichever mechanism or by whatever name called.
To permit greater flexibility to the residents borrowing in foreign currency,
it has been decided that in cases where the underlying is still surviving,
the client, on cancellation of the swap contract, may be permitted to reenter into a fresh FCY-INR swap to hedge the underlying but only after
the expiry of the tenor of the original swap contract that had been
cancelled.
Foreign Investment in India by Foreign Portfolio Investors:
RBI announced in the Sixth Bi-Monthly Monetary Policy Statement 201415, issued on February 03, 2015 that all future investments by registered
Foreign Portfolio Investors (FPIs) in the debt market in India will be
required to be made with a minimum residual maturity of three years.
RBI has clarified few matters as under in this regard:
a) Query: The applicability of the directions to investment by FPIs in
commercial papers (CPs).
Clarification: Any fresh investments shall be permitted in any type of
debt instrument in India with a minimum residual maturity of three years.
Accordingly, FPIs shall not be allowed to make any further investment in
CPs.
b) Query: The applicability of these guidelines on debt instruments having
maturity of three years and over but with optionality clause of less than
three years.
Clarification: FPIs shall not be allowed to make any further investments
in debt instruments having minimum initial / residual maturity of three
years with optionality clause exercisable within three years.
c) Query: The applicability of these guidelines on amortized debt
instruments having average maturity of three years and above.
Clarification: FPIs shall be permitted to invest in amortized debt
instruments provided the duration of the instrument is three years and
above.
26
Human Resources:
Project Gratuity Automation: Payment of Gratuity in HRMS:
Application for Payment of Gratuity:
Members/employees will apply for Payment of Gratuity in HRMS Portal.
In case of Normal Retirement, they can apply three months prior to date
of retirement whereas in other cases i.e resignation, voluntary retirement
etc., they can apply one month prior to date of separation, if their date of
separation is marked in the HRMS system.
In addition, there is a facility for Branch Head, Recommending authority
/ designated (maker) official at LHO to apply on behalf of employee
through Manger Self Service (MSS) (maker can apply from the link
available in ES), if employee is not able to apply through HRMS system.
After submitting the application through HRMS Portal, applicant has to
take the print of application and submit, duly signed and witnessed, to
next authority for recommendation / approval.
On approval the intermediary account opened at CAO for the purpose
will be debited on the next date of retirement/separation, or if already
retired/separated then next day of approval. Branch System Suspense
Accounts will be credited. The head of the Branch/OAD has to obtain
necessary documents viz stamped receipts etc before disbursement of
the Gratuity amount by reversing the entry parked in System Suspense
Account. The Branch/OAD officials can also generate Gratuity Payment
Advice through HRMS Portal.
d) The obligation to export under the 20:80 scheme will continue to apply
in respect of unutilized gold imported before November 28,2014 i.e the
date of abolition of the 20:80 scheme.
Indenting for import of gold by the DBs for the purpose of outright sale
should be on back to back basis only. Gold will be supplied to our DBs
for outright sale on the basis of firm commitment from their customers
by depositing the money, equivalent to applicable customs duty, with
the branch at the time of indent. All sale of gold will be against upfront
payment only.
Based on the report generated through SAP, the designated Officer at

CAO Kolkata will check the payments made during the day and zeroise
the intermediary account by reversing the entries and debiting the same
to Gratuity Trust Fund account.
Rationale:
1. BPR branches have to submit ECS mandate in respect of Auto Loans to
the concerned RACPC immediately on disbursement and not wait for the
migration of document.
R: Corporate Centre has observed that there is a strong correlation among
NPA, frauds, non-migration of auto loan documents and timely activation
of ECS mandate at BPR branches. Prompt submission of ECS mandate
will enable RACPC to activate the mandate and follow up recovery.
General:
Gold Banking Import of Gold: Review / Restart of Gold Banking
Activities:
Now, Designated Branches (DBs) can start activity of Sale of Gold
(Wholesale) on outright basis to domestic jewellers and also grant Metal
Gold Loan to domestic jewellers from consignment gold stock.
Guidelines on Import of Gold by Nominated Banks/Agencies:

RBI Clarifications:
i) The obligation to export under the 20:80 scheme will continue to apply
in respect of unutilized gold imported before November 28, 2014 i.e the
date of abolition of the 20:80 scheme.
ii) Nominated banks are now permitted to import gold on consignment
basis. All sale of gold domestically will, however, be against upfront
payments. Banks are free to grant gold metal loans.
iii) Star and Premier Trading House (STH/PTH) can import gold on DP
basis as per entitlement without any end use restrictions.
iv) While the import of gold coins and medallions will no longer be
prohibited, pending further review, the restrictions on banks in selling
gold coins and medallions are not being removed.
RBI has issued clarificatios as under:

a) Nominated banks are now permitted to import gold on consignment
basis,
b) All sale of gold domestically will be against upfront payment only,
c) Banks are free to grant Metal Gold Loans,
27
28
RECENT BANKING DEVELOPMENTS Mar 2015

PB Business:
Personal Banking Advances: Obtention of Report from Credit
Information Companies (CICs):
Presently, operating units have to obtain Credit Information Report from
two of the four Credit Information Companies viz Credit Information
Bureau (India) Limited (CIBIL), Equifax Credit Information Services Pvt
Ltd (ECISPL), Experian Credit Information Company of India Ltd
(ECICIPL) and Highmark Credit Information Services Pvt Ltd (HMCISPL)
as follows:
Particulars
Report from one
Report from two
Credit Bureau
Credit Bureaus
I) P Seg Secured Loans*
Car Loans
Limit upto Rs. 5 Lacs
Limit > Rs. 5 Lacs
All other Secured loans
Limit upto Rs. 1 lac
Limit > Rs. 5 lacs
(including Education Loans,
Two Wheeler & Super Bike
Loans)
II) P Seg unsecured Loans
Personal Loans
Limit upto Rs. 1 Lac
Limit > Rs. 1 Lac
Education Loans
Limit > Rs. 4 Lac
All other Loans
Limit > Rs. 3 Lac
*Not applicable for Loans against Specified Securities
In future CIC reports have to be obtained from the following two CICs
only for all the PBBU Segment for Loans above the threshold limit
prescribed.
i. Credit Information Bureau (India) Limited (CIBIL)
ii Equifax Credit Information Services Pvt Ltd (ECISPL)
It should be noted that CIBIL CIC report would be primary report and
Equifax CIC report would be secondary report.
Real Estate, Habitat & Housing Development: Tab Banking: Home
Loan in Principle Approval (HLIPA):
The maiden mobile client application has been designed and developed
by GITC Belapur on Kony Mobile Application Development Platform
(MADP). The features of the Application are as under:
The Application will enable Field Staff to source a credit proposal

from a potential customer even when they are on move without the
need to carry and fill in any physical document.
29
The Application has been integrated with Lead management System

(LMS).
Allows the field staff to access and process the leads assigned to
him or her by LMS. Also create a new lead of his own based on
marketing efforts / other channels.
Helps in meeting the potential Home Loan borrower on their
marketing drive, collect the relevant data, calculate the eligible loan
amount based on all parameters and submit the application for in
principle approval.
The application based on inputs, will also be sending email and
SMS to the prospective customer informing his eligibility, rate of
interest, EMI and other relevant details.
Through the application the Marketing executives are able to capture
photographs of the applicant, KYC documents, and geo locations
of the property along with its photographs.
The data captured through the application is integrated with LOS
so that data up to QDE level in LOS could be captured and requires
no repetition.
The application will help in collecting the required documents and
photographs in one go and reduce the turnaround time in sourcing
of Home Loan applications.
SBI: Scholar Loan Scheme:

Hitherto, there were 3 types of Classification of eligible institutions: Now,
reclassified into 4 groups (List AA, List A, List B and List C).
List AA :
3 institutes - IIM Ahmedabad, ISB Hyderabad , ISB
Mohali.
List A :
35 institutes
List B :
12 institutes
List C :
43 institutes
Total
93
Securities, Max Loan Amt:
List
Security Stipulated
Maximum Loan Amount
List AA without Tangible Collateral
Rs. 30 lacs
List A
without Tangible Collateral
Rs. 20 lacs
with Tangible Collateral
Rs. 30 lacs
List B
Rs. 20 lacs
List C
Rs. 7.5 lacs
with Tangible Collateral
Above Rs. 7.5 lacs & up to Rs. 30 lacs
Some instructions have been excluded from the SBI Scholar Scheme; also,
eligible Courses have been restricted in a few institutes. If loan cannot be
30
taken up under the SBI Scholar Loan scheme, it may be considered under
SBI Student Loan Scheme.
Home Loans:
Process for Online approval of Builder Tie-ups (OPAS)
The extant process for according approval to residential projects under
Banks Builder Tie-up norm involves (i) approval of the Project by the
Approving Authority and (ii) uploading of Project details, on Banks
Builder Tie-up site. This two stage approval process has been replaced
with a Online Project Approval Solution (OPAS).
Personal Loans: modification in standing instructions in CBS for
standing instruction (S.I) between Deposit and Loan Account:
The Recovery of EMIs in Personal Loans are generally done by setting up
of Standing Instructions (S.I) between the Deposit (salary) and Loan
account at the time of opening of the loan account. This is particularly
true for Xpress Credit and Pension Loans.
Now, Hold Required has been made mandatory i.e., there will be no
option of choosing Yes/No, whenever an SI is to be created for recovery
of EMI (Loan Servicing) between a Deposit and Loan account. The
mandatory Hold will be applicable for both SI creation and amendment
transaction; also the chase period has been increased from existing 30
days to 32 days. The extra two days of chase will help the system to
process at least two SIs, if these are not older then 32 days.
SI is to be set with the actual tentative date of salary payment. The
operating units should also be advised to choose 100: Loan Servicing
as Purpose of SI in the Screen No.SCR:000900 as this would be required
to activate the above mentioned functionality of automatic Hold and
chase period of 32 days in case SI is set up for recovery of EMIs from
Deposit A/c to Loan A/c.
Central Government Salary Package (CGSP) Inclusion of Employees
of Autonomous bodies / academics/councils etc. under union ministries,
under CGSP:
Currently, CGSP is restricted to employees of various Union ministries
and their departments, Election Commission, CBDT, CBEC. But there are
host of other establishments coming under Union Government which
are not included under CGSP. These include employees of Autonomous
bodies, Academies, Institutions, Statutory Bodies, Commissions,
Committees, Councils, like ESIC, AIIMS, AIR, IGNOU, IITs, IIMs, Kendriya
Vidhyalaya, Port Trust, Universities, CVCs, etc. Employees of these
31
establishments are having salary accounts with us, but are not covered
under the structured package. Now, employees of autonomous bodies
etc are also eligible.
Agri Business:
Financial Inclusion: Business Correspondents (BCs): appointment of
non-deposit taking NBFCs (NBFC-ND) as BCs:
The Reserve Bank of India has permitted Banks to appoint NBFCs (NonDeposit taking) (NBFC-ND) as BCs.
Eligibility Criteria:
1.
RBI registered NBFCs-ND with asset size of Rs. 50 crore and above
and considered by RBI as Systemically Important (NBFC-NDSI)
shall be considered to be eligible for engagement as BCs.
2.
Such NBFC-NDSI should not be defaulters with any bank and the
loan account with the bank should have remained as Standard
Assets all through.
3.
The names of NBFC-NDSI and /or any of its promoters / directors/
trustees etc should not be in the CIBIL defaulters list.
4.
The NBFC-NDSI should not have Negative Net Owned Fund (NOF).
5.
The NBFC-NDSI should have been in existence for at least 3 years.
Financial Inclusion: Business Correspondent channel: Issue of barcode
based Pass Book to FI Customers:
Hitherto, passbooks were issued to customers at BC channel only by the
link branch and in no case can a passbook be issued at the BC/CSP
outlet by the CSP operator.
As FI a/cs have been increasing steadily and as the Govt has directed
banks to issue PBs to all FI Customers, it has been decided to issue barcode
based passbook to all FI customers maintaining balance in the account.
Interest Subvention Scheme - 2014-15:
Based on the GOI guidelines, RBI has advised Banks to continue the
interest subvention scheme @2% for the year 2014-15.
Details:
A-Interest Subvention at 2% to Banks:
i) Interest subvention of 2% p a will be made available to PSBs and Private
Sector Scheduled Commercial Banks (in respect of loans given by their
rural and semi-urban branches) on their own funds used for short-term
crop loans up to Rs.3.00 lacs per farmer provided the lending institutions
make available short term credit at the ground level at @ 7% p a to farmers.
ii) 2% interest subvention will be calculated on the crop loan amount
from the date of its disbursement / drawal up to the date of actual
repayment of the crop loan by the farmer or up to the due date of the loan
fixed by the bank, whichever is earlier, subject to a maximum period of
one year.
32
iii) The benefit of interest subvention will also be available to small and
marginal farmers having Kisan Credit Card for a further period of up to
six months post harvest on the same rate as available to crop loan against
negotiable warehouse receipt for keeping their produce in warehouses.
iv) To provide relief to farmers affected by natural calamities, the interest
subvention of two percent will continue to be available to banks for the
first year on the restructured amount. Such restructured loans may attract
normal rate of interest from the second year onwards as per the policy
laid down by the RBI.
B-Additional Interest Subvention of 3% to prompt paying farmers:
Additional interest subvention @ 3% p a will be available to the prompt
paying farmers from the date of disbursement of the crop loan up to the
actual date of repayment by farmers or up to the due date fixed by the
bank for repayment of crop loan, whichever is earlier, subject to a
maximum period of one year from the date of disbursement. This also
implies that the prompt paying famers would get short term crop loans @
4% per annum during the year 2014-15. This benefit would not accrue to
those farmers who repay after one year of availing such loans.
2. Interest Subvention Claim process: Interest subvention claims are to be
submitted in two stages in prescribed claim formats as under:
- Unaudited half-yearly claim as at September 30, 2014.
- Audited claim as at March 31, 2015.
3. Restoration of normal lending rate after the end of subvention period:
After expiry of the interest subvention period subject to a maximum period
of one year, normal lending rate has to be restored in these accounts to
plug income leakage.
Subvention details like subvention start date and subvention end date
are to be entered by the branches at the time of account opening for eligible
accounts so that CBS can automatically restore the normal lending rate
after the expiry of the interest subvention period.
This scheme is valid up to 31st March 2015.
Education Loan Scheme: Obtaining Aadhaar details of borrowers:
PAN card of the student and the Parent / Guardian was made a required
document for all new Education Loans w.e.f 18.02.2012.
Now, CIBIL has introduced Aadhaar as one of the key identifiers in
addition to others based on which account details of the borrower will be
accepted in CIBIL database. Also, GOI has advised that Banks should
endeavour to link loan/interest subsidy with Aadhaar Card for proper
tracking of students in the larger interest of all.
Hence, Aadhaar details of the borrower should also be obtained wherever
available, in addition to PAN and other identifiers prescribed by CIBIL.
33
However, no application will be rejected for mere want of Aadhaar details

and the borrower will be advised to submit Aadhaar before the second
scheduled disbursement as being done hitherto in case of non-availability
of PAN.
In cases, where the borrower is not in possession of either PAN or
Aadhaar with him/her, obtaining Aadhaar details will be preferred as
Aadhaar is being used for administration of subsidies by the Govt. and
is also a proof of identity and address anywhere in India. Moreover, it is
based on biometric system for identification of an individual and is more
reliable.
In cases, where the student has already submitted PAN, Aadhaar details
should also be obtained during the course of the study period.
Pradhan Mantri Jan-Dhan Yojana (PMJDY):
Claim Procedure for Life Insurance Cover of Rs.30,000/- provided by
LIC.
A life cover of Rs.30,000/- was announced by the PM for all those who
subscribe to a bank account for the fist time during the period 15th August,
2014 to 26th January, 2015. The scheme aims to provide security to those
families who cannot afford direct insurance, namely the urban poor and
rural poor and who are not covered under social security scheme.
The life cover of Rs.30,000/- will be payable on death of the account
holder due to any cause, subject to fulfillment of the eligibility conditions
as under:
i)
Person opening Bank account for the first time, with RuPay Card in
addition, during the period from 15-08-2014 to 26-01-2015.
ii) The person should normally be head of the family or an earning
member of the family and should be in the age group of 18 to 59 (i.e
person should be at least 18 years old and should not have
completed 60 years of age). In case the head of family is 60 years or
more of age, the second earning person of the family in the above
mentioned age group will be covered, subject to eligibility.
iii) Person must have a RuPay Card and Bio-Metric Card (Aadhaar)
linked to bank account or in process of being linked to bank account
if not already there.
iv) The account can be any bank account including a small account.
v) For the coverage to be effective, the RuPay Card should be valid and
in force at the time of the death of the member.
vi) Only one person in the family will be covered. In case of the person
having multiple cards/accounts the benefit will be allowed only
under one card i.e one person per family will get a single cover of
Rs.30,000/-, subject to the eligibility conditions.
34
vii) The life cover of Rs.30,000/- under the scheme will be initially for a
period of 5 years, i.e till the close of financial year 2019-20. Thereafter,
the scheme will be reviewed.
viii) In case the PMJDY Account is held jointly, the first account holder
i.e primary account holder will be eligible for cover subject to the
eligibility conditions.
Ineligible Categories:
i)
Central Govt and State Govt employees (in service or retired) and
their families.
ii) Employees (in service or retired) of Public Sector Undertakings,
Public Sector Banks, any entity owned by Central Govt, any entity
owned by a State Govt or any entity owned by the Central Govt and
any State Govt and their families.
iii) Persons whose income is taxable under IT Act 1961 or are filing the
yearly Income Tax return or in whose case TDS is being deducted
from the income, and their families.
iv) Persons who are included in the AamAadmiBimaYojana covering
48 occupations defined under the scheme and their families.
v) Otherwise eligible account holders, who have life cover on account
of any other scheme of the Bank against the account, shall have to
choose between the two schemes and derive benefit from only one.
vi) All persons who do not fulfill the basic eligibility conditions of the
scheme.
Claim Settlement Procedure:
a) The claim is payable to nominee(s) / legal heirs of the account
holder. The nominee will be the person having nomination in the
Bank account. In the absence of nominee or if the nominee predeceases the insured member or if the nominee is not spouse, child
or parent, the legal heirs of account holder should submit Indemnity
Bond to dispense with legal evidence of title in the prescribed format.
b) The claim will be credited to Bank account of nominee/legal heirs
through APBS i.e the amount will be credited to account linked to
Aadhaar Card number.
c)
The branch maintaining account of deceased account holder will
forward the claim along with requisite documents to nearest
Pension and Group Scheme Unit (P & GS unit) of LIC designated for
this purpose for processing of claims.
d) The documents to be attached with claim forms will be self-attested
by claimant/legal heirs. However, Death Certificate has to be duly
verified/attested by the bank.
35
SBI Asset Backed Loan (Commercial Real Estate) (ABL-CRE):

Changes in prepayment penalty:
In case of pre-payment / pre-closure from internal accruals prepayment / pre-closure penalty will not be levied.
As per RBI Circular no-RBI/2014-15/72, Floating rate term loans
sanctioned to individual borrowers are exempted from levy of
foreclosure charges.
2% of the drawing power.
Agri Business SBI Special OTS for tractor loans 2014-15.
Frequently Asked Questions (FAQs):
Sl
No
1.
Queries
Clarification / response
Under the same CIF, one

account is Sub Standard
and other accounts are
doubtful or loss assets or
in the same CIF different
IRAC status exists. What
is the rate of waivers to be
allowed?
2.
Whether
accounts
borrower
NPA due
NPA all
norms in
covered.
Generally, all accounts in single

CIF should have the same asset
classification. If for any reason
IRAC status is not the same, the
worst IRAC among all the
accounts would be taken for the
purpose of calculation of OTS
amount. For example, if one
account is under D1 category and
other is in D2 asset category, then
both the accounts should be taken
as D2 for calculation of OTS
amount. If the assets value of
securities in the borrowers
accounts is less than 10% of
outstanding, all facilities will be
treated as loss assets.
Yes, Standard accounts of the
same borrower will also be
covered which became NPA due
to one account NPA all account
NPA norms in CCDP, as IRAC
classification is borrower wise
and not account wise.
3.
Date of disbursement in
36
standard
of
same
which became
to one account
account NPA
CCDP can be
The
related
linked
accounts
3.
Date of disbursement in
case of tractor loans
should be 31.03.2011 or
before.
What
disbursement criteria is to
be taken for related linked
accounts in the same CIF?
The related linked accounts

would be eligible even if
sanctioned/disbursed after 31-032011, if they satisfy other
eligibility criteria.
4.
Same borrower is having

multiple CIFs. Whether
accounts opened in other
CIF can be considered for
OTS, if otherwise eligible.
In case a borrower having
a tractor loan (NPA) and
KCC (standard) though
both the accounts are
treated as NPAs as per
IRAC
norms
(classification is borrower
wise and not account
wise) whether it is
necessary to close the
KCC account though the
account individually is
standard. In case it is
required to be closed
whether any waiver can
be given (say, in the
accrued interest till the
date of closure).
In case a borrower is
willing to settle the dues
in tractor loan and want
to continue the KCC as
standard
account.
Whether the KCC account
can be allowed to be
continued?
If there is shortfall in
provision or sufficient
provision is not available
Yes, if the accounts are in the

same borrowers name and
capacity as of tractor loan NPA
account.
5.
6.
7.
Generally, all accounts in single

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

for
writing
off
the
amount, what needs to be
done?
8.
9.
No, as per the scheme, all

accounts of the same borrower are
to be settled concurrently under
the OTS and need to be closed. As
such the borrower has to close the
KCC account also.
10.
Generally, provisions should be

available as per IRAC status of
account. The write off amount is
37
38
Interpretation of Waiver
of
entire
notional
/unrealized/unapplied
interest and also waiver
in
outstanding
on
31.12.2014.
Whether interest applied
but not realised but not
fully reversed at the time
of stamping as NPA
which now forms part of
the outstanding can be
included in the above
statement?
Some of the Tractors had
been seized by recovery
agents and all these
Tractor a/cs are coming
under OTS Scheme. Since
there is no provision to
pay
commission
to
recovery
agents,
we
request you to kindly
guide us in this matter so
that we would settle all
these
Tractors
NPA/AUCA a/cs under
this OTS Scheme.
Whether loans given for
purchase
of
Combine
harvester are eligible or
not?
account. The write off amount is

less than the provision to be
maintained (for example in D1 &
D2 accounts, write off amount
would be 15% whereas provision
maintained would be 25% and
higher). However, in cases where
there is a shortfall in provision,
branches should provide 100%
provision on the remaining
amount (After recovering the full
OTS amount) as on 31.03.2015 and
the amount should be written off
in the Month of April, 2015.
Whatever outstanding is there as
on 31.12.2014 that is to be
reckoned for calculation of OTS
amount (interest already debited
to the account will be part of
outstanding) and no accrued or
notional
interest
is
to
be
recovered. On this outstanding as
on 31.12.2014 (except in case of
substandard assets) applicable
concessions will also be given i.e
15%, 20%, 25%, and 40% of the
outstanding depending on the
IRAC status of the borrowers.
If the tractor loan is eligible under
this OTS scheme, it should be
settled immediately irrespective
of whether the tractor is seized or
not or given to recovery agent.
Since the amount going to be paid
is discounted outstanding (Bank
own sacrifice), no need to part
any commission. But suitable
notification has to be sent
immediately after the receipt of
agreed settlement amount to
recovery agent.
Loans for purchase of combine
harvesters are not eligible under
this OTS scheme.
No fresh loans are to be sanctioned to the borrowers whose accounts are

settled under SBI Special OTS for tractor loans 2014-15.
SME Business:
SMECCC has bee renamed as SME Centre.
Technology:
Swayam Barcode based Passbook Printing Kiosks:
Barcode based Passbook Printing Kiosks are being set up at various
branches. Branches which are carrying high number of passbook printing
transactions have been identified for installation of these Kiosks. These
Kiosks are branded as SWAYAM.
The number given below the barcode printed on the barcode sticker is
required to be mapped to the customers account number in CBS.
Customers may then go to SWAYAM and print their passbooks. It may
also be noted that the barcode stickers can be provided to the branches
where SWAYAM has not been provided. With this, the customers of
such branches may also print their passbooks at SWAYAM which are
installed at off-site locations etc available on 24*7 basis.
Retail Internet Banking: User Friendly Ways of Resetting Login
Password:
Presently, a customer who has forgotten both his login and profile
password is required to visit his home branch for receiving duplicate
password. The home branch after completing due-diligence issues a preprinted kit and registers/enters it in Branch-Interface_INB.
Now he can use the following options also.
a) Online resetting of login password by INB customer using his ATM
card details.
b) Resetting of login password at anybranch.
C & I Business:
Lending under Consortium / Multiple Banking Arrangement:
In connection with lending under Consortium or Multiple Banking
Arrangement, it is common experience that exchange of information
between lenders is far from satisfactory.
Following are some of the important directions of RBI:
At the time of granting fresh facilities, banks may obtain declaration
from the borrowers about the credit facilities already enjoyed by
them from other banks in the prescribed format. In the case of
existing lenders, all the banks may seek a declaration from their
existing borrowers availingsanctioned limits of Rupees five crore
and above or wherever, it is in their knowledge that their borrowers
are availing credit facilities from other banks, and introduce a system
of exchange of information with other banks as indicated above.
39
Subsequently, banks should exchange information about the

conduct of the borrowers accounts with other banks in the
prescribed format at least at quarterly intervals.
Obtain regular certification by a professional, preferably a Company
Secretary, Chartered Accountant or Cost Accountant, regarding
compliance of various statutory prescriptions that are in vogue, as
per prescribed specimen.
Advances:
Metal Gold Loan (MGL) and Sale of Gold:
Interest rates on MGL: Revised
Security
Rate of Interest (both

domestic and export
purpose) if borrowed
gold is used
Rate of Interest if GDS
gold is used
Cash
Security
BG/S
BLC
Cash
Credit
limit
(A- and
above)
4.00
4.25
5.00
5.75
3.75
4.00
4.75
5.50
Cash Credit
limit
(Others)
For ECR of BBB and better rated companies, interest rate can be improved.
Rate of Commission on Sale of Gold (including sale on account of closure
of MGLs): Revised
Existing
Revised Rates
Rates
Domestic US$ 3.00
Volume per month Rate per troyounce
Purpose
per troyoun
Rs.50 crs & above 50 cents
ce + Service
Rs.20 cr - Rs.50 cr 75 cents
Tax, as appli below Rs.20 crs
USD 1.00
cable + Other In addition to the above, Service Tax,
taxes, if any.
as applicable, is also to be recovered.
Export
US$ 1.50 per
No change
US$ 1.50 per troyo
Purpose
troyounce +
unce + Service Tax,
Service Tax,
as applicable +
as applicable
Other taxes, if any.
+ Other taxes,
if any.
40
Rate of commission may be reduced by the appropriate authority.

For ECR of BBB and better rated companies, margin up to 110% of value
of gold (plus applicable charges like Customs duty, CIP etc) may be
reduced by the appropriate authority.
Minimum period for interest payment: Minimum 15 days interest should
be recovered if the loan is closed within 15 days. It is applicable for both
domestic and export purpose.
Foreign Exchange:
Acquisition / transfer of immovable property Prohibition on citizens
of certain countries:
No person being a citizen of Pakistan, Bangladesh, Sri Lanka,
Afghanistan, China, Iran, Nepal or Bhutan without prior permission of
the Reserve Bank shall acquire or transfer immovable property in India,
other than lease, not exceeding five years.
RBI has now included Macau and Hong Kong, the two Special
Administrative regions of China in the list.
NRI Services Re-KYC procedure of NRI Accounts: Acceptance of selfattested documents in selected cases:
NRI customers can submit fresh documents for re-KYC as under:
a) Customers visiting the branch in person: KYC documents viz Proofs
of Identity and Overseas address proof etc have to be submitted
across the counters.
b) Customers not visiting the branch: The KYC documents have to be
sent to the home branch through post or courier from overseas.
Additionally, third party attestation of all the requisite KYC
documents is also required.
The requirement of third party attestation for re-KYC has been posing
inconvenience to them. It has now been decided that the NRI customers
residing in a few selected low risk countries can submit the re-KYC
documents with self-attestation subject to the following:
a) The NRI should be a resident of any of the following 30 (thirty)
countries only: Australia, Austria, Bahrain, Belgium, Canada,
China, Denmark, Finland, France, Germany, Hong Kong, Iceland,
Ireland, Italy, Japan, Kuwait, Netherlands, New Zealand, Norway,
Oman, Qatar, Saudi Arabia, Singapore, South Africa, Spain, Sweden,
Switzerland, United Arab Emirates (UAE), United Kingdom (UK)
and United States (US).
b) Each of the single/joint NRI account holder has to submit following
additional document in addition to the proofs of identity and
overseas address as part of KYC documents:
41
Bank statement of self-account carrying name/logo of an

Overseas Bank in the country of residence, evidencing that
credits / debits have taken place in the account in the
preceding three months period. The statement should not be
more than 3 months old. (In such cases, other additional
document, as per existing KYC policy for NRI customers, such
as cheque drawn, paid or cancelled of overseas account or any
proof of income/pay slip/tax slip will not be needed).
c)
All the documents being submitted should be self-attested.
d) NRI customers can send all documents to the home branch via his
registered email address as scanned copies or by post / courier. (If
it is scanned and emailed, efforts should be made to procure hard
copies of these documents whenever the customer visits the branch
in person.)
In this connection, it is reiterated that this procedure will be applicable
only for re-KYC of the existing KYC non-complaint accounts. This will
not apply to the KYC being done for new accounts and existing
instructions of third party attestation and documents in hard copy, for
customers not visiting the branch should be adhered to in all new cases.
NRI Services: Requests for PIS/Demat/Trading Accounts being
submitted at our FOs:
ADs are permitted to open PIS accounts for NRIs to capture / route
transactions being done by them in secondary equity market. It is
mandatory for the NRIs to route their dealing in secondary market in
India in shares and convertible debentures of listed Indian companies
on a recognised stock exchange through PIS (Portfolio Investment Scheme)
account only. The facility of opening PIS account is offered to NRI
customers of the Bank. The PIS account, which is opened at NRI Branch,
Mumbai is mapped with the respective NRE Savings Bank (SB) account
being maintained with any of the branches. It is also mapped to the
Demat account and Trading account of the customer being maintained
with SBI Capsec to enable the customer to execute trades online. The
underlying linkage of these four accounts enables the NRI customer to
carry out sale/purchase transaction and funds settlement seamlessly
without any manual intervention by using our INB facility and trading
platform of SBICapsec.
Many NRIs also approach our foreign offices with a request for opening
of PIS/Demat/Trading accounts. Our FOs will handle these requests
subject to the local regulatory regulations.
42
NRI Branch Mumbai will be designated as a single contact point at the

domestic leg for our foreign offices. The applications for opening of PIS/
Demat/Trading accounts sourced by any FO will be submitted to NRI
Branch Mumbai, who will in turn coordinate with both SBICapsec and
our domestic office (home branch of the NRI) for further processing of
application.
Mandatory use of Structured Financial Messaging System (SFMS) for
receiving or sending LC and other related transactions:
A facility exists in Eximbills application for sending and receiving of
inland LCs through SFMS channel for intra and inter Bank transactions
(LCs issued by SBI Branches / other Banks, amendment of LCs and
payment of bills).
Negotiation of bills under non-SFMS LCs by a few identified branches is
also permitted.
Human Resources:
Payment of Family Pension: provision for payment of Family Pension
to parents for life:
Now, the parents are also included as beneficiaries. As such, the eligibility
for family pension will be as per the following sequence:
a) To widow/widower up to his/her death or remarriage whichever
is earlier.
b) Failing (a) above, the eldest of surviving children in order of their
birth up to the age of 25 years or he / she is gainfully employed,
whichever is earlier.
c)
In case beneficiary is an unmarried daughter, until she attains 25
years of age or is married or is gainfully employed, whichever occurs
first.
d) This process will continue till the last beneficiary attains age of 25
years or is gainfully employed or is married in case of daughter,
whichever is earlier.
d) Failing (a) to (d) above, to son or daughter for life if he/she is
physically crippled or disabled so as to render him/her unable to
earn a living even after attaining the age of 25 years.
e)
Failing (a) to (e) above, to the parents who were wholly dependent
upon the employee when he/she was alive provided the deceased
employee has left behind neither a widow nor a child. Among the
parents, mother will have precedence over father.
The words gainfully employed shall mean that he/she is either self
employed or is otherwise employed and is earning from such employment,
43
an income more than the amount of family pension to which he/she is

entitled. Where the earning is less than the entitled family pension, the
amount of family pension will be payable but be reduced by the amount
of such income.
General:
Western Union Remittances: Under the existing ABMT (Account Based
Money Transfer) facility customers can directly credit to their accounts
proceeds of remittances received from abroad through Internet Banking
facility. As a large number of Suspicious Transactions have been noticed
in this channel, ABMT facility will henceforth be available only for
accounts which have been in operation for 6 months.
PPF A/c:
Option Not to subscribe further in the PPF account beyond 15 years:
Govt guidelines on continuance of PPF A/c:
On maturity of PPF account, depositor may also opt not to subscribe
further to his/her PPF account beyond 15 years or date of extended
maturity (20, 25 years as the case may be)
In such cases, depositor is entitled for interest on balances as on the
date of maturity at the rate applicable, until such time he/she
decides to close the account.
Deposits made in the PPF accounts, after expiry of the contractual
period viz 15, 20, 25 years, without exercising the option for
continuance of account would not qualify for any interest
thereon, as such subscription should be treated as irregular deposits.
Further, Central Board of Direct Taxes (CBDT) has clarified that
deposits made in PPF accounts, after expiry of the contractual period
viz 15,20,25 years, without exercising the option for continuance
of accounts would not enjoy concession available under Section 80C of Income Tax Act.
Gift Cards: Issuance fee waived up to 31.03.2016.
Service Tax:
Service Tax on commission paid to Recovery Agents/Resolution Agents:
Now, commission paid to the Recovery Agents is liable for Service Tax to
Govt for the recovery charges paid to such agents. As the commission/
remuneration paid to resolution/recovery agent is inclusive of service
tax, such payments should be made by debit to Charges only after
reducing service tax payable.
44
RECENT BANKING DEVELOPMENT: April15

P B Business:
Providing key fact statement to personal and education loan borrowers:
Based on Reserve Bank of India guidelines, it has now been decided to
provide a Key Fact Statement to all customers availing loans and advances
under any of the Personal and Education Loan Schemes. The detailed
modalities for issuance of Fact Sheet will be as under:
i. A duly filled in Fact Sheet will be handed over to all customers against
their acknowledgment on duplicate copy at the time of receipt of complete
loan proposals by the sourcing Branch/outfits.
ii. Duplicate copy of Fact Sheet, duly acknowledged by the customers,
will be enclosed with the loan application before submission to CPCs/
Branches for processing and sanction.
iii. At the time of documentation, Branches/CPCs will issue a revised
Fact Sheet to the customers against acknowledgement of the customers
and keep it along with the documents.
Car Loans: waiver of processing fee extended up to 30.06.15. It is applicable
to all schemes for purchase of new cars.
Waiver is applicable to SME Retail Car loans but not for purchase of taxi
/ for transport operators / fleet operators.
Home Loans above Rs.10 lacs:
Now, CIC reports have to be obtained from CIBIL and Equifax Credit
Information Services Pvt. Ltd (ECISPL) only for loans above Rs.10 lacs.
Campaign for opening of savings bank accounts with non-personalised
welcome kits:
One of our main USPs while opening new accounts with our bank is
issue of non personalised Welcome kits (NPWK) to our customers
immediately. Personalised Welcome Kits are issued to customers (who
specifically request for them) by sending through speed post from LCPC
after collecting the cheque book and ATM card from the vendors.
The issue of Welcome Kit to customers which includes INB Kit & ATM
card will also help in decongestion of branches by migrating them to
alternate channels. A special campaign viz Non-Personalised welcome
kit campaign has been launched. The details are:
Period: April 2015 to 30th June15.
Minimum no. of accounts to be opened (other than FI accounts) are as
under:
45
Metro / Urban
Semi Urban/ Rural
: 500 accounts during the period.

: 400 accounts during the period.
The target for the Campaign:

% of Non-Personalized Welcome Kits issued out of total new
accounts (excluding F.I. accounts) opened are given below.
Crown
Metro/Urban Semi Urban/Rural
Gold
> 80 %
> 70 %
Silver
60 70 %
55 65 %
Bronze
50 60 %
45 50 %
Campus Branches eligible for Gold Crown only on achieving >
85%.
Incentives are also proposed to be given.
Home Loans & Home Loan Related Loans:
In addition to arrangement letter, Fact Sheet is now to be given to borrowers
in respect of Home Loans, Top-up loans and Reverse mortgage Loans the
time of receipt of the complete loan proposed against borrowers
acknowledgement. At the time of documentation a revised Fact Sheet
will be issued.
SME Business:
The Ministry of Housing and Poverty Alleviation has restructured the
SJSRY scheme and launched the NULM (National Urban Livelihoods
Mission).
There are 4 products under the scheme.
BR TL NULM (SSI)
BR TL NULM (Groups) SSI
BR TL NULM SBF
BR TL NULM (Group) SBF
SME documentation is applicable; also CGTMSE Cover is available for
eligible activities.
Tie-up with Ola Cabs: for financing operators engaged by Ola Cabs for
purchase of new passenger cars for hiring. Scheme is rolled out at 5
centers.
Min : Need-based
Max : Rs.50 lacs
CGTMSE Cover available;
Repayment : 30 60 months.
46
Repayment will be facilitated by OLA CABS and will be done on

fortnightly basis.
Review of SMECCC initiative and remedial measures.
Nationwide rollout of recommendations of the Boston Consulting Group
(BCG): SME delivery model for loans up to Rs. 50 cr.
Change in nomenclature.
As per revised SME Delivery Model, nomenclature of SMECCCs and
RASMECCCs has been changed as SME Centre and RASMEC (Retail
Assets & Small and Medium Enterprises Centre)
Rice Mill Plus changes in collateral security stipulations:
Loans up to Rs. 50 lacs to be mandatorily covered under CGTMSE. For
loans of Rs. 50 lacs Rs.1 cr to be covered under CGTMSE only if the
guarantee fee is borne by the borrower.
Loans without CGTMSE cover
Units with CRA rating SB 4 and above: Equitable mortgage of property
/ tangible security belonging to borrower / guarantor valued not less
than 50% of the loan amount.
Units having CRA rating SB 5 to 9: Equitable mortgage of property /
tangible security belonging to borrower / guarantor valued not less than
75% of the loan amount.
Rationale: NPAs under the scheme is high. Liberalised Scheme of Lending
to SMEs: Changes in collateral security stipulations.
Loans up to Rs.50 lacs: Loans eligible under CGTMSE should be
mandatorily covered under CGTMSE.
For loans of Rs.50 lacs Rs 1 cr: Loans eligible under CGTMSE to be
covered under CGTMSE only if the guarantee fee is borne by the borrower
as per the banks extant guidelines.
Loans not covered under CGTMSE: Collateral as per the existing
guidelines under the scheme to be obtained.
Rationale: NPAs under the scheme is high.
CGTMSE Scheme and OLA CABS tie-up.
As per existing stipulation disbursement in CGTMSE guaranteed loans
should be made only after generation of Demand Advice Notice (DAN)
47
by CGTMSE for guarantee. Usually, CGTMSE approves the application

and generate DAN with in 2-3 days.
But, as per the OLA CABS tie-up disbursement has to be made within 48
hours as a special case, before generation of DAN.
Agri Business:
Interest Subvention Scheme (ISS) Monitoring of end-use of crop loans:
Now, RBI has advised all the Banks to:
(i) Conduct a comprehensive scrutiny of the entire agri loan portfolio,
with special focus an Agri gold loan portfolio, for 2012-13 & 2013-14 in
terms of the check list provided.
(ii) Re-verify / re-submit the claims for 2013-14 based on scrutiny (as
these have not been paid yet).
Mandatory use of AGRI LOS in all branches except V-SAT branches
for opening of loan accounts in CBS:
LOS for Agri loans was launched in Jan14 for appraisal, sanction, control
and documentation thereby ensuring standardization of credit process.
It has an interface with CBS, External Credit Bureau, Census India data,
PAN data base, RBI defaulters list etc. 10 Agri loan products have been
rolled out for processing in Agri LOS. It ensures correct data entry, better
risk management, validation of scoring models and develops historical
data for moving to Internal Rating Based approach for capital
computation. It has been decided to block the usage of CBS for opening
agri loan accounts directly.
Warehouse receipt financing with collateral management services.
Waiver of processing charges.
The processing charges under the scheme have now been waived to meet
competition and garner more business.
The waiver in processing charges would be applicable for demand loans
sanctioned against warehouse receipts under Produce Marketing Loans
scheme where stocks are managed by approved Collateral Managers
only. The concession will not be applicable for warehouse receipts issued
against the stocks managed by Private Warehouses.
RuPay (DEBIT) card to FI customers.
Extension of retention period of RuPay PIN mailers.
As the backlog in delivery of PIN mailer continues, the retention period
of undelivered PIN mailers for FI accounts opened / to be opened has
been extended till 30.06.2015. (i.e. PIN mailers generated for RuPay Card
(FI) till 30.06.2015) up to 30.09.2015.
48
Financial Inclusion: Review of waiver of charges levied on customers

serviced at BC channel in RUSU / URMET areas up to 30.09.2015:
Now, account opening charge of Rs.20/- from customers at BC channel
is levied w.e.f. 01.04.2015. However, waiver of charges for transaction at
RuSu/UrMet areas has been extended up to 30.09.2015 as under:
i)
Extension of waiver of All transaction charges (except remittances)
in RuSu areas till 30.09.2015.
ii) Waiver of transaction charges for AEPS (Aadhar Based Payment
System) and RuPay card based transactions in UrMet areas till
30.09.2015.
Advances:
Non-Cooperative Borrowers: Classification/Declassification and
Reporting: RBI Guidelines:
Definition: The definition of a Non-Cooperative Borrower has been
modified to read as:
A Non-Cooperative Borrower is one who does not engage constructively
with his lender by defaulting in timely repayment of dues while having
ability to pay, thwarting lenders efforts for recovery of their dues by not
providing necessary information sought, denying access to assets
financed/collateral securities, obstructing sale of securities, etc. In effect,
a Non-Cooperative Borrower is a defaulter who deliberately stone walls
legitimate efforts of the lenders to recover their dues.
Revised authority structure to approve classification/declassification
of Non-Cooperative Borrowers: RBI have prescribed a two tier authority
structure to be put in place for classification/declassification of NonCooperative Borrowers. The first tier shall be responsible for
classification/declassification and the second for review of such
classification/declassification. Accordingly, two Committees have been
constituted for the purpose of classification/declassification and review
as under:
Committee for classification/declassification of a borrower as NonCooperative Borrower (Identification Committee/1st Committee)
Chairman
of
Committee
1st Alternate
2nd Alternate
Members
the
DMD (SAMG)
DMD (MCG)
DMD (Ops-NBG)
01. Any one GM of CAG / MCG /
SMEBU / RBU
02. GM (SAMG)
49
SAMG shall extend the necessary secretarial assistance to both the

Committees
Other guidelines:
a. The cut off limit for classifying a borrower as non-cooperative is
aggregate fund-based and non-fund based facilities of Rs.5 crore
from the Bank.
b. A Non-Cooperative Borrower in case of a company will include,
besides the company, its promoters and directors (excluding
independent directors and directors nominated by the
Government and the lending institutions).
c. In case of business enterprises (other than companies), NonCooperative Borrowers would include persons who are in-charge
and responsible for the management of the affairs of the business
enterprise.
d. After considering the submission of the borrower, if the
Committee concludes to classify the borrower as Noncooperative, the Committee will issue an Order recording the
borrower to be Non-cooperative along with the reasons for the
same. In all cases the borrower should be provided an opportunity
for Personal hearing before issuing the Order.
e. The order issued by the Committee will be reviewed by a higher
Committee (Review committee/2nd Committee) and the order will
become final only after it is confirmed by the Review Committee
(2nd Committee).
f. Bank will report information on all Non-cooperative borrowers
classified as per the laid down procedure to RBI under CRILCCMain return every quarter.
g. A review of the status of all Non-cooperative borrowers has to be
conducted half-yearly.
h. Removal of names from the list of Non-Cooperative Borrowers
will be separately reported under CRILC with appropriate
reasoning/rationale for such removal.
i. Since the criteria for classification of a Non-Cooperative Borrower
are different from those for classification of a Wilful Defaulter as
defined by RBI, the operating units may put up their
recommendations for the classification/declassification of a
borrower or a Wilful Defaulter or both, separately, for approval
by the Committees.
Modification in Provisioning norms: The Bank is now required to make
higher provisions as applicable to substandard assets in respect of new
50
loans sanctioned to Non cooperative borrowers as also new loans

sanctioned to any other company that has on its board of directors any of
the whole time directors / promoters of a non-cooperative borrowing
company or any firm in which such a Non cooperative borrower is in
charge of management of affairs though for the purpose of asset
classification and income recognition, the new loans would be treated as
Standard Assets.
SBI Base Rate reduced to 9.85 pa; SBAR to 14.6 (w.e.f.10.04.15).
Compliance certificate.
Pre disbursement compliance of terms & conditions of sanction:
With a view to strengthening the underlying processes, it has been decided
to introduce a structure along with standard format for ensuring
compliance of terms and conditions of sanction across the Business
Verticals.
For units with exposures below Rs.1.00 crore (FB+NFB Limits)
Branch Manager/official responsible for disbursement will have to ensure
that terms and conditions of sanction have been complied with, and a
simple confirmation to this effect, as detailed below, would be kept on
record:Confirmed that all pre-disbursement conditions and formalities have
been complied with, except the following for which approval of the
appropriate authority is on record.
shall become final only after it is confirmed by the said Review

Committee.
Except in very rare cases, a non-whole time director should not be
considered as a wilful defaulter unless it is conclusively established that
I.
he was aware of the fact of wilful default by the borrower by virtue
of any proceedings recorded in the Minutes of the Board or a
Committee of the Board and has not recorded his objection to the
same in the Minutes, or,
II. the wilful default had taken place with his consent or connivance.
Collection and Dissemination of Information on Wilful Defaulters

RBI has advised the following mechanism for identification of Wilful
Defaulters
(a) The evidence of wilful default on the part of the borrowing company
and its promoter/whole-time director at the relevant time should be
examined by a Committee headed by an Executive Director and
consisting of two other senior officers of the rank of GM/DGM.
(b) If the Committee concludes that an event of wilful default has
occurred, it shall issue a Show Cause Notice to the concerned
borrower and the promoter/whole-time director and call for their
submissions and after considering their submissions issue an order
recording the fact of wilful default and the reasons for the same. An
opportunity should be given to the borrower and the promoter/
whole-time director for a personal hearing if the Committee feels
such an opportunity is necessary.
(c) The Order of the Committee should be reviewed by another
Committee headed by the Chairman / CEO and MD and consisting,
in addition, of two independent directors of the Bank and the Order
Online Loan against shares:

Online loan against shares to Individuals/staff has been launched.
Under the revised process, individuals are now required to submit loan
application online and its processing, sanction and follow-up will be
centralized at a single Nodal Branch, i.e., Specialised Securities Finance
Branch Worli, Mumbai.
Henceforth branches are not authorized to sanction Loans against shares
to individuals or Staff members. Loans will henceforth be sanctioned by
the Nodal Branch.
51
However, the above exception will not apply to a promoter director

even if not a whole time director.
SBI: Appeals / Representations received from Borrowers / Promoters /
Directors / Guarantors identified as Wilful Defaulters by the Competent
Committees prior to 07/01/2015 will now be heard and disposed of by
the new Committees headed by DMD to be set up for identification of
Wilful Defaulters as per revised instructions and not by the earlier
Grievance Redressal Committee. Further, such borrowers will be finally
declared as Wilful Defaulter after review / confirmation of the order of
the Identification Committee by the next higher Committee to be
constituted as per revised instructions.
The scheme envisages financing to individual borrowers against the

security of BSE-100 shares, which qualifies the parameters set for
acceptance of shares as security
Eligibility Criteria:
Existing individual customers with KYC compliant accounts, good past
relationship, having demat account with our SBI CAP Securities Ltd (SSL).
Loan will only be sanctioned to individuals in his/her individual name
52
i.e., loan will not be sanctioned jointly. The customer otherwise eligible
for the loan should have an active mobile number and e-mail id. The
customer has to submit the following documents as a proof of income
along with the loan Application form.
(i) For employees:
(a) Latest monthly salary slip showing deductions
(b) Latest form 16 from employer
(ii) For others:
Copy of IT Returns for the last two years, duly acknowledged by ITO
with computation of income.
Purpose:
For meeting contingencies and needs of personal nature and for
subscribing to rights or new issue of shares against security of existing
shares. [Max. Rs.10 lacs for subscribing to IPOs]
However, the loans under the scheme are not to be sanctioned for
i)
Speculative purpose
ii) Inter-corporate investments, or
iii) Acquiring controlling interest in company / companies.
iv) Loan against our own SBI Shares.
Loan Amount:
a) Minimum : Rs.500/b) Maximum: For any personal purpose maximum loan is Rs.20.00
lacs
For subscribing to IPOs maximum loan is Rs.10.00 lacs
Security: Pledge of Demat Shares.
Margin: 50% of the prevailing Stock Exchange market prices of the shares
as calculated based on the prevailing market price as on the date and
time of loan sanction.
Processing Fee: Nil
Repayment:
Demand Loan:
The loan is to be repaid in 30 EMIs. The first EMI will fall due on the next
month of loan sanction.
Overdraft: The drawing power of the Overdraft account will be reduced
every month and loan has to be liquidated in maximum of 30 months.
Opinion Report:
Brief Opinion Report should be compiled in the prescribed format.
Prepayment Penalty:
No prepayment penalty
53
Penal Interest Rate:

If the EMI / Instalments(s) is not credited in the loan account of the
borrower on due date, the undernoted charges will be recovered from the
borrower:
Rs.500.00 + service tax (at present, Rs.562.00) for non-credit of
EMI / Instalment(s) on or before the due date.
2% per month penal interest on overdue instalment for the
overdue period.
Documentation:
i)
Simplified Application form to be generated through online portal.
ii) Loan Agreement Loan against Shares (to be generated through
LOS)
iii) Arrangement letter (to be generated through LOS)
Coverage:
Customer of any Branch can apply for the loan. The processing and
sanction of loan will be done by a single nodal Branch i.e., Specialised
Securities Finance Branch, Worli. The loan will in the Books of the nodal
Branch.
Parameters for acceptance of shares as security:
There is no change in the extant instructions on the parameters for
acceptance of shares as security.
i)
The equity shares offered as security should be fully paid. No advance
will be granted against partly paid shares / debentures.
ii) Preference shares will not be accepted as security.
iii) No advances will be granted against SBI shares, as the same is
strictly prohibited under Section 20 (1) (a) of the Banking Regulation
Act, 1949.
iv) The shares offered as security must be in Demat form.
v) The shares offered should be of a company listed in BSE 100 Index
Companies, except those of SBI. The list of BSE 100 Index companies
is available on www.bseindia.com.
vi) Shares, the market price of which has fallen below par during
preceding 52 weeks, will not be accepted as security.
vii) The market price of the security which will be at variance with the
arithmetical average of preceding 52 weeks high and low by more
than 25% in downward direction will not be accepted as security.
viii) P/E ratio of the company should not exceed 40. In case P/E ratio is
not available, the shares of the concerned company should not be
accepted as security.
ix) The total number of shares of company traded on NSE and BSE
54
should exceed 25,000 on the day of financing and on each of the

preceding 2 days.
Security where the market price 52 week high is 4 times of the 52
week low will not be accepted.
These limits shall be monitored by the exchanges and breaches, if any,

may be reported. For the convenience of monitoring, exchanges may
prescribe fixed limits for the contracts in currencies other than USD such
that these limits are within the equivalent of USD 5 million.
Follow up of Loan Accounts:

The follow up of advances will be taken care by the Nodal Branch on
regular basis. In case of the following eventualities SMS and e-mail will
be sent to the borrowers as under:
1st Alert: If Margin falls below 37.50%, an SMS alert will be sent to borrower
with copy to BM of the Nodal Branch. This will be followed by e-mail to
borrower.
a) 1st case: Borrower takes action and replenished the margin through
fund deposit and continues the account.
b) 2nd case: If, no Action to replenish the margin is taken by the Borrower,
2nd alert as under will be sent.
nd
2 Alert:
i)
If Margin further falls to below 25%, another SME alert will be sent
to borrower. This will be followed by an email to the borrower that
his securities will be squared off without any further intimations.
ii) SSL to invoke either full or partial pledge to liquidate outstanding
with interest.
iii) Depository to process pledge invocation request.
iv) SSL to sell securities. Their brokerages and charges will be deducted.
v) Credit of Sale of Proceeds by SSL to individual loan account of
the Borrower.
vi) SSL to intimate the Nodal Branch and the Borrower.
Increase in eligible limit for importers hedging contracted exposure:

At present, importers are permitted to hedge their contracted exposures
in the ETCD market up to 5 per cent of their eligible limit. With a view to
bringing at par both exporters and importers, it has now been decided by
RBI to allow importers to take appropriate hedging positions up to 100
per cent of the eligible limit.
x)
Foreign Exchange:
Risk Management and Inter-bank Dealings: Revised Guidelines relating
to participation of Residents in the Exchange Traded Currency
Derivatives (ETCD) market.
Increase in position limits not requiring establishment of underlying
exposure:
Presently, domestic participants are allowed to take a long (bought) as
well as short (sold) position up to USD 10 million per exchange. As a
measure of further liberalisation, it has now been decided by RBI to
increase the limit (long as well as short) in USD-INR pair up to USD 15
million per exchange. In addition, domestic participants shall be allowed
to take long as well as short positions in EUR-INR, GBP-INR and JPYINR pairs, all put together, up to USD 5 million equivalent per exchange.
55
KYC Documents for opening of NRE / NRO / FCNR (B) and RFC
Accounts:
Key features of KYC due diligence for NRIs are mentioned below:
a) The KYC due diligence will entail obtention of Proof of Status,
Proof of Identiy, Proof of Permanent Address (either of Overseas
of Indian) and Current Address document (overseas only). The
customer has the liberty to indicate one of these addresses as the
address for correspondence. For customers not visiting our branches
i.e. non-face to face customers, an additional proof will be needed.
b) In case of NRIs/PIOs/OCIs, they will mandatorily give copy of
their passport for Proof of Identity, and the same document can
also be accepted for Proof of Permanent Address (provided there
is no change in permanent address). In case they want to give
permanent address other than the one appearing in Passport, then
any of the Officially Valid Document (OVD) carrying the address
should be obtained. The Officially Valid Documents are Driving
license, Voters Identity card issued by Election Commission of India,
Job card issued by NREGA duly signed by an officer of the State
Government and Letter issued by the Unique Identification Authority
of India containing details of name, address and Aadhaar number.
c)
The NRI will have to also advise his current overseas address and
this can be done by submission of a self-declaration, to be submitted
along with supporting document for positive confirmation of the
overseas address. For the purpose, applicant can give self-declaration
as per specified format or applicant may sign and write Self
declaration of overseas address for NRI account opening purpose
on the document being given for positive confirmation.
d) NRIs with seafarer work profile can submit alternate document
(other than VISA / work permit) for Proof of Status, as many of
them do not have Visa / Work Permit.
56
e)
If the NRI applicant does not have any acceptable document for
current (overseas) address, then he/she can submit current
(overseas) address of their blood relative (spouse, father, mother,
sister, brother and child) as per acceptable document list for current
address. In such case, NRI applicant will also be required to submit
supporting proof of relationship with the blood relative (Passport,
PAN Card, Driving License, Voter Identity Card, Aadhaar Card,
Marriage Certificate, Birth Certificate).
f)
The address (out of current of permanent), preferred by NRI
applicant for receiving correspondences from the Bank, should be
entered in Address for correspondence Details (India / Foreign)
in the CIF screen. Accordingly, other address should be entered in
Alternate address Details (India / Foreign) of CIF screen.
NRI account opening application form has also been revised. The new
account opening form can be used for the purpose of opening RFC
accounts as well. However, it cannot be used for opening NRO account
by foreign tourists, for which a separate application form is being
developed.
for verification /
requisition) in Voucher movement register,
destruction of vouchers. after authorization by BM/Service Manager.
2. BM/Service Manager will give certificate
every month in BMMC that the movement of
Vouchers from / to Record room has taken
place after his / her authorization.
3. Destruction of vouchers / records at
prescribed intervals, as per prevalent OP
& SP instructions.
Interest rates on Small Savings Schemes:
Scheme
5 Year SCSS, 2004
PPF, 1968
Kishan Vikas Patra
Sukanya Samriddhi Account Scheme
Rate of Interest w.e.f.

01.04.2015
9.3% p.a
8.7% p.a
8.7% p.a
9.2% p.a
Export of Goods and Services Project Exports:

Presently, Exim Bank in participation with commercial banks in India
may extend Buyers credit up to the limit of USD 20 million to foreign
buyers in connection with export of goods on deferred payment terms
and turn key projects from India.
With a view to further liberalizing the procedure and as the Working
Group structure has been dismantled, it has been decided by RBI to
withdraw the limit of USD 20 million for Buyers credit which may be
extended to foreign buyers in connection with export of goods on deferred
payment terms and turn key projects from India.
Cross Selling SBI Life: New Product SMART INCOME PROTECT

(IRDA LICENSE NO: UIN:111N085V02):
Smart Income Protect is an individual, non-unit linked, with profit
endowment insurance Product and designed to satisfy the insurance
and financial needs of salaried class customers of the Bank. The policy
provides two options on maturity (1) Guaranteed annual payouts @11%
of basic sum assured amount over a period of 15 years after maturity (2)
Option to receive maturity benefit amount in lump sum which includes
guaranteed sum assured @110% basic sum assured plus vested
reversionary and terminal bonuses, if any at maturity.
General:
Safe keeping of vouchers/retrieval/destruction of records:
Issues
Measures to be in place
1. Safe keeping 1. Voucher sorting to be done Teller-wise (and not
of Vouchers & product i.e. SB/CA/TDR/BGL etc., wise) ondaily
records
basis.
2. Vouchers to be kept in date-wise bunches/boxes.
3. Vouchers to be moved to record room, on T + 2
basis, after entering them in Record register.
ATM: Fund transfer option

a) Card to card transfer
b) Account based transfer
Following changes have been made in the Transfer Option in ATMs.
2. Retrieval of Voucher
Fund Transfer using ATM:

One of the options available to the customer on the first screen after swiping
the card in the ATM is Transfer. Customers can choose either Card to
Card or Account Based Transfer to transfer money to any account
holder of SBI. To remit to an account in our Associate Banks, the sender
will have to choose Card to Card option only. In Card to Card option,
1. Record to vouchers movement (in/out on

57
58
the beneficiarys debit card number has to be entered, in Account Based

Transfer the beneficiarys account number is required.
Time of Credit:
The credit in the case of an SBI beneficiary is afforded immediately and to
Associate Bank beneficiary on T+1 day.
The limits have been revised as under:
Sr.
No.
1
2
3
Detail
Revised Limits
Maximum Per Txn Limit

Maximum No. of Txns
permitted
Maximum limit per day
under Card to Card and
Card to Account facility
a) Maximum limit is Rs.40,000/per day

b) There is no limit on the number
of transactions.
c) The limit of Rs.40,000/- per day
will be common across the C2C
and Card to Account facility.
Solvency Certificate: Often, customers approach the Bank for issue of a

solvency certificate.
(i) Eligibility:
Min. 1 year satisfactory relationship except for education loan
borrowers or depositors.
Can be issued for commercial purpose and Non-Commercial

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

RFIA / Credit Audit:The Audit Committee of the Central Board has made a number of
suggestions to
a) tighten the scoring parameters as per the risk residing at the auditee
unit
b) draw up broad profiles for various types of branches and
c)
suggest new audit parameters.
Matters to be improved in the Current Audit Scoring System:
Of late, concerns have been expressed that due to rigidities in the existing
format and the different business mix at branches, the resultant risks are
not brought about adequately in the audit scores.
Eg: (i) Gr 1 branches (including branches in CAG and MCG) get
maximum Credit Risk Management score (CRM) of 525 where as
credit CPCs score is 700.
59
ii)
Number of branches have income from non-credit business, and

hence carry operational risk. This is not captured correctly.
iii) Even though a branchs overall audit score may be good, some
components o the business could carry significant risk. Eg: In a
MCG branch with a score > 75% (low risk), there may be say 2 / 3
accounts with scores less than 60% (high risk).
The present system of reporting does not capture this type of information.
iv) A sizeable number of branches have obtained CRM score < 70%;
but the overall scores exceeded 700 and hence such branches are
included among AC branch category. The present system does not
enable capturing of individual risk parameters. Hence, there is a
need for a composite scoring system revealing such risks.
Salient aspects of the Revised Scoring Matrix:
(i) Max score for CRM has been increased to 700 for CAG and MCG
branches which are entirely credit oriented braches from the present
level of 525.
(ii) Group 1 NBG branches with credit level of Rs.500 cr and above are
now treated at par with MCG / CAG branches; for Gr 1 branches
with credit level of Rs.250 to Rs.500 cr, CRM score has been increased
to 600; ORM score adjusted accordingly.
iii) Non BPR branches (Gr. II): A new category of branches with noncredit related income of Rs.1 cr and above or retail deposits of Rs.150
cr and above has been carved out and given a higher score (450)
under ORM, due to the inherent operational risk associated with
the business mix.
(iv) Gr II & III, BPR center branches with SME advances of Rs.50 lacs
and above: Higher score of (Gr II:550; Gr III: 500) is given for CRM as
these advances reside at the branch
Composite Rating Introduced:
i)
If a branch is rated AC, but has a few High Risk Accounts, the rating
symbol would show the same (Eg: AC: HRA 3).
ii) If a AC branch has a CRM / ORM score < 70%, this will be shown as
AC: C; AC: O.
C means CRM > 70%; O means ORM < 70%.
iii) A separate rating for credit audit is being given now.
Introduction of the revising scoring will enable Inspectors to capture risk
more accurately; also the process is made more objective.
The scheme envisages financing to individual borrowers against the
security of BSE-100 shares, which qualifies the parameters set for
acceptance of shares as security
60
RECENT BANKING DEVELOPMENT: Apr & May 15
STATEMENT ABOUT OWNERSHIP AND OTHER

PARTICULARS OF BANKING DIGEST.
Human Resources:
Mandatory Leave for Employees Posted in Sensitive Positions or Areas
of Operation:
RBI has reiterated that, as a prudent operational risk management
measure, it is imperative that employees posted in sensitive positions or
areas of operations (viz., treasury, currency chests, risk modelling, model
validation, etc.) are covered under a Mandatory Leave policy wherein
such employees are required to compulsorily avail of leave for a few days
(say 10 working days) in a single spell every year, during their posting in
such areas. The bank should also identify such highly sensitive positions
where the bank will, without any prior intimation, advise the employee to
be away from his desk for a specified number of working days each year.
While the employee is on mandatory leave or asked to be away from his
desk as above, it should be ensured that he does not have access to any
physical or virtual resources related to his work responsibilities, with
the possible exception of corporate email.
1) Place of Publication:
2) Periodicity of Publication:
3) Publishers Name:
a. Nationality
b. Address:
Bangalore
Monthly
Shri G. Subramanian
Indian
J. S. Institute of Banking
and Finance Pvt. Ltd.
Bangalore 560 070.
4) Editors Name:
Shri G. Subramanian
a. Nationality
Indian
b. Address:
J.S. Institute of Banking
and Finance Pvt. Ltd.
Bangalore 560 070.
5) Name of Printing Press:
Raja Printers
Bangalore 560 027.
6) The Name and Address of
J.S. Institute of Banking
the Owners:
and Finance Pvt. Ltd.,
Ramanashree Park View,
2nd Floor, 2462,
24th Cross Road,
Banashankari 2nd Stage,
Bangalore 560 070.
I, G. Subramanian, hereby declare that the particulars given above
are true to the best of my knowledge and belief.
30.05.2015
G. SUBRAMANIAN
Signature of Publisher.
Forex:
Merchanting Trade to Nepal and Bhutan: In terms of the revised
merchanting trade guidelines stipulated by RBI in Mar 14, for a trade to
be classified as merchanting trade, goods acquired should not enter the
Domestic Tariff Area and the state of the goods should not undergo any
transformation. Further, the goods involved in the merchanting trade
transaction would be the ones that are permitted for exports / imports
under the prevailing Foreign Trade Policy (FTP) of India, as on the date
of shipment and all the rules, regulations and directions applicable to
exports (except Export Declaration Form) and imports (except Bill of
Entry), should be complied with for the export leg and the import leg
respectively.
As Nepal and Bhutan are landlocked countries, there is a facility of transit
trade whereby goods are imported from third countries by Nepal and
Bhutan through India under the cover of Customs Transit Declarations
in terms of the Government of India Treaty of Transit with these two
countries. In consultation with Government of India, RBI has clarified
that goods consigned to the importers of Nepal and Bhutan from third
countries under merchanting trade from India would qualify as trafficin-transit, if the goods are otherwise compliant with the provisions of the
India-Nepal Treaty of Transit and Indo-Bhutan Treaty of Transit
respectively.
61
62
Export of Goods and Services- Declaration of Exports of Goods/

Software:
Presently, every exporter of goods or software has to declare the same in
the prescribed form.
To further liberalise and simplify the procedure, it has been decided to
dispense with the requirement of declaring the export of Goods /Software
in the SDF in case of exports taking place through the EDI ports, as the
mandatory statutory requirements contained in the SDF have been
subsumed in the Shipping Bill format.
Foreign Currency (Non-Resident) Account (Banks) (FCNR (B)) Scheme:
RBI has observed that Authorised Dealer banks are insisting on different
requirements at the time of closure of FCNR (B) deposits and subsequent
remittance of funds as under:
i)
Submission of A2 form s
ii) Insisting on physical presence of the account holder
iii) Asking for purpose of remittance
In this connection RBI has clarified banks that A2 form is to be filed at the
time of purchase of foreign exchange using rupee funds and hence is not
applicable while remitting FCNR (B) funds. Further, banks, with the help
of technology, will have to devise better alternatives/ methods for
ensuring bonafides of the transaction rather than insisting on physical
presence of the account holder, in order to ensure hassle free remittance
of funds to the account holder.
Automated Process for Reversal of Inland Bills purchased/discounted/
negotiated in Exim Bills:
To eliminate delays in reversal of crystallized inland bills and prevent
income leakage the reversing of bills in Exim Bills software has now been
automated. This will also provide a list of crystallised bills of a customer
over a period of time.
The process of reversal in EXIM Bills software.
Accounting entries which will be put through by the system automatically
if Bills are not paid on the Notional Due Date (Sight Bills)/Due Date
(Usance Bills)
01. Dr. Overdue Inland Bills Purchased/Discounted/Negotiated (under
L/C or Non L/C) of the Customer (Intermediary account required to be
opened)
Cr. Inland Demand Bills Purchased Account (under L/C or Non-L/C of
the Customer Sight Bills) or
63
Cr. Inland Usance Bills Discounted Account of the Customer (under L/C
or Non-L/C of the Customer Usance Bills)
02. Dr.CC/OD/CA of the Customer (if sufficient DP/Balance is not
available then excess drawings would automatically be permitted by the
CBS without requirement of manual intervention and approval for
overdrawing). Exception Report would, however, be generated at EOD.
Cr. Overdue Inland Bills Purchased/Discounted/Negotiated (under L/
C or Non-L/C) of the Customer (The aforementioned Intermediary
account).
All the above mentioned entries will be put through by the system
simultaneously on the same day and Intermediary account will not have
any balance at the end of day.
In respect of Bills purchased (Sight Bills), if the payment is not
received within 13 days from the date of purchase, the entry
will be reversed by the system on the 14th day. If the 14th day
happens to be a holiday, it will be reversed on the previous
working day.
In respect of Bills discounted (Usance Bills), irrespective of the
tenor, if the payment is not received on the due date, the Bill
entry will be reversed by the system on the next day. If the
immediate next day after the due date happens to be a holiday,
it will be reversed on the immediately preceding working day.
Penal interest is applicable.
In the Trade Finance site, on daily basis, a report containing a list of
inland bills which are due for auto-reversal after 7 days will be provided.
The report may be used by the branches as a tool to follow up for retirement
of bills on respective due dates.
No manual reversal of overdue inland bills in CBS directly is permitted.
Deposits:
Rights of transgender persons Changes in bank forms/applications
etc:
RBI has noted that transgender persons face difficulties in opening
accounts as there is no provision for them in the account opening
and other forms.
2.
in this connection, RBI has advised banks to refer to the judgement
dated April 15, 2014 of the Supreme Court in the case of National
Legal Services Authority v. Union of India and others on treating
all transgender persons as third gender. The Supreme Court, in
that case, upheld transgender persons right to decide their selfidentified gender and directed the Centre and State Government to
64
3.
grant legal recognition of their gender identity such as male, female

or third gender.
Banks are, therefore, directed to include third gender in all forms/
applications etc. prescribed by the Reserve Bank or the banks
themselves, wherein any gender classification is envisaged.
Advances:
Loan frauds in banks.
RBI has expressed disquiet about the rising number of frauds in banks as
well as reporting delays in respect of frauds. It has issued a framework
for fraud risk management (7.5.2015).
Highlights:
(i) The concept of a Red Flagged Account has been introduced as an
important step in fraud risk control.
Early Warning Signals (EWS) and Red Flagged Accounts (RFA)
2.1 The concept of a Red Flagged Account (RFA) is being introduced in
the current framework as an important step in fraud risk control. A RFA
is one where a suspicion of fraudulent activity is thrown up by the
presence of one or more Early Warning Signals (EWS). These signals in a
loan account should immediately put the bank on alert regarding a
weakness or wrong doing which may ultimately turn out to be fraudulent.
A bank cannot afford to ignore such EWS but must instead use them as a
trigger to launch a detailed investigation into a RFA.
The threshold for EWS and RFA is an exposure of Rs.500 million or more
at the level of a bank irrespective of the lending arrangement (whether
solo banking, multiple banking or consortium). All accounts beyond
Rs.500 million classified as RFA or Frauds must also be reported on the
CRILC data platform together with the dates on which the accounts were
classified as such.
Early Detection and Reporting
At present the detection of frauds takes an unusually long time. Banks
tend to report an account as fraud only when they exhaust the chances of
further recovery.
Filing Complaints with Law Enforcement Agencies
Banks are required to lodge the complaint with the law enforcement
agencies immediately on detection of fraud. There should ideally not be
any delay in filing of the complaints with the law enforcement agencies
since delays may result in the loss of relevant relied upon documents,
65
non-availability of witnesses, absconding of borrowers and also the

money trail getting cold in addition to asset stripping by the fraudulent
borrower.
Penal measures for fraudulent borrowers
In general, the penal provisions as applicable to wilful defaulters would
apply to the fraudulent borrower including the promoter director(s) and
other whole time directors of the company insofar as raising of funds
from the banking system or from the capital markets by companies with
which they are associated is concerned, etc. In particular, borrowers who
have defaulted and have also committed a fraud in the account would be
debarred from availing bank finance from Scheduled Commercial Banks,
Development Financial Institutions, Government owned NBFCs,
Investment Institutions, etc., for a period of five years from the date of full
payment of the defrauded amount. After this period, it is for individual
institutions to take a call on whether to lend to such a borrower. The
penal provisions would apply to non-whole time directors (like nominee
directors and independent directors) only in rarest of cases based on
conclusive proof of their complicity.
No restructuring or grant of additional facilities may be made in the case
of RFA or fraud accounts.
No compromise settlement involving a fraudulent borrower is allowed
unless the conditions stipulate that the criminal complaint will be
continued.
Central Fraud Registry:
The Reserve Bank is in the process of designing a Central Fraud Registry,
a centralised searchable database, which can be accessed by banks. The
CBI and the Central Economic Intelligence Bureau (CEIB) have also
expressed interest in sharing their own databases with the banks. More
information in this regard would follow once the structure is finalised.
RESOLUTION PERIOD FOR BIFR/CDR/JLF CASES:
In terms of RBI Guidelines, the maximum resolution period permitted to
SCs/RCs for realisation of stressed assets acquired by them is 8 years.
However, in most cases of restructuring proposals of stressed assets, as
approved by BIFR / CDR / JLF, the repayment period goes beyond a time
frame of 8 years. In such cases, SCs/RCs, who are holding a part of the
stressed assets, express their inability to go along with the other lenders
beyond 8 years due to the regulatory constraints mentioned above and
insist on an exit at the end of 5 or 8 years, thereby jeopardizing the
restructuring efforts of the majority lenders.
66
3.
(1)
(2)
It has therefore been decided to make certain modifications to the

existing Directions as under:
For the purpose of the restructuring proposals approved / to be
approved by BIFR/CDR/JLF, SCs/RCs shall be permitted to accept
a resolution period co-terminus with other secured lenders.
In all such cases, the redemption period of Security Receipts (SRs)
held against these assets may be extended to be in congruence with
the resolution period approved by BIFR/CDR/JLF, subject to the
Independent Credit Rating Agencies continuing to positively rate
these SRs, i.e. as long as the Net Asset Value of the SRs continue to
be positive.
Technology:
Security and Risk Mitigation Measures for Card Present and Electronic
Payment Transactions:
RBI has already advised banks regarding the security issues and risk
mitigation measures related to Card Present (CP) transactions and for
electronic payment transactions wherein various timelines were
indicated for accomplishment of tasks for securing card and electronic
payment transactions.
2.
The Reserve Bank has been gradually strengthening security and
risk mitigation measures in card transactions. The acceptance
infrastructure is getting geared to accept EMV chip and pin cards.
However, in case of card issuance, while some banks have already
moved to EMV chip and pin cards issuance, a large number of banks
continue to issue Magnetic stripe cards. Thus, given the level of
readiness of the card acceptance infrastructure at point of sale and
also the implementation of PIN@POS for debit cards, the time is
appropriate to move further along the path to migrate away from
magnetic stripe only cards to chip and pin cards.
3.
RBI has advised that with effect from September 01, 2015 all new
cards issued debit and credit, domestic and international by
banks shall be EMV chip and pin based cards.
4.
The migration plan for existing magnetic stripe only cards will be
framed in consultation with stakeholders and timeline for the same
will be advised in due course.
General:
Dispensing with No Due Certificate (NDC) for lending by Banks:
Due to technological developments and various alternatives available
with banks to avoid multiple financing it has been decided by RBI to
follow the undernoted course of action:
67
I.
To dispense with obtention of No Due Certificate (NDC) from

individual borrowers (including SHGs & JLGs) in rural and semiurban areas for all types of loans including loans under Government
Sponsored Schemes (GSS), irrespective of the amount involved,
unless the GSS itself provides for obtention of NDC.
II. To use an alternative framework of due diligence as part of credit
appraisal exercise other than the NDC which could, among others,
consist of one or more of the following:
Credit history check through Credit Information Companies
Self declaration or an affidavit from the borrower
CERSAI registration
Peer monitoring
Information sharing among lenders.
Simplified procedure for opening of Currency Chests:
Strict adherence to the Technical Specifications of construction as
mandated by RBI must be ensured by banks.
Final Approval from the respective RO of RBI may be sought after
construction is completed. No deviation will be permitted or considered
and any construction falling short of specifications will not be approved.
All other locations:
1.
Banks may construct new CCs at any place after informing the RO
concerned of the RBI, under whose jurisdiction it is to be established.
Other conditions as above are the same.
2.
The banks may also note to obtain all necessary approvals from
other agencies before beginning construction.
3.
Strict adherence to the Technical Specifications of construction in
terms as stipulated by RBI must be ensured by banks.
4.
Final Approval from the respective RO of RBI may be sought after
construction is completed. No deviation will be permitted or
considered and any construction falling short of specifications will
not be approved.
The approvals will normally be accorded within 30 days provided the
construction conforms to the specifications.
Acquisition of Accommodation on Lease/Rental basis by Commercial
Banks for their use (i.e. for Office and Residence of Staff)
Liberalization of guidelines:
RBI has advised that norms and procedures for acquisition of
accommodation on lease / rental basis by commercial banks for their use
are left to be determined by the banks themselves. Banks must ensure
68
that their branches are not functioning from premises unauthorized in

law. Further, banks are advised that the legitimate grievances of owners
of property leased to the bank should be examined at appropriately senior
level in the bank and expeditious action should be taken to redress such
grievances.
Calendar of Reviews
It has been observed that Calendar of Reviews introduced by RBI uses
considerable Board time and as a result the Board may not be in a position
to give focused attention to matters of strategic and financial importance.
In this connection, the Committee to Review Governance of Boards of
Banks in India (Chairman - Dr. P J Nayak) had also recommended that
discussions in the Boards of banks need to be upgraded and greater
focus should be on strategic issues.
RBI has now dispensed with the Calendar of Reviews and replaced it
with the seven critical themes prescribed by the Nayak Committee namely,
business strategy, financial reports and their integrity, risk, compliance,
customer protection, financial inclusion and human resources and leave
it to the banks Boards to determine other list of items to be deliberated
and periodicity thereof.
Critical themes in board deliberations
Category
Description
Business Strategy
Development of new products; competitiveness
of individual businesses; business reviews in
relation to targets.
Risk
Policies concerning credit, operational, market,
liquidity risks; assessing the independence of the
risk function.
Financial Reports
Detailed scrutiny of quarterly and annual financial
and their integrity
results; NPA management and reported NPA and
provisioning integrity.
Compliance
Regulatory requirements; adherence to RBI and
SEBI norms; observations from the annual
financial inspection by RBI, and from the Long
Form Audit Report; review of decisions in previous
minutes of meetings, and key decisions within
subsidiaries; review of action taken reports;
appointments to board committees.
Customer Protection Mis-selling, particularly third-party products;
laying down the appropriateness of products to
different customer segments; understanding the
69
Financial Inclusion
Human Resources
broad trends and concentration in the growth of

customer grievances and their resolution.
Review of priority sector lending; payments for
the disadvantaged; deposit mobilization from
weaker sections; support to microfinance
institutions; and other issues.
Appointments and approvals of directors, perks
and perquisites for employees, incentive schemes
for employees, promotion policies for employees,
training and skill development of employees.
Card Payments Relaxation in requirement of Additional Factor of

Authentication for small value card present transactions:
Reserve Bank has received requests for waiver of the additional factor of
authentication (AFA) so as to foster innovative payment products /
processes as also to enhance the convenience factor in certain types of
card transactions.
RBI has now, decided to relax the extant instructions relating to the need
for AFA requirements for small value card present transactions only using
contactless cards. In this regard, it is advised by RBI that i.
Relaxation for AFA requirement is permitted for transactions for a
maximum value of Rs 2,000/- per transaction;
ii. The limit of Rs.2000/- per transaction will be the limit set across all
categories of merchants in the country where such contactless
payments will be accepted;
iii. Beyond this transaction limit, the card has to be processed as a
contact payment and authentication with PIN (AFA) will be
mandatory;
iv. Even for transaction values below this limit, the customer may
choose to make payment as a contact payment, which has to be
facilitated by both issuing and acquiring banks. In other words,
customers cannot be compelled to do a contactless payment;
v.
Banks are free to facilitate their customers to set lower per-transaction
limits. The responsibility for authorizing the contactless payment
based on such card-based limits will lie with the card issuing banks;
vi. Suitable velocity checks (i.e., how many such small value transactions
will be allowed in a day / week / month) may be put in place by
banks as considered appropriate; and
vii. The contactless cards should necessarily be chip cards adhering to
EMV payment standard, so as to be acceptable across the existing
card acceptance infrastructure which are EMV compliant based on
the earlier mandate in this regard.
70
However, the above relaxations shall not apply to:

i)
ATM transactions irrespective of transaction value; and
ii) Card Not Present transactions (CNP).
CONCEPT BRIEF I
Indian Economy Roundup May 2015
Mandatory issue of acknowledgement to pensioners on submission of

life certificates:
In terms of extant instructions, all pensioners are required to furnish a
life certificate to the pension disbursing bank every year in November for
continuance of pension. This certificate can be submitted at any branch
of the pension paying bank. The Government of India has also launched
from September, 2014 a scheme for introduction of Aadhaar based digital
life certificates known as Jeevan Pramaan.
However, complaints are received from central/state government
pensioners/ pensioners associations regarding pensioners being
deprived of regular pension payments due to misplacement of life
certificates at the branches concerned. In order to alleviate the hardships
faced by pensioners on this account, all agency banks handling
government pension payments may, henceforth, issue a duly signed
acknowledgement to pensioners on receipt of the life certificate submitted
in physical form. Banks may also consider entering the same in their CBS
immediately on receipt and issuing a system generated receipt to the
pensioners. This would serve the twin purpose of acknowledgement to
the pensioners as well as real-time updation of records.
71
Prime Minister Narendra Modi has visited many countries publicising

the latent potential in India that makes it a favourable investment
destination. The Government has been taking steps to make India
conducive for businesses to invest in line with Indias large requirement
of funds towards developmental programmes in general and
infrastructural developments in particular.
Monsoons: The Australian Meteorological Department has predicted that
the probability of the El Nino effect is 3 times more likely in 2015 than
normally. The Indian Meteorological Department (IMD) has also
concurred with this and expects that while the monsoon will arrive earlier
than scheduled, the rainfall will be below normal 93% of Long Term
Average (LTA) rainfall this year. Only 46% of cultivated land (140.8
million hectares) in India is irrigated; the remaining 54% of land is still
dependent on rains. This makes the El Nino phenomenon a very real
threat for Indian farmers. The Government has announced compensation
programmes for farmers across the country for the losses they have
suffered from untimely rain.
Car Sales: Indias car sales increased by 4% in 2014-15. According to
Society of Indian Automobile Manufacturers (SIAM) data, domestic car
sales increased by 18% to 1.59 lakh units in April 2015 as compared to
the year-ago period; this is the fastest growth in 30 months.
Industrial Output: It grew by 2.1% in March 2015 against 4.9% in the
previous month. In 2014-15 industrial production increased by 2.8%.
Core Sector growth contracted by 0.1% in March 2015, a 7- month low.
Inflation: CPI inflation was 4.86% in April 2015 as compared to 5.25% in
March 2015; food inflation was 5.11% as compared to 6.14% in March
2015. Wholesale Price Index (WPI) deflation continued for the 6th month
in a row 2.65% in April 2015 compared to 2.33% in March 2015.
Interest Rates: There are hopes that RBI will reduce its rates further to spur
demand because of WPI deflation and decreasing trends in CPI inflation.
However, over 70 scheduled banks have not reduced their base rates
despite 2 cuts in policy repo rate by RBI in the recent past. Only major
banks like SBI, HDFC Bank, ICICI Bank and Axis Bank reduced their
rates.
Trade: Exports fell by 24% to US$ 22 billion while imports fell by 7.5% to
US$ 33 billion. The resultant trade deficit was US$ 11 billion. This is the
fifth consecutive month of decline in exports. In 2014-15 exports were
US$ 310 billion, 1.23% lower than the previous year and below the target
72
Concept Brief
of US$ 340 billion. The World Trade Organisation (WTO) has reduced
global trade growth forecast to 3.3% from 4%.
Capital: The Finance Ministry has asked Public Sector Banks (PSBs) to
attract investors to raise funds for capital to conform to BASEL III norms.
Indian banks need Rs.2.4 lakh crore capital by 2018.
NPAs:
According to data from RBI, banks Gross NPA has increased to

4.45% as on March 15 2015 as compared to 4.1% in March 2014.
GNPA for PSBs was 5.17% in March 2015. Overall stressed advances
of the banking system was 10.9% in March 2015 as compared to
10% a year ago. Overall stressed advances includes restructured
standard advances and GNPA. At the end of 2014, NPAs of PSBs
was Rs.2.6 lakh crore.
Despite bad loans doubling in the last 3 years, RBI Governor

Raghuram Rajan has surmised that they have still not reached their
peaks.
RBI has suggested that boards of banks look into their financial
results and Non-Performing Assets (NPAs) in detail during their
discussions. The P J Nayak Committee had recommended that banks
review their results with focus on 7 critical themes business
strategy, financial reports and their integrity, risk, compliance,
customer protection, financial inclusion and human resources.
Gold: Gold imports increased by 19.5% to US$ 34.32 billion in 2014-15 as
compared to the previous year. In April, gold imports rose by 78% to US$
3.1 billion as compared to the year-ago period. The Government has
released a draft gold monetization scheme to make use of the idle gold in
the hands of households and institutions as well as to reduce reliance on
imports. Gold closed at Rs.27,284 per 10 g while silver closed at Rs.39,290
per kg on May 20 2015.
Currency Markets: The Rupee has fallen 3% this calendar year to below
Rs.64 against the Dollar this is a 20 month low. The Rupee closed at
63.82 against the Dollar on May 20 2015.
Stock Markets: The traditionally low yield on bonds in developed markets
such as US and Germany rose to a years high. This was also affected by
Greece using its emergency reserves to repay an IMF loan. This resulted
in an outflow of funds from emerging markets. Indias stock markets and
the 10-year Government securities (G-Sec) fell on May 12 2015; the Sensex
dropped by 2.3% and the Nifty by 2.4%. The Sensex closed at 27837
while the Nifty closed at 8423 on May 20 2015.
Bond Yield: The yield on the 10-year benchmark government bond has
also hardened in line with global markets. It was 7.86% at the end of
April 2015; it has increased to 7.98% as of May 8 2015.
73
Oil Prices: Oil prices increased to over US$ 60 a barrel; this is the first time
this year. It is expected that there will be a fall in shale gas output.
Insurance Schemes of Government: Central Bank of India (CBI) has signed
an MoU with The New India Assurance Co. Ltd to offer the Pradhan
Mantri Suraksha Bima Yojana (PMSBY). This was announced in the
Union Budget 2015-16.
Credit Growth: Bank credit grew by 8.6% in 2014-15 as compared to 14.3%
in 2013-14. According to RBI data, credit to agriculture grew by 15% to
Rs.7.7 lakh crore as of March 20 2015 compared to the year-ago period; in
2013-14, the growth was 13.5%. Credit to industry grew by 5.6% to
Rs.26.65 lakh crore. In 2013-14 the credit growth was 13.1%. Credit to
services also grew at 5.6% to Rs.14.12 lakh crore; in 2013-14, it was 16.1%.
Tax Collections: The GOI collected Rs.47,747 crore in indirect taxes, in
April 2015, an increase of 46.2% over the year ago period. Gross tax
collections for 2014-15 were Rs.12.5 lakh crore a growth of 9% over the
previous year. The new service tax of 14% (up from the current 12.36%)
will be effective from June 1 2015. The Budget also widened the service
tax base in preparation for the Goods and Services Tax (GST) that is
expected to be in place by April 2016.
Fiscal Deficit: Indias fiscal deficit for 2014-15 was Rs.5 lakh crore or 4%
of GDP; this is lower than the targeted 4.1% of GDP. The current years
target is 3.9% of GDP. Revenue deficit for 2014-15 was Rs.3.6 lakh crore
or 2.8% of GDP which is lower than the Revised Estimate (RE) of 2.9%.
Disinvestment: The Government plans to partially divest stake in 25 public
sector companies expecting a revenue flow of over one third of the current
years divestment target of Rs.41,000 crore.
Black Money: The Enforcement Directorate (ED) has attached assets worth
Rs.9,003 crore in its efforts to flush out black money. It had filed 173
chargesheets in 2014-15.
Foreign Flows:
FDI: Foreign Direct Investment (FDI) increased by 63% to US$ 3.28

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

Venture Capital (VC) funds in the first quarter of 2015 with 69 deals
against Chinas 66. However the value of the deals in India was
US$ 1.35 billion against Chinas US$ 2.99 billion.
IPOs in China: A host of IPOs in China have led to outflow of funds

from Indian stock markets 25 Chinese companies plan to mobilise
US$ 377 billion.
Chinese Investment: India and China have signed 25 deals worth

US$ 22 billion during Indian PM Modis visit to China. ICICI Bank
and Infosys plan to open branches in China. A Chinese consortium,
74
Concept Brief
Guizhou International Investment Corporation (GIIC) plans to invest

US$ 500 million in Indian GMRs Kakinada Special Economic Zone
(SEZ) Pvt. Ltd.
South Korean Investment: India and South Korea signed 7 agreements

with their bilateral relationship becoming a Special Strategic
Partnership; South Korea will invest US$ 10 billion towards
developing infrastructure in India.
MAT: GOI has set up a panel to study Minimum Alternate Tax (MAT)
for Foreign Institutional Investors (FIIs) under justice A P Shah to
address issues faced on tax on capital gains for FIIs.
Forex: Foreign exchange reserves crossed US$ 350 billion for the
first time for the week ended May 1 2015. It was US$ 352.13 billion
as on May 8 2015. This is an all-time high.
India on US IPR Watch: US has placed India, China, Russia and Ukraine
among 13 nations in its priority watch list for Intellectual Property Rights
(IPR) violations.
Growth Forecast: The World Bank has estimated that India will grow by
7.5% in FY16, 7.9% in FY17 and 8% in FY18. This is lower than the
Indian Governments Budget estimate of 8.5% and RBIs estimate of 7.8%
for 2015-16. According to a United Nations (UN) report, India is expected
to grow by 8.1% in 2015-16 on the back of consumer demand and reform
measures undertaken by the Government. Finance Minister Arun Jaitley
expects the Indian economy to grow by 9-10% who said that India has
the potential to grow at this rate reforms will be the catalyst. Fitchowned Indian Ratings has estimated that India will grow by 7.7% for
FY16. It has also stated that India will be able to weather foreign outflows
better because of its reforms agenda and lower oil prices.
The challenges for the Indian economy are in the form of rising bad loans
within the country and poor earnings within the industry. Increasing
crude oil prices on the back of geo-political tensions as well as forecast of
reduced shale gas output are pressures India faces on the external front.
Foreign investors are also wary of some of the Governments policy actions
such as Minimum Alternate Tax (MAT) and retrospective taxation. The
Government has created a panel to look into MAT to ward off concern in
this regard. The Government completed one year in office in May 2015.
While the mood in the market is still upbeat, ground-level action has not
matched the expectations of the industry and common man. Growth
forecasts have been very positive but overall fundamentals are yet to
show signs of improvement and recovery.
75
MODEL TEST
(BASED ON MAY 2015 INFORMATION)
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)
18)
19)
20)
21)
22)
23)
24)
25)
26)
27)
76
Recently, France-based Software Company, Capgemini

announced that it will acquire ______.
Who won the Jnanpith Award for 2014?
All NBFCs may now sell Mutual Funds. There are no minimum
eligibility criteria. True/False?
What is a micro-ATM?
Expand SIDBI.
Who will be the new head of the BRICS bank, New Development
Bank (NDB)?
UK has elected _____ as its Prime Minister in the recently-concluded
elections.
Floyd Mayweather is a _______.
Additional Factor of Authorisation (AFA) is not required for card
present transactions of value less than Rs._____ per transaction.
PMJJBY stands for _____.
The head of the panel appointed by the GOI that will select nonexecutive Chairmen in Public Sector Banks (PSBs) is _____.
Ping Pay is the mobile-based application of _____.
EMV chip stands for _____.
The President of Egypt is _______.
The 2016 Olympics will be held in ________.
The Black Money Bill 2015 passed by the Parliament is mainly
focussed on ensuring that_______ are declared by Indian
residents.
eftCheque is a mobile app developed by ______.
SmartBuy is an online platform of _______.
FDI inflows may enter the country through the _____ and _____
route.
Contactless cards use NFC technology to make payments through
readers. Expand NFC.
Recently, SBI has signed MoUs with e-commerce companies
______ and ______ to fund online sellers.
CATMI stands for ______.
Who won the 2015 IPL?
Who is the Chief Election Commissioner?
Who will be Chairman of the proposed GST Council?
Indias Chief Statistician is _______.
The Tamil Nadu CM is ______.
ANSWERS:
1) US-based iGate
2) Bhalchandra Nemade
3) True
4) A micro ATM is a hand-held device that Business
Correspondents (BCs) use to accept deposits and dispense cash.
5) Small Industries Development Bank of India
6) K V Kamath
7) David Cameron
8) professional boxer
9) 2,000
10) Pradhan Mantri Jeevan Jyoti Bima Yojana
11) RBI Governor Raghuram Rajan
12) Axis Bank
13) Europay MasterCard Visa
14) Abdel-Fattah el-Sisi
15) Rio de Janeiro, Brazil
16) foreign assets
17) ICICI Bank Ltd.
18) HDFC Bank Ltd.
19) automatic; approval
20) Near Field Communication
21) Amazon; Snapdeal
22) Confederation of ATM Industries
23) Mumbai Indians beating Chennai Super Kings
24) Nasim Zaidi
25) Union Finance Minister Arun Jaitley
26) T C A Anant
27) J Jayalalithaa
77
PRIORITY SECTOR ADVANCES (ChangesApril 2015)

Model Test - II
Priority Sector Lending Changes
Based on the recommendations of the Internal Working Group, headed
by Lily Vaders, Chief General Manager, RBI on priority sector lending,
RBI has since issued revised guidelines.
A Model Test covering the entire revised guidelines is given below.
1.
Which committees recommendations led to changes in priority
sector lending w.e.f 23.04.2015?
A: The recommendations of an Internal working group, headed by lily
vaders, chief general manager, RBI led to the changes in priority
sector lending.
2.
What are the different categories of advances under priority sector
finance:
A: i)
Agriculture
ii)
Micro, Small and Medium Enterprises
iii) Export Credit
iv) Education
v)
Housing
vi) Social Infrastructure
vii) Renewable Energy
viii) Others
3.
What is the priority sector target fro SCBs and foreign banks with 20
branches and above?
A: 40 percent of Adjusted Net Bank Credit [ANBC defined in sub
paragraph (iii)] or Credit Equivalent Amount of Off-Balance Sheet
Exposure, whichever is higher.
Foreign banks with 20 branches and above have to achieve the Total
Priority Sector Target within a maximum period of five years starting
from April 1, 2013 and ending on March 31, 2018 as per the action
plans submitted by an Internal working group set up by RBI and
approved by RBI.
4.
What is the priority sector target for foreign banks with less than 20
branches?
A: 40 percent of Adjusted Net Bank Credit or Credit Equivalent Amount
of Off-Balance Sheet Exposure, whichever is higher; to be achieved
in a phased manner by 2020.
5.
Is there any distinction between direct and indirect advances under
Agriculture segment?
A: No. It has been abolished now.
78
Model Test
6.
A:
7.
A:
8.
A:
9.
A:
10.
A:
11.
What is the priority sector target for agriculture?

18 percent of ANBC or Credit Equivalent Amount of Off-Balance
Sheet Exposure, whichever is higher.
Within the 18 percent target for agriculture, a target of 8 percent of
ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure,
whichever is higher is prescribed for Small and Marginal Farmers,
to be achieved in a phased manner i.e., 7 per cent by March 2 0 1 6
and 8 per cent by March 2017.
What is the priority sector target for agriculture for foreign banks?
Foreign banks with 20 branches and above have to achieve the
Agriculture Target within a maximum period of five years starting
from April 1, 2013 and ending on March 31, 2018 as per the action
plans submitted by the Internal working group and approved by
RBI. The sub-target for Small and Marginal farmers would be made
applicable post 2018 after a review in 2017.
Is there a sub-target for Micro Enterprises?
Yes.
7.5 percent of ANBC or Credit Equivalent Amount of Off-Balance
Sheet Exposure, whichever is higher to be achieved in a phased
manner i.e. 7 per cent by March 2016 and 7.5 per cent by March
2017.
What is the target for Weaker Sections?
10 percent of ANBC or Credit Equivalent Amount of Off-Balance
Sheet Exposure, whichever is higher.
What is the target for foreign banks as regards Weaker Sections?
Foreign banks with 20 branches and above have to achieve the
Weaker Sections Target within a maximum period of five years
starting from April 1, 2013 and ending on March 31, 2018 as per
the action plans submitted by Internal working group and approved
by RBI.
What is the time-period within which foreign banks with less than
20 branches has to achieve the priority sector target of 40%?
A: Financial Year The Total Priority Sector as percentage of ANBC
or Credit Equivalent Amount of Off-Balance Sheet Exposure,
whichever is higher
2015-16
32
2016-17
34
2017-18
36
2018-19
38
2019-20
40
79
The additional priority sector lending target of 2 percent of ANBC each

year from 2016-17 to 2019-20 has to be achieved by lending to sectors
other than exports. The sub targets for these banks, if to be made
applicable post 2020, would be decided in due course.
12. What is ANBC and how it is computed?
A: ANBC means Adjusted Net Bank Credit. Net Bank Credit means
Bank Credit in India minus bills
Rediscounted with RBI and
other approved Financial Institutions.
Adjusted Net Bank Credit is worked out as per table below:
Bank Credit in India [As prescribed in item No.VI
of Form A under Section 42 (2) of the RBI Act,
1934].
Bills Rediscounted with RBI and other approved

Financial Institutions
Net Bank Credit (NBC)*
II
III (I-II)
Bonds/debentures in Non-SLR categories under

HTM category+ other investments eligible to be
treated as priority sector +Outstanding Deposits
under RIDF and other eligible funds with
NABARD, NHB and SIDBI on account of priority
sector shortfall + outstanding PSLCs
IV
Eligible amount for exemptions on issuance of

long-term bonds for infrastructure and affordable
housing
as
per
circular
DBOD.BP.BC.No.25/08.12.014/2014-15 dated July
15, 2014.
Eligible advances extended in India against the
incremental FCNR (B)/NRE deposits, qualifying
for exemption from CRR/SLR requirements.
ANBC
VI
III+IV-V, VI
* For the purpose of priority sector computation only. Banks should not
deduct / net any amount like provisions, accrued interest, etc. from NBC.
It has been observed that some banks are subtracting prudential write off
at Corporate/Head Office level while reporting Bank Credit as above. In
such cases it must be ensured that bank credit to priority sector and all
other sub-sectors so written off should also be subtracted category
wise from priority sector and sub-target achievement.
80
Model Test
All types of loans, investments or any other items which are treated as
eligible for classification under priority sector target/sub-target
achievement should also form part of Adjusted Net Bank Credit. (RBI)
13. What are the classifications of lending to agriculture?
A: Agriculture lending now includes:
(a) Farm Credit (which will include short-term crop loans and
medium/long-termcredit to
farmers)
(b) Agriculture Infrastructure and
(c) Ancillary Activities.
14. What are the various types of farm credit to individual farmers,
SHGs and JLGs that are classified as farm credit?
A: Loans to individual farmers [including Self Help Groups (SHGs) or
Joint Liability Groups (JLGs), i.e. groups of individual farmers,
provided banks maintain disaggregated data of such loans],
directly engaged in Agriculture and Allied Activities, viz., dairy,
fishery, animal husbandry, poultry, bee-keeping and sericulture.
This will include:
(i) Crop loans to farmers, which will include traditional/nontraditional plantations and horticulture, and, loans for allied
activities.
(ii) Medium and long-term loans to farmers for agriculture and
allied activities (e.g. purchase of agricultural implements and
machinery, loans for irrigation and other developmental
activities undertaken in the farm, and developmental loans
for allied activities.)
(iii) Loans to farmers for pre and post-harvest activities, viz.,
spraying, weeding, harvesting,
sorting, grading and
transporting of their own farm produce.
(iv) Loans to farmers up to Rs.50 lakh against pledge/
hypothecation of agricultural produce (including warehouse
receipts) for a period not exceeding 12 months.
(v) Loans to distressed farmers indebted to non-institutional
lenders.
(vi) Loans to farmers under the Kisan Credit Card Scheme.
(vii) Loans to small and marginal farmers for purchase of land for
agricultural purposes.
15. What are the various types of farm credit to Corporate farmers, FPCs
of individual farmers, partnership firms and cooperatives that are
classified as farm credit?
A: All agriculture activities and Allied activities viz dairy, fishery,
81
16.
A:
17.
A:
18.
A:
82
animal husbandry, poultry, bee-keeping and sericulture up to an

aggregate limit of Rs.2 cr per borrower. This will include:
(i) Crop loans to farmers which will include traditional/nontraditional plantations and horticulture, and, loans for
allied activities.
(ii) Medium and long-term loans to farmers for agriculture and
allied activities (e.g. purchase of agricultural implements and
machinery, loans for irrigation and other developmental
activities undertaken in the farm, and developmental loans
for allied activities.)
(iii) Loans to farmers for pre and post-harvest activities, viz.,
spraying, weeding, harvesting, sorting, grading and
transporting of their own farm produce.
(iv) Loans up to Rs.50 lakh against pledge/hypothecation of
agricultural produce (including warehouse receipts) for a
period not exceeding 12 months.
What are the loans that are classified as agri infrastructure loans?
i)
Loans for construction of storage facilities (warehouses, market
yards, godowns and silos) including cold storage units/ cold
storage chains designed to store agriculture produce/products,
irrespective of their location.
ii) Soil conservation and watershed development.
iii) Plant tissue culture and agri-biotechnology, seed production,
production of bio- pesticides, bio-fertilizer, and vermi
composting.
What is the criterion for classifying loan as an agri infrastructure
loan?
Aggregate sanctioned limit of Rs.100 cr per borrower from the
banking system will apply.
What are the loans for various ancillary activities that are classified
as priority sector advance?
(i) Loans up to Rs.5 crore to co-operative societies of farmers for
disposing of the produce of members.
(ii) Loans for setting up of Agriclinics and Agribusiness Centres.
(iii) Loans for Food and Agro-processing up to an aggregate
sanctioned limit of Rs.100 crore per borrower from the banking
system.
(iv) Bank loans to Primary Agricultural Credit Societies (PACS),
Farmers Service Societies (FSS) and Large-sized Adivasi
Multi-Purpose Societies (LAMPS) for on-lending to agriculture.
(v) Loans sanctioned by banks to MFIs for on-lending to
agriculture sector subject conditions.
Model Test
(vi) Outstanding deposits under RIDF and other eligible funds

with NABARD on account of priority sector shortfall.
19. Who are included in calculating the sub-target under agriculture
lending?
A:
Farmers with landholding of up to 1 hectare are considered as
Marginal Farmers.
Farmers with a landholding of more than 1 hectare and upto 2
hectares are
considered
as Small Farmers.
Landless agricultural labourers, tenant farmers, oral lessees and
share-croppers.
Loans to Self Help Groups (SHGs) or Joint Liability Groups (JLGs),
i.e. groups of individual Small and Marginal farmers directly
engaged in Agriculture and Allied Activities, provided banks
maintain disaggregated data of such loans.
Loans to farmers producer companies of individual farmers, and
co-operatives of farmers directly engaged in Agriculture and Allied
Activities, where the membership of Small and Marginal Farmers is
not less than 75 per cent by number and whose land-holding share
is also not less than 75 per cent of the total land-holding.
20. What is the investment criteria in plant & machinery for
manufacturing sector enterprises?
A: Micro Enterprises
Does not exceed twenty five lakh rupees
Small Enterprises
More than twenty five lakh rupees but
does not exceed five crore rupees
Medium Enterprises
More than five crore rupees but
does not exceed ten crore rupees
21. What is the investment criteria in equipment for service sector?
A: Micro Enterprises
Does not exceed ten lakh rupees
Small Enterprises
More than ten lakh rupees but does not
exceed two crore rupees
Medium Enterprises
More than two crore rupees but does
not exceed Five crore rupees
22. What is the criteria for classification of loans to Micro and Small
and Medium (Service) Enterprises as priority sector?
A: Bank loans up to Rs.5 cr to Micro and small enterprises and Rs.10 cr
to Medium Enterprises engaged in services as defined under
MSMED Act, 2006.
23. Are advances to KVI sector units classified as eligible for the subtarget under Micro enterprises?
83
A:
24.
A:
25.
A:
26.
A:
27.
A:
28.
A:
84
Yes.
What are the other types of advances to MSMEs that are eligible for
classification as priority sector advances?
(i) Loans to entities involved in assisting the decentralized sector
in the supply of inputs to and marketing of outputs of artisans,
village and cottage industries.
(ii) Loans to co-operatives of producers in the decentralized sector
viz. artisans, village and cottage industries.
(iii) Loans sanctioned by banks to MFIs for on-lending to MSME
sector subject to conditions.
(iv) Credit outstanding under General Credit Cards (including
Artisan Credit Card, Laghu Udyami Card, Swarojgar Credit
Card, and Weavers Card etc. in existence and catering to the
non-farm entrepreneurial credit needs of individuals).
(v) Outstanding deposits with SIDBI on account of priority sector
shortfall.
A small Manufacturing units investment in plant and machinery
crosses the limit of Rs.5.00 cr as on 01.04.2015. Will the advance to
the unit continue to enjoy the priority sector status?
Yes. Up to 3 years from the date it crosses the limit.
Is export credit a priority sector advance for a domestic bank?
Yes, subject to the following. Incremental export credit over
corresponding date of the preceding year, up to 2 percent of ANBC
or Credit Equivalent Amount of Off-Balance Sheet Exposure,
whichever is higher, effective from April 1, 2015 subject to a
sanctioned limit of Rs.25 crore per borrower to units having turnover
of up to Rs.100 crore.
What is the present stipulation for foreign banks in respect of export
credit?
Foreign banks with 20 branches and above:
Incremental export credit over corresponding date of the preceding
year, up to 2 percent of ANBC or Credit Equivalent Amount of OffBalance Sheet Exposure, whichever is higher, effective from April
1, 2017 (As per their approved plans, foreign banks with 20 branches
and above are allowed to count certain percentage of export credit
limit as priority sector till March 2016).
Foreign banks with less than 20 branches:
Export credit will be allowed up to 32 percent of ANBC or Credit
Equivalent Amount of Off-Balance Sheet Exposure, whichever is
higher.
Are educational loans classified as priority sector loans?
Loans to individuals for educational purposes including vocational
Model Test
29.
A:
i)
ii)
b)
c)
30.
A:
31.
A:
courses up to Rs.10 lakh irrespective of the sanctioned amount will

be considered as eligible for priority sector.
What are the present stipulations for treating Home Loans under
priority sector?
(i) Loans to individuals up to Rs.28 lakh in metropolitan centres
(with population of ten lakh and above) and loans up to Rs.20 lakh
in other centres for purchase/construction of a dwelling unit per
family provided the overall cost of the dwelling unit in the
metropolitan centre and at other centres should not exceed Rs.35
lakh and Rs.25 lakh respectively. The housing loans to banks own
employees will be excluded.
Loan amount
(Maximum)
Rs.28 lacs
Cost of
the dwelling unit
Rs.35 lacs
Metropolitan Centres
(pop: 10 lacs and above)
Other Centres
Rs.20 lacs
Rs.25 lacs
a) Repairs to damaged
Dwelling units
Metropolitan
Rs.5 lacs
Other centres
Rs.2 lacs
Loans to Govt agency
Rs.10 lacs per
For construction of
dwelling unit Dwelling units /
Slum clearance
Housing projects exclusively Rs.10 lacs per
for the purpose of houses for dwelling unit
economically weaker sections /
low income group
(EWS means family income not exceeding Rs.2 lacs p a)
Are advances for social infrastructure classified as priority sector?

Bank loans up to a limit of Rs.5 crore per borrower for building
social infrastructure for activities namely schools, health care
facilities, drinking water facilities and sanitation facilities in Tier II
to Tier VI centres.
Are advances for renewal energy production classified as PS?
Bank loans up to a limit of Rs.15 crore to borrowers for purposes
like solar based power generators, biomass based power generators,
wind mills, micro-hydel plants and for nonconventional energy
based public utilities viz. street lighting systems, and remote village
85
electrification. For individual households, the loan limit will be

Rs.10 lakh per borrower.
32. What are the criteria for classifying loans to SHG / JLG as PS
advance?
A: a) Loans up to Rs.50,000/- per borrower provided directly by banks
to individuals and their SHG/JLG.
b) The individual borrowers household annual income in rural
areas does not exceed Rs.100,000/- and in non-rural areas
Rs.1,60,000/-.
33. Up to what limit loans to distressed formers is classified as PS
advance?
A: Up to Rs.1 lac per borrower to prepay their debt to non-institutional
lenders.
34. What are the criteria for classifying loans under PMJDY as PS
advance?
A: a) Overdrafts extended by banks up to Rs.5,000/- under Pradhan
Mantri Jan-Dhan Yojana (PMJDY) accounts.
b) The borrowers household annual income does not exceed Rs.100,
000/- for rural areas and Rs.1,60,000/- for non-rural areas.
35. How many types of advances are classified as weaker section
advances? What are they?
A: 12. They are:
No. Category
1.
Small and Marginal Farmers
2.
Artisans, village and cottage industries where individual credit
limits do not exceed Rs.1 lakh
3.
Beneficiaries under Government Sponsored Schemes such as
National Rural Livelihoods Mission (NRLM), National Urban
Livelihood Mission (NULM) and Self Employment Scheme for
Rehabilitation of Manual Scavengers (SRMS)
4.
Scheduled Castes and Scheduled Tribes
5.
Beneficiaries of Differential Rate of Interest (DRI) scheme
6.
Self Help Groups
7.
Distressed farmers indebted to non-institutional lenders
8.
Distressed persons other than farmers, with loan amount not
exceeding Rs.1 lakh per borrower to prepay their debt to noninstitutional lenders
9.
Individual women beneficiaries up to Rs.1 lakh per borrower
10. Persons with disabilities
11. Overdrafts up to Rs.5,000/- under Pradhan Mantri Jan-DhanYojana
86
Model Test
(PMJDY) accounts, provided the borrowers household annual

income does not exceed Rs.100,000/- for rural areas and
Rs.1,60,000/- for non-rural areas
12. Minority communities as may be notified by Government of India
from time to time
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Category
Small and Marginal Farmers
Artisans, village and cottage industries where individual
credit limits do not exceed Rs.1 lakh
Beneficiaries under Government Sponsored Schemes such as
National Rural Livelihoods Mission (NRLM), National Urban
Livelihood Mission (NULM) and Self Employment Scheme for
Rehabilitation of Manual Scavengers (SRMS)
Scheduled Castes and Scheduled Tribes
Beneficiaries of Differential Rate of Interest (DRI) scheme
Self Help Groups
Distressed farmers indebted to non-institutional lenders
Distressed persons other than farmers, with loan amount not
exceeding Rs.1 lakh per borrower to prepay their debt to noninstitutional lenders
Individual women beneficiaries up to Rs.1 lakh per borrower
Persons with disabilities
Overdrafts up to Rs.5,000/- under Pradhan Mantri JanDhanYojana (PMJDY) accounts, provided the borrowers
household annual income does not exceed Rs.100,000/- for
rural areas and Rs.1,60,000/- for non-rural areas
Minority communities as may be notified by Government of
India from time to time
36. Are investments in securitised assets classified as PS advance?

A: (i) Investments by banks in securitised assets, representing loans
to various categories of priority sector, except others category,
are eligible for classification under respective categories of
priority sector depending on the underlying assets provided:
(a) the securitised assets are originated by banks and financial
institutions and are eligible to be classified as priority sector
advances prior to securitisation and fulfil the Reserve Bank of
India guidelines on securitisation.
(b) the all inclusive interest charged to the ultimate borrower by
the originating entity should not exceed the Base Rate of the
investing bank plus 8 percent per annum.
87
37.
A:
38.
A:
88
The investments in securitised assets originated by MFIs, which

comply with the guidelines in this regard are exempted from this
interest cap as there are separate caps on margin and interest rate.
(ii) Investments made by banks in securitised assets originated by
NBFCs, where the underlying assets are loans against gold
jewellery, are not eligible for priority sector status.
A bank has acquired assets through Direct Assignment and Outright
purchase? Are they classified as PS advance?
Assignments/Outright purchases of pool of assets by banks
representing loans under various categories of priority sector,
except the others category, will be eligible for classification under
respective categories of priority sector provided:
(a) the assets are originated by banks and financial institutions
which are eligible to be classified as priority sector advances
prior to the purchase and fulfil the Reserve Bank of India
guidelines on outright purchase/assignment.
(b) the eligible loan assets so purchased should not be disposed
of other than by way of repayment.
(c) the all inclusive interest charged to the ultimate borrower by
the originating entity should not exceed the Base Rate of the
purchasing bank plus 8 percent per annum.
The Assignments/Outright purchases of eligible priority sector
loans from MFIs, which comply with the guidelines in this regard
are exempted from this interest rate cap as there are separate caps
on margin and interest rate.
(ii) When the banks undertake outright purchase of loan assets
from banks/ financial institutions to be classified under priority
sector, they must report the nominal amount actually
disbursed to end priority sector borrowers and not the premium
embedded amount paid to the sellers.
(iii) Purchase/ assignment/investment transactions undertaken
by banks with NBFCs, where the underlying assets are loans
against gold jewellery, are not eligible for priority sector status.
Are Inter Bank Participation certificates bought by banks classified
as PS advance?
Inter Bank Participation Certificates (IBPCs) bought by banks, on a
risk sharing basis, are eligible for classification under respective
categories of priority sector, provided the underlying assets are
eligible to be categorized under the respective categories of priority
sector and the banks fulfil the Reserve Bank of India guidelines on
IBPCs.
Model Test
39. RBI has proposed that Priority Sector Lending Certificates may be
issued by banks? Will these certificates be classified as PS advance?
A: The outstanding priority sector lending certificates (after the
guidelines are issued in this regard by the Reserve Bank of India)
bought by the banks will be eligible for classification under
respective categories of priority sector provided the assets are
originated by banks, and are eligible to be classified as priority
sector advances and fulfil the Reserve Bank of India guidelines on
priority sector lending certificates.
40. Are bank loans to MFIs classified as PS advances?
A: Yes.
(a) Bank credit to MFIs extended for on-lending to individuals
and also to members of SHGs /JLGs will be eligible for
categorisation as priority sector advance under respective
categories viz., Agriculture, Micro, Small and Medium
Enterprises, and Others, as indirect finance, provided not
less than 85 percent of total assets of MFI (other than cash,
balances with banks and financial institutions, government
securities and money market instruments) are in the nature of
qualifying assets. In addition, aggregate amount of loan,
extended for income generating activity, should be not less
than 50 percent of the total loans given by MFIs.
(b) A qualifying asset shall mean a loan disbursed by MFI,
which satisfies the following criteria:
(i) The loan is to be extended to a borrower whose household
annual income in rural areas does not exceed
1,00,000/- while for non-rural areas it should not exceed
1,60,000/-.
(ii) Loan does not exceed 60,000/- in the first cycle and
100,000/- in the subsequent cycles.
(iii) Total indebtedness of the borrower does not exceed
1,00,000/-.
(iv) Tenure of loan is not less than 24 months when loan
amount exceeds 15,000/- with right to borrower of
prepayment without penalty.
(v) The loan is without collateral.
(vi) Loan is repayable by weekly, fortnightly or monthly
installments at the choice of the borrower.
(c) Further, the banks have to ensure that MFIs comply with the
following caps on margin and interest rate as also other
pricing guidelines, to be eligible to classify these loans as
priority sector loans.
89
(i)
41.
A:
42.
A:
90
Margin cap: The margin cap should not exceed 10 percent

for MFIs having loan portfolio exceeding 100 crore and
12 percent for others. The interest cost is to be calculated
on average fortnightly balances of outstanding
borrowings and interest income is to be calculated on
average fortnightly balances of outstanding loan
portfolio of qualifying assets.
(ii) Interest cap on individual loans: With effect from April 1,
2014, interest rate on individual loans will be the average
Base Rate of five largest commercial banks by assets
multiplied by 2.75 per annum or cost of funds plus margin
cap, whichever is less. The average of the Base Rate shall
be advised by Reserve Bank of India.
(iii) Only three components are to be included in pricing of
loans viz., (a) a processing fee notexceeding 1 percent of
the gross loan amount, (b) the interest charge and (c) the
insurance premium.
(iv) The processing fee is not to be included in the margin cap
or the interest cap.
(v) Only the actual cost of insurance i.e. actual cost of group
insurance for life, health and livestock for borrower and
spouse can be recovered; administrative charges may be
recovered as per IRDA guidelines.
(vi) There should not be any penalty for delayed payment.
(vii) No Security Deposit/ Margin are to be taken.
(d) The banks should obtain from MFI, at the end of each quarter,
a Chartered Accountants Certificate stating, inter-alia, that
the criteria on (i) qualifying assets, (ii) the aggregate amount of
loan, extended for income generation activity, and (iii) pricing
guidelines are followed.
What is the periodicity of monitoring of PS lending targets by RBI?
Quarterly Hitherto, it was annual. Data on PS advances have to be
furnished by banks at quarterly and annual intervals to RBI.
To ensure continuous flow of credit to priority sector, there will be
more frequent monitoring of priority sector lending compliance of
banks on quarterly basis instead of annual basis as of now.
The data on priority sector advances have to be furnished by banks
at quarterly and annual intervals as per revised reporting formats,
the guidelines for which will be issued separately.
What are the stipulations of RBI if a bank does not achieve PS target?
Scheduled Commercial Banks having any shortfall in lending to
priority sector shall be allocated amounts for contribution to the
Model Test
Rural Infrastructure Development Fund (RIDF) established with

NABARD and other Funds with NABARD/NHB/SIDBI, as decided
by the Reserve Bank from time to time.
Non-achievement of priority sector targets and sub-targets will be
taken into account while granting regulatory clearances/
approvals for various purposes.
43. No service charge / inspection charge should be revised on PS loans
up to Rs._______.
A: Rs.25,000/44. Are contingent liabilities / off balance sheet items reckoned for PS
target achievement?
A: Contingent liabilities/off-balance sheet items do not form part of
priority sector target achievement. However, foreign banks with less
than 20 branches have an option to reckon the credit equivalent of
off-balance sheet items, extended to borrowers for eligible priority
sector activities, along with priority sector loans for the purpose of
computation of priority sector target achievement. In that case, the
credit equivalent of all off-balance sheet items (both priority sector
and non-priority sector excluding interbank) should be added to
the ANBC in the denominator for computation of Priority Sector
Lending targets.
45. What items are included in the concept of all inclusive interest?
A: The term all inclusive interest includes interest (effective annual
interest), processing fees and service charges.
91
Model Test-I (for STP aspirants)

(MM II Confirmation Exam)
Part A: Objective Questions
Time: 1 hours
Marks: 100
Development Banking
1.
Scheme of financing SHG members in rural areas for on lending for
housing is
a) Gruha Nivas
b) Sahayog Nivas
c) Apna Ghar
d) None of these
2.
PMJDY Relates to :
a) IRDP
b) Deposit Mobilisation
c) NRLM
d) Financial Inclusion
3.
Maximum finance for SHG credit card:
a) Rs.1 lac
b) Rs.5 lacs
c) 4 times of the corpus of the SHG
d) Rs.10 lacs
4.
If a student has not completed his course within time, Education
loan can be extended by another .. months
a) 6
b) 12
c) 24
d) 36
5.
Processing fees are not applicable to:
a) SME loans
b) Education Loans
c) Car loans
d) Corporate loans
6.
Max amount in Artisan Credit Card is:
a) Rs.2.00 lacs
b) Rs.3 lacs
c) Rs.4 lacs
d) Rs. 5lacs
7.
RENT Plus scheme in SME segment is replaced with..
a) SME Rent Plus
b) Lease Rental Discounting Scheme
c) Advance rent
d) None of the above
8.
Which Committee recommended SHGs?
(a)Kalia Committee
(b) Ojha Committee
(c) None of these
9.
Which one of the following is TRUE regarding eligibility of DAL
MILL PLUS ?
a) Units should be SB 9 and above b) Unit must be profit making
c) Margin for Term loan is 15% -25 %
d) All the above
10. CERSAI is established under which Act?
a) RBI Act b) BR Act
c) SARFAESI Act
d) Transfer of Property Act
11. Under Stree shakti tractor loan (SSTL) minimum agriculture land
holding required is.
a) 5 Acres b) 4 Acres
c) 3 Acres
d) 2Acres
92
Model Test
12. Nature of facility available under GCC is

(a) W.C
(b) T.L (c) a & b
(d) None of these
13. In case of modified new Tractor loan scheme, acceptable DSCR
is.
a) 1.33
b) 1.5
c) 1.75
d) 2
14. BSBA (Basics Savings Bank Accounts) under PMJDY are :
a) Not KYC Compliant
b) KYC Compliant
15. DSCR is calculated to find out
a) Profitability of the unit
b) Ascertain repaying capability of T/L
c) Assess Working Capital Requirement
16. BEP helps to arrive at:
a) T/L instalments b) amount of T/L
c) Moratorium period
d) None of these
17. Eligibility criteria for availing finance under SBI Fleet Finance scheme
is..
a) Must be having 10 vehicles
b) Minimum amount should be
Rs. 50 lacs
c) Must have National or State Permit
d) All of these
18. For Education Loans Service area approach is .?
a) Applicable
b) Not applicable
19. Maximum amount of loan under SBI Collateral free loan is ?
a) Rs. 25 lacs
b) Rs.50 lacs
c) Rs.75 lacs
d) Rs.100 lacs, if the borrower is agreeable to pay the guarantee fee.
20. Which one of the following is correct regarding PMJDY?
(a)If a person is already having a Bank A/C, he can open a new
Bank A/C in another Bank
(b)Existing A/C will be converted into PMJDY A/ C
(c) New A/C cant be opened, but credit facilities and Rupay card
can be given for the existing account
21. A small farmer is one who owns
a) up to 5 acres of dry land
b) up to 2.5 acres of wet land
c) More than 5 acres of dry land
d) a or b.
22. Average Quarterly balance required in Power Pack A/C is Rs..
lacs
a) Rs.2
b) 3
c) 5
d) 10
23. Satisfaction of charge has to be registered with the Registrar of
companies as per Companies Act 2013 through filing in form
No_______
a) CHG - 1
b) CHG - 2
c) CHG 4
d) None of these
93
24.
What is the capital subsidy eligible from NABARD under SURYA

KIRAN scheme for financing purchase of solar photo voltaic home
lighting system?
a) 10%
b) 20 %
c) 30%
d) 50%
25. PMJDY customers are protected by PAI up to an amount of Rs.
a) 100,000
b) 1,50,000
c) 30,000
d) None pf these
26. Guaranteed portion of CGTMSE guaranteed accounts would attract
a risk weightage of
a) 50 %
b) Zero
c) 100%
d) None of these
27. Under CGTMSE , the Lock in Period for submitting the claim is
a) 24 months from the date of account becoming NPA
b) 24 months from the date of sanction
c) 24 months from the date of joining the trust
d) 18 months from the date of payment of guarantee fee
28. A Small Manufacturing Enterprise is one , wherein investment in
Plant & Machinery is
a) between Rs. 25 lacs and Rs. 5 Cr
b) between Rs. 10 lacs and Rs. 2 Cr
c) up to Rs. 10 Cr
d) None of these
29. The penalty for delay in payment of bills to MSMEs for period beyond
45 days is
a) 3 times the Bank rate
b) 2 times the Bank Rate
c) 20%P.A
d) None of these
30. The family income limit for financing under the Scheme for financing
SHGs of scheduled tribes is
a)Rs.81,000 p.a in Rural Areas
b) Rs.1,04,000 p.a in urban areas
c) None of these
d) both a & b
Technology:
1.
What is the expansion of IFM?
2.
ATM cards are issued to visually impaired persons as under:
a) Account to be opened in the joint names of the visually impaired
customer and normal person and card is issued to the normal
person
b) Card is not issued
c)
Card can be issued in the sole name of the visually impaired
customer
3.
Disaster Recovery Plan and BCP to be approved by the controller
every year by
94
Model Test
a) 10th of January
b) 31st January
st
c) 31 December
d) By 31st March
4.
Chief Information Security Officer (CISO) is stationed at
a) SBIICM b) GITC, Belapur
c) Corporate Centre HQ d) Chennai
5.
CRA is maintained in module.
a) CC/OD b) Loan Tracking
c) DL/TL d) None of these
6.
Gift Card can be issued to:
a) Account holder b) Non Account holder
c) either a or b
d) None of these
7.
SBI Classic debit card is valid for
a) 5 years b) up to 2049 c) 20 years
d) up to Nov 2022
8.
Validity period of Virtual card is :
a) 48 hours
b) 24 hours
c) 36 hours
9.
Pre-printed Kit (PPK) contains?
a) User id b) Password
c) Both a&b
d) none of the these
10. Disaster recovery site of CTS system is at:
a) Chennaib) Hyderabad c) Mumbai
d) Kolkata
11. Letters of Credits are opened in which module?
a) Loan Tracking Module b) Contingent Accounts Module
c) LoaCC/OD Module
d) DL/TL Module
12. Automated Pass book printing facility of the Bank is known as
a) Swayam
b) Selfie
c) Kiosk
d) DBO
13. The Central server at CDC is known as
a) Tandem
b) Cyrus
c) HP Super Dome
d) Param
14 . Capability depends on
a)User Type
b)Capability level
c) Transaction group
d) All of these
15. Core activities of CBS are operations relating to
a) Savings Bank/Current Accounts
b) Issue & Payment of Drafts/Bankers Cheque
c)Term deposits
d) All of these
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Personal Banking
1.
What is the product type of SBI FLEXI Deposit scheme?
a) TDR
b) STDR
c) RD d) None of these
2.
For opening an account RBIs permission is NOT required for
nationals of which of the following countries?
a) Sri Lanka
b) Bangladesh c) Bhutan
d) Nepal
e) All of these
15.
16.
95
96
If PAN is not furnished, TDS will be deducted at the rate of

a) 8%
b) 10%
c) 15% d) 20%
For verification of validity of TDS Certificate, which form can be
available with I.TAX dept.?
a) 24 AS b) 25 AS
c) 26 ASd) 37 AS
Capital Gains A/Cs are regulated by
a) RBI
b) Sub Registrar
c) IT Dept
In YUVA SB A/C free collection of one cheque can be done in a
month upto Rs..
(a)50,000 (b)40,000
(c)30,000
(d) 20, 000
Home Loan may be sanctioned for reimbursement of investment
made by the borrower in house from own resources during the
preceding months with minimum margin of 25%.
(a) 12
(b)6
(c) 18
(d) 24
What is the MAX loan amount that can be sanctioned under
Xpress credit?
a) Rs. 10 lacs
b) Rs. 15 lacs
c) Rs.20lacs
d) Rs.25 lacs
What is the minimum balance required in Premium Savings
Account?
a) Rs.5000 b) Rs.10,000
c) Rs.25,000
d) Rs.50,000
What amount is loadable and reloadable in Foreign Travel card?
a) USD100
b) USD150
c) USD200
d) USD250
Under Corporate Salary Account, what is the min gross monthly
salary per account?
(a)5000
(b) NIL
(c)2000
(d)1000
Limitation period starts in SB & CA A/Cs from which date?
(a)Last Cr.
(b)Last Dr.
(c)last txn.
(d) from the date of demand
While Opening SB Account Online KYC documents to be submitted
with in
(a) 7 days
(b) 15 days
(c) 30 days
(d) 45 days
How many accounts can be mapped through Mobile banking
service?
a) 3
b) 4
c) 5
d) 6
Under Scholar loan for admission in list A A colleges the loan
eligibility without collateral security is Rs._____
a)Rs. 10lacs b) Rs. 15lacs
c) Rs,30lacs d) None of these
Branches can now transfer an SB account to another branch based
on a self-declaration from the account holder about his/her current
address and he / she has to submit proof of address within a period
Model Test
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
of
a.
6months
b) 3 months
c) one month d) none of these
Number of Digits in PPK is
a.
16
b) 14
c) 12
d) 10
The Green Remit Card (GRC) is meant for
a) Home branch customers
b) Non Home branch customers
c) both a&b
d) none of these
SBI MMID: (Mobile Money Identification) prefix is
a) 9000
b) Rs9001
c) 9002
d) 9003
What documents are required for settlement of missing persons for
minimum 1 year and claims up to Rs.1.00 lakh?
a) FIR
b) Non-traceable Report by Police
c) Indemnity from the claimant
d) All of these
RBI has recently increased the limit of Prepaid cards from Rs. 50,000
to Rs..
a) 75,000
b) 100,000
c) 150,000
d) 200,000
Minimum NMI under SBI Saral scheme is
a) Rs.2500
b) Rs.3000
c) Rs.5000
d) Rs.10000
Max loan in Home Equity Scheme is . % of the valuation less
present o/s in home loan
a) 75
b)85
c) 90
d) 95
Who is the natural Guardian of Mohammedan boy, whose father
has expired?
(a) mother
(b)mothers father
(c)uncle
(d) fathers father
While sanctioning a Car Loan, Minimum repayment period should
be
a) 3 years
b) 2 years
c)1 Year
d) None of these
After the death of the depositor in a E or S account whether a loan
can be sanctioned against the deposit?
a) Can not be sanctioned
b) Can be sanctioned
The minimum loan amount under Housing loans to NRIs is
a)Rs. 1 lac
b) Rs. 3 lacs
c) Rs. 5 lacs
d)Rs. 10 lacs
Cap on the balance in Phele Kadam /Udaan is.for account &
for CIF
a) Rs.2lacs & Rs. 5 lacs
b) Rs. 5lacs & Rs. 5 lacs
c) Rs. 5lacs & 10 lacs
d) Rs. 5lacs & 15 lacs
Due diligence in respect of High risk account have to be done at the
interval of
a)10Years b)8 Years
c)5 years
d) 2 Years
97
30.
Disbursement to legal heirs in respect of Deceased Accounts

settlement can be made through
a) draft
b) Credit to Account
c) RTGS/NEFT
d) All of these
C&I Banking
1.
Recently Govt withdrew 20:80 scheme on import of
a) Crude Oil
b) Gold
c) Silver d) None of these
2.
Allowing all credits and disallowing all debits with the freedom to
close the accounts is known as
a) Freezingb) Partial freezing
c) blocking d) None of these
3.
Capital Goods in progress defined in Balance Sheet as
(a) Current Asset (b) Fixed Asset (c) Non Current Asset
(d) Tangible Asset
4. Stock Audit is entered through which module in CBS?
a) Contingent Accounts Module
b) CC/OD Module
c) Loan Tracking Module
d) DL/TL Module
5.
Which Rating Ageny works under RBI?
a) CAMELS
b) CAMEL
c) ICRA
d) None of these
6.
Credit Rating Agencies are regulated by
a) SIDBI b) RBI
c) SEBI
d) Finance Ministry
7.
Under hire purchase system the buyer becomes the owner of goods
a)Immediately after delivery
b) Immediately after down payment
c) Immediately after the payment of last instalment
d) None of these
8.
Special Mention Account in advances is when:
a) The account is irregular for non payment of interest for 30 days
b) The interest and/or instalment has not been serviced beyond 30
days
c) The account is not in default but has shown early warning signals
d) All of these
9.
Minimum period for which WCDL can be sanctioned is..
a) 90 days b) 60 days
c) 45 days
d) 30 days (except for oil cos)
10. Margin stipulated for working capital limit for software activities
is
a) 25%
b) 30%
c) 35%
d) None of these
11. Early sanction Review is required to be made for SME loans of
Rs._______ cr to _______cr
a) Rs. 2 Cr to 5 Cr
b) Rs. 5 Cr to 10 cr
98
Model Test
c)
Rs. 10 Cr to 25 Cr
d) Rs. 1 Cr to 5 cr
12. Premium received on issue of shares is shown in ..
a) Liability side of B/S b) Asset side of B/S
c)
Debit side of P&L
13. For Capital adequacy purposes all Guarantees attract Credit
conversion factor as under
a)100% for All Financial Guarantees
b) 50% for Performance Guarantees
c) Both a&b
d) None of these
14. Simplified Model of CRA is applicable for units requiring credit
limits
a) between Rs. 25 lacs to 5 Crs
b) between Rs. 25 lacs to 2 Crs
c)Up to Rs. 10 Cr
d) None of these
15. Under Credit Rating Assessment system Borrower rating is required
to be rated
a) Half yearly
b) Yearly
c)Once in 2 Years
d) None of these
General Banking :
1.
NGOs/NPOs promoted by UN come under which risk category
a) Low Risk
b) High Risk
c) Medium Risk
2.
Paid up capital for payment banks and small Banks is
a) Rs.500 Cr
b) Rs. 200 Cr c) Rs.150 Cr
d) Rs. 100 Cr
3.
Ea adhaar Card verification is done through.
a) PMO Sectt
b) CDC
c) UIDAI
d) RBI site
4.
ECB proceeds can now be kept as Term deposit in AD-1 category
banks up to a max period of
a) 6months
b) 9 months
c) 12 months d) 24 months
5.
Capital Market is controlled by
a) RBI
b) GOI
c) SIDBI
d) SEBI
6.
Prohibition of creating charge on uncalled capital(No Banking
Company shall create any charge upon any uncalled capital) of the
company is dealt under
a) Sec 14 of BR Act
b) Sec 37 of RBI ACt
c) Companies Act
d) None of the these
7.
M3 is known as
a) Broad Money
b) Quick Money c) Short Money
d) none of these
8.
The Vigilance week , is observed in :.
a) Ist week of November
b) Ist week of August
c)Last week of August
d) Last week of November
99
9.
23.
Preventive Vigilance Committees are to be formed at branches

having staff strength of :
a) 10 & more
b) 20 & more c) 25 & More
d) 50 & More
To disclose matters of public interest suspected or alleged
wrongdoing that affects more than the personal or private interests
of the person making the disclosure is known as
a) PIL
b) Ombudsman c) Solicitor d) Whistle blower
The testing of fugitive ink / water droplet test must be carried
before payment of cheques for value.. & above.
a) Rs.100000
b) Rs.50,000
c) Rs.25,000
d) Rs.10,000
Max deposit permissible under SBI Tax Savings Scheme is(in
2014-15)
a) Rs.1,50,000
b) Rs.100,000 c) Rs.75,000
d) Rs.50,000
Duplicate branch keys, when withdrawn to be re-deposited
a) whenever convenient
b) with in 24 hours
c) Next day
d) Same day before the closing of banking hours
For getting exemption from I.TAX form 15H/G should be
submitted to I. TAX dept. before of next month
a) 30th
b) 15th
c) 10th d) 7th
FCNR (B) can be opened in how many currencies?
a) 10
b) 8
c) 6
d) 4
eZ Card is
a) Credit Card
b) Debit Card c) Pre paid card
d) None of these
Senior Citizens get special interest rate in INB opened accounts as
per
a) Declaration from the customer b) DOB entered in CBS
c) both a &b
d) none of these
Max limit of SBI Scholar loan without collateral is Rs.
lacs for A listed colleges.
a) 4
b) 7.5 c) 10
d) 20
Max period for which LC can be issued?
a) 24 months b) 18 months c) 12 months d) none of thse
If payment through Western Union Money Transfer exceeds Rs.
., it should be credited to A/C.from:
a) 100,000 b) Rs.75,000
c) Rs.50001
d) 50,000
Banking Ombudsman can award max compensation of :
a) Rs.10 lacs
b) Rs.20 lacs
c) Rs.30 lacs
d) Rs. 50 lacs
In PPF A/Cs how many instalments can be made in a finnacial
year?
a) 6
b) 8
c) 10
d) 12
Customer day is celeberated every month on which date ?
100
Model Test
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
a) 5th & 25th

b) 10th & 25th
c) 15th & 25th
d) None of these
24. NOFHC stands for
25. Which among the following is not a profitability ratio?
a) GRR
b) ROE
c)
ROA
d) CAR
26. A power of Attorney Holder can
a) Only operate the Locker b) Surrender the Locker c)Both a & b
d) None of these
27. For Sole proprietary concerns KYC is required to be done
a) KYC as Individual
b) KYC as proprietor
c)
either a or b d)both a&b
28. In case of Defence employees the Home Loan documents can be
signed by
a) Power of Attorney Holder
b) Spouse
c)
either of parents
d) None of these
29. Maximum Loan for a pensioners who are up to 72 years of age is
a) Rs.5 lacs
b) Rs.10 lacs
c) Rs.14 lacs
d) None of these
30. Fee payable to Home Loan counsellors for loans below Rs.50 lacs
is_______.
a) 0.30% of loan amount
b) 0.25% of the loan amount
c) 0.10% of the loan amount
d) None of these
General Awareness:
1.
The national calendar is based on: :
a) Gregorian Calendar
b) Julian Calendar
c) Saka Samvat
d) Vikram Samvat
2.
Top up loan product for the existing home loan borrowers in State
Bank of Hydrabad is:
a) SBH money
b) Financial Hub
c) SBH Top Up
d) SBH Home Cash
3.
Banks maintain by way of cash, a percentage of demand and time
liability with RBI, it is known as.
a) SLR
b) GRR
c) CRR d) None of these
4.
What is the entry level max age limit in critical illness insurance
of SBI General?
(a)70 yr
(b)65 yr
(c)60 yr
(d)55 yr
5.
Which is not used by RBI to control liquidity?
(a)Exchange Rate (b) SLR
(c)Bank Rate
(d)CRR
6.
If another Bank sends us cheque for collection, what is the % share
of commission for us?
(a) NIL
(b) 10%
(c)25%
(d)50%
101
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
(a)
102
What is the total number of branches of SBI including foreign offices

as on 31.12.2014?
a) 16816
b) 16206
c) 15916
d) 15902
What is the Paid up capital of State Bank of India as on 31.12.2014?
a) Rs.671 crore
b) Rs.746.57 Crore
c) Rs.684 crore
d) Rs.694 crore
A contract that grants the holder the right to buy/sell but not the
obligation:
a) Option
b) Contract
c) Option Contract
d) None of these
The vice-chairman of NITI-Ayog is ________
(a) Arvind Subramanian
(b) Arvind Panagariya
(c) Rajiv Mehrishi
(d) None of these
SBI has started General Insurance business with which of the
following foreign partner?
a) IAG, Australia
b) Cardiff SA of France
c) Aviva Insurance
d) Lombard
What is the NIM of SBI as on 31.12.2014?
a) 3.50%b) 3.85%
c) 3.66%
d) 3.33%
Who is the Chairman of IBA?
a) S.S.Mundra
b) K.R.Kamath c) T.M.Bhasin
d) Arundathi Bhattacharya
The Chairman of SEBI is:
a) U.K. Sinha
b) Aravind Panagarya
c) Dr. Raghuram Rajan
d)MontekSingh Ahluwalia
Who is the Chairman of IRDA?
a) C.B.Bhave
b) Yogesh Aggrawal
c) Depak parekh
d) T.S.Vijayan
SBI(Subsidiary Banks) Act was enacted in the Year:
a) 1955
b) 1956
c) 1958
d) 1959
CRR is governed by which Act ?
a) BR Act
b) RBI Act c) NI Act d) None of these
Government of Indias stake in SBI is:
a) 61.58% b) 58.60%
c) 62.31%
d) 63.31%
Rupay Card is developed by
(a)CSDL
(b)NSDL
(c)NPCI (d) RBI
The transaction type R 41 in RTGS is what type of transaction?
(a) C to C
(b) Bto B
(c) Cto B
(d)B to C
PBBU does not cover the following business
Housing Loans
(b) Car Loans (c) Personal Loans
(d) None of these
Model Test
22. What is the instrument used by RBI under Liquidity Adjustment

Facility (LAF)?
a) Repo rate
b) Reverse repo rate
c) Bank Rate
d) a & b
23. A financial term that describes a financial institution that does not
have a physical presence in the country where incorporated:
a) Apex Bank b) Foreign Bank c) Shell Bank d) Core Bank
24. Limit of loan under 100 % earnest money deposit scheme of State
Bank of India.
a) Rs.1 lac
b) Rs.5lacs
c) Rs. 15lacs
d) Rs. 10 lacs
25. Micro units development refinance agency, Mudra Bank is being
set up with a corpus of Rs.
a)20,000 Cr b) Rs.15,000 Cr c) Rs. 10,000Cr d) Rs. 50000 Cr
26. In respect of accounts becoming NPA after the lock in period claim
is required to be submitted with in months from the date of
account becoming NPA
a) 18
b)24
c) 30
d)36
27. Recovery Monitoring Committee of the Central Board is headed by
a) RBI Nominee
b) GOI Nomineec) Chairman
d) MD(CBG)
28. SARB branches will report to
a) DGM (B&O)
b) GM(SAMRO)
c) DGM SAM Br
d) DGM(SARB at SAMRO)
29. Chief Economic Advisor to Prime Minister is
a) Kaushik Basu b)Arvind Subramanian c)Arvind Panagariya
d) Jagdish. Shettigar
30. Central Management Committee of the Bank comprises of
a) Chairman & MDs
b)
All the Banks DMDS
c)
All the DMDS who are heads of Business Groups
d) a & b
ANSWERS : Part A: Objective Questions
Development Banking:
1b
2d
3c
4b
5b
6a
7b
8a
9d
10 c
11 d
12 c
13 b
14 b
15 b
16 c
17 d
18 b
19 d
20 c
21d
22 c
23 c
103
24 c
25 a
26 b
27 d
28 a
29 a
30 d
Technology:
1 Integrated
Module
2c
3a
4b
5b
6c
7c
8a
9c
10 b
11 b
12 a
13 c
14d
15 d
15 c
16 a
17 d
18 b
19 c
20 d
21b
22 c
Forex 23 a
24 d
25 d
26 a
27 b
28 c
29 d
30 d
Personal Banking:
1c
2e
3d
4c
5c
6d
7a
8b
9c
10 c
11 a
12d
13 c
14 c
104
Model Test
C&I Banking
1b
2b
3b
4d
5d
6c
7c
8d
9d
10 c
11 d
12 a
13 c
14a
15 b
General Banking
1a
2d
3c
4a
5d
6a
7a
8a
9a
10 d
11 c
12 a
13 d
14 d
15 c
16 c
17 b
18 d
19 c
20 d
21 a
22 d
23c
24 Non-Operating
Financial Holding
Company
25 d
26 a
27 c
28 a
29 c
30 b
General Awareness
1c
2d
3c
4b
5a
6d
7b
8b
9c
10 b
11 a
12 a
13 c
14 a
15 d
16 d
17 b
18 b
19 c
20 a
21 a
22 d
23 c
24 d
25 a
26 b
27 c
28 d
29 b
30d
J S INSTITUTE OF BANKING AND FINANCE, BANGALORE
DESCRIPTIVE QUESTIONS:
I:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
II.
1.
2.
3.
4.
Rationale:
Cluster financing of SMEs should be given importance.
Moratorium period is given for repayment of term loans.
Current Ratio is considered as one of the important ratios.
Expired L/C & BGs should be reversed.
Balance in liberalised KYC accounts should not, at any point of
time exceed Rs.50,000/-.
The Bank should focus on Net Interest Margin.
Repo rate has been reduced in two stages from 8% to 7.5% by RBI.
Vehicle financed by the Bank is insured in the name of the borrower
only.
The Bank has introduced Krishi Kalyan Yojana.
SME Asset Backed Loan has been introduced.
Situation Analysis:A good customer of your bank has issued a cheque for the payment
of insurance premium for Rs.9417/-. Your bank wrongly dishonours
his cheque. The cheque was returned to the customer. But he is out
of station. When he returned he is informed by the insurance
company that his policy has expired. He files a case in the Consumer
Forum and claims damages. The staff concerned is in for trouble.
Are there any chances of rectification of the mistake? Discuss.
Mr. X is having a current account with temporary OD for the last 4
years. Temporary OD facility has not been documented. Bank
returns a cheque of 5000/-, drawn by him without informing him.
He threatens the Bank with legal action. Discuss.
Mrs. X has a TDR for Rs. 10 lakhs. She has availed a Demand Loan
on the TDR. She requests you to include the name of her son M
who is a minor, in the TDR. Discuss how you will help her.
Mr. Bansal, a safe deposit locker customer went to a foreign country.
The safe deposit locker is a joint account with his wife Mrs. Bansal
with E or S operation. The key has been lost by Mrs. Bansal and she
has approached the branch with a request to break open the locker
and give the ornaments to her because she has to attend a very close
relatives marriage. What will you do?
III. Communication:
1.
Write a letter to your Regional Manager requesting posting of one
more award staff for your branch.
105
106
Model Test
IV. Comprehension:
1.
Cash Deposit Machine (CDM)
As a part of enhancing customer convenience and providing a 24 x 7
channel of customer service, Cash Deposit Machines (CDM) are
introduced by State Bank of India. Apart from enhancing customer comfort,
this has also reduced deployment of branch resources on low value cash
deposit transactions and has enabled the Bank in utilizing the resources
for up-selling and cross-selling of other products.
Cash Deposit Machine is a cash-in kiosk that allows a customer to
deposit loose bank notes. Banks customers who own any variant of
ATM-cum-Debit Card and SME Insta Deposit Cards are allowed to deposit
the cash to their mapped account(s). The deposit of Cash is through a
bunch of loose notes up to a maximum of 200 pieces at any one instance
(50 pieces in case of certain CDMs). The machine scans for quality
(genuineness) and quantity (counts Note piece by piece) of notes
deposited. Customer is allowed to deposit up to a maximum of Rs.49900/
- per transaction. The machine accepts cash in denominations of Rs.1000/
-, Rs.500/- and Rs.100/- notes only. The Cash deposited through this
machine is credited to the customers account immediately. The customer
will get an immediate response indicating the credit to the linked account
if the account to which the transaction is made is enabled with SMS
facility.
CDMs work on the sensor4 technology. Cash deposited are counted,
authenticated and the quantity and value are displayed to the customers.
Once the customer confirms that the quantity and value are correct, the
cash is sent to the vault / cash box, but if the customer cancels the
transaction, the cash is returned to him. The escrow facility provided
allows the customer to cross check his transaction before the notes reach
the vault / cash box. Suspect notes are detected by the CDM and are not
deposited. These are held in the machine in a separate box. The branches
will handle such notes as per extant instructions of the Bank in this
regard. Apart from depositing cash, the customers can also carry out
other functions like Balance Enquiry. Mini Statement and PIN Change.
The benefits of this initiative are being used as an USP for marketing
Banks liability products.
The joint custodians of the branch will be provided with a password to
operate the safe of CDMs. The collected notes in the cassettes will be
tallied with the number of notes for their quantity and value as printed
on the supervisory slip. As the customers accounts have been already
credited on a real time basis, the value of such cash will be debited to
107
branch cash balance account as in a normal manner. It is the responsibility

of the joint custodians to evacuate the cash at regular intervals during
the day to avoid overflowing of the cassettes resulting in the stoppage of
CDMs. In addition to ensuring that all such notes are accounted for before
EOD at the branch, the joint custodians should reconcile the physical
cash with supervisory slip and BGL account balance before accounting.
If any difference is observed, the same should be dealt with immediately.
If CDM detects any suspect note, the joint custodians will verify the
genuineness of the same. If in the process, any counterfeit note is found,
branches are advised to follow meticulously the instructions issued by
RBI on detection and impounding of counterfeit notes from time to time.
The recent one of such instructions is available in RBI/2012-13/104 DCM
(FNVD) No. G - /16.01.05/ 2012-13 dated July 2, 2012. In addition,
branches also maintain the records of such suspect transactions in the
register with the following information: Date of transaction, Transaction
reference number, Nature of suspect / remarks / action taken, Particulars
of tenderer (Name, a/c number with contact details), Denomination /
pieces / serial number. The Joint custodians will enter the above details
under their signature and the BM will initial.
With a view to ensuring adequate security & safety the following measures
need to be taken:
a) Two built-in cameras are installed in the CDM, that record all the
transactions and the identity of the person doing the transaction.
One is to record the customers and their movements and the other to
record the events in the cash box. This video can be used for resolving
any disputes at a future date.
b) The customer can be identified by his / her card number, time of
deposit, record of rejection (denomination) in the transaction log,
electronic Journal (eJ) report and the sequence in which such notes
are placed in the reject bin. The reject bin will contain only suspect
notes. Customer identification can be done with the help of face
image and hand movement which can be viewed in CDM.
c)
All the CDMs are adequately insured for the value of the asset and
also their contents.
d) Cash verification is done every quarter and CDM Cash verification
certificate is made as part of the quarterly / half yearly / yearly
closing exercises.
Questions:
1.
What are the objectives of introducing CDMs in the Bank?
2.
Who can deposit Cash in a CDM?
3.
What are the limitations for depositing Cash?
108
Model Test
4.
5.
6.
What is the process of depositing notes in a CDM?

How the Cash deposited in a CDM is handled at the Branch?
What Security measures have been incorporated for the safety &
security of the cash?
Answers to Descriptive Questions:

Rationale:
1.
Will help in increased market penetration. Market share will go up
significantly. Management of such advances will be cost-effective.
Units in a cluster are more stable and derive benefits of volume /
services required for such units.
2.
A unit requires adequate time for acquisition of land, construction
of factory building, erection of machinery and trial production. It
will work above the BEL (Break Even Level) only when it achieves
commercial production. Hence, during the construction period, no
repayment should be stipulated. Otherwise, the units working
capital a/c will become irregular. The projects require generally 12
to 24 months for achieving commercial level of operations. At this
level only, it can make profit and the repayment can commence.
3.
The units ability to meet its commitments as and when they arise
depends on the liquidity of the unit. Hence a comfortable liquidity
position of the unit provides a safe cushion to the Banks working
capital advances. A comfortable current ratio indicates sufficient
current assets with the unit to service its current liabilities; the unit
can carry on its commercial production smoothly in such a case; an
ideal current ratio would provide a good safety cushion for the
working capital advance.
4.
i)
If the expired guarantees are not removed from the books, it
will show inflated liability for the Bank.
ii) It is necessary to keep the contingent liability to the bearest
minimum as capital adequacy norms are applicable for the
guarantees.
iii) If the BG limit for a customer is exhausted on account of expired
BGs, the Bank will not be able to give further guarantees which
will result in loss of fee-income and customer dissatisfaction.
5.
i)
The restriction will prevent the account being used for money
laundering purposes by unscrupulous persons; also will curb
unaccounted moneys being put through the account.
ii) Will enable the common man (under privileged) to avail
banking facilities without much hassles, as their income will
be low and the ceiling will be sufficient to cover their needs.
109
iii)
6.
7.
8.
9.
10.
If customer needs higher balance, larger volume of transactions

the a/c can be converted into a full KYC-Complaint a/c.
The Business volume/mix will change from year to year but the
efficiency of operations will be judged by the Net Interest Margin in
our efforts to optimize yield on advances and minimize cost of
deposits for getting maximum margin. It will reveal the
intermediation efficiency of the bank. Presently, the economy is
experiencing a downswing. Interest rates are getting softened
putting pressure on the margins.
Repo rate is the rate at which RBI lends to banks against government
securities.
Decrease in repo rate will result in reduced cost of borrowings for
banks from RBI and this would result in banks charging reduced
interest rates to borrowers which would spur the credit off-take
from banks triggering the economic growth.
If the insurance is done in the joint names of the Bank and the
borrower, third party claims may be made against the Bank as a coowner in case of accidents. Also, the Bank Interest clause
incorporated in the policy is sufficient to protect the interest of the
Bank in case of damage to the vehicle.
a) To enable the farmer to get KCC and PML at one instance.
b) To avoid multiple appraisal, frequent visits to branch, repetitive
loan sanction and documentation etc.
c)
To ensure smooth flow of credit at RACPCs / Branches to
farmers.
It is a modification of SME Easy Loan Against Property; Drop-line
overdraft (combined OD & DL) facility is provided. The scheme
provides loans for those who are unable to furnish detailed financial
data, but are in a position to offer property as collateral. LTV ratio is
60% up to loan of Rs.10 Cr; and 50% for loans above Rs.10 Cr.
Earlier the loan was meant only for trading units and now it also
covers units under Manufacturing & Services sector.
Situation Analysis:1.
The bank is liable for wrongful dishonour of the cheque. Hence, the
bank should immediately contact the insurance company preferably
by deputing an official to explore the possibilities of revival of the
lapsed policy. Some Insurance companies offer such facilities. The
bank should bear the extra cost incurred for the purpose. After the
policy is revived the Bank should advise the customer in the matter
and persuade him to withdraw the case from the Consumer Forum.
110
Model Test
2.
3.
4.
The bank should ascertain the lapses on the part of staff and initiate
suitable action as appropriate to avoid recurrence of such incidents.
In the first instance, the Bank should not have allowed the OD
facility, without a formal arrangement for 4 years. Having allowed
overdraft in the a/c during the past 4 years, the Bank has led the
customer to presume that his cheque would be paid by the Bank
even if adequate balance is not there in the account.
However, the Bank should not have stopped the facility abruptly. It
should have put the customer on notice and avoided embarrassment
to him. As a mark of good customer service, the bank should have
advised him in the matter. Even now the bank should advise the
customer about its willingness to consider sanction of the limit on
merits.
She has to close the loan account inasmuch as inclusion of the
Minors name in the TDR during the tenure of the loan would amount
to granting a loan on minors deposit; also, it would amount to
entering into a loan Contract with the minor, which is void ab initio.
Alternatively, his name could be included as survivor by converting
the TDR on Former or Survivor basis or she can be advised to
nominate her minor son M to the deposit.
The key has been lost and the locker has to be forced open. In such
circumstances, the request of all the locker holders is to be obtained
in writing and the locker is forced open in the presence of all of
them. Hence, a communication must be sent to Mr. Bansal about the
matter seeking his confirmation by email / fax / telephone. Also the
breaking open must be arranged 2/3 days later so that there will be
time for Mr. Bansal to confirm the arrangement, by email / fax. In
view of the urgency and after satisfying ourselves about the
circumstances as stated by Mrs. Bansal, the locker may be forced
open by the locker suppliers technical personnel. An indemnity
has to be obtained from Mrs. Bansal for permitting this. Also, an
inventory of the contents has to be kept on record. A letter ratifying
the action has to be obtained on Mr. Bansals return. We have to
satisfy ourselves beyond doubt about the standing/integrity of
parties and bonafides of the request of Mrs.Bansal. CAs prior
approval has to be obtained.
Communication:Address in Regional
Language
Address
Hindi
in
The Regional Manager

State Bank of India,
Regional Business Office,
Region V,
Zonal Office, Hubli
Br/28
111
9th May 2015
Dear Sir
Staff AWARD
Posting of a Customer Assistant
Please refer to the discussions the undersigned had with you at the
recently held review meeting at your office on the 16th Feb in the captioned
subject. As desired by you I am providing the business particulars of the
branch as under:
Business
P segment deposits
P Segment advances
Agri Advances
2.
Number of
accounts
7697
2150
3568
112
Business level
Rs. 5.30 Cr
Rs. 1.56 Cr
Rs. 55.68 Cr
Recently the branch has added 2500 accounts under PMJDY

scheme. The branch has anNPA level of Rs. 1.14 Cr. While all-out
efforts are being made to bring down the NPAs , we are handicapped
by shortage of staff at the branch . Apart from the Branch Manager,
the staff component at the branch is as under:
a) Manager (Branch Operations)

b) Field officers
c) Senior Special Asst (CO)
d) Senior Assts
e) Sub Staff
State Bank of india,

Chikkalagundi
Mudhol Taluk,
Karnataka
Tel: 1345
Fax : 12345
Model Test
:
:
:
:
:
1
2
1
2
1
3. With this staff strength we are finding it increasingly difficult to improve

our customer service further. There is lot of scope for giving gold loans,
opening accounts under Pehle Udaan and Pehle Kadam, but we are
finding it estreemly difficult to go out and market the business and exploit
the potential due to shortage of man power.
5.
4.
Therefore I request you to kindly make arrangements to post at least

one senior Asst to tide over the situation and improve the business
and customer service at the branch.
Thanking You
Yours faithfully
(Sd) xx
Branch Manager
Name: xxx
Comprehension:
1.
The objectives of introducing CDMs are:
a) Enhancing customer convenience and providing a 24 x 7
channel of customer services;
b) Reducing deployment of branch resources on low value cash
deposit transactions;
c)
Utilising the resources for up-selling an cross-selling of other
products.
2.
Banks customers who own any variant of ATM-cum-Debit Card
and SME Insta Deposit Cards are allowed to deposit the cash to
their mapped account(s).
3.
The deposit of Cash is through a bunch of loose notes up to a
maximum of 200 pieces at any one instance (50 pieces in case of
certain CDMs). The machine scans for quality (genuineness) and
quantity (counts Note piece by piece) of notes deposited. Customer
is allowed to deposit up to a maximum of Rs.49900/- per transaction.
The machine accepts cash in denominations of Rs.1000/-, Rs.500/
- and Rs.100/- notes only.
4.
CDMs work on the sensor technology. Cash deposited are counted,
authenticated and the quantity and value are displayed to the
customers. Once the customer confirms that the quantity and value
are correct, the cash is sent to the vault / cash box, but if the customer
cancels the transaction, the cash is returned to him. The escrow
113
6.
114
facility provided allows the customer to cross check their transaction

before the notes reach the vault / cash box. Suspect notes are detected
by the CDM and are not deposited. These are held in the machine in
a separate box. The branches will handle such notes as per extant
instructions of the Bank in this regard.
The joint custodians of the branch will be provided with a password
to operate the safe of CDMs. The collected notes in the cassettes will
be tailed with the number of notes for their quantity and value as
printed on the supervisory slip. As the customers accounts have
been already credited on a real time basis, the value of such cash
will be credited to branch cash balance account as in a normal
manner. It is the responsibility of the joint custodians to evacuate
the cash at regular intervals during the day to avoid overflowing of
the cassettes resulting in the stoppage of CDMs. In addition to
ensuring that all such notes are accounted for before EOD at the
branch, the joint custodians should reconcile the physical cash with
supervisory slip and BGL account balance before accounting. If
any difference is observed, the same should be dealt with
immediately. If CDM detects any suspect note, the joint custodians
will verify the genuineness of the same. If in the process, any
counterfeit note is found, branches are advised to follow meticulously
the instructions issued by RBI on Detection and impounding of
counterfeit notes from to time.
With a view to ensuring adequate security & safety two build-in
cameras are installed in the CDM that record all the transactions
and the identity of the person doing the transaction. One to record
the customers and their movements and the other to record the events
in the cash box. The customer can be identified by his / her card
number, time of deposit, record of rejection (denomination) in the
transaction log, electronic journal (eJ) report and the sequence in
which such notes are placed in the reject bin. Customer identification
can be done with the help of face image and hand movement which
can be viewed in CDM. CDMs are adequately insured for the value
of the asset and also their contents. Cash verification is done every
quarter and CDM Cash verification certificate is made as part of the
quarterly / half yearly closing exercises.
Model Test
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Segment- Wise Revenue
AUDITED FINANCIAL RESULTS OF SBI

FOR THE YEAR ENDED 31.03.2015
Segment Revenue (Income)
Treasury Operations
Corporate / Wholesale Banking

Operations
Retail Banking Operations
Insurance Business
Other Banking Operations
Add/(Less): Unallocated
Highlights
Capital and Liabilities
Capital
Reserves & Surplus
Deposits
Borrowings
Other Liabilities and provisions
Total Capital and Liabilities

Assets
Total Income
Total Expenditure
Operating Profit
Provisions for NPAs
Net Profit After Tax
Govt of India share holding
CAR
BASEL II
BASEL III
Gross NPAs
Net NPAs
Return on Assets
Face value of shares
Total
115883.84
58977.46
495027.40
1300026.39
9329.16
68835.55
2048079.80
48616 Cr
36207 Cr
12409 Cr
4635 Cr
3742 Cr
58.60 %
12.79%
12.00%
4.25%
2.12%
0.76%
Re.1/- (Reduced from
Rs.10 wef 22.11.2014)
121
16072.75
19668.71
1070.04
48616.41
Segment Results (Profit before tax)
Treasury Operations
Corporate / Wholesale Banking

Operations
Retail Banking Operations
Insurance Business
Other Banking Operations
2048079.80
Cash and Balances with RBI

Balances with Banks and money
at call and short notice
Investments
Advances
Fixed Assets
Other Assets
Total Assets
as at 31.03.2015
(Audited) (Rs. cr)
746.57
127691.65
1576793.25
205150.29
137698.04
31.03.2015 (Audited)
11804.91
Total
2738.73
-1209.54
4207.95
5737.14
Important aspects of Accounting During the year 2014-15:

Rate of depreciation on Fixed Assets has been changed to Straight Line
Method, which has resulted in higher value for fixed assets/profit.
(Rs.420.76Cr)
During the year, the Bank aligned its method with regard to valuation of
plan assets (from book value to fair value) with Accounting Standard 15
Issued by the ICAI. As a result of the change, the value of Plan Assets of
superannuation funds has increased by Rs.2,183 crores
Provision Coverage Ratio as on March 31,2015 works out to 69.13%
(Previous year 62.86%)
The Central Board has declared a dividend of Rs.3.50 per share (@350%)
for the year ended March 31, 2015.
122
Postal Regn. No. RNP / KA / BGS / 2107 / 20142016

Posted at Bangalore PSO, Mysore Road, Bangalore-560 026 on 5th of every month
Licensed to Post without prepayment, License No.WPP-113
Regd. with Registrar of Newspaper for India Under RNI No. KARENG / 2006 / 20140
Pages : 124
GOOD NEWS
The Institute
ESTABLISHED in 1991 as J.S.Institute of Banking and Careers. It has
been renamed as J.S.Institute of Banking and Finance Pvt. Ltd. w.e.f
1.4.2004. It essentially caters to ambitious bankers, guiding them through
all the promotional exams and processes in the banking hierarchy.
Top class faculty and core competency have now entrenched JS Institute
as one of the premier centres of banking excellence in the country. Apart
from conducting intensive coaching classes, the Institute publishes books,
journals and guides that are indispensable for thousands of bankers
across India.
The Institute was associated with ICICI Bank Ltd., Times Bank
Ltd.,Karnataka Apex Co-operative Bank Ltd., Infosys Ltd., Valtech (I) Ltd.,
I-Flex Solutions Ltd. University of Agriculture Sciences, GKVK, Blore, M.P.
Birla Institute of Management, Blore etc. in their training programmes.
Companion Volume for JAIIB exams.

IIBF has made changes in JAIIB
syllabus. Few topics have been added
in Principles of Banking and Legal and
Regulatory Aspects of Banking. Some
topics have been deleted and
operational banking topics added in
Accounting & Finance for Bankers.
It is also accredited to IIBF, Mumbai.
J. S. Publications
Banking Guide for SBI Group Promotion Exams

Banking Digest
MM Special Guide
Nationalised Banks (Objective Questions Digest)
Interview Mastermind
Objective Questions Digest: JAIIB / CAIIB Exams
J. S. Programmes
Intensive classes for : TO, MM II to Scale V, JMG, STP for POs / TOs / JMGs,
(Systems) Exams of SBI Group & Nationalised Banks and for JAIIB / CAIIB
Exams.
Buy our CV for JAIIB.

Pages: 150+
Price: Rs.80/-
The Editor
G.Subramanian, Director, JS Institute of Banking and Finance (Pvt) Ltd,
has acquired valuable experience in different facets of banking during his
22-year tenure with S.B.I. Joining the Bank as a Probationary Officer, he
has worked at branches, Zonal Office, Head Office and Corporate Centre
covering diverse fields as SSI financing, credit, foreign exchange, inspection
and audit. He was also a senior faculty member at the Banks Apex Staff
College, Hyderabad, and later in his career did a stint as Training Officer,
Zambia National Commercial Bank. He has authored books on Foreign
Exchange, Management Accounting and Finance for SSI.
Please send us Recolleted Questions

of JAIIB / CAIIB exams. Attractive
prizes for best recolleted questions.
Printed, Published and Edited by G. Subramanian, on behalf of J. S. Institute of Banking

and Finance Pvt. Ltd., Printed at Raja Printers, No. 59, Gangadharappa Block, 4th Cross,
Lalbagh Road, K. S. Garden, Bangalore-560 027, and Published at J. S. Institute of
Banking and Finance Pvt. Ltd., Ramanashree Park View, 2nd Floor, 2462, 24th Cross
Road, Banashankari 2nd Stage, Bangalore - 560 070. Editor: Mr.G.Subramanian.
123
124

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SBI 2015 EXAMS

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The issue contains the

Economy, Recent Banking

Lending and Model Tests.

We are sure these will be

This issue consists of total

for our readers in the ensuing

Insurance Policies in Rural

ADB Loan for Water

Producer Companies (FPCs) .............. 2 2

Multiple Banking Arrangement ......... 3 9

Recent Banking DevelopmentsDates, Anniversaries:. ....................... 1 9 Mar1 5

Project Exports ........................................5 7

BANKING & FINANCEMay 2015

Rupay Platinum Debit Card: SBI has launched a Rupay

Banking & Finance

to restructure stressed assets to beyond 8 years.

panel that will select non-executive Chairmen in Public Sector

Banking & Finance

18% in the 6th and 7th year

Officer (CEO) of Bank of Baroda (BoB), Bank of India (BoI), Canara

Banking & Finance

Banking & Finance

SC on Photos of Politicians: The Supreme Court (SC) has stated

JS Digest of Banking and Finance May15

Banking & Finance

Government and the Lieutenant General (LG) Najeeb Jung. Both

annually due to disasters occurring because more than 58% of

Banking & Finance

continue his term as President of Kazakhstan; he has been in

a visiting professor at the universities of Harvard and Minnesota.

Banking & Finance

RECENT BANKING DEVELOPMENTS Feb 2015

ii) Collateral Security: No Collateral Security

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

Recent Banking Developments

JS Digest of Banking and Finance May15

No collateral security to be obtained other

Recent Banking Developments

Maximum Acceptable Level

indicating details of such cases may be forwarded to the concerned

JS Digest of Banking and Finance May15

Risk Management and Inter Bank Dealings: Foreign Currency (FCY)

Recent Banking Developments

Based on the report generated through SAP, the designated Officer at

Guidelines on Import of Gold by Nominated Banks/Agencies:

RBI has issued clarificatios as under:

JS Digest of Banking and Finance May15

Recent Banking Developments