Volume - XIII No.02 February 2010
Rs.20 per copy • Annual Subscription Rs.200
B anking The
Institute of Banking
Career & Studies,
Contents of this Issue
BANKING FEATURES : 2-11, 20
• Credit / Monetary Policy Review
• Repo in Corporate Debt Securities
• Disclosures in bank balance sheet
• RBI Note Refund Rules
• Tax Planning - Deductions
• Right of Set-off
• Farmers' Club Program
• Deposit insurance
• Finance Commission
Diary of events - Jan, 2009: 13
• Policy, Economy
• Banking Developments
• Capital Markets & Insurance
General Awareness : 15
Those who win, are those, who think they can Multi-Option questions:16-18
BANKING POLICY : 19
Corporate & Distribution Office • Interest Subvention - Agriculture
1008, Sector 45-B, Chandigarh
Phone 0172 2665 623 • Rupee Export Interest
(Contact - Sh.SP Sharma / DS Rana) • Advance remittance for Imports
eMail - banking.events.update @ gmail.com • Bank guarantee for service Importer
update. Data Bank : 20
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Promotion INTERVIEW-page3 Now available !!!
Editor - Ms Gurmeet Toor, Executive Editor - S. Chand Singh, Editor in Chief - Sh. N S Toor
2 ♦ Banking events updatE ♦ February 2010
Q3 Credit & Monetary Policy Review •Among the EMEs, India was one of the strongest
The quarterly review of the Annual Policy Statement was announced • In the primary market, activities picked up in
by RBI on Jan 29, 2010. The major features are: terms of IPOs and private placements. Net
Challenges before the Global Economy: In 2009, the advanced mobilisation by the mutual funds exhibited
economies had been focussing on dealing with the financial crisis significant increase.
and restoring the health of the financial sector and the Emerging Global Outlook
Market Economcies (EMEs) were engaged in mitigating the adverse
(a) Global Growth : Global economic
impact of the global financial crisis on their real economies. In
performance improved during the third and
2010, the effort in advanced economies is on, to further improve
fourth quarters of 2009, prompting the IMF to
the financial conditions and strengthen the growth impulses, while
reduce the projected rate of economic
the endeavour in the EMEs is to strengthen the recovery process
contraction in 2009 from 1.1 % made in Oct 2009
without compromising on price stability and to contain asset price
to 0.8 % in its latest World Economic Outlook
inflation stemming from large capital inflows.
Update released on January 26, 2010. The IMF
Indian Economy: has also revised the projection of global growth
• At 7.9 %, the GDP growth in the second quarter of 2009-10, showed for 2010 to 3.9 %, up from 3.1 %.
continuation of the recovery, witnessed in the first quarter. (b) Global Inflation: In the advanced economies,
• Agriculture and allied activities registered a better than expected the headline inflation is expected to increase
growth of 0.9 %. This reflects only a part of the overall adverse from zero in 2009 to 1.3 % in 2010. In emerging
impact of the deficient South-West monsoon on kharif output. and developing economies, inflation is expected
• Strong industrial recovery was the key, underlying strength behind to rise to 6.2 % in 2010 from 5.2 % in 2009.
the recovery of GDP in the second quarter. The core infrastructure India Outlook
sector also exhibited stronger growth during April-Dec 2009.
(a) Growth: In the 2nd Quarter Review of Oct
• Services activities (accounting for 64.5 % of the GDP) registered 2009, RBI had placed the baseline projection
a growth of 9.0 % in the second quarter of 2009-10. The recovery for GDP growth for 2009-10 at 6.0 % with an upside
was largely driven by 12.7 % growth due to payouts of arrears relating bias. Assuming a near zero growth in agricultural
to the 6th Pay Commission Award. Excluding this , the services production and continued recovery in industrial
sector growth was 7.0 % during the second quarter. production and services sector activity, the
External Economy baseline projection for GDP growth for 2009-10
• Merchandise exports registered a positive growth of 18.2 % in has been raised to 7.5%.
Nov 2009 after a phase of decline over 13 consecutive months and According to the Reserve Bank’s Professional
the pace of decline in imports moderated significantly to 2.6 %. Forecasters Survey conducted in December
Monetary Conditions 2009, the outlook for 2009-10 growth has been
• Broad money (M3) growth exhibited some moderation in recent revised upwards from 6.0 % to 6.9 %.
months and was at 16.5 % as on January 15, 2010, as against the (b) Inflation: The headline wholesale price index
indicative money growth projection of 17.0 % presented in the (WPI) inflation was 1.2 % in March 2009. It
Second Quarter Review of Monetary Policy 2009-10. continued to decline and became negative
• On the component side of money growth, the deposit growth of during June-August 2009 due to the large
scheduled commercial banks at 16.8 % was lower than the 18.0 % statistical base effect. It turned positive in Sept
indicative projection in the Second Quarter Review of Monetary 2009, accelerated to 4.8 % in Nov 2009 and
Policy 2009-10. further to 7.3 % in Dec 2009. On a financial year
• Non-food credit growth, which decelerated over 12 months basis, between April-Dec 2009, WPI moved up
following the peak in Oct 2008, has shown a reversal in the trend by 8%.
since Nov 2009. Non-food credit growth of Banks (SCBs) at 14.4 % as RBI emphasised that the conduct of monetary
on Jan 15, 2010 remains lower than both 21.9 % growth seen in the policy will continue to condition and contain
corresponding period of last year. perception of inflation in the range of 4.0-4.5%,
Financial Markets: in line with the medium-term objective of 3.0 %
• Money market rates remained well anchored within the liquidity inflation consistent with India’s broader
adjustment facility (LAF) corridor, and in the CBLO market, which integration with the global economy.
accounts for about 80 % of the volume in the money market, the (c)Money and Credit Aggregates
rates remained below the call money rates. • Money supply : During the current financial
• Stock markets, though volatile, sustained the gains of previous year, the year-on-year growth in money supply
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www.banking update. Contact us at 098143 31661 ..................Dr. APJ Abdul Kalam, Former President of India
(COMPILATION- ARUNDEEP TOOR, in Sydney, Australia - on the basis of information available on RBI Website)
Banking events updatE ♦ February 2010 ♦ 3
(M3) moderated from over 20.0 % at the beginning of the financial year to
16.5 % on January 15, 2010, reflecting deceleration in bank credit growth
• Year-on-year increase in non-food bank credit to the commercial sector,
at 14.4 % as on January 15, 2010, was significantly lower than the 22.0 % COURSE
growth a year ago.
• Over 98 %of the net market borrowing program of the Central Government
for 2009-10 has already been completed by January 28, 2010.
Based on latest trends of IBPS Exam
Projections for 2009-10
A large no. of bankers already succeeded by
(a) Indicative adjusted non-food credit growth projection : reduced to 16%. using the course material. If unable to attend
(b) Projected M3 growth in 2009-10 reduced to 16.5 % for policy purposes. class room program, this is the best option.
(c) Aggregate deposits of banks are projected to grow by 17%. Course Kit : The course kit include:
(a) subject-wise basic study material,
Risk Factors (b) assignment to improve retention
RBI observes that while the baseline scenario is comforting, a number of (c) objective type practice exercise
downside risks to growth and upside risks to inflation need to be recognised. (d) recalled questions
(e) mock test papers.
(i) There is still uncertainty about the pace and shape of global recovery.
Fee : Rs.1500 (may differ. - may be checked
There are concerns that it is too dependent on public spending and will before remittance). Fee to be paid in advance
unravel if governments around the world withdraw their fiscal stimuli by way of DD at Chandigarh in our favour OR
prematurely. As the world discovered during the recent crisis, the global be deposited in CBS a/c with PNB.
economy is heavily inter-linked through the business cycle. A downturn in How to enrol : To enrol, advise (a) name, (b)
global sentiment will affect not only our external sector but also our domestic address for correspondence (c) Email address,
(d) bank name, (e) scale for which appearing,
(f) phone / Cell number and (f) details of sub-
(ii) Oil prices have been range-bound in the recent period. However, if the jects for the exam (relevant course material, other
global recovery turns out to be stronger than expected, oil prices may than internal bank guidelines shall be sent).
increase sharply, driven both by prospects of demand recovery and the
return of the investment motive, which will affect all commodities. This
could stoke inflationary pressures even as growth remains below potential.
Course is based on exam pattern of IIB&F. A
(iii) Expectations of softening domestic inflation are contingent on food large no. of candidate have succeeded in all 3
prices moderating. This, in turn, depends significantly on the performance papers in first attempt with our study material.
of the south-west monsoon in 2010. If rainfall is inadequate, high food prices Course Kit : The course kit include:
will continue to intensify inflationary pressures. (a) subject-wise basic study material,
(iv) So far, capital inflows have been absorbed by the current account deficit. (b) assignment to improve retention
(c) objective type practice exercise
However, sharp increase in capital inflows, above the absorptive capacity of (d) mock test papers.
the economy, may complicate exchange rate and monetary management. Fee : Rs.850 per subject. Fee payable in advance
(v) As growth accelerates and the output gap closes, excess liquidity, if by DD on Chandigarh or in cash across our
allowed to persist, may exacerbate inflation expectations. counter or credit to our PNB-CBS account.
Policy Stance How to enrol : To enrol, advise name, address
for correspondence, eMail id, mobile phone,
Monetary policy stance for the remaining period of 2009-10 will be as under: bank name, subjects for enrolment.
• To anchor inflation expectations and keep a vigil on the trends in inflation
and be prepared to respond swiftly and effectively through policy adjustments
Free Website Class for
• To actively manage liquidity to ensure that credit demands of productive
If you have been called for a Promotion Interview
sectors are adequately met consistent with price stability. in your bank and you want to prepare your self
• To maintain an interest rate environment consistent with price stability to face various questions on latest banking
and financial stability, and in support of the growth process. concepts, you can join our free internet class,
while sitting in your office or at home, on our
website. For details you can contact us.
Bank Rate, Repo Rate, Reverse Repo Rate and SLR : These rates remain
unchanged at 6%, 4.75%, 3.25% and 25% respectively. NS TOOR's
Cash Reserve Ratio : Increaseed by 75 basis points from 5.0 % to 5.75 % of
their net demand and time liabilities (NDTL) in 2 stages. The 1st stage of Institute of Banking
increase of 50 basis points will be effective the fortnight beginning Feb 13,
2010, followed by the 2nd stage of increase of 25 basis points, effective the Career & Studies
fortnight beginning Feb 27, 2010. As a result of the increase in the CRR, Office:SCO No.34, Sector 33-D,
Chandigarh 160 047
about Rs. 36,000 crore of excess liquidity will be absorbed from the system. Phone: 0172-2665623, 093178-12720
Monetary Policy 2010-11 : The Monetary Policy for 2010-11 will be announced email - firstname.lastname@example.org
on April 20, 2010.
4 ♦ Banking events updatE ♦ February 2010 BANKING FEATURES
Repo in Corporate Debt Securities Prohibition on sale of repoed security : The security
acquired under repo shall not be sold by the repo buyer
The Reserve Bank of India in exercise of its powers (lender of the funds) during the period of repo.
conferred by section 45W of the Reserve Bank of India
Haircut: a. A haircut of 25% (or higher as maybe decided
Act, 1934 issued the Repo in Corporate Debt Securities
by the participants depending on the term of the repo)
(Reserve Bank) Directions, 2010, to all the persons dealing
shall be applicable on the market value of the corporate
in repo in Corporate Debt Securities. The features are:
debt security prevailing on the date of trade of 1st leg.
Commencement : These directions shall come into force
b. Participants may refer to the rating-haircut matrix that
with effect from March 01, 2010.
may be published by the Fixed Income Money Market and
Eligible securities for repo in Corporate Debt Securities Derivatives Association of India (FIMMDA), to determine
a.Only listed corporate debt securities which are rated the appropriate haircut.
‘AA’ or above by the rating agencies, that are held in the Valuation: For arriving at the market value of the corporate
security account of the repo seller, in demat form, shall debt security, the participants undertaking repo in
be eligible provided that Commercial Papers (CPs), corporate bonds may refer to the credit spreads published
Certificates of Deposit (CDs) and other instruments by the FIMMDA.
including Non-Convertible Debentures (NCDs) of less than
Capital Adequacy: Repo transactions in CDS shall attract
one year of original maturity, shall not be eligible securities
capital charge as per CRAR guidelines issued by RBI.
for undertaking repo.
Disclosure: The details of CDS lent or acquired under
Eligible Participants: The following entities shall be eligible
repo or reverse repo transactions shall be disclosed in
to undertake repo transactions in CDS:
the “Notes on Accounts” to the Balance Sheet.
a.Any scheduled commercial bank excluding RRBs and
Accounting: The repo transactions in CDS shall be
accounted as per the revised guidelines on uniform
b.Any Primary Dealer authorised by the Reserve Bank of accounting for repo/reverse repo transactions in
India; Government securities, which would be issued separately.
c.Any non-banking financial company registered with the Computation of CRR/SLR & borrowing limit:
Reserve Bank of India (other than Government companies
a.The amount borrowed by a bank through repo shall be
as defined in section 617 of the Companies Act, 1956);
reckoned as part of its Demand and Time Liabilities (DTL)
d.All-India Financial Institutions, namely, Exim Bank, and the same shall attract CRR/SLR.
NABARD, NHB and SIDBI;
b.The borrowings of a bank through repo in corporate
e.Other regulated entities, subject to the approval of bonds shall be reckoned as its liabilities for reserve
the regulators concerned, viz., requirement and, to the extent these liabilities are to
i.Any mutual fund registered with the Securities and the banking system, they shall be netted as per clause (d)
Exchange Board of India; of the explanation under section 42(1) of the RBI Act,
ii.Any housing finance company registered with the 1934. Such borrowings shall, however, be subject to the
National Housing Bank; and prudential limits for inter-bank liabilities.
iii.Any insurance company registered with the Insurance Documentation: The participants shall enter into bilateral
Regulatory and Development Authorit Master Repo Agreement as per the documentation finalized
f.Any other entity specifically permitted by the Reserve by the FIMMDA.
Bank Definitions: For this purpose:
Tenor: Repos in CDS shall be for a minimum period of one
a. ‘Corporate Debt Security’ means non-convertible debt
day and a maximum period of one year.
securities, which create or acknowledge indebtedness,
Trading: Participants shall enter into repo transactions in including debentures, bonds and such other securities
corporate debt securities in the OTC market. of a company or a body corporate constituted by or
Reporting of Trades: under a Central or State Act, whether constituting a
a. All repo trades shall be reported within 15 minutes of charge on the assets of the company or body corporate
the trade on the FIMMDA reporting platform. or not, but does not include debt securities issued by
b. The trades shall also be reported to any of the clearing Government or such other persons as may be specified
houses of the exchanges for clearing and settlement. by the Reserve Bank, security receipts and securitized
Settlement of trades: debt instruments”
a.All repo trades in corporate debt securities shall settle b. ‘Security Receipts’ means a security as defined in clause
either on a T+1 basis or a T+2 basis under DvP I (gross (zg) of section 2 of the Securitisation and Reconstruction
basis) framework. of Financial Assets and Enforcement of Security Interest
b.Repo transactions in corporate debt securities shall Act, 2002 (54 of 2002)
settle in the same manner as outright OTC trades in c. ‘Securitized debt instrument’ means securities of the
corporate debt securities. nature referred to in sub-clause (ie) of clause (h) of
c.On the date of reversal of repo trades, the clearing section 2 of the Securities Contracts (Regulation) Act,
houses shall compute the obligations of the parties and 1956(42 of 1956).
facilitate settlement on DvP basis. •
Compilation : Arundeep Toor (Sydney - Australia).
BANKING FEATURES Banking events updatE ♦ February 2010 ♦ 5
Disclosures in Bank Balance Sheet
The users of the bank financial statements need information about the financial position and CLASS ROOM COACHING
performance of the bank in making economic decisions. The use of notes and supplementary
information provides the means to explain and document certain items, which are either BANK PROMOTION EXAM
presented in the financial statements or otherwise affect the financial position and by
performance of the reporting enterprise. The market discipline (pillar 3 under Basel II) works
only if market participants have access to timely and reliable information, which enables
them to assess banks’ activities and the risks inherent in these activities.
N S TOOR & AK GUPTA*
Presentation: ‘Summary of Significant Accounting Policies’ and ‘Notes to Accounts’ is *Director, Bankers' Training
shown under Schedule 17 and Schedule 18 respectively by banks to maintain uniformity. Institute, New Delhi 09350476949
Minimum Disclosures: At a minimum, the items listed in RBI circular are required to be We conduct class room coaching programs
disclosed in the ‘Notes to Accounts’. Banks are encouraged to make more comprehensive for various scales (Clerical to Asstt. General
disclosures if they are significant and aid in the understanding of the financial position and Managers) in banks such as SBI associate
performance of the bank. The listed disclosure is intended to supplement, and not to Bank, PNB, BoB, BoI, Canara Bank, CBI, Union
Bank, OBC, Vijaya Bank, Corpn Bank etc.
replace, other disclosure requirements under relevant legislation or accounting and financial
The programs are conducted in Chandigarh,
reporting standards. Delhi, Lucknow, Jaipur, Mumbai, Patna,
Summary of Significant Accounting Policies : Banks should disclose the accounting Indore, Hyderabad and other centres.
policies regarding key areas of operations at one place (under Schedule 17) along with Our results : Because of focussed attention
notes to accounts in their financial statements. A suggestive list includes - Basis of Accounting, and the hardwork during the training sessions
Transactions involving foreign exchange, Investments – classification, valuation, etc, and later on, the candidates attending these
Advances and Provisions thereon, Fixed Assets and Depreciation, Revenue Recognition, classes have given excellent results. Many of
our candidates have topped the selection lists
Employee Benefits, Provision for Taxation, Net Profit, etc, etc.
and bagged most of the top positions.
Disclosure Requirements: In order to encourage market discipline, RBI has developed Study kits : Candidates are provided study
a set of disclosure requirements which allow the market participants to assess key information kits based on latest pattern of examination
on capital adequacy, risk exposures, risk assessment processes and key business parameters followed by IBPS, Mumbai. It consist of basic
which provide a consistent and understandable disclosure framework that enhances study material on all apsects of examination,
comparability. Banks are also required to comply with the Accounting Standard 1 (AS I) on practice test exercises and recalled questions
Disclosure of Accounting Policies issued by the ICAI. The enhanced disclosures have been of previous examinations. The study material
differs from bank to bank depending up the
achieved through revision of Balance Sheet and Profit & Loss Account of banks and enlarging
syllabus and the level of scale.
the scope of disclosures to be made in “Notes to Accounts”.
In addition to the 16 detailed prescribed schedules to the balance sheet, banks are required Mock Test CD for promotion & JAIIB
to furnish the following information in the “Notes to Accounts”: examination : Pls refer page 13 for details.
2.Investments (1. Repo Transactions 2. Non-SLR Investment Portfolio)
3.Derivatives (1. Forward Rate Agreement/ Interest Rate Swap, 2. Exchange Traded FINANCIAL AWARENESS Digest
Interest Rate Derivatives 3. Disclosures on risk exposure in derivatives) for general knowledge requirement
4.Asset Quality (1. Non-Performing Assets, 2. Particulars of Accounts Restructured, 3.Details relating to financial and other matters.
of financial assets sold to Securitisation/Reconstruction Company for Asset Reconstruction
4.Details of non-performing financial assets purchased/sold, 5. Provisions on Standard Mar 09 Issue Now Available !!
6 Asset Liability Management
7.Exposures (1. Exposure to Real Estate Sector, 2.Exposure to Capital Market, 3. Risk
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Category wise Country Exposure, 4. Details of Single Borrower Limit (SGL)/ Group Borrower
Limit (GBL) exceeded by the bank, 5.Unsecured Advances)
8 Miscellaneous (1.Amount of Provisions made for Income-tax during the year, 2. Disclosure Contact us or
of Penalties imposed by RBI) 09814 331 661
Disclosure Requirements as per Accounting Standards where RBI has issued for coaching classes.
guidelines in respect of disclosure items for ‘Notes to Accounts: (1 Accounting Standard 5 –
Net Profit or Loss for the period, prior period items and changes in accounting policie, 2
Accounting Standard 9 – Revenue Recognition, 3. Accounting Standard 15 – Employee
Benefits, 4. Accounting Standard 17 – Segment Reporting, NS TOOR's
Part B: Geographic segments
(1) Accounting Standard 18 – Related Party Disclosures (2) Accounting Standard 21 – Institute of Banking
Consolidated Financial Statements (3) Accounting Standard 22 – Accounting for Taxes on
Income (4) Accounting Standard 23 – Accounting for Investments in Associates in Consolidated
Financial Statements (5) Accounting Standard 24 – Discontinuing Operations (6) Accounting
Career & Studies
Office:SCO No.34, Sector 33-D,
Standard 25 – Interim Financial Reporting (7) Other Accounting Standards (8) Additional Chandigarh 160 047
Disclosures (9) Provisions and Contingencies (10) Floating Provisions (11) Draw Down from Phone: 0172-2665623, 093178-12720
Reserves (12( Disclosure of complaints, (13) Disclosure of Letters of Comfort (LoCs) issued email - email@example.com
6 ♦ Banking events updatE ♦ February 2010 BANKING FEATURES
RBI (Note Refund) Rules 2009 to do, call for any information or hold any inquiry relating
to any claim presented before him under these rules,
The Note Refund Rules were comprehensively revised and and where the genuineness of the note is doubtful, he
simplified during Sept 2009, which are called, the RBI (Note shall send such doubtful note for expert opinion to the
Refund) Rules, 2009. The rules apply to a note (currency Currency Note Press, Nashik Road or to any other authority
note / bank note), which is a legal tender on the date of as designated under any law in force for this purpose.
its presentation before the Bank. RBI has decided that Rule : 6. General provisions in relation to all claims-
any officer of the designated branch can adjudicate (1) No claim for a note, alleged to have been stolen, lost
mutilated notes presented to the branch. or wholly destroyed, shall be entertained.
Provisions Sec 28, in RBI Act, 1934: A person cannot as a (2) If the Prescribed Officer is satisfied that a mutilated
matter of right be entitled to recover from the Central note presented before him is one which appears to have
Govt or RBI, the value of any lost, stolen, mutilated or been cancelled at any office of the Bank or the claim is
imperfect currency note. one which appears to have already been paid under these
Exchange of soiled notes: The facility is to be provided rules, he may, after making enquiries under rule 5 above
by all banks at all of their branches to all tenderers. reject the claim on such note.
Exchange of mutilated notes: The facility would be (3) A claim in respect of a note, which, -
available at designated bank branch/es (including (i) cannot be identified with certainty as a genuine note
cooperative banks and RRBs) to all tenderers whether for which the Bank is liable under the Act;
they are account holders or not. (ii) has been made imperfect or mutilated, thereby causing
Definitions of different category of notes the note to appear to be of a higher denomination, or
Bank note: Any note issued by RBI, but does not include has been deliberately cut, torn, defaced, altered or dealt
a Govt note other than one rupees note, issued by the with in any other manner, not necessarily by the claimants,
Govt of India, Ministry of Finance, Department of Economic enabling the use of the same for making of a false claim,
Affairs. to defraud the Bank or the public,
Imperfect note: Any note, which is wholly or partially, (iii) carries any extrinsic words or visible representations
obliterated, shrunk, washed, altered or indecipherable intended to convey or capable of conveying any message
but does not include a mutilated note. of a political or religious character or furthering the
Mutilated note: A note of which a portion is missing or interest of any person or entity;
which is composed of more than two pieces. (iv) has been imported into India by the claimant from
Mismatched note : A mutilated note, which has been outside India in contravention of the provision of any law;
formed by joining a half note of any one note to a half (v) any information called for by the Prescribed Officer
note of another note. A mismatched note can be identified or the Bank, is not furnished by a claimant within a period
on the basis of number, signature etc. and /or after of three months from the date of receipt of the notice
examining other security features. or letter asking for the information, or
Soiled note: A note which, has become dirty due to usage (vi) in the opinion of the Prescribed Officer, a deliberate
and also includes a two piece note pasted together fraudulent intention appears in respect of such a claim
wherein both the pieces presented belong to the same shall be rejected and shall not be eligible for consideration
note, and form the entire note. under any other Law for the time being in force.
Essential features of a note means Rule : 7 Claims for imperfect note -The value of an
(i) the name of the issuing authority in Hindi and/or English imperfect note may be paid for full value/half value as
i.e. Bank or Govt of India, as the case may be; specified in the tables given in Rule 8 relating to mutilated
(ii) the guarantee clause in Hindi and/or in English; notes, if the matter, which is printed on the note has not
(iii) the promise clause in Hindi and/or in English; become totally illegible, and the Prescribed Officer is
(iv) the signature in Hindi and/or in English; satisfied, having regard to the printed matter which is
(v) the Ashoka Pillar emblem or Mahatma Gandhi portrait, legible on the note, that it is a genuine note.
as the case may be; and Rule: 8 Claims for Mutilated Notes (Rule-8):
(vi) the water-mark of the Ashoka Pillar emblem or Mahatma (1) Adjudication for notes of Rupee 1, 2, 5, 10, 20:
Gandhi portrait, as the case may be. (i) if the area of the single largest undivided piece of the
Rule : 3. Decision on Adjudication of mutilated note - note presented, is more than 50% of the area of the
For dispute in relation to adjudication of mutilated note, respective denomination, rounded off to the next
the same shall be referred to RBI, for its decision and RBI complete square centimeter (cm), full value on mutilated
decision shall be binding on the claimant, his nominees notes of the above denominations shall be payable;
and legal heirs or representatives as the case may be . (ii) If the area of the largest undivided piece of the note
Rule : 4. Presentation and disposal of claim - A claim in presented is less than or equal to 50 % of the area of the
respect of any note may be presented before the note, the claim shall be rejected.
Prescribed Officer for adjudication and payment of value (2) Payment of claim for note of Rs.50 and above:
under these rules. (i) Full value of the mutilated notes of the above
Rule : 5. Right to call for information or to hold enquiries denominations shall be payable if the area of the single
- The prescribed officer may, if considered necessary so largest undivided piece of the note presented is more
Source : Website of RBI
BANKING FEATURES Banking events updatE ♦ February 2010 ♦ 7
than 65 % of the area of the respective denomination on the expiry of a period of 3 months from the date of
rounded off to the next complete square centimeter; the decision rejecting the claim or to pay half-value, as
(ii) if the undivided area of the single largest undivided the case may be, unless within this period, an order from
piece of the note presented is equal to or more than 40 a competent Court is submitted to any office of the Bank
% and less than or equal to 65 % of the area of the or branch of the designated bank restraining the Bank
respective denomination rounded off to the next complete from destroying or otherwise disposing of the said note.
square centimeter, half the value of the note is payable. Rule : 12. Payment to Legal heirs or nominees-
(iii) If the area of the single largest undivided piece of (1) If a claimant who has submitted a claim under these
the note is less than 40%, no value shall be payable, and rules, is dead, his legal representatives shall be eligible to
the claim shall be rejected. receive the payment due to the claimant subject to the
(iv) if the claim of mutilated notes of Rs.50 to Rs.1000 determination of the claim by the Prescribed Officer.
denomination notes consists of a note composed of two (2) The legal representatives shall be entitled to receive
pieces of the same note and the two pieces, individually, the payment due to the claimant, if any, upon furnishing
have an area equal to or more than 40 % of the total area to the Prescribed Officer an indemnity bond executed
of the note in that denomination, then the claim may be by the legal representative in favour of the branch or
refunded for full value and need not be treated as office of the Bank or any other institution or entity as
consisting of two tenders for half value. designated by the Bank for this purpose;
Rule:9. Payment of claim in respect of mismatched note-
Provided payment upto an amount of rupees five hundred
The payment of claim in respect of a mismatched note
may be made to the legal heir of the claimant on a
may be dealt with as follows, namely-
declaration for this purpose.
(a) in case of notes upto Rs.20 denomination notes, the
(3) In case of mutilated note presented at the Bank
area of the larger of the two pieces presented may be
through Triple Lock Receptacle (TLR ) cover, the tenderer
measured and adjudicated as per the provisions of sub-
shall indicate his name and address alongwith other details,
rule (1) of Rule 8, ignoring the smaller half.
such as, bank account number, etc. as specified on the
(b) if none of the two pieces presented meets the minimum
cover, and the individual tenderers, may, at their option,
area stipulated as per the provisions of clause (i) of sub-
in addition, also indicate on the cover, the name and
rule 1 of rule 8 above, the claim shall be rejected.
address of the nominee who may receive the amount that
(c) in case of Rs.50 and above denominations, the two
is determined to be due on the claim without production
pieces may be treated as two separate claims and dealt
of indemnity, subject to proper identification.
Rule:10. Claimants to be bound by rules- Rule : 13. Printed Forms: Printed form will be used
(1) Any payment which is provided under these rules shall Rule: 14. Stamp Duty : paid by person executing bond.
be made only as matter of grace. Rule: 15. Procedure when payee is untraced-
(2) Any person who makes any claim on account of an (1) In case of the note having been adjudicated at the
imperfect note or mutilated note shall be deemed to have office of the Bank, the value or part of the value of a
made the said claim subject to the provisions of these note is payable to the claimant and if such claimant, is
rules, which shall be binding on all claimants and their not found or is dead, his legal representatives or the
heirs or assigns. nominee specified by him cannot be found or fails within
Rule 11. Retention and destruction of note- a period of three months from the date of communication
Notwithstanding the denomination of a note or the to him the decision to take steps to receive payment,
decision of the Prescribed Officer on the claim, a note the amount payable shall be paid to the Banking
presented before the Prescribed Officer for making a claim Department of the Bank
shall be retained and destroyed or otherwise disposed of (2) In case of the mutilated note having been adjudicated
by the Bank in the following manner, namely- at the branch of designated bank or other entities, such
(a) in the case of a note in respect of which full payment payment may be credited with the Issue Office of the
is made, at any time after the payment; and Bank after a period of three months from the date of
(b) in the case of a note in respect of which no payment communication to the tenderer of the decision to take
is made, ,or on which half value payment has been made, steps to receive the exchange value.
Most-used book Banking Problems Practice Sets For Banking infor- For all types of
by bankers 30th & Rationales 5th Mock Tests 10th mation in Hindi bank interviews
(2010) Edn Rs.300 (2010) Edn Rs.250 Edn Rs.165 7th Edn Rs.300 5th Edn Rs.250
8 ♦ Banking events updatE ♦ February 2010 BANKING FEATURES
Tax Planning - Deductions from Income the house, can be claimed as deduction under section
Section 80C of Income Tax Act 1961, which had replaced 80C in the year of purchase of the house.
the then existing Section 88 wef 1.4.2006 allows different National Savings Certificate (NSC): National Savings
types of deductions from income of an Assessee. It brought Certificate (NSC) is a 6-Yr small savings instrument eligible
a major change in the method of providing the tax benefit. for section 80C tax benefit. Rate of interest is 8%
Total limit: As per this provision of the Income Tax Act, compounded half-yearly, i.e. the effective annual rate of
the qualifying investments, up to a maximum of Rs. 1 Lakh, interest is 8.16%. If Rs 1,000, is invested, it becomes Rs
are deductible from income of the assessee i.e. income 1601 after 6 years. The interest accrued every year is
gets reduced by the amount of this investment. liable to tax (i.e., to be included in your taxable income)
but the interest is also deemed to be reinvested and thus
This benefit is available to assessee, irrespective of their eligible for section 80C deduction.
level of income. For example, if an assessee is in the highest
tax bracket of 30%, and makes investment of Rs. 1 Lakh, Infrastructure Bonds: These are also popularly called Infra
he saves a tax of Rs. 30,000. Bonds. These are issued by infrastructure companies, and
not the government. The amount that is invested in these
Qualifying Investments bonds can also be included in Sec 80C deductions.
Provident Fund (PF) & Voluntary Provident Fund (VPF: Pension Funds – Section 80CCC: This section stipulates
PF is automatically deducted from salary. Both the that an investment in pension funds is eligible for
employee and employer contribute to it. While employer’s deduction from income. Section 80CCC investment limit is
contribution is exempt from tax, employee's contribution clubbed with the limit of Section 80C – it means that the
is counted towards section 80C investments. The employee total deduction available for 80CCC and 80C is Rs. 1
also has the option to contribute additional amounts Lakh.This also means that investment in pension funds
through voluntary contributions (VPF). Current rate of upto Rs. 1 Lakh can be claimed as deduction u/s 80CCC.
interest is 8.5% per annum (p.a.) and is tax-free.
5-Yr bank fixed deposits (FDs): Tax-saving fixed deposits
Public Provident Fund (PPF): Among all the assured returns (FDs) of scheduled banks with tenure of 5 years are also
small saving schemes, Public Provident Fund (PPF) is a good entitled for section 80C deduction.
investment. The current rate of interest is 8% with is tax-
free. The normal maturity period is 15 years. The minimum Senior Citizen Savings Scheme 2004 : Senior Citizen
amount of contribution is Rs 500 and maximum is Rs 70,000 Savings Scheme (SCSS) is a lucrative scheme among other
in a financial year. the small savings schemes but it is meant only for senior
citizens. Current rate of interest is 9% per annum payable
Life Insurance Premiums: Any amount that the tax paper quarterly. It needs to be noted that the interest is payable
pays towards life insurance premium for himself, his spouse quarterly instead of quarterly compounding. Thus,
or children can also be included in Section 80C deduction. unclaimed interest on these deposits will not earn any
But the amount of life insurance premium paid for parents further interest. The interest income under this scheme
(father / mother / both) or in-laws is not eligible for is chargeable to tax.
deduction under section 80C. If the assessee is paying
premium for more than one insurance policy, all the 5-Yr post office time deposit scheme: These are similar
premiums can be included. It is not necessary to have to bank fixed deposits. Although available for varying time
the insurance policy from Life Insurance Corporation (LIC) duration like one year, two year, three year and five year,
– even insurance bought from private insurance companies only 5-Yr post-office time deposit – which currently offers
can be considered here. 7.5% rate of interest –qualifies for tax saving under section
80C. Effective rate works out to be 7.71% per annum (p.a.)
Equity Linked Savings Scheme (ELSS): There are some as the rate of interest is compounded quarterly but paid
mutual fund (MF) schemes specially created for offering annually. The Interest income is entirely taxable.
tax savings. These are called Equity Linked Savings Scheme,
or ELSS. The investments that an assessee makes in ELSS NABARD rural bonds: There are two types of Bonds issued
are eligible for deduction under Sec 80C. by NABARD (National Bank for Agriculture and Rural
Development): NABARD Rural Bonds and Bhavishya Nirman
Home Loan Principal Repayment: The Equated Monthly Bonds (BNB). Out of these two, only NABARD Rural Bonds
Installment (EMI) that a tax payer pays every month to qualify under section 80C.
repay the home loan consists of two components – Principal
and Interest.The principal component of the EMI qualifies Unit linked Insurance Plan (ULIP): ULIPs cover Life
for deduction under Sec 80C. Even the interest component insurance with benefits of equity investments.They have
can save significant income tax – but that would be under attracted the attention of investors and tax-savers not
Section 24 of the Income Tax Act. For this a reference only because they help in saving the tax but they also
shall be required to be made to the relevant section. perform well to give good returns in the long-term.
Stamp Duty and Registration Charges for a home: The Others: Apart form the major avenues listed above, there
amount paid as stamp duty while purchasing a house, and are some other things, like children’s education expense
the amount paid for the registration of the documents of (for which the assessee needs receipts), that can be
claimed as deductions under Sec 80C. •
BANKING FEATURES Banking events updatE ♦ February 2010 ♦ 9
of the partnership firm. But where the firm’s account
Right of Set-Off
shows credit balance, the bank cannot set off the credit
The set-off refers to ‘combining of two or more accounts balance against the debts due from the individual partner.
of the customer for final settlement of accounts’. It Guardian : Where a person has opened an account in the
involves at least one account with a debit balance and name of his minor child in the capacity of a guardian, the
another account with a credit balance. (say an overdraft account cannot be treated in the same right as his own
and a current or saving bank or FDR account). account with the bank. Hence, bank cannot exercise right
Definition : The right is not defined in any Act, but it is a of set-off on such accounts.
statutory right arising on account of contractual Trust : The funds held by a person in a trust account (say
obligations of the bank and its customers. by a solicitor by opening a Client Account to keep the
Different branches as a one unit: For exercising this right, funds on behalf of his clients) are to be treated in a
all branches of a particular bank are treated as one unit, different right from his liability as an individual. Such funds
which means that a loan account in Branch -1 can be cannot be used by the bank for exercising the right of
adjusted by using the funds lying in a deposit account in set-off.
Branch-2, by observing the other conditions. Joint accounts : If the account of a person shows debit
Possession of deposit receipt or pass-book : Possession is balance, such dues cannot be recovered from his joint
not necessary for exercising the right of set-off. account with others. On the other hand, to settle the
Right of lien and set-off : These are two independent loan in the joint names, the funds lying in the individual
rights. Where a right of set-off is available, the right of account of one or more of them, can be used to settle
lien cannot be available. the joint liability.
Conditions: The right can be used subject to fulfillment Guarantor's account : The right can be exercised against
of certain conditions, as under: the funds lying in the account of a guarantor but only
1.Relationship : The right can be exercised when the when demand is made on the guarantor which determines
relationship is that of debtor/creditor (deposit a/c) on his liability.
the one hand and creditor/debtor (loan a/c) on the other Garnishee order and attachment order : The banker has
hand and exist simultaneously. right to exercise the right before the garnishee order or
2.Notice : The right can be exercised only after sending attachment order is made effective, for the lawful debt
a prior notice to the depositor, expressing the intention which is due.
of the bank to exercise the right of set-off. The notice Term deposits which are not due: Though the right is
will be of a reasonable period. available, but the right can be used only after the term
3.Type of loan: The loan should be certain, determined, deposit becomes due. But such term deposits can be
due & not a future or contingent debt and where no used for adjustment of loan acconts u/s 60 of Indian
agreement to the contrary exists. In other words, the Contract Act by exercising Right of Appropriation.
right can be used, for those loans, which have become Summary of position of availability of Set-off
due for payment and repayment has not been made by Deposit in the Loan in the Status of
the customer. Where the customer has been paying the name of name of of right
loan as per agreed terms, the right is not available. Single person Jointly with others Available
4.Time barred loans : Time barred loans can be recovered Partner in a firm Partnership Firm Available
by use of right of set-off, since such loans continue to be Single name Same name Available
lawful, otherwise. Proprietor Proprietorship firm Available
5.Same name and capacity : It is essential that the account Joint Account One of joint holder Not available
must be in the same name and in the same capacity/ Partnership Firm One of partners Not available
right. The money belonging to someone else cannot be Trust Trustee Not available
made available to satisfy personal debts of some other Trustee Trust Not available
person. Dividend a/c of Co Loan a/c of co. Not available
Special types of accounts: Minor (u/g.shipa/c) Guardian Not available
Partners/partnership: Where a partner’s account shows Single person Single person Not available
credit balance, the right can be exercised for the dues different capacity
Risk Management Financial Mgmt General Mgmt Accounting & Legal Aspects of Legal Aspects of
4th Edn Rs.150 4th Edn Rs.125 4th Edn Rs150 Finance 4th Edn Banking 4th Edn
Banking 4th Edn
OUR CAIIB &
10 ♦ Banking events updatE ♦ February 2010 BANKING FEATURES
(5) Incentive for acting as Business facilitators for banks.
Farmers' Club Program of NABARD
(6)Any other charges.
Farmers’ Clubs are grassroot level informal forums. Such Clubs are
Who can organise Farmers' Clubs
organised by rural branches of banks with the support and financial
Any bank operating in rural area, including Commercial
assistance of NABARD for the mutual benefit of the banks concerned and
Banks (CB), Regional Rural Banks (RRB), & Cooperative
Banks (SCB, SCARDB, PCARDB, DCCB and PACS) and all
Functions: The broad functions of the Farmers’ Clubs are as under:
grass root level organisations such as NGO, Post Offices
• to coordinate with banks to ensure credit flow among its members and etc. can form Farmers' Club. There is no restriction of no.
forge better bank borrower relationship, of clubs to be formed. All the clubs should have savings
• to organise minimum one meeting per month and depending upon the bank account with the bank.
need, there can be 2-3 meetings per month. Non-members can also be Set Up
invited to attend the meetings,
Farmers’ Club can be promoted in a village/ cluster of
• arange interface with subject matter specialists in the fields of agriculture villages, generally in the operational area of a Bank.
and allied activities etc., extension personnel of Agriculture Universities,
While it should have minimum of 10 members, no upper
Development Departments and other related agencies for technical know
limit in the membership is envisaged. Every Club would
how upgradation. For guest lectures, even experienced farmers who are
have two office bearers - One 'Chief Coordinator' and
non members from the village/ neighbouring villages could be invited,
the other 'Associate Coordinator'. The office bearers
• Liaison with Corporate input suppliers to purchase bulk inputs on behalf would be elected by Club Members on a democratic basis
of members, for a term of 2 years. The office bearers should be
• Organise/facilitate joint activities like value addition, processing, collective residents of the area of the operation of the club. No
farm produce marketing, etc.; for the benefit of members. They can also NGO representative can be office bearer of the club. The
sponsor / organise SHGs, main functions of the office bearers would be to convene
• Undertake socio-economic developmental activities like community works, meetings, to arrange meetings with experts,
education, health, environment and natural resource management etc. maintenance of Books of Accounts, coordination with
• Market rural produce and products Bank, Line Departments of the State Governments,
What is Farmers' Club Programme maintaining proper liaison with Bank
NABARD encourages banks to promote Farmers' Clubs in rural areas under Membership
the Farmers’ Club Programme, earlier known as Vikas Volunteer Vahini All villagers except willful defaulters can become members
(VVV) Programme (which was launched by NABARD in Nov 1982).The VVV of the club.
Programme was rechristened as Farmers’ Club Programme in 2005 by How to form Farmers’ Club by bank branches
revisiting its earlier mission. • Bank branch can promote the clubs directly or engage
Benefits of Farmers' Club to Bank Branch Farmers’ Club promoting agencies like Krishi Vigyan Kendras
The formation of Farmers’ Club leads to better Banker-Borrower relationship (KVKs), Agriculture Universities, NGOs, Corporates, etc.
in the area. It can help in (a) mobilisation of deposits (b) increase in the • Select a village/ cluster of villages suitable for launching
credit flow and diversification of lending (c) generation of new business Clubs in the operational area of the bank branch.
avenues (d) increase in the recoveries and decline in the non-performing • Identify a few borrowers with good track record of
assets (d) reduction in the transaction costs of financial institutions/ Banks proper loan utilisation, aptitude and capacity for team
(e) socio economic development of the village. work.
• Besides, the Farmers’ Club has also been instrumental in certain social • Encourage the members to select a Chief Coordinator
welfare measures like free eye check-up camp, Animal Health Care Camp, and an Associate Coordinator. This will ensure collective
Mass vaccination camp, community works like road, check-dams, leadership and continuance of the Club.
• Provide orientation training to them with the help of
Financial Support from NABARD/Banks
NABARD (Regional Office / DDM or trained officers from
NABARD provides uniform assistance @ Rs.10000 per club per annum for the bank) before launching.
a period of 3 years. It is released in two instalments of 50% each (first in
• Encourage members to convene monthly meeting
advance and 2nd by way of reimbursement of expenses). The assistance
regularly, guide them to have meaningful discussion and
is towards meeting the following minimum and mandatory expenses:
take necessary follow up action.
1. Formation and maintenance expenses - Rs.2000
• Motivate members them to identify credit and non-
2. Awareness/orientation meet at base level - Rs.5000
credit needs (training, socio-economic, village
3. Meet with experts programs (2 in a year) - Rs.3000 infrastructure, etc.), prepare a plan of action and
If the assistance exceeds Rs.10000, it will be met by the bank with a accordingly arrange for expert talks, counselling, need-
maximum of Rs.5000 per annum during the first 3 years. Banks will provide based activities, etc. with the help of Government
assistance the Farmers' Clubs up to max. of Rs.10000 per annum during Departments and other agencies concerned.
4th and 5th year. • Encourage members to maintain Membership Register,
Sustainability of clubs Minutes Book and accounts Register.
It is to be ensured through creation of a corpus of the club over a period • Evolve a performance parameter and measure the Clubs’
of 3-5 years, when the funding suport by agencies will be withdrawn. It contribution annually.
can be by way of:
• Use Club as a tool in aid of branch not only in the matter
(1) Token membership fee (2) Monthly savings (3) Service charges for of credit and recovery but also in facilitating promotion of
SHG and JLG loans @ 0.5% and 1% respectively (4) Commission for
selling insurance products.
SHGs, micro credit and convergence of services.
Source: Website of NABARD
Banking events updatE ♦ February 2010 ♦ 11
DICGC is a wholly owned subsidiary of RBI and DICGC Act 1961 provides insurance cover on the FOR BANKERS
deposits of banks.
Handbook on Banking : 300.00
Insured Banks: The deposit insurance is compulsory for all banks in India. All commercial Information (30th Edn
banks (except urban coop banks from Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, and Jan 2010) by N S Toor
the Union Territories of Chandigarh, Lakshadweep and Dadra and Nagar Haveli) are covered by Bank Lending (Edn : 2003) : 500.00
the DICGC. Primary cooperative societies are not insured by the DICGC.
by Arun Chatterjee
Cancellation of insurance cover : DICGC may cancel the registration of an insured bank if
Model Test Papers for : 165.00
it fails to pay the premium for three consecutive periods or the bank is prohibited from receiving Bank Promotions Edn
fresh deposits; or its licence is cancelled or a licence is refused to it by the RBI; or it is wound up August 2009 by N S Toor
either voluntarily or compulsorily; or it ceases to be a banking company.
Credit Management : 400.00
Types of insured Deposits : All deposits such as savings, fixed, current, recurring, etc. (2004) Arun Chatterjee
(except deposits of foreign Governments, Central/State Governments, inter-bank deposits,
Banking Problems/ : 250.00
deposits of the State Land Development Banks with the State co-operative bank, any amount
due on account of and deposit received outside India, any amount, which has been specifically
exempted by the corporation with the previous approval of RBI). by Arundeep/ N S Toor
Extent of insured deposit : Each depositor in a bank is insured upto a maximum of Rs.1,00,000
Handbook for Bank : 275.00
(Rupees One Lakh) for, both the principal and interest amount held by him in the same right and
Managers (2008) by LN
same capacity (joint deposit a/c of A&B and B&A to be taken as separate accounts) as on the Kumar
date of liquidation/cancellation of bank’s licence or the date on which the scheme of amalgamation/
merger/ reconstruction comes into force. Analysis of Balance
Sheet (6th Edition 2008) : 150.00
Deposits kept with different branches : The deposits kept in different branches of a bank by N S Toor
are aggregated for the purpose of insurance cover and a maximum amount upto Rs.1 lac is
paid. Credit Risk Management
by Arundeep/ N S Toor : 225.00
Deposits with more than one bank: Where a depositor has deposits with more than one
bank, deposit insurance coverage limit is applied separately to the deposits in each bank, even Mannual of Foreign
if the two banks are closed on the same day. Exchange : 250.00
R S Arora (Edn - 2005)
If a bank goes into liquidation:The DICGC pays to each depositor through the liquidator,
the amount of his deposit upto Rs.1 lac within two months from the date of receipt of claim list Book-Keeping & Eco-
from the liquidator. nomics for Bankers (Edn : 150.00
2005) by N S Toor
If a bank is reconstructed or amalgamated / merged with another bank: The
DICGC pays the bank concerned, the difference between the full amount of deposit or the limit How to face Bank Inter-
of insurance cover in force at the time, whichever is less and the amount received by him under views? (Edition 2010) : 250.00
the reconstruction / amalgamation scheme within two months from the date of receipt of claim by N S Toor
list from the transferee bank / Insured bank/transferee bank as the case may be.
Hkkjrh; cSafdax &fof/k] ijEijk
Operational aspects of the scheme (as per amendments wef Oct 1, 2003)
,oa Uk, vk;keu-l- rwj : 300.00
Payment of deposit insurance: The deposit insurance premium (to be borne by banks) (7th Edition Aug 2009)
which had been 5 paise per Rs.100 of Assessable Deposit till 2003-04, was enhanced in the first
phase from 5 paise to 8 paise per Rs.100 of Assessable Deposit wef the financial year 2004-05. JAIIB/CAIIB BOOKS : NEW SYLLABUS
The 2nd phase of upward revision of premium to 10 paise per Rs.100 of Assessable deposits has (Objective Type - 2009 Edition)
beome effect from the financial year 2005-06, payable by all the insured banks wef from the Principles of Banking : 150.00
half-year April 2005 onwards. Accouning & Finance : 125.00
Half-yearly periodicity for payment of insurance premium: The half yearly period for Legal Aspects of Banking : 125.00
payment of deposit premium are April-September and October-March (instead of Jan-Jun and General Bank Management : 150.00
Financial Management : 125.00
Basis for payment of premium :The premium is payable in advance on the total deposits on Risk Management 150.00
the close of business on the last working day of the preceding half year (instead of last Friday All these books are by:
of the preceding half year). Hence the premium is to be calculated on the total deposits as at the Arundeep Toor & N S Toor
close of the business on the last working day of the relative preceding half year i.e. March and (For detailed studies enrol to
September, respectively. our correspondence course)
Time and periodicity of payment of premium : The advance premium for the respective
half year is payable within 2 months (instead of 1 month as per the previous guidelines) from the
beginning of the half year. Accordingly, the premium for Apr-Sep half -year is to be paid by last
You can order these books with us
day of the May and that for Oct-Mar half-year, it is to be paid by November 30. Due to change
in procedure, the bank need not calculate and pay the adjustment in the premium paid in Skylark Publications
advance and the actual premium payable for that half year. 1/5, Bhagat Singh Lane, Gole Market,
• New Delhi-110 001 (Ph- 011 2336 1966)
12 ♦ Banking events updatE ♦ February 2010
Problem-1: Mr. Ram Kumar is valued customer of your branch. He ROBLEMS ON
has an FDR of Rs.6 lacs. The FDR is maturing in 2 years from now.
He has requested the bank to mention the name of his three sons
as nominees, on the FDR. When he was advised that only single relevant records. In no case, a cheque should be
nomination is allowed, he has requested for the following: paid, when it is marked stop payment.
i) Split the FDR into Rs.2 lac each. (ii) Delayed or non-submission of stock reports
ii) Mark nomination of three sons individually on each FDR. can convert a loan account to sub-standard
He has also instructed that he should not incur any loss of interest category. Hence stock statement register should
and interest should continue to be credited on monthly basis to be completed immediately. Stock statement must
his saving bank account as earlier. How bank can help him. be obtained without any further delay in all cash
Decision: FDR should be split in three different accounts (and credit accounts. Further, these should be
not just 3 different FDRs only), in the name of Mr. Ram Kumar. obtained in time, invariably in all cases and where
There after the nomination should be completed by obtaining DA- these are submitted late, the list should be put
1 form, in the favour of one son each for each FD account. The up with suggested further action.
nominee’s name can also be written, on the FDRs, as requested (iii) In the absence of entries in the LC registrar,
by Mr. Ram Kumar. bank cannot ascertain its liability. It also leads to
Justification: A split of FDR into 3 separate FD accounts for the wrong presentation of the balance sheet. Hence,
aggregate amount and without change in the total time period, is LC register should be completed immediately,
permitted as per RBI/IBA deposit guidelines. Such split is not be particularly in respect of such LC which have not
considered as cancellation of FDR and no penalty is recoverable yet expired. Necessary contra-entry should also
on such split. be passed to account for the LC in the balance
As regards nomination, it is available on individual accounts. If one sheet of the bank. In future, LCs should be issued
account is maintained with separate FDRs, only one nomination is only after entering the relevant details in the LC
can be made. But if separate accounts are opened, for each registered and passing of contra-vouchers.
account, the nomination can be separate. The procedural aspect in case of all the above,
Problem-2: A partnership firm has approached you to open a should also be gone through and in no case, these
current account with following partners (i) Ram Kumar (ii) Ram Lal should be violated. Any failure to carry out these
instructions, shall make the concerned official
(iii) Shyam Kumar (iv) A Pvt Ltd. Company and (v) A HUF Firm. What
liable for departmental action.
should the bank do and why?
Problem-4 : A person wishes to open an RFC
Decision: The account cannot be opened.
Account with your branch. Please list out the
Justification: Under provisions of Indian Partnership Act, only the
formalities to be completed for opening the
persons competent to contract, can become partners in a firm.
account. Further, he wants to credit the following
Hence, the three individuals are competent to be partners. As
amount in his account, please advise whether
regards a company, including, a private limited company, it can
these entries can be credited into his account
also become partner in a firm. HUF however, is not allowed to
given reasons thereof:
become partner as per Supreme Court judgement.
i) FCNR Deposit of US $ 2 lacs
In the given situation, the firm is not a legally valid partnership.
ii) NRO Deposit of Rs.2.5 lacs
Hence account cannot be opened. However, if the firm is
reconstituted by excluding the HUF, as one of the partners, the iii)Sale proceeds of US $ 2.5 lacs pertaining to
account can be opened on the basis of fresh mandate. residential property at Boston, USA.
Problem-3: In the Annual Inspection report for the last year, the Solution: The following formalities will be required:
inspectors have pointed out many irregularities. Some of these (a) copy of his pass-port indicating his arrival in
are given below. You have advised by the branch head to draft an India, which should be on or after April 18, 1992
office order describing the importance of the matter and also (b) information relating to KYC compliance i.e.
the resultant risk involved in not doing so. proof of address, photograph, introduction.
i) Stop payment instructions are not being marked regularly in As regard credit of amount to his RFC account,
the stop payment register. following action shall be taken:
ii) Stock Statement register is incomplete and the statements are (i) FCNR deposit amount of US $ 2 lac shall be
not being submitted by parties on regular basis. credited to the account, as the amount in FCNR/
NRE-RA account which is received from abroad,
iii) Letter of Credit register is not being maintained and issued LCs
can be credited to the RFC account.
are not being entered in the register.
(ii) Amount in NRO account cannot be credited,
Solution: The draft of the Office order shall be as under:
as it is local money and cannot be remitted outside
The inspecting official has detected certain serious irregularities.
India when a person is resident.
The concerned officials are advised to ensure the compliance.
(iii) The sale proceeds of property sold abroad
(i) Non-marking can lead to financial loss to the customer and
can be credited to the account, as the funds are
resultantly to the bank. Proper acknowledgement should be issued
in the form of inward remittances.
for stop payment instructions. These should be marked in the
*Based on Punjab & Sind Bank promotion exam for scale II to III - Dec 2009
Banking events updatE ♦ February 2010 ♦13
Trade Deficit has been lower at $32.2 billion for the second quarter
Diary of of 2009-10.
Events • The Country’s Total External Debt at the end of September stood
at $242.8 billion, an increase of $18.2 billion over end March .
POLICY • The Appointment Committee of the Cabinet has approved the
• POSITION OF PUBLIC-PRIVATE PARTNERSHIP PROJECTS: appointment of Mr.R.Gopalan, currently Special Secretary, as
The country as a whole has 450 PPP Projects involving an Secretary of Department of Financial Services, Finance Ministry.
aggregate outlay of Rs.2.24,175.75 Crore. Karnataka is the Top • NABARD CREDIT LINE TO UP: National Bank for Agriculture and
ranked State in using the PPP Route. It has 95 Projects with total Rural Development (NABARD) has sanctioned Line of Credit of
outlay of Rs.39,491,85 Crore. Larson & Toubro (L&T) leads the Rs.102 Crore to Uttar Pradesh under the Rural Infrastructure
domestic company category with total outlay of Rs.3,498 Crore. Development Fund (RIDF).
• J & K BANK AND RBI TO REVIVE URBAN-CO-OPs: J&K Bank • N.KOREA BANS FOREIGN CURRENCIES: North Korea has
and RBI have signed a MOU to constitute a Task Force on Urban banned the use of Foreign Currency. As per Order issued by
Co-Ops Banks to identify potentially viable UCBs and draw up a North Korea’s State Security Bureau, severe punishment has been
time-bound action plan for their revival. There are four UCBs in warned anyone using US Dollars, Euros, Yuan and other Non-
J&K. State level Task Force of UCBs has been constituted in north Korean Currency.
various states. Thus 1714 UCBs are covered under the MOU
• UNIQUE ID PROJECT-CUSTOMER BASE: The Unique
which constitute 99.6% of the total number of UCBs accounting
Identification Authority of India (UIDAI) plans to harness the
for 99.8% of total deposits of the Sector.
customer base of Banks and Mobile Phone Operators in its
• COMPLAINTS POSITION IN BANKING OMBUDSMAN: mammoth task of issuing a Single, Universal Identity Number to all
According to the latest data for 2008-09, total 69,117 complaints Resident Indians.
were received at 15 Banking Ombudsman Offices throughout
• NHB FOR MORTGAGE GUARANTEE: National Housing Bank
the country. 21,982 complaints relate to Private Banks which
(NHB) has roped in another foreign partner for its Mortgage
constitutes 32%. Private Banks were followed by SBI Group,
Guarantee Company. Unlike the two existing Foreign Investors-
which got 18,167 complaints which is 26% of total complaints
Asian Development Bank and International Finance Corporation-
received in Ombudsman. Other PSU Banks had only 14,974
the third one is believed to be an Experienced International Player
complaints which constitutes 22%.
in Mortgage Guarantee Business and is a “Strategic Partner”.
• EAST AND SOUTHEAST ASIAN FOREX FUND: East and
• RULES OF ORIGIN FOR TRADE PACTS: The Finance Ministry
Southeast Asian countries are going to launch a $120 billion
has come out with the Rules for Determination of Origin of Goods
Emergency Fund, the Fist such Alliance in the Region, to shield
for the preferential trade agreement with South Korea and the
themselves from a financial crises. Under the Scheme, known as
Free Trade Agreement (FTA) with the 10-member ASEAN. The
the Chiang Mai Initiative Multilateralisation, Japan, China, South
Rules of Origin came into force from January 1, 2010 for both
Korea, Hong Kong and the 10 Asian members can swap their own
these agreements in goods.
currency into US Dollars in case of liquidity crunch.
• SLB CONTRACTS TENURE EXTENDED: SEBI has extended the
• HIGH COURT RULING ON MISCONDUCT: In a significant
tenure of contracts in Securities Lending and Borrowings (SLB) to
judgment, the Bombay High Court has held that habitual absence
12 months from one month. In its second revision of the SLB
from work place without taking leave or giving prior intimation
framework since its operationalisation in April 2008, SEBI has said
amounts to misconduct on the part of employee.
that the Approved Intermediary (Clearing Corporation/Clearing
• SEBI PANEL ON PUBLIC ISSUE SCAM: Justice Wadhwa
Committee set up by SEBI has suggested recovery of Rs.95.96
Crore from those who rigged Initial Public Offers (IPOs) between
Bank promotion test and JAIIB exam
• FINANCE COMMISSION PRESENTS ROADMAP: The Thirteen
Finance Commission, headed by Dr. Vijay Kelkar has recommended
a new Roadmap for achieving medium-term Fiscal Consolidation
online MOCK TEST - CD
through 2010-15. • For better understanding of what you have prepared.
• GOVT. SHELVES INTRODUCTION OF UTN: The Govt decided • For removing the confusions that occured while studying.
to shelve the introduction of the UTN which Tax Payers need to • For better time management in the real exam like situation.
quote along with the permanent Account number (PAN) when • For testing your preparation and confidence level before Exam.
tax is deducted at source. The introduction of UTN was scheduled You can practice on-line without use of internet. By installing the
to be implemented from Jan 2010. software on your computer system, you can use it by obtaining pass-
word from us.
• INDIA-ASIAN FTA TO BE EFFECTIVE: Imports of several items
from Malaysia, Singapore, Thailand will become cheaper as India- Special features : Explanation given for correct and wrong options
for all questions for better understanding of the mistakes made. This
Asian Free Trade Agreement comes into force with these countries
improves the understanding of the guidelines behind the questions
in the first phase from January 1, 2010.These countries account
and help in retaining for a longer period.
for bulk of the $44 billion India-Asian trade.
• The questions are shuffled when you use the test next time.
• BALANCE OF PAYMENTS DATA: The Current Account deficit • Each time, you can set your own time to improve efficiency.
was at 12.62 billion in July-Sept 2009, marginally higher than
$12.57 in the same period last year. For exam focussed study material
Promotion Success- CD
Exports declined to $42.630 billion in the second quarter 2009 as
against $53.630 billion in the same period last year.
Imports declined to $74.55 billion in July-Sept.2009 as against
$92.75 billion in of last year. • For details please contact us at 0172 2665623 or our Website.
• Cost-Rs.300 for each CD.
14 ♦ Banking events updatE ♦ February 2010 DIARY OF EVENTS
House) shall have the flexibility to decide the tenure. • EQUIFAX –NEW CREDIT INFORMATION CO : Equifax has
• STANDARDISED DOCUMENT FOR SALE OF NPAs: The formed Equifax Credit Information Services (ECIS), a Joint Venture
drafting of a Standardised Deed of Assignment is being carried between Equifax and 6 Leading Indian Financial Institutions, to
out jointly by Asset Reconstruction Companies (ARC) and Banks provide a broad range of Credit Data and Information Solutions
under the aegis of IBA. The Document will eliminate ambiguities throughout India. Equifax was granted in-principle approval in
pertaining to the conveyance of Title/ rights/interest in assets April 2009.
when the former buys loans from the later. • India and Finland have signed a revised Double Taxation
• PAN MANDATORY FOR SHARE TRANSFER: SEBI has clarified Avoidance Agreement (DTAA). The lowering of withholding tax
that it shall be mandatory to furnish a copy of PAN (on) rates will promote greater investments , flow of technology and
transmission of shares to the Legal Heir(s) where the deceased technical services between the two countries.
shareholder was the Sole-Holder of shares. Pan would also be • SUPREME COURT VERSION ON BOUNCED CHEQUE: The
mandatory for deletion of the name of the deceased shareholder Supreme Court has ruled that notice with respect to a cheque
where the shares were held in the name of two or more can be issued only once. The deadline or limitation starts from
shareholders. the date of the first notice. Later notices do not matter.
• LIFE INSURANCE INDUSTRY MOUNT LOSSES: The Life • ACCOUNTING STANDARDS ROADMAP RELEASED: The Govt
Insurance Industry posted a loss of Rs.4,878 Crore in the Financial has released the roadmap for convergence of Indian Accounting
year 2008-09 as against a loss of Rs.3,413 Crore in 2007-08.The Standards with the Globally Acknowledged International Financial
losses are mainly due to private sector Life Insurers, who were Reporting Standards(IFRS). By April 2011, the listed Companies
unable to translate higher expenditure into growth in fresh and those with a net worth of over Rs.1000 Crore will have to
business premium. convert their balance sheets to the notified Accounting Standards
• SEBI FOR AUDIT OF CREDIT RATING AGENCIES: SEBI has which are convergent with IFRS. But IFRS convergence will only
said that all Credit Rating Agencies (CRAs) have to get an Internal be voluntary for SMEs.
Audit done every six months. Internal Audit shall cover all aspects • CCEA APPROVES PURA SCHEME: The Cabinet Committee on
of CRA operations and procedures, including the investor Economic Affairs has approved the “Provision of Urban Amenities
grievance redressal mechanism. in Rural Areas” (PURA) Scheme with a plan outlay of Rs.248
• SEBI EASES NORMS FOR FINANCE COMPANIES: SEBI has Crore. The scheme is aimed at providing better opportunities to
said that the Regulated Finance Companies no longer need to rural people and help reduce migration from rural to urban areas.
show 100% Asset Cover while selling unsecured debt instruments The scheme will be implemented in Public Private Partnership
to raise capital. This clarifies that in case of debt which is classified (PPP) Mode.
as “Unsecured”, no asset cover needs to be maintained. • REGULATORS CLOSE FIVE BANKS IN US: Regulators of US
• EXPERT PANEL ON LOW CARBON ECONOMY: An Expert Panel seized five US Banks which were taken over by other institutions.
has been constituted by the Planning Commission, to be headed Last year, 140 US Banks failed, the Highest Annual Level since
by Mr. Kirit Parikh, one of its former member, to prepare a 1992 in the wake of the savings and loan crises .
strategy for low carbon economy for India. The Panel will present • TRADING ENERGY-SAVING CERTIFICATES: Under the new
an Interim Report outlining the Roadmap for India for low carbon Perform, Achieve and Trade (PAT) Proposal, which would be
growth by end April 2010 and a final report by end September. implemented over 700 Industrial Units across the country will be
• CHINA World’s TOP EXPORTER: China is now the World’s given targets for reducing their energy consumption. Those
Leading Exporter ahead of Germany. In the 11 months from managing the better their targets will be allowed to sell energy
January to November, Chinese exports reached a total value of saving credits to those failing to achieve the required cuts. Energy
$1.07 Trillion while German Exports amounted to $1.05 Trillion. Conservation Act 2001 is to be amended to enable trading of
• SEBI SETS TIMELINE FOR SHARING INFORMATON: SEBI certificates.
has fixed a timeline for Exchanges to disseminate information on • EXPORT-IMPORT FROM INDIA: During Apr-Nov 2009 period,
individual securities in a move to streamline operations related to the exporters were USD 104.25 billion and Imports USD 170.43
Market Wide Position Limits (MWPL) in a move to streamline billion. Accordingly, the trade balance was USD 66.18 billion.
operations related to MWPL of derivative contracts. • EQUITY AND DEBT ISSUANCES IN 2009: Equity issuances
• RBI WARNS AGAINST UNDERPRICING OF RISK: Deputy for the year 2009 at Rs.72,000 Crore (37% higher than 2008)
Governor of RBI has said that the Banks are resorting to Sub- were still dwarfed by debt offerings. Debt issuances, which ranked
PLR short term lending due to the excess liquidity in the system. in Rs.1,44,700 Crore, set a five-year record in 2009.
There is a temptation to under-price risk whenever there is excess • PERSONAL AND CORPORATE TAX COLLECTIONS: The
liquidity and pressure to generate profits. Pricing below cost can Centre’s Corporate Tax Collections grew 44.03% in December to
be risky and the risk cost is very often not captured adequately. Rs.53,293 Crore as against Rs.37,002 Crore in the same month
Banks should also be cautioned about large investment into debt- of the last year. However, Personal Income Tax Collections
oriented mutual funds. declined to 19.75% that month to Rs.13,117 Crore as against
• CHINA RAISES BANKS’ RESERVE RATIO: China has raised Rs.16,345 Crore.
the Bank’s Reserve Ratio by 50 basis points from January 18. • COMPUTER-AIDED TEACHING SCHEME: The Cabinet
The Central Bank of China has said that the existing levels are Committee on Economic Affairs, chaired by the Prime Minister,
15.5% for big banks and 13.5% for smaller ones. Dr. Manmohan Singh, approved the Revised Scheme on
• INDIA TO JOIN WTO PANEL: India will join a WTO Panel as an Information and Communication Technology (ICT) that aims to
“Observer” that would give the country an insight into how provide the required computer hardware, software and e-content
Governments of developed countries place multi-billion to imparting computer literacy and ICT-enabled teaching and
procurement orders with the Industry. The Cabinet Committee learning.
on WTO cleared the proposal for the country to join the exclusive • Corporation Bank and Canara Bank have increased the
club comprising a 14 full-fledged members and about 20 observers. Authorised Capital from the existing level of Rs.1,500 Crore to
Compilation : SP Sharma & Sapandeep Toor Source : Financial Newspapers, Financial News-Magazines & Financial and Institutional Web-sites
Banking events updatE ♦ February 2010 ♦15
• Heavy Engineering Corporation, Bhattacharya in Uttrakhand.
GENERAL AWARENESS Ranchi has received from the Indian • Mysore, the city of palaces, has been named
• China unveiled the Fastest Rail Link in the Nuclear Society the INS Industrial the 4th Best Destination in India, in the
World. The Train can go 394.2 km per hour. Excellence Award 2008 for its list of “31 places to go in 2010” by the New
• Russia, the World’s largest Crude Exporter outstanding contribution towards York Times citing its booming Yoga Centres
launched a 2,757-kilometere “Strategic” manufacturing special products for the which cater to everyone’s need. Srilanka
pipeline that will supply oil to Energy- hungry Department of Atomic Energy. topped the list.
China and Asia pacific region in its bid to reduce • For the First Time in its 800 Year History, • Narain Kartikeyan, the First and the only
dependency on problematic European markets. Cambridge University plans to issue Indian to have raced in Formula One, is
• Ms Kalyani Kaul, a Barrister of Indian Origin Bonds to raise money from the markets. ranked 126 in the Castrol Rankings for
who handled high-profile cases in the UK, has • R.Gopalan has assumed charge as the 2009. He is the Highest ranked among Indian
been appointed a Recorder by Queen Secretary for Banking and Financial Drivers, ahead of GP2 racer Karun
Elizabeth and will soon preside over hearings Services Industry. Chandhok.
in county courts. • The J&K Government has declared • According to UN Report, nearly 90% of
• The Rajiv Gandhi Thermal Power Project 2010 as “Visit Kashmir” Year for the World’ 7000 Oral Languages will
(RGTPP) at Khedar in Hissar of Haryana created Domestic and International Tourists. disappear within the next 100 years.
history on Project-Implementation, when it • Leading IT Firm, Mind Tree, has been • Science-fiction blockbuster “AVATAR”
syncronised the First Sub-critical Unit of 600 ranked Second in Asia in the Corporate took Top Honors at the 67th Golden
Mw capacity in the Country, in a record period Governance Poll 2009 conducted by Globes winning Best Picture and Mr.
of 35 months. Asiamoney Magazine. The Company has James Cameron as Best Director as Oscars
• Mother Teresa, the Catholic Nun who devoted also been ranked the First for Best Overall Frontrunner.
her life to the sick and poor of India, honoured for Corporate Governance in India. • The First Rail Car for the Mumbai
with Noble Peace Prize in 1979, will also be • India and Japan have decided to jointly Monorail Project has reached the city from
honoured on the New US Postage Stamps. develop One City in India as “Solar City”. transportation solution major Scomi’s Kula
• The facility, for mobile users to change their The Government has so far, given in Lumpur works.
mobile operator, but retain their cellphone principle approval of 34 cities in the country • Canadian Actress Emmanuelle Chriqui
number, being delayed to April 2010, is to be to be developed as Solar Cities. has topped an annual poll of the World’s 99
implemented throughout the country instead • World’s Tallest Hotel in Dubai “Rose Most Desirable Women.
of earlier plan of DOT in two phases. Rayhaan” has been inaugurated after the • The Cabinet Committee on Economic
• Chandigarh City has been declared the “Best much awaited opening of Burj Dubai, Affairs has approved the setting up of Model
in the Country” by National AIDS Control renamed as Burj Khalifa and also is certified Colleges in 74 Identified Districts in the
Organisation in Blood Transfusion Services. as the “Tallest Hotel in the World” by the Country in a bid to aid students in the
• According to the Sectoral Survey by the Guinness Book of World Records. educationally backward districts.
National Sample Survey Organisation (NSSO), • According to Global Outplacement • The Central Government has appointed the
Maharashtra continued to lead the States Consultancy Challenger, Grey & Christmas, Former Foreign Secretary Shiv Shankar
in the Country contributing to the growth of with a total of 12,88,030 Layoffs in the Menon as the National Security Advisor.
Services Sector, which account for over 55% US in 2009, the Year saw the Heaviest • The Government Selection Committee
of the GDP. Downsizing since 2002. These were Higher headed by Vice-President of India, has
• Pop Princess Britney Spears of Los Angeles than12,33,993 in 2008. approved the name of Mrinal Pandey for
Singer, has been crowned the Biggest Star of • According to the 2010 Quality of Life the post of “Prasar Bharti Chairperson”.
the past decade as per New Internet Poll. Index, India has moved up 35 places to • Vijay Mallya-led United Spirits, the No.1
• Mr. Mota Singh, who is the UK’s First Sikh and become the 88th Best Country in the Spirits Company in India , has emerged as
Asian Judge, also Queen’s Counsel, has been World to live. Overall France topped for the World’s Second Largest Spirits Firm
Knighted in the Queen’s New Year Honours list the fifth consecutive year, followed by in terms of volume .
for “Services to the Administration of justice, Australia, Switzerland and Germany.
• Padma Shree Awards conferred on-
community relations and to the voluntary sector. • China supplanted the US as the Former ICAI President, Mr. T.N.Manoharan
• Dr. Subbana Ayyapan has been appointed World’s Largest Auto Market after its and Chairman of TVS Motor Company, Mr.
the new Director- General (DG) of the Indian 2009 Vehicle sales jumped 46% ending Venu Srinivasan.
Council of Agricultural Research (ICAR) more than a century of American
• Padma Vibhushan Awards conferred on-
• The Vienna Philharmonic’s acclaimed New year Dominance.
Former RBI Governor, Dr. Yaga Venugopal
Concert was broadcast in a record 72 countries • Indian Posts has the Largest Postal Reddy, Founder of Apollo Hospitals, Dr.
and on the Internet for the for the First Time, Network in the World with over 1.55 Pratap Chandra Reddy.
has been the World’s Largest Classical Music Lakh Post offices. India Posts and Thomas
• Padma Bhushan Awards conferred on-
Event in terms of International Coverage. Cook have tied up to provide travel-related
Actor Amir Khan, Promoter of Leela Group
• The Burj Dubai Tower, World’s Tallest facilities at Five post offices in Delhi and
of Hotels, Captain C.P.Krishnan Nair.
Building has been inaugurated on 4th January. the tie-up could be extended to other post
offices. • The President had approved 130 Awards. In
• SAIL has bagged the SCOPE Meritorious all, 6 Padma Vibhushan, 43 Padma Bhushan
Award for Research and Development (R&D), • Letika Saran, a 1976 IPS Officer, became
and 81 Padma Shri Awards have been given.
Technology Development and Innovation for the First Woman Director General of Police
of Tamilnadu, becoming the Second • The Indian School of Business (ISB) has
2007-08.HPCL has also won the SCOPE Award been ranked 12th in the Global B-School
for Best Practices in Human Resource Woman to head a State Police Force in the
Country after Kanchan Chaudhry Rankings .
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16 ♦ Banking events updatE ♦ February 2010
a RBI, 2 days the persons handling cash.
b SEBI, 1 hour a a and b only
PAPER c FIMMDA, 15 min b a and d only
Question based on latest policy d Ministry of Corporate Affair, 1 month c b and c only
01 Disclosure of information relating to which 08 A haircut of ___ (or higher, as maybe d b and d only
of the following has been made decided by the participants depending 14 Frauds involving forged instruments are
mandatory, as part of ‘notes on accounts’ on the term of the repo) shall be to be reported by :
of balance sheet of a bank wef Mar 31, applicable on the market value of the a paying bank only
2010: corporate debt security, prevailing on b collecting bank only
a movement of non-performing advances the date of trade of 1st leg. c paying or collecting bank, as decided
b fee/remuneration received in respect of a 25% by them mutually
bancassurance business undertaken by b 20%
d paying and collecting bank both, to
the bank c 15% collate the facts
c no. of cases and amount considered d 10%
15 In the case of collection of an
under CDR scheme 09 Trading in currency futures in recognised instrument, which is genuine but the
d Total amount of unsecured advances stock exchanges, is allowed in India in amount is collected fraudulently by a
outstanding as at Mar 31, 2010. which of the following currency pairs: person who is not the true owner, the
02 Banks are required to make a no. of a USD-Rupee ______ , which is defrauded, will have
disclosures relating to various aspects of b USD-Rupee, Euro-Rupee to file fraud report with the RBI
banking. These are shown in the balance a paying bank only
c USD-Rupee, Euro-Rupee, Yen-Rupee
d USD-Rupee, Euro-Rupee, Yen-Rupee, b collecting bank only
a part of respective asset or liability
Pound Sterling-Rupee c paying or collecting bank, as decided
b part of respective income or expenditure by them mutually
c notes on accounts Questions based on Fraud Reporting
& Counterfeit notes d paying and collecting bank both, to
d all or any of the above collate the facts
10 If a bank fails to report a fraud required
03 RBI has issued direction relating to repo 16 In the event of an altered/fake cheque
to be reported to RBI, the bank can be
in Corporate Debt Securities by exercising having been paid/encashed involving
penalized by RBI u/s ___ of ___ Act.
powers u/s ___ of ____ Act: two or more branches of a bank under
a 43-C, B R Act
a 17 E, RBI Act Core Banking Solution (CBS), which of
b 47-A, B R Act
b 22 (c) Banking Regulation Act the following would be responsible for
c 43-C, RBI Act reporting:
c 22 (c) RBI Act
d 47-A, RBI Act a the branch which has released the
d 45 W, RBI Act
11 Under Fraud Reporting guidelines of payment
04 Which of the following is not part of
RBI, the banks are required to nominate b the branch to which the cheque actually
corporate debt securities, for which repo
an official of rank of ____ who is relate
transaction can be undertaken:
responsible to submit all fraud related
a debentures issued by a company c the branch which has released the
b debt securities issued by a govt. payment and the branch to which the
a AGM cheque actually relate
c bonds issued by a company b DGM
d none of the above d there is no need as HO can extract the
c General Manager information at HO level.
05 For repo transactions in corporate debt d as decided by Board of Directors
securities, which of the following condition 17 Which of the following case would not
12 For the purpose of reporting of frauds, require a report to RBI:
should be satisfied (a) security should be
the fFrauds are classified mainly as per a theft, burglary only
a listed security (b) security must be rated
the provisions of : b theft, robbery only
AA or above by a rating agency (c)
security should be held in demat form in a RBI Act c burglary, dacoity and robbery
account of the repo seller (d) the security b Indian Penal Code d theft, burglary, dacoity and robbery all
should not be a commercial paper or c Banking Regulation Act 18 Which of the following is not correct
certificate of deposit or non-convertible d Civil Procedure Cod regarding a report about fraud to RBI,
debentures: 13 The following cases where fraudulent where the amount is Rs.1 lac and above:
a a to d all intention is not suspected/proved at the a soft copy format involving all categories
b a to c only time of detection, will be treated as fraud of frauds to be sent in all cases
c b, c and d only and reported accordingly (a) cases of b hard copy format to be sent for frauds
d a, c and d only cash shortage more than Rs. 10,000/-, involving an amount of Rs.5 lac or above
(b) cases of cash shortage more than to Central Office and also the concerned
06 What is the minimum and maximum period
Rs.5,000/- if detected by management Regional Office of RBI
of repo in corporate debt securities?
/ auditor/ inspecting officer and not
a min one day and max 6 months c hard copy format to be sent to Regional
reported on the day of occurrence by
b min one day and max 12 months Offices of RBI for amount of Rs.1 lac
the persons handling cash (c) cases of
c min 7 days and max 6 months and above up to Rs.5 lac.
cash shortage more than Rs. 5,000/-,
d min 7 days and max 12 months (d) cases of cash shortage more than d none of the above
07 All repo trades under corporate debt Rs.5,000/- if detected by management 19 Frauds of Rs.1 lac and above are to be
securities are to be reported on the ___ / auditor/ inspecting officer and not reported to RBI on ____ within _____:
reporting platform within ____: reported on the day of occurrence by a FMR 3, 2 weeks
Banking events updatE ♦ February 2010 ♦17
b FMR 2, 1 week 25 If certain conditions are satisfied, banks 30 Cases relating to burglary, theft, dacoity
c FMR 1, 3 weeks are allowed to close frauds for a limited or robbery are to be reported to RBI on
d FMR 1, one week statistical / reporting purpose, where a ____ basis within 15 days, on ____:
20 If borrower as well as the 3rd party such the amount involved is: a quarterly, FMR-4
as builders, chartered accountants, a Rs.5 lac and above b half-yearly, FMR-2
motor vehicle dealers etc. are also b Rs.10 lac and above c yearly, FMR - 2
involved in fraud, report about these 3rd c up to Rs.20 lac d no reporting required.
parties is required to be submitted to: d up to Rs.25 lac Questions based on counterfeit
a Vigilance Commission 26 Private banks are to report the frauds notes
b Reserve Bank of India to State Police, where the amount of 31 Which among the following is not
c Serious Fraud Office fraud is ______, committed by outsider authorised to impound the counterfeit
d Indian Banks Association of their own or in connivance with the note, if presented (a) branches of public
21 Frauds of Rs.100 lac and above are to staff: sector banks (b) branches of private
be reported to RBI on FMR-1 and a DO a Rs.10000 and above sector and foreign banks (c) branches
letter to DBS, RBI, within _____: b Rs.1 lac and above of coop and regional rural banks (d)
a 2 weeks c Rs.5 lac and above treasuries or sub-treasuries (e) RBI issue
d Rs.1 cr and above office:
b 1 week
27 Private banks are to report the frauds a b and c
c 3 weeks
to Serious Frauds Investigation Office, b d and e
where the amount of fraud is ______: c b to e
22 Cases of attempted fraud where the loss
is likely to be Rs.1 cr and above, had the a Rs.10000 and above d none of the above
fraud taken place, are to be reported to b Rs.1 lac and above 32 Each bank note is to be branded as
Fraud Monitoring Cell of RBI, with in: c Rs.5 lac and above counterfeit note, with a rubber stamp
a 2 weeks d Rs.1 cr and above having a uniform size of:
b 1 week 28 Which of the following statement a 3 cm x 5 cm
c 3 weeks regarding reporting of frauds to State b 3 cm x 4 cm
d immediately Police by a public sector bank is false? c 4 cm x 4 cm
23 Banks should submit a copy each of the a amount of Rs.1 lac and above – Report d 5 cm x 5 cm
Quarterly Report on Frauds Outstanding by Regional Head of the bank to Senior 33 When a counterfeit note is impounded,
in the format given in ____ to the Central Officer of State CID a receipt is required to be issued to the
Office and the Regional Office of the b amount of less than Rs.1 lac but above tenderer which should be signed by:
Reserve Bank under whose jurisdiction Rs.10000 – Branch head to report to a cashier
the Head Office of the bank falls within local police station b tenderer
___days of the end of the quarter to c amount of less than Rs.10000 – Regional c cashier and tenderer
which it relates. Head to decide whether to report or not d manager and tenderer
a FMR-1, 15 days d none of the above 34 The counterfeit note impounded by the
b FMR-2, 15 days 29 Which of the following statement bank:
c FMR-3, 15 days regarding reporting of fraud to CBI by a a shall be kept by the bank
d FMR-1, 30 days public sector bank is correct: b shall be returned to the customer
24 Banks should ensure that all frauds of a if amount is Rs.1 cr or above and there c shall be sent to police by filing FIR
Rs. 1.00 lakh and above are reported to is staff involvement – Banking Security
d shall be forwarded to RBI
their Boards within: and Fraud Cell
35 Data is required to be submitted by
a promptly on their detection. b if amount is Rs.1 cr or above and there
banks on counterfeit notes to :
b within 1 week of detection is no staff involvement – Economic
Offences Wing a RBI issue office on a monthly basis
c within 3 days, if the amount is Rs.1 cr or b RBI central office on a quarterly basis
above c if amount is Rs.5 cr or above – Anti-
corruption Bureau in all cases c Ministry of Finance, Serious Fraud
d all the above Investigation Office, on a half yearly
d all the above
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18 ♦ Banking events updatE ♦ February 2010
basis c guarantor is fully liable for the loan as it these will not be accepted:
d Ministry of Finance, Serious Fraud was up him to verify the facts before a a minor with age of only 5 year
Investigation Office, on a quarterly basis giving guarantee b a senior citizen with age of 110 years
36 If counterfeit notes are dispensed by d the amount can be recovered only from c a person who has recently been declared
an ATM of a bank: one of them only. insolvent
a the said ATM operations will be 41 If an exporter suffers loss in an export d a trust, of whose X is a trustee
automatically cancelled transaction, which of the following 47 If deficit financing is financed by printing
b it will be construed as an attempt to organisations provide the export of additional currency/bank notes, it :
circulate counterfeit notes by the bank guarantee:
a increases govt. borrowing
concerned. a Exim Bank
b increases the supply of goods in the
c it will be investigated by CBI b Export Credit Guarantee Corporation economy
d all the above c Director General Foreign Trade c increases the prices of goods and
37 If a counterfeit note is returned by the d Reserve Bank of India services and leads to inflation
police, it is to be carefully preserved for 42 A loan has been sanctioned to an d reduces the liquidity in the banking
a period of ___ from date of receipt from enterprise which is neither located in NE system
the police authorities: Region, nor a women enterprise and not 48 Banks can sell their NPA accounts to
a 1 year b 3 years a micro enterprise. What is the amount which of the following (a) other banks
c 5 years d 8 years of guarantee cover, if the balance in the (b) other financial institutions (c) non-
Questions based on recalled account is Rs.60 lac. bank finance companies (d) asset
questions a no cover is available, as the amount management companies:
38 Bailment of good to secure the exceeds Rs.50 lac a a and b only
performance of a promise is called: b the amount is Rs.42.50 lac b a, b and c only
a bailment c the amount is Rs.37.50 lac c b, c and d only
b pledge d the amount is Rs.50 lac d a to d any
c hypothecation 43 Which of the following policy is known 49 A kite flying transaction represents
d lien as Annual Policy Statement? which of the following:
39 When a loan is given by a bank on the a annual budget of Central Govt. a when overdraft is allowed by a bank to
security of railway receipt (RR) or goods b credit and monetary policy of RBI a firm
receipt (GR) issued by a transport c foreign trade policy of DGFT b when additional loan is allowed by a bank
company, which type of charge is d regulations issued by SEBI to a firm to cover the amount of
created: 44 What is the objective of holding a irregularity in the account
a pledge customer meet on 15th of every month: c when loan is allowed for a transaction
b lien a to inform the customer about new which is not a genuine business
c hypothecation schemes the bank has come out with transaction
d assignment b to sort out grievances of customers d all the above
40 Account of X was running irregular. Bank c to conduct such business which cannot 50 Which of the following committee had
agreed to continue the loan provided X be conducted on other normal days recommended the concept of working
provided some personal guarantee. X d all the above capital term loan:
offered guarantee of Y. Later on when 45 A gold card is allowed with a standby a Nayak Committee on working capital
loan was not paid and bank initiated limit to the extent of ___% of the b Tandon Committee on working capital
action against X and Y, Y took the plea sanctioned limit, at the time of sanction c Chore Committee on working capital
that he is not liable as the fact of of gold card: d Kapoor Committee on SSI financing
irregularity was not brought to his notice a 10% b 15%
by the bank: c 20% d 25%
a Y is not liable because full facts were 46 X has proposed that in his deposit ANSWERS
not disclosed account one of the following should be 01 b 02 c 03 d 04 b 05 b
b amount can be recovered from X and Y 06 b 07 c 08 a 09 d 10 b
accepted as a nominee. Which one of
in equal proportion 11 c 12 b 13 a 14 a 15 b
16 a 17 d 18 d 19 c 20 d
21 b 22 a 23 b 24 a 25 d
26 b 27 d 28 d 29 b 30 a
Name:____________________________________________________ 31 d 32 d 33 c 34 c 35 a
36 b 37 b 38 b 39 a 40 c
Address:__________________________________________________ 41 b 42 b 43 b 44 b 45 c
46 d 47 c 48 d 49 c 50 b
__________________________________________Pin ____________ • 21 mock papers based
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DraftNo___________Date_________drawn on___________Bank, for Rs______fvg • July 2008 10th Edn
Banking & Management Academy. PERIOD from ________ to________ MODEL TEST PAPERS FOR
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by N S Toor
Subscription - 1 yr: Rs.200, 2 yrs : Rs.380 & 3 yrs : Rs.560 Single Current Copy Rs.20 (Old Issues - Rs.25 per copy. For more than 2 copies add courier charges also)
Banking events updatE ♦ February 2010 ♦ 19
B ANKING EEFC Accounts - Clarification retail investors. With a view to enhancing investor
education relating to risk characteristics of regulatory
POLICY In terms of RBI regulation dated May 03, 2000, a person
capital instruments, banks issuing subordinated debt
resident in India is permitted to open, hold and maintain with an Authorized to retail investors have been advised by RBI (Jan
Dealer in India, a Foreign Currency Account known as Exchange Earner's Foreign 13, 2010) to adhere to the following conditions:
Currency (EEFC) Account subject to the terms and conditions of the Exchange a) The requirement for specific sign-off from the
Earner's Foreign Currency Account Scheme. Further, in terms of RBI circular investors for having understood the features and
dated November 30, 2006, all categories of foreign exchange earners are allowed risks of the instrument may be incorporated in the
to credit up to 100% of their foreign exchange earnings. common application form (draft Shelf Prospectus,
RBI has clarified (Dec 29, 2009) that all categories of foreign exchange earners Shelf Prospectus and Tranche Document) of the
are allowed to credit up to 100% of their foreign exchange earnings. As such, it proposed debt issue.
will be in order for the Authorised Dealers to allow SEZ developers to open, hold b) For floating rate instruments, banks should not
and maintain EEFC Account and to credit up to 100% of their foreign exchange use its Fixed Deposit rate as benchmark.
earnings, as specified in the paragraph 1 (A) of the Schedule.
c) All the publicity material, application form and
Advance Remittance for Import of Rough Diamonds other communication with the investor should clearly
AD Category –I banks are permitted to make advance remittance without any state in bold letters how a subordinated bond is
limit and without bank guarantee or standby letter of Credit, by an importer different from fixed deposit particularly that it is not
(other than Public Sector Company or Department / Undertaking of the covered by deposit insurance.
Government of India /State Governments), for import of rough diamonds into Remittance of Salary - Relaxation
India from the undernoted 9 mining companies, subject to certain conditions:
In terms of RBI circular dated Sept 20, 2003, a national
i.De Beers UK Limited, ii.RIO TINTO, UK, iii. BHP Billiton, Australia, iv. ENDIAMA, of a foreign state resident in India, being an employee
E.P. Angola, v.ALROSA, Russia, vi. GOKHARAN, Russia, vii. RIO TINTO, of a foreign company or a citizen of India employed
Belgium, viii.BHP Billiton, Belgium and ix. Namibia Diamond Trading Company by a foreign company outside India, and in either
(PTY) Ltd (NDTC) (name of this company added on Dec 29, 2009). case on deputation to the office/ branch/ subsidiary/
External Commercial Borrowings (ECB) Policy – Spectrum joint venture in India of such foreign company, may
allocation payment open, hold and maintain a foreign currency account
Keeping in view the large outlay of funds required to be paid directly to the Govt with a bank outside India and receive the salary
within a limited period of time, RBI has decided (Jan 25, 2010) to make a one- payable to him by credit to such account subject to
time relaxation in the end-use conditions of the ECB policy. the conditions mentioned therein, which inter alia,
Accordingly, the payment for spectrum allocation may initially be met out of include that the amount to be credited to such
Rupee resources by the successful bidders, to be refinanced with a long-term account shall not exceed 75 per cent of the salary
ECB, under the approval route, subject to the following conditions: accrued to or received by such person from the foreign
i. The ECB should be raised within 12 months from the date of payment of the
final installment to the Government; The Government of India, has liberalised the above
facility as indicated below:
ii. The designated AD - Category I bank should monitor the end-use of funds;
(i) A citizen of a foreign state, resident in India, being
iii. Banks in India will not be permitted to provide any form of guarantees; and an employee of a foreign company or a citizen of
iv. All other conditions of ECB, such as eligible borrower, recognized lender, all- India, employed by a foreign company outside India
in-cost, average maturity, etc, should be complied with. and in either case on deputation to the office /branch
/subsidiary /joint venture in India of such foreign
Eligible borrowers in the telecommunications sector proposing to fund the payment
company may open, hold and maintain a foreign
for Spectrum allocation directly out of the proceeds of the ECBs may continue to
currency account with a bank outside India and
avail of the ECBs under the automatic route as per the extant policy.
receive the whole salary payable to him for the
All other aspects of ECB policy remain unchanged. services rendered to the office/branch/subsidiary/
Prudential Norms on Creation and Utilisation of Floating Provisions joint venture in India of such foreign company, by
(Financial Institutions) credit to such account, provided that income-tax
The banks are permitted to use the floating provisions only for contingencies chargeable under the Income-tax Act,1961 is paid
under extra-ordinary circumstances for making specific provisions in impaired on the entire salary as accrued in India.
accounts after obtaining Board’s approval and with prior permission of RBI. RBI (ii) A citizen of a foreign state resident in India being
has extended the same guidelines to All Indian Term Lending and Refinancing in employment with a company incorporated in India
Institutions (Jan 05, 2010). may open, hold and maintain a foreign currency
Disclosure in Balance Sheet – Bancassurance Business account with a bank outside India and remit the whole
salary received in India in Indian Rupees, to such
In order to increase transparency in the financial statements of banks, Reserve
account, for the services rendered to the Indian
Bank of India has from time to time issued circulars to banks requiring disclosures
company, provided that income-tax chargeable under
in the ‘Notes to Accounts’ to their Balance Sheet. To enhance the transparency,
the Income-tax Act, 1961 is paid on the entire salary
RBI has decided (Jan 07, 2010) that banks should disclose in the ‘Notes to
accrued in India.
Accounts’, from the year ending March 31, 2010, the details of fees/remuneration
received in respect of the bancassurance business undertaken by them.
Ready Forward Contracts in Corporate Debt Securities
Log on our website
RBI decided (Jan 08, 2010) to introduce repo in corporate bonds and has issued and view free lectures
a direction dated January 08, 2010 under section 45W of the RBI Act, 1934. on interesting aspects
Retail Issue of Subordinated Debt for Raising Tier II Capital of current Indian
Banks have indicated to RBI that they would like to issue subordinated debt to Banking.
Registration RNI No. 67802/98 Postal Regn No.CHD / (0001) 2009-11
20 ♦ Banking events updatE ♦ February 2010 Licensed to Post Without Prepayment at PO Sector 47, Chandigarh No.PP/PB-3/0005/2009-11
Finance Commission DATA COLUMN
The Finance Commission is constituted by the President under Article 280 Business of Banks
of the Constitution, mainly to give its recommendations on distribution of (Rs.in Cr) Mar31'09 Jan01'10
Aggregate deposits 4086865 4264540
tax revenues between the Union and the States and amongst the States Cash in hand/RBI 201249 229309
themselves. Two distinctive features of the Commission’s work involve (a) Investments 1247820 1412798
redressing the vertical imbalances between the taxation powers and Bank Credit: 2771441 3020808
expenditure responsibilities of the centre and the States respectively and -Food 46750 46359
-Non-Food 2724691 2974448
(b) equalization of all public services across the States. Cash-Deposit Ratio 5.16 5.38
Functions of the Finance Commission: It is the duty of the Commission to Investment-Deposit 31.99 33.13
make recommendations to the President as to— Credit-Deposit 71.04 70.84
• the distribution between the Union and the States of the net proceeds (Rs.in Cr) Mar31'09 Jan01'10
of taxes which are to be, or may be, divided between them and the M3 (Out of which) 4764019 5285446
allocation between the States of the respective shares of such proceeds; (a) Currency with public 666364 729859
(b) Demand deposits-Banks 581247 625232
• the principles which should govern the grants-in-aid of the revenues of
(c) Time Deposits - Banks 3510835 3926548
the States out of the Consolidated Fund of India; (d) Other deposits with RBI 5573 3806
• the measures needed to augment the Consolidated Fund of a State to Sources of Money Supply
supplement the resources of the Panchayats in the State on the basis of (a) Net Bank credit to Govt 1277199 1514836
(b) Bank credit to Comrcl sector 3013637 3266128
the recommendations made by the Finance Commission of the State; (c) Net Forex assets of Banks 1352184 1341748
• the measures needed to augment the Consolidated Fund of a State to Important Banking Indicators
supplement the resources of the Municipalities in the State on the basis of Bank rate 06.00% (29.04.2003)
the recommendations made by the Finance Commission of the State; Statutory Liqdity Ratio 25.00% (07.11.2009)
Cash Reserve Ratio 05.75% (27.02.2010)
• any other matter referred to the Commission by the President in the Prime Lending Rate 11.0-11.75% (Leading banks)
interests of sound finance. Reverse Repo Rate 03.25% (22.04.2009)
The Commission determines its procedure and have such powers in the Repo Rate 04.75% (22.04.2009)
Federal Reserve(US) rate: 1.00%
performance of their functions as Parliament, may by law, confer on them. Bank of England Rate : 0.50%
Appointment of the Finance Commission and Members: As per the European Comm. Bank 1.00%
provisions contained in the Finance Commission [Miscellaneous Provisions] Capital & Money Market Indicators
Act, 1951 and The Finance Commission (Salaries & Allowances) Rules, 1951, Parameter end-Jan 10 A year back
the Chairman of the Commission is selected from among persons who have Call rates (percent) 3.50 5.50
Dollar-spot TT (Rs.) 46.87 48.92
had experience in public affairs, and the 4 other members are selected Euro-spot TT (Rs.) 66.94 69.34
from among persons who: BSE - Sensex (points) 16263 9002
(a) are, or have been, or are qualified to be appointed as Judges of a High NSE - Nifty(S&P CNX) 4978 2771
Foreign reserves(Million $) 285161 252178
(b) have special knowledge of the finances and accounts of Government;
INDIAN ECONOMY-IMPORTANT PARAMETERS
RBI's growth estimate for 2009-10 : 7.5%
(c) have had wide experience in financial matters and in administration; or GDP growth-2008-09 (revised estimate) : 6.7%
(d) have special knowledge of economics. Share of service sector in GDP (Mar08) : 64.5%
Implementation of recommendations of Finance Commission : (a) Those to Share of manufacturing sector in GDP : 18.2%
Share of agriculture sector in GDP : 17.3%
be implemented by an order of the President: The recommendations relating
GDP growth-2007-08 (revised estimate) : 9.01%
to distribution of Union Taxes and Duties and Grants-in-aid fall in this Current Inflation Rate (Wholesale) - Dec09: 7.03%
category. Money Supply (M3) expansion Nov"09 : 17.1%
(b) Those to be implemented by executive orders: The recommendations in Exports during 2008-09 : 168.0 bn
Trade deficit (2007-08) : 80.6 Bn
respect of sharing of Profit Petroleum, Debt Relief, Mode of Central
Current Account position (Apr-Mar 08) : 17.4 Bn
Assistance, etc. are implemented by executive orders. Export target for 2009-10 (in $) : 200 bn
First Commission & no. of Finance Commissions: The First Finance GDP at factor cost (adv est 2007-08 Cr) : 4303654
Commission was constituted under the chairmanship of Shri K.C. Neogy on India's share in world merchandise export : 1.45%
Food grain production (2007-08) -Estimate : 227.3
6th April, 1952. 13 Finance Commissions have been appointed at intervals
Poverty line ratio (2004-05) : 22%
of every 5 years. India's currency rating (S&P) : BB Postv
Composition of the 13th Finance Commission: It was been set up under India's external debt (Sept 2009) US $ : 242.8 Bn
the Chairmanship of Dr. Vijay L. Kelkar. Other Members of the Commission Fiscal Deficit Target (2009-10) 6.8% of GDP : 400996 cr
Revenue Deficit Target (2008-09) 4.8 % of GDP : 282735 cr
are Dr. Indira Rajaraman, Prof. Atul Sarma, Dr. Sanjiv Misra. Shri B.K. Chaturvedi Tax-GDP ratio (2008-09) : 11.2%
(part-time Member) and Shri Sumit Bose the Secretary. Apr- Nov 2009:Export 104.25 bn Imports : 170.4 bn
Tenure of the Thirteenth Finance Commission: The Finance Commission Per capita Income 2008-09 (Rs.) : 37490
was required to give its report by 31st October, 2009, which has already Indian economy's ranking in world in PPP : 3rd
Indian economy's ranking in world in value: 10th
been given. Its recommendations will cover the five year period commencing
from 1st April, 2010. OUR PUBLICATIONS : REFER PAGE 11
Sh. N S Toor can be reached by readers at firstname.lastname@example.org DATE OF DESPATCH - Feb 7 / 10, 2010
Published by Gurmeet Toor (Mrs.) at 1008, Sector 45-B, Chandigarh- Printed by Gurmeet Toor (Mrs) at Golden Graphics 'n' Printers, Industrial Area, Ram Darbar, Chandigarh on
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