Tuesday, November 27, 2012

Banking terms

What do you mean by "Above par?"
The term that indicates that the price of a security is higher than its nominal value

Abscissa - this refers to the value on the horizontal axis of a point on a two dimensional graph

Absolute advantage: A country has an absolute advantage if its output per unit of input of all goods and services produced is higher than that of another country

Abandonment option: The option to close out an investment prior to the fuifilment of the original conditions for termination

Abandon: To choose not to exercise or sell an option. Abandonment occurs when the option is out of money on the expiration date.


01.       The first bank in India was set up on modern lines in 1770 by an agency house
02.       Bombay stock exchange was made functional as early as 1870
03.       The first life insurance company in the country – Oriental Life Insurance company
04.       Oriental Life insurance company was established in 1818
05.       First General (non life) Insurance company was set up in 1850
06.       There were 566 private commercial banks in the country with 4151 branches in 1951
07.       There are 32 foreign banks in the country
08.       Foreign banks have around 310 branches all over the country
09.       The Unit trust of India came into existence in 1964
10.       Export Risk Insurance Corporation was set up in July 1957
11.       Export Risk Insurance Corporation was converted as ECGC in January 1964
12.       ECGC – Export Credit Guarantee Corporation
13.       The deposit insurance corporation was set up in 1962
14.       The fourteen banks which were nationalized on 19.7.1969 were – Central Bank of India; Bank of Maharashtra; Dena Bank; Punjab National Bank; Syndicate Bank; Canara Bank; Indian Bank; Indian Overseas Bank; Bank of Baroda; Union Bank; Allahabad Bank; United Bank of India; United Commercial Bank and Bank of India
15.       Six banks were nationalized during the second stage on 15.4.1980
16.       Regional Rural Banks were set up in 1975
17.       NABARD was established in 1982
18.       NABARD – National Bank for agriculture and rural development
19.       Securities and Exchange Board of India was established in 1988
20.       Licensing for new private sector banks was issued in 1993
21.       Indian financial system is composed of three components – financial assets, financial markets and financial intermediaries or institutions
22.       Financial assets are classified into primary or direct securities and secondary or indirect securities
23.       Financial markets can be classified into money market and capital market
24.       Financial intermediaries can be classified into organized and unorganized
25.       Organized financial intermediaries can be classified into banking institutions and non banking financial institutions
26.       Primary securities are those securities which represent financial claims against real sectors
27.       Real sectors represent bills, bonds, shares, book debts etc.
28.       National savings certificates, infrastructure bonds, Indira Vikas Patras, Krishi Vikas Patra etc. are examples of financial assets
29.       Money market is the center of dealings mainly of short term character in monetary assets
30.       The capital market deals in long term funds, both debt and equity
31.       Financial instruments of the capital market are classified into the following two categories namely; government or gilt edged securities and corporate securities
32.       The main financial instruments of corporate sector are – shares, debentures, public deposits and loan from institutions
33.       Banking commission was established in 1972
34.       Capital market is a market which deals in long term funds
35.       Regional Rural Banks fall within supervisory purview of RBI
36.       IRDA is the regulatory authority for all insurance companies in the country including LIC of India
37.       IRDA has its headquarters at Hyderabad
38.       Mutual funds fall within the supervisory purview of SEBI
39.       Export and Import Bank of India does not fall within the purview of development banks
40.       State Bank of India was formulated as per SBI act 1955
41.       ICICI Bank Limited is the first Universal Bank established in the country
42.       New Bank of India merged with Punjab National Bank
43.       The central monetary authority of the country is Reserve Bank of India
44.       Scheduled commercial banks are banks which have been included in the second schedule of RBI act, 1934; registered under companies act and got licence as per Banking Regulations act 1949
45.       When the banks entertain in dealing with insurance business, it is called as bankassurance
46.       Universal banking is the roof under which various banking products are available
47.       When the repayment period of any loan is upto 36 months, the loan is called as short term loan
48.       When the repayment period is between 37 to 84 months, such loans are called as medium term loans
49.       When the repayment period is more than 84 months, they are called as long term loans
50.       In the case of Regional Rural Banks, the contribution structure between Government of India, State Government and Sponsoring banks are in the ratio of 50:15:35


01.       Accounts are allowed to be operated by cheques in respect of current and savings accounts
02.       Interest is not paid in current accounts
03.       Mortgage is a security on immovable property for loan given by the bank
04.       Financial inclusion means provision of – financial services namely; payments, remittances, savings, loans and insurance at affordable cost to persons not yet given the same
05.       When a bank returns a cheque unpaid, it is called as – dishonor of the cheque
06.       Demat accounts are accounts in which the shares of various companies are traded in electronic form
07.       NEFT means – National Electronic Funds Transfer
08.       No upper limit has been prescribed for RTGS
09.       RTGS means – Real Time Gross Settlement
10.       Distribution of insurance products and insurance policies by banks as corporate agents is known as – bankassurance
11.       Interest on savings bank account is now calculated by the banks on daily product basis
12.       Government of India is the largest shareholder (in percentage shareholding) of a nationalized bank
13.       Banks in the country normally publicise  that additional interest rate is allowed in retail domestic term deposits held by– senior citizens   
14.       A centralized databases with online connectivity to branches, internet as well as ATM network which has been adopted by almost all major banks of the country is known as – core banking
15.       Commercial paper is not considered as the money market instrument
16.       With a view to facilitate payment of balance in the deposit account to the person named by the depositor without any hassles in the event of death of the account holder, the following facility was introduced for bank accounts in the country – Nomination
17.       ATM cards are issued to a person who maintains any of the following accounts namely – savings bank accounts and current accounts
18.       ATM is a computer which is dedicated to perform certain specific jobs only
19.       ATM is a user friendly machine and the customer does not require any training for using it
20.       ATM is totally menu driven which displays instructions to the customer step by step for operating the same
21.       A working croup on cheque truncation and E-cheques was constituted by RBI under the chairmanship of Dr. R.B. Barman and major recommendations of group include – the physical cheque will be truncated within the presenting bank; settlement will be generated on the basis of current MICR code line data and electronic images will be used for payment processing
22.       RTGS benefits the customer and the bank
23.       RTGS means a payment system in which – both processing and final settlement of funds transfer instructions can take place continuously
24.       RBI in regard to RTGS has decided that – RTGS would be accessible to all retail customers and there would be no floor ceiling for routing the transactions through RTGS and settlement of transactions. 
25.       State Bank of India is considered to be the first bank to launch a mutual fund
26.       In commercial paper the following parties can invest – individuals, banking companies and corporate bodies registered or incorporated in the county and unincorporated bodies, Non Resident Indians and foreign Institutional Investors.
27.       The commercial paper may be issued in multiples of Rs. 5 lakhs subject to the minimum size of an issue to a single investor being – Rs. 5 lakhs
28.       Commercial paper may be issued for period ranging from seven days to one year
29.       Commercial paper is essentially – unsecured money market instrument
30.       Social control was imposed on commercial banks effective from – 1st February, 1969
31.       Fourteen major Indian banks having deposits of more than Rs. 50 crores were nationalized on 19.07.1969
32.       With effect from 19.07.1969, the fourteen major Indian banks were nationalized by the Government of India under – the banking companies (acquisition and transfer of undertakings) act 1970
33.       Effective from 15.04.1980, six banks with demand and time liabilities exceeding Rs. 200 crores were nationalized
34.       In the wake of Narasimhan committee recommendations the banks which entered into the capital markets – State Bank of India, Oriental Bank of Commerce and Bank of India.
35.       In the wake of Narasimhan Committee recommendations, the financial sector reforms were implemented by the government of India
36.       Financial sector reforms aim towards introduction of capital adequacy norms, based upon capital to risk weighted asset ratios; prudential norms relating to classification of assets, income recognition and provisioning; setting up of a strong supervisory and surveillance mechanism for the banking system and financial sector through the Board for financial supervision in RBI
37.       According to Hilton Young Commission, the RBI act, 1934 was enacted
38.       The Banking Commission was appointed by the Government of India in January, 1969 under the chairmanship of R.G. Saraiya
39.       In order to study the functioning of Public Sector banks, James Raj Committee was appointed
40.       Kamath working group was appointed to study the problems arising out of the adoption of multi agency in agricultural banking
41.       The banking laws committee was headed by – P.V. Rajamannar
42.       The National Credit Council which symbolized the role of credit planning in development was set up in the year – 1968
43.       During the year-1966, RBI set up the All India Rural Credit Review Committee in order to – reassess the developments that have taken place in the field of rural credit since 1954, that is subsequent to submission of the report of the All India Rural Credit Survey Commission
44.       Talwar committee submitted its report in the year 1977
45.       Talwar committee was appointed by Government of India to – submit recommendations on customer service on banks
46.       In order to review the existing system of inspection of banks by RBI, Pendarkar working group was appointed
47.       Under the chairmanship of H.N. Sinor, the working group to examine various issues concerning the deposit rates including floating rate of interest on fixed deposits was constituted by RBI
48.       RBI had constituted the working group on flow of credit to SSI sector under the chairmainship of A.S. Ganguly
49.       The Joint stock banking system started in the late 18th century/early 19th century
50.       The Bank of Bengal got its charter in 1809

Friday, November 23, 2012




01.  Summons are to be issued to defendants:  within 30 days from the date of filing suit
02.  Written statement has to be filed by the defendants within – 30 days of service of the summons which can be extended to 90 days by the court
03.  Time fixed for any act under the code can be extended not exceeding – 30 days in total
04.  The plaintiff has to produce documents and pay requisite fee within – seven days of orders of the court
05.  If the summons are returned plaintiff has to apply for a fresh summons – within seven days of return failing which suit shall be dismissed
06.  Adjournments will not be granted for more than – three times during the hearing of suit
07.  Summons can be served by Private Courier-  approved by High court/district court or through email, fax registered post-ack due
08.  No appeal can be filed other question of law – if the suit amount does not exceed Rs. 10000.00
09.  No second appeal can be filed from the decree of money suit if the amount – does not exceed Rs. 25000.00
10.  No arrest of Judgment debtor can be made if decree amount – does not exceed Rs. 2000.00
11.  No arrest of judgment debtor in a civil suit can be made -  irrespective of the amount if she is a lady
12.  If the decreed amount exceeds Rs. 2000.00  - but does not exceed Rs. 5000.00 arrest can be made for a period not exceeding six weeks
13.  If the decreed amount exceeds Rs. 5000.00 – arrest can be made for a period not exceeding three months
14.  Fine for non-compliance of summons  is Rs. 5000.00
15.  In execution of decree by civil court  - basic things like cooking  vessels. Clothers, personal ornaments as per religious use , tools for making livelihood, family pension, gratuity wages of labourers, dwelling house wages of labourers etc cannot be attached
16.  In execution of decree by civil court – if the house is mortgaged it can enforced
17.  In execution of decree by civil court – the salary to the extent of first Rs. 1000.00 and 2/3 of remainder cannot be attached


18.  Deficiency means  any fault, imperfection, shortcoming in quality/nature/manner of service
19.  Complaint has to be filed  within two years from the cause of action
20.  District forum – claims upto Rs. 20 lakhs
21.  State commission – claims of above Rs. 20 lakhs upto Rs. 1 crore
22.  National commission – claims of above Rs. 1 crore
23.  Bank has to file its version – within 30 days of notice
24.  Non compliance of orders of forum will attract – a fine of upto Rs. 10000.00 or imprisonment of three years or both
25.  Appeal to be filed against orders of District Forum in State forum – after depositing 50% of amount granted by State Forum or Rs. 35000 whichever is less
26.  Appeal against the orders of National Forum – can be filed before Supreme Court after depositing 50% of decreed amount by the National Commission or Rs. 50000 whichever is less
27.  Limitation for filing of appeals – 30 days from the orders


28.  In order to proceed under the scheme – the customer has to first write to the bank
29.  If the bank has not replied within one month or rejected the complaint or if the reply of the bank is not satisfactory to the customer – then he can prefer complaint with the banking ombudsman
30.  Limitation for filing Complaint is  - one year from the date  of reply from the bank
31.  When no reply is received from the bank  - then one year and one month from the date of complaint
32.  The award by Banking Ombudsman would be  - actual amount of loss or Rs. 10 lakhs whichever is less
33.  Bank has to settle complaint – within one month of receipt of the same
34.  Bank has to honour award  - within one month from the date of acceptance of award by the complainant
35.  Any person aggrieved by the award – may prefer an appeal within 30 days before the appellate authority (RBI Deputy Governor)
36.  In case the bank has to file appeal – they have to obtain permission of Chairman and Managing Director and in his absence permission of Executive Director for preferring appeal

37.  Study circle – is a forum to expand the knowledge horizon of employees and it helps employees know various information through persons skilled in those areas
38.  Brainstorming sessions – it is a forum to obtain feedback and elicit ideas/views/suggestions on relevant topics through discussions it instills thinking process
39.  Circle Management Board – To formally review all aspects of Circle/s functioning and determine ways and means to improve the working and to monitor the level of implementation of various ideas, schemes, programmes etc.
40.  Employees’ suggestion scheme – It is a scheme through which various suggestions are obtained from all sections of employees. Suggestions are obtained in regard to changes/modifications in procedures/systems of our bank
41.  Branch visits/interface – To review and monitor the branch’s functioning and to guide the personnel in all matters
42.  Training – To induct the employees, develop skills, impart knowledge on functional and behavioural areas and to develop potentiality and personality of the individual
43.  Quality Circle – It is a voluntary group of employees working in the same work area coming together to solve work related problems
44.  Employees Recognition Scheme – All employees are motivated to take part in various developmental activities like deposit mobilization, recovery, clientele build up and they are awarded for their contributions by enrolling them in various clubs like Chairman’s Club, ED’s Club and GM’s club etc
45.  Staff Meeting – To foster team building and to provide a forum for individual development. Corporate objectives can be propagated and the talents of employees can be recognized. It promotes a two way communication and is an useful tool for improvement in work culture
46.  Entry interview – To introduce the details of history and culture of the bank to the new entrant and to make the new entrant comfortable to the new atmosphere
47.  Exit interview – To get a free and frank feedback from the person leaving the organization and to bid a warm farewell to the outgoing employee


48.  FEMA 1999 – came into effect from 01.06.1999
49.  Schedule I – prohibited “TXN”
50.  Schedule II – Central Government permission required
51.  Schedule III – deals with purpose, limits where RBI permission is required in cases like – gifts exceeding USD 5000; donations exceeding USD 5000; Private visits exceeding USD 10000 per financial year; private visits exceeding USD 25000 per occasion
52.  Release of forex upto USdollar 1 lakh – for medical treatment
53.  Education, emigration and employment – mere documentary proof exchange can be released
54.  For beyond documentary proof for release of forex – RBI permission is required
55.  LRS  Liberalised Remittance Scheme for individuals
56.  Individuals can remit – Usdollar 2 lakhs per financial year
57.  Individuals can conduct – any permissible current account and capital transact tions
58.  Who can open LRS ? – a banker can allow any customer who has completed one year of satisfactory dealings can open(provision of PAN is a must)
59.  Each individual in a family – can individually enjoy the limits indicated
60.  NRIs – any person residing abroad for more than 182 days during the preceeding financial year; any person going abroad for gainful employment or circumstances indicating indefinite period of stay abroad; wife accompanying Non Resident Indian abroad is also treated as NRI; Officials deputed to Embassies, UNESCO etc; Indian students going abroad for studies abroad whether he earns or not
61.  Persons of Indian Origin – Foreign Nationals whose parentage can be traced back to India; parents or grant parents holding Indian passport or citizen of India
62.  Foreign tourists visiting India – can open Non Resident Ordinary account for six months period
63.  RBI permission is required – to retain the account beyond six months period
64.  Foreign Nationals visiting India with work permits for studies, for business and their spouse accompanying them to say in India – can open domestic savings bank accounts and KYC has to be satisfied
65.  For students – certificate from educational institution is a must
66.  For opening accounts of Nationals belonging to Pakistan, Bangladesh – RBI permission is required
67.  Foreign nationals of Foreign Origin – are eligible to open NRO account
68.  QA 22 account – discontinued
69.  Foreign entities can also open – NRO account
70.  TDS in NRO account – normally 30%; educational cess: 3%
71.  Interest income can be repatriated  - subject to payment of income tax
72.  Repatriation upto USdollar 1 million per financial year – for all bonafide purposes subject to documentary proof
73.  NRO – casual overdrawings: No limit/no ceiling as per FEMA – as per discretion of the bank


74.  TDS – not applicable to NRE account ( no tax liability on income earned through interest)
75.  Joint accounts – NRI along with NRO not permitted
76.  NRE account – letter of authority can be issued to NRO
77.  Letter of authority holder – only for local payments
78.  Power of attorney holder in NRE account – apart from local payments investment is also permitted
79.  Loans to power of attorney holder – permitted with specific provision and independent permission is required
80.  Power of attorney holder – cannot open/close the account
81.  Transfer from NRE to NRE account – permitted freely if depositor himself gives instructions
82.  NRE TOD – Rs. 50000/- as per FEMA guidelines
83.  NRO TOD – No limit
84.  NRE term deposit – LIBOR SWAP rate prevailing on last day of the month applicable to USD for the corresponding maturity plus 175% basis points
85.  FEDAI displays the rate  - in their website


86.  LIBOR – swap rate prevailing on last day of the month applicable to respective currency for corresponding period plus 100 basis points
87.  Banks are generally permitted to open accounts in – US dollars,GBP, Euro, AUD, CAD, YEN
88.  FCNR (B) accounts not opened in – Yen in Canara Bank
89.  FCNR FDR – minimum one year
90.  FCNR KDR – minimum one year + one day
91.  FCNR FDR – Interest payable at the time of maturity if accepted for a minimum one year
92.  If interest is to be paid before maturity date like monthly/quarterly interest etc – minimum period is one year + one day
93.  No interest is payable – if closed before one year
94.  Joint deposits – If one party dies and the account is closed, no penalty is levied
95.  Latest guidelines – party is closing FCNR account before maturity in US dollar; but want to invest in EURO, then penalty will be 0.5%(however normally penalty is 1%)
96.  Loan against NRE deposit – maximum loan NRE/FCNR:Rs. 20 lakhs only irrespective of number of deposits held by the depositor
97.  Opening of account in third currency – is permitted
98.  Loan is granted – in native currency (say rupee)
99.  Interest on loan if it is remitted in Indian rupees – BPLR minus 3.5%
100.Loan in Indian Rupees – not to be credited to NRE account and only to NRO account and loan in foreign currency amount can be credited to NRE account or repatriated – however, closure of loan account from NRE account or adjustment of deposits