TREASURY BILLS: They are main instruments of short term borrowings by the Government and serve as a convenient gilt-edged security for the money market.RBI as the agent of the Government issues treasury bills at a discount
02. INTERBANK PARTICIPATIONS: In order to provide an additional instrument for evening out short-term liquidity within the banking system, the Reserve Bank of India has permitted banks to issue Inter Bank Participations
03. CERTIFICATE OF DEPOSIT: With a view to further widening the range of money market instruments and to give investors greater flexibility in the deployment of their short-term surplus funds, RBI has permitted banks to issue certificate of deposits. It is a negotiable money market instrument and issued in dematerialized form or as a Usance Promissory Note, for funds deposited at a bank or other eligible financial institution for a specified time period. It can be issued by select all India financial institutions within the umbrella limit fixed by RBI, Local Area Banks and scheduled commercial banks excluding RRBs
04. BANKER’S LIEN: It is a general lien and is specially conferred by section 171 of the Indian Contract Act, 1872 and is available in respect of all securities deposited with him as banker by a customer, unless there is a contract inconsistent with lien. The right of lien is available to the banker only when the goods/securities have been given to him as bailee
05 RULE IN CLAYTON’S CASE: It pertains to appropriation of payments in a running account having debit balances . According to the above, the moneys paid in by a customer in his current account are to be applied towards adjustment of overdraft in the order of time in which the debts were incurred. To avoid operation of the rule in Clayton’s case a banker should rule-off the account which is overdrawn and open a fresh account for further transactions when the bank receives notice of death or insolvency of a partner or a joint account holder
06.CERTIFICATE OF INCORPORATION: It brings the company into existence as a legal person.
07.MEMORANDUM OF ASSOCIATION: It is a document which defines the company’s relation with the outside world and the scope of its activities. It is also known as “Unalterable charter” of the company
08.ARTICLES OF ASSOCIATION:It is a document which lays down the regulations or bye-laws for carrying into effect the object of the company as defined in its memorandum of association and for the management of its internal affairs
09.DOCTRINE OF INDOOR MANAGEMENT: As per the above, a bank is not affected by any irregularities in the internal management of the company it it deals with the company in reliance on the articles of the association and in consonance with the resolution received by the bank from persons conducting the affairs of the company
10.PERSONS OF INDIAN ORIGIN: He is a citizen of any country other than Bangladesh or Pakistan if he at any time held an Indian Passport; he or either of his parents or any of his grand parents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955; the person is a spouse of an Indian citizen or a person referred to as above.
11.GOIPORIA COMMITTEE RECOMMENDATIONS: RBI had set up, in October, 1990, a 12 member committee headed by IBA chairman Mr M N Goiporia to assess the current state of customer service in banks. The terms of reference of the committee include – a) identifying the causes of persistently poor customer service in banks and areas in which deficiencies prevail and how the situation could be rectified; b) suggesting ways and means for improvement in work culture and inculcation of greater customer orientation on the part of bank employees; and c) to examine the technological upgradation for ensuring better customer service, better housekeeping, quicker flow of information and effective supervision and managerial control to inject competitive strength in banks
12.SWIFT: The society for Worldwide Inter bank Financial Telecommunication – SWIFT- was registered as a company in Belgium. It is a bank owned non profit cooperative society becoming operational in May, 1977. It supplies messaging and interface software world-wide for exchange of financial messages. It helps its customers reduce costs, improve automation and manage risk and provides 24 hour global support to 7500 financial institutions in 200 countries. Its network is a worldwide telecommunication network. It is an interbank transaction data processing system designed for the exclusive use of banks and used to process international financial transactions among member banks. SWIFT system handles communications for payment/transaction instructions and related messages and functions. It is a transaction processing network but not a settlement or clearing house system. It makes available data on transactions in computer readable form for use of bank’s in-house computers system to help automated processing of several functions
13.SHARED PAYMENT NETWORK SYSTEM: It was mooted by Indian Banks Association and endorsed by Rangarajan Committee. It envisages provision of round the clock banking conveniences. Under SPNS, a customer of a bank can perform basic banking functions like cash withdrawal, balance enquiry etc at any ATM belonging to any bank. The user bank could derive the benefit of several ATMs and banks will be enable to offer services including cash withdrawal, balance enquiry, printing of statement of accounts, cash/cheque deposits, credit card authorization etc.,
14. HOLDER: The term – ‘holder’ refers to the person who is entitled to possess the instrument in his own name and to recover the amount thereunder. In view of section 8 of the Negotiable Instruments Act, 1881, the term – ‘holder’ would not include a thief in possession of an instrument payable to bearer; or the finder of a lost instrument payable to bearer; or even the payee himself if he cannot recover the amount due on the instrument, as when he is prohibited from doing so by an order of the court. He can convert a blank endorsement into an endorsement in full and can obtain a duplicate of a lost bill by giving an indemnity if so required by the drawer and he has right to sue in his own name on the instrument
15.NEGOTIATION: As per the provisions contained in the Negotiable Instruments Act, negotiation means transfer of a negotiable instrument to any person so as to constitute that person the holder thereof. A negotiable instrument may be negotiated by delivery or by endorsement and delivery. A negotiable instrument payable to bearer is negotiable by delivery and when it is payable to order it is negotiated by endorsement and delivery.
16.ESCROW: It refers to conditional delivery of an instrument e.g. a cheque handed over to a third party to be delivered to the payee on the fulfillment of a certain condition by the latter
17. HUNDI : Bills of exchange drawn by Indians in an oriental language, or vernacular of India are called hundies. They are governed by usages and customs prevailing in various parts of the country. Hundi is the most prevalent form of negotiable instruments recognized by usage i.e. other than those recognized by the statute
18.INCHOATE CHEQUE: It means a negotiable instrument which is incomplete as to its date, amount or name of the payee. The drawer of an inchoate cheque is not liable until the cheque is negotiated and the authority to complete an inchoate cheque vests in the holder.
19.MATERIAL ALTERATION: It is one which varies the rights, liabilities or legal position of the parties, ascertained by the deed in its original state. It varies the legal effect of the instrument as originally expressed and it reduces to certainty some provision which was originally unascertained and as such void. It implies an alteration in the date or payee or amount. Converting a cheque from ‘order’ to ‘bearer’ is a material alteration
20.NOTING: It means the minutes recorded by a notary public on a dishonoured bill at the time of dishonour. It may be made upon the dishonoured instrument or upon a paper attached thereto or partly upon each. It should contain the fact of dishonour and the date of dishonour; the reasons, if any, assigned for such dishonour and the notary’s charges. If the instrument has not been expressly dishonoured, the reasons why the holder treats it as dishonoured.
21.KITE FLYING : It refers to drawing/accepting of bills just to accommodate the other party without the backing of any genuine trade transactions
22.PROTESTING: It is a formal notarial certificate attesting the dishonour of the bill and based upon the noting
23.ACCOMMODATION BILL: It is one which a person signs as a drawer, acceptor or endorser without receiving value therefore, and for the purpose of lending his name to some other persons.
24. SYNDICATION OF CREDIT: It is an agreement between two and more lending institutions to provide a borrower a credit facility using common loan documentation. While syndication is very similar to the system of consortium lending in terms of dispersal of risk, in the former the borrower has freedom in terms of competitive pricing and financial discipline is sought to be brought about by the lending banks through a fixed repayment period.
25. AMERICAN DEPOSITORY RECEIPT: It is a depository receipt issued by a bank or a depository in United States of America (USA) against underlying rupee shares of a company incorporated in India
26. GLOBAL DEPOSITORY RECEIPT: It is a security issued by a bank or a depository outside India against underlying rupee shares of a company incorporated in India
27.DIRECT INVESTMENT OUTSIDE INDIA: It is an investment by way of contribution to the capital or subsctiption to the memorandum of association of a foreign entity
28. SYNDICATED CREDIT is an agreement between two and more lending institutions to provide a borrower a credit facility using common loan documentation.