BCSBI

Certificate Examination
in Customer
Service & Banking
Codes and Standards
Version 1.0
(FOR Oct. 2016 & Jan 2017 Exam.)
(A Very useful book for Day to Day Banking and all

Knowledge Based Examinations)
COMPILED BY
Sanjay Kumar Trivedy (Divisional Manager )

Canara Bank, Government Link Cell, Nagpur, PGNS Complex, Modi No. 3, First Floor,
Sitabuldi, Nagpur-440012,: 0712 – 2522271,2522272 / 07774069639
E-mail: linkcellnagpur@canarabank.com; sanjaytrivedy@canarabank.com
INDEX
SI. No CONTENTS Page No.
1. ABOUT CERT. EXAM IN AML&KYC 02-03

2. SYLLABUS 04-04
3. MODULE - A 05-22
4. MODULE-B 23-49
5. MODULE -C 50-62
6. MODULE-D 63-81
7. MEMORY BASED RECALLED QUESTIONS 82-101
8. TEST YOUR SELF 102-128
Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 1|Page

About Certificate Examination in Customer Service
& Banking Codes and Standards
IIBF Certificate Examination – OCT. 2016 & JAN 2017
OBJECTIVE
To enhance knowledge of banking professionals in the field of Customer Services and to
fulfill the increasing need of such professionals.
MEDIUM OF EXAMINATION: Examination will be conducted in English only.
Cut-off Date of Guidelines / Important Developments for Examinations

In respect of the exams to be conducted by the Institute during May / June of a calendar year, instructions /
guidelines issued by the regulator(s) and important developments in banking and finance up to 31st December of
the previous year will only be considered for the purpose of inclusion in the question papers. In respect of the
exams to be conducted by the Institute during November / December of a calendar year, instructions / guidelines
issued by the regulator(s) and important developments in banking and finance up to 30 June of that year will only
be the considered for the purpose of inclusion in the question papers. Reference: IIBF Monthly Magazine:
VISION, Sept. 2016, Page no. 7.
DURATION OF EXAMINATION: The duration of the examination will be of 2 hours.

Pass: Minimum marks for pass in every subject - 50 out of 100 marks.
PATTERN OF EXAMINATION: (i) Question Paper will contain 120 objective type multiple choice questions
for 100 marks. (ii) The examination will be held in Online Mode only, (iii) There will NOT be negative marking
for wrong answers. (iv) Questions for 20 marks each will be from Module A, B and C. Question for 40
marks will be from Module D of the syllabus
TYPES OF QUESTIONS
120 Objective Type Multiple Choice Questions - carrying 100 marks – 120 minutes and question will be based on
Knowledge Testing, Conceptual Grasp, Analytical / Logical Exposition, Problem Solving & Case Analysis
A. MULTIPLE CHOICE ( Each Questions 0.5 Marks )– QUESTIONS & ANSWERS ( 70-74QUES )
B. MULTIPLE CHOICE – ( Each Questions 01 Marks )– PROBLEMS & SOLUTIONS (18-20QUES)
C. MULTIPLE CHOICE – ( Each Questions 02 Marks )– APPLIED THEORY – QUES. & ANS.
(10 -14 QUES)
D. MULTIPLE CHOICE – ( Each Questions 02 Marks )– CASE STUDIES & CASE LETS (PROBLEMS &
SOLUTIONS ) ( 12-15QUES )
QUESTIONS MODELS : TYPES OF QUESTIONS

Type – A: MULTIPLE CHOICE – QUESTIONS & ANSWERS
The Best Method for assessing working capital limit used by the bank for seasonal Industries is :
1. Operating Cycle Method, 2. Projected Networking Method, 3. Projected Turn over Method & 4. Cash
Budget Method
Type – B: MULTIPLE CHOICE – PROBLEMS & SOLUTIONS
Mr. Ram Kumar is having overdraft account with Canara bank upto Rs.100,000. The present Debit Balance in
the account was Rs. 80550.00. The bank has received attachment order from Income tax deptt. For Rs. 16,200.00.
What can the bank do in this situation ?
- Unless the bank is a debtor, there can be no attachment and an unutilized overdraft account does not render
the bank a debtor ( but creditor ) & hence can not attach.

Type – C: MULTIPLE CHOICE – APPLIED THEORY – QUES. & ANS
Financial Institution wish to have the money lent by them repaid in time. Secured advances sanctioned by banks
possess what kind of security ?
- Secured Advances have impersonal security i.e. Tangible Security
Type –D : MULTIPLE CHOICE – CASE STUDIES & CASE LETS (PROBLEMS & SOLUTIONS )
Economic development of a country to a large extent depends upon Agril. & Industrial sectors. Development of
agril. Depends upon irrigation facilities while industrial development on availability of power,good transport and
fast communication facilities. All these are called infrastructure. Read the caselet & explain which industries
constitute infrastructure?
a. Energy, Transport & Communication
b. Irrigation, construction of bridges & dams over Rivers & stable govt. at Centre.
c. Availability of Funds for PMEGP , SJSRY & Indira Awas Yojana
Type of Questions – Basically four types of Multiple Choice Questions asked in Exam of
Which Type – A : Concept based Straight Questions ( 70-71 QUES - 0.5 MARKS EACH ) ;
Type – B : Problems & Solutions (20-25 QUES - 1.0 MARKS EACH); Type – C : Applied
theory based Questions (10-15 QUES - 2.0 MARKS EACH) ; Type – D : Case Study & Case-
lets based Questions ( 10-15 QUES - 2.0 MARKS EACH )
PERIODICITY AND EXAMINATION CENTRES

a) Examination will be conducted on pre-announced dates published on IIBF Web Site. Institute conducts
examination on Quarterly basis, however periodicity of the examination may be changed depending upon the
requirement of banking industry.
b) List of Examination centers will be available on the website. (Institute will conduct examination in those centers
where there are 20 or more candidates.)
PROCEDURE FOR APPLYING FOR EXAMINATION

Application for examination should be registered online from the Institute’s website www.iibf.org.in. The schedule
of examination and dates for registration will be published on IIBF website.
PROOF OF IDENTITY
Non-members applying for Institute’s examinations/courses are required to attach/ submit a copy of any one of the
following documents containing Name, Photo and Signature at the time of registration of Examination Application.
Application without the same shall be liable to be rejected.
1) Photo I/Card issued by Employer or 2) PAN Card or 3) Driving Licencse or 4) Election Voter’s I/Card or
5) Passport 6) Aadhaar Card
TIME
Examination Date
16.10.2016 Sunday
Will be given in the admit Letter
08/01/2017 Sunday
Last Date for receipt of Change of Centre Requests at the respective Zonal Offices for the
Examinations scheduled for JAN 2017 : 24th Nov 2016
Revised Examination Fees inclusive SERVICE TAX @15% with effect from 01st Jun, 2016
(Examination Eligible for Members and Non-Members)
For For Non-
Sr. No. Name of the Exam Attempts
Members(Rs) Members(Rs)
Certificate Exam In
1 Customer Service & First Attempt 1150 1725
BCS
Subsequent each attempt 1150 1725

Syllabus
Certificate Examination in Customer Service & Banking Codes and Standards
The details of the prescribed syllabus which is indicative are furnished in this booklet. The
Institute however, also reserves to itself the right to vary the syllabus / rules / fee structure
from time to time. Any alterations made will be notified.
Module – A
Definition of a customer – Banker- Customer relationship – Points of contact – Types

of customers – Types of relationships, such as individuals, corporates, etc. and their
Peculiarities – Need for building up customer relationships and Importance of
Customer Service in a country like India - Changing Expectations and Perceptions –
Termination of relationship
Module – B
Modern day banking – Core Banking / Electronic Payments – phone banking –

Mobile banking – internet banking – How business is sourced – Different retail
Products – Home Loans – Vehicle Loans – Consumer durables – Credit Cards –
Bancassurance – Demat services – Selling through agents – Recovery process, etc. This
Module should also deal with general areas of grievances - pass book, account statement,
unsolicited business, different charges, etc.
Module - C
Efforts made by banks, association of banks and Reserve Bank of India to improve
Customer service – Regulations, Instructions, KYC / AML guidelines-Banks’ duties
and rights – Customer Service Committees – Grievance Redressal Mechanism
Including Banking Ombudsman – Importance of Developing Skills and Attitudes –
Use of IT in improving customer service.
Module - D
Genesis of Banking Codes and Standards Board of India – its set up and functions
– Code of Bank’s Commitment to Customers and Code of Bank’s Commitment to
Micro and Small Enterprises.

Module – A
CUSTOMERS & THEIR ACCOUNTS

BANKER
The Banking Regulation Act 1949 (Section 5c) defines a banker as a person undertaking business of
banking. Banking means (Section 6) accepting deposits from public, for the purpose of lending or
investment, repayable on demand or otherwise withdrawable by , cheque, draft, order or otherwise.
CUSTOMER
There is no legal definition of a bank customer but from various judgements, a customer means a
person who opens account with the bank. When customer tenders an account opening form to open
the a/c (proposal) and banker accepts it (opens the account), a contractual relationship is established.
Initial deposit : The initial deposit for opening an account may be (a) cash, (b) cheque or (c) no deposit
even at the time of opening the account, as ZERO balance account (BSBDA) can be opened.
CUSTOMER AS PER KYC POLICY
As per RBI, for KYC policy, a 'Customer' may be defined as a person who is engaged in a financial
transaction or activity with a reporting entity and includes a person on whose behalf the person who is
engaged in the transaction or activity, is acting (Master cir 01.07.15).
Banker Customer Relationship and Accounts of Customers

1. Banker Customer Relationship
Bank is one which conducts business of banking. Banking has_been defined in Section 5 of Banking
Regulation Act.'Customer is not defined in any Act. However, it is defined in KYC norms. As per various
court decisions, any person for whom bank agrees to open an account is called as customer of the
bank.
Various types of relationships
T e of Transaction Bank Customer
Deposit in the bank (CR balance in account) Debtor Creditor
Loan from. Bank (Debit balance in account) Creditor Debtor
Safe Deposit-Locker Lessor (Licensor) Lessee (Licensee)
Safe custody Bailee Bailor
Issue of draft (after issue of draft) Debtor Creditor
Payee of draft Trustee Beneficiary
Collection of cheque & Standing Instruction Agent P r inc ip a l
Goods left negligently by customer Trustee Be n e f i c ia r y
Purchase of che ue from customer Holder for value Endorser
Purchase/sale of securities on behalf of customer . Agent Principal
Currency Chest on behalf of RBI Agent RBI is principal
Mone de osited. No instructions for its dis osal. Trustee Beneficiary
Pled e Ea ved at el Pawner Pled er
Mort a e M or tgage e Mortgagor
H othecation H othecatee Hypothecator
Assignment Assignee Assignor
2. Banker's Obligations
There are two main duties of a bank i.e (1) Duty to maintain secrecy of customer's account (ii)
Duty to honour cheques.
Duty to maintain secrecy:
1. A bank has duty to maintain secrecy of customer's account as per Implied Contract.
2. Moreover, as per Section 13 of Banking Companies (Acquisition and Transfer of Undertaking)
Act also, the . bank is required not to disclose any information relating to affairs of its
customers.
3. The duty to maintain secrecy continues even after closure of account.
4. Balance in the account of an employee should not be disclosed to employer. Similarly balance in
the account of wife not to be disclosed to husband and vice versa.
5. If bank discloses customer's affair (e.g. in case of insufficient balance in the account advising
the presenter of cheque to deposit deficit amount), bank will be liable to customer for resultant
loss. Exceptions to rule of secrecy:
1. Courts: As per Banker's Book Evidence Act, bank may be required to produce certified copies of
record in the court.
2. Police: Officer incharge of a police station may issue a written order for production of documents
in connection with trial or investigation. Police can even seize records against proper receipt.
3. The information may also be required to be parted to inspector appointed to investigate affairs
of a limited company under section 235/237 or under FEMA.
4. Revenue Authorities: Bank may be required to produce to income Tax Authority, record
pertaining to transaction of a customer. However, roving enquiries should not be made except in
case of cash transactions of Rs 1 lac and above.
5. RBI: As per Banking Regulation Act or RBI Act, Reserve Bank may seek information from bank.
6. Banking Practice: Banks have the practice of sharing information in general among themselves. The
information should be given in confidence and without any responsibility on the part of supplying
bank.
7. Consent of customer: For example, information is given to a Credit Information Company as per
express consent of customer.
8. To protect bank's interest.
Duty to honour cheques
As per section 31of N I Act, a bank is under obligation to pay cheques issued by customer provided
(i) there is a sufficient balance in the account (ii) the cheque is otherwise in order (iii) the funds
are properly applicable i.e. not attached by Garnishee order or attachment order. If a bank
dishonour a cheque drawn by a customer despite satisfaction of aforesaid conditions, bank will be
liable to Drawer (and not to payee or true owner) for damages suffered by him.
BANKER'S OBLIGATIONS
`Banks' deal in public money and therefore various relationships with the customer impose certain
duties on the Banks.
These duties are :
a Duty to honour cheques of customers (details given in the previous pages under NI Act),
b Duty to maintain secrecy of a/cs.
DUTY TO MAINTAIN SECRECY OF CUSTOMER'S ACCOUNT

In addition to implied contract between bank and customer not to disclose the affairs of the customer,
Section 13 of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970, specifically
requires a banker not to divulge any information relating to the affairs of the constituents, except in
circumstances in which they are in accordance with law and practice and usage customary among
bankers.
Hence the banker should not disclose balance of the account, financial position of the customer and
details of dealings in customer's account. If these facts are disclosed it may harm the reputation of
the account holder and bank may be held liable.
a Banker's duty of secrecy arises out of implied terms of the contracts with customer. Such duty is a
legal one and not merely a moral one.
b Obligation of secrecy is not for a particular account of the customer. It is extended to all the
transactions that go through the account and securities offered in that respect,
c Duty is not discontinued even when customer is dead or account is closed,
d Obligation is extended to the information obtained from various sources, regarding customer's
account/financial position,
DISCLOSURE OF CUSTOMER'S ACCOUNT INFORMATION
There are certain circumstances under which a banker is justified if he discloses information regarding
customer's account. These disclosures may be under banking practices or under compulsion of law.
DISCLOSURE UNDER BANKING PRACTICES It is customary among bankers that they obtain
necessary information about parties from other bankers where these parties are maintaining
accounts, in order to ascertain their financial position and credit worthiness. Disclosure under this
cause would be fully justified and implied consent of the customer is presumed to exist. While
disclosing information under Bankers reference, following precautions must be observed :
a Opinion must be based on the dealing with the customer and not on market report or rumours.
b Disclosure should be by a general statement and not by actual figures. General statement should be
so balanced that it should be neither too low nor too high in its sense.
c Disclosure must be impartial and without prejudice.
d Information should be as per IBA format in eneral terms such as:
Very small means (Rs.0.10 lac or less)
Small means (0.10-0.25 lac)
Moderate means (0.25-0.50 lac)
Moderate to fair means (0.50-1 lac)
Fair means (1-2 lac)
Fairluood means (2-3 lac)
Good means (3-10 lac)
Very ood means (10-25 lac)
Lar e means (25-50 lac)
Very lar e means (oveir0 lac)
Disclosure in the interest of bank

Some time disclosure is required to protect the bank's own interest e.g. disclosure of information to
guarantor to recover the dues and disclosure of state of affairs of account to bank's lawyer to file the
suit.
Disclosure under duty to the public
When it becomes duty of the banker to disclose the information of customer's account, in public
interest, such disclosure is justified e.g. during war, if customer is dealing with the enemy, it is
banker's duty to disclose it to the government authorities.
Disclosures with expressed or implied consent of the customer Expressed Consent - When
the customer himself directs the banker to provide information to his agent or representative While
giving such information, bank must take care to disclose the information to the extent it is required,
and not beyond that. Information regarding balance should be given on telephone, only when
customer's voice is recognised by the banker.
Information to Credit Information Companies Information can be given by banks without

consent of customers, to Credit Information Companies, under provisions of Credit Information
Companies (Regulatioa) Act 2005. (RBI Cir 01.07.13)
Implied Consent
When a customer takes loan by furnishing a guarantee, he impliedly authorises that bank for giving
information to the guarantor. In this case, banker should disclose information only when it is required
and to the extent it is required. When customer furnishes the name of banker to the third party for
the purpose of trade reference, it is an implied consent to the banker to disclose.
DISCLOSURE UNDER LAW
When, a Banker discloses information under compulsion of law, it must be ensured that the
information supplied should be as per requirement only. No additional or voluntary disclosure should
be made. The disclosure in terms of the provisions of various Acts, as under:
Banker's Book Evidence Act 1891
Uls 6, a judge may order a party to inspect and take copies of entries in banker's books. The judge
may also order the bank to produce certified copies of the entries accompanied by a further certificate
that no other entries in the books of the bank are relevant to the matter of such proceedings. Such
order shall be served on the bank three clear days exclusive of bank holidays before the same is to be
obeyed, unless otherwise directed by the court.
As per Section 4, a certified copy of an entry in a banker's book shall, in all legal proceedings, be
received as prima facie evidence.
Code of Civil Procedure (CPC)
CPC empowers a civil court to issue summon to any person to produce documents and/or to appear
as witness and accordingly, when a summon is issued, bank has to comply.
Criminal Procedure Code 1973
In terms of Section 94, any court may, by warrant, authorise a police official to conduct search and
take possession of stolen property, counterfeit currency notes, forged documents (cheques). Banks
can part with such documents by obtaining receipt and retaining photo copy for their records.
U/s Section 91 (I), a court OR any officer-incharge of a police station may issue a written order for
production of documents in connection with trial or investigation and in compliance thereof, the bank
may part with true copy of any document, book or information.
Ws 102, a Police Officer can seize a stolen property (including money lying in bank a/c). In case of
State of Maharashtra vs Tapas Neogy,
Supreme Court has ruled that a police/CBI officer can exercise the powers u/s 102 and can direct the
bank to remit to CBI/Police and bank is bound to comply with the same.
Foreign Exchange Management Act 1999 Section 19 E and F empowers Directorate of
Enforcement to summon a bank official to give evidence or to produce any document in its
Possession. Section 43 also empowers Directorate of Enforcement and RBI to inspect books and
accounts of ADs and examine an official on oath.
Income Tax Act 1961
U/s 131 of Income Tax Act, bank officer can be examined on oath and can be told to produce books of
account and other documents concerning the transactions of a customer. Further, Section 133
empowers the Income Tax Officer, Appellate Asstt. Commissioner,Inspecting Asstt.Commissioner
andCommissioners to summon any person to furnish information relating to a pending enquiry. A
bank is bound to comply, provided there is a summon with a seal on prescribed form. The customer
should be informed accordingly.As per CBDT roving (general information) enquiries can be made for
cash transactions of Rs.l Iac and above and regarding assets declared for loans/overdrafts of Rs.50
lac and above.
Reserve Bank of India Act
It has vast powers under various Acts such as RBI Act or Banking Regulation Act to call for
information from a bank. Sec. 45 B authorises RBI to collect credit information and provide the same
to different banks. U/s 45 C also RBJ can direct any bank to submit statements relating to credit
information as it deems fit.
TERMINATION OF RELATIONSHIP
The relationship terminates :
 when the customer closes the account after giving appropriate notice wherever required.
 when bank closes the account after due notice, which is compulsory and failing which, the banker may be held
accountable for damage, if any, due to dishonour of cheques;
 with knowledge of the death, insanity and insolvency of the customer
 on garnishee order and attachment order.
3. Banker’s Rights: Bank has three rights namely (i) Right of Lien (ii) Right of Set Off (iii) Right of
A4. Right of Lien:
1. Lien is the right of creditor to retain possession of goods and securities belonging to the
debtor till the debts due to him (creditor) are paid.
2. This right is available only on goods and securities and not on balances in the accounts.
3. Lien entitles retention of possession of goads but the creditor cannot sell the goods.
4. Lien can be Particular lien (Sec 170 of the Indian Contract Act) or General Lien. Right of General
Lien, is available only to bankers, factors, wharfingers, attorneys (Section 171 of the Indian Contract
Act).
5. Banker's Lien is also a general lien but it is an implied pledge because the banker has right to retain as well
as sell goods of the borrower after giving him reasonable notice.
6. For exercising right of lien, (a) the goods or securities and debt should be in the same right and
same capacity (b) Loan should be due or overdue and lawful (iii) Reasonable notice is given.
Further, Right of Lien is available on the goods and securities received in the ordinary course of
business.
7. It is not available when the goods or securities have been deposited for a specific purpose; goods
received for safe custody or lying in safe deposit vault or goods left by the debtor negligently.
However, in the case of loans against pledge of jewellery, bank can exercise right of general lien on
the ornaments left in the possession of the bank after adjustment of the jewellery loan in case some
other advance is outstanding.
Negative lien is a declaration from the borrower to the effect that securities/goods offered as security are
not encumbered and that the borrower will not create any charge over them without bank's permission. This
undertaking does not create any charge in favour of the bank and therefore advance against negative lien
are treated as dean advance.
5_ Right of Set Off:
1. Set off is the rigifto combine two or more accounts having debit and credit balance.
2. It is not defined in any Act.
3. This right arises when two parties are debtor as well as creditor to each other i.e. one
account should be in debit and another account should be in credit.
4. In the case of banks, this right arises when wants to combine its loan due from a borrower
with his deposit accounts.
5. For exercising right of set off following conditions should be satisfied (i) Both accounts
should be in same right and same capacity (ii) The debt should be due and not accruing due
(iii) Reasonable notice should be sent to the depositor before exercising set off.
6. Right of set off can be exercised even in case of loans which are time barred.
7. It can be applied on fixed deposit when it matures and not on FD which is not due as yet.
Similarly it can not be applied for adjusting term loan or CC or overdraft which are regular
and not overdue.
8. If a loan is in the name of an individual, set off can be exercised on credit balance in his individual
account and sole proprietorship account. Set off can not be exercised on deposit accounts which are
held jointly with other individuals, or partnership in which.the borrower is partner, or client account
maintained by a solicitor or.account of minor under guardianship where borrower is the guardian or
on the credit balance of a trust in which borrower is trustee.
9. If loan is in joint names, set off can be exercised on credit balance in joint account as well
as credit balance in individual accounts of joint borrowers.
10.If loan is in the name of a partnership firm then set off can be exercised on credit balance in
the name of firm, partners and any other partnership firm which has just same partners as are in
the borrowing firm. 11. For exercising right of set off, all branches of a bank are considered as
one.
6. Right of Appropriation
1. Section 59,60,61 of Indian Contract Act, deal with appropriation of payments.
2. Clayton's Rule is related to appropriation of payments. This rule is applicable in case of
death, insolvency, insanity of a joint borrower or partner or guarantor or retirement of a
partner or revocation of guarantee by guarantor.
3. Clayton's rule is applicable in case of running borrowal accounts like cash credit or overdraft.
As per Clayton's rule, credit entry will set off debits in the chronological order of time. This
means that first item on the debit side will be discharged first by a credit and so on.
07. Garnishee Order

 A Garnishee Order is an order issued by court under section 60 (Order 21, Rule 46) of the Code of
Civil Procedure, 1908. Through this order the court attaches the deposit of a particular depositor
with the bank. The bank upon whom the order is served is called Garnishee. The depositor who
owes money to another person is called judgement debtor while the person to whom money is due
is called judgement creditor.
 The court first issues order Nisi requiring the bank to explain as to why the funds in the account not
be utilised to meet the judgement creditor's claim. After this order, the order Absolute is issued
directing the bank to freeze the entire balance or a portion of credit balance in the account of the
judgement debtor.
Upon receipt of Garnishee Order Nisi, the operation in the account are suspended, the bank has to
earmark desired balance in the account of the judgement debtor.
 Garnishee Order applies to existing debts as also debts accruing due i.e. SB/CD/RD/FD.
 Garnishee Order applies only.to those accounts of Judgement Debtor which have credit balance.
 The relationship between bank and judgement debtor is of debtor and creditor. Bank is the
debtor of Judgement Debtor who is a creditor of the bank.
 Garnishee order does not apply to money deposited subsequent to receipt of Garnishee order. It
also does not apply to cheques sent for collection but yet to be realized. But if credit was allowed in
the account before realization with power to withdraw to customer, GO will be applicable on this
amount.
 GamiSheeorder does not apply to unutilized portion of overdraft or cash credit account of the
borrower as no debt is due to judgement debtor.
 Bank can exercise right of set off before applying Garnishee Order.
 Garnishee order is-applicable only if both debts are in same right and same capacity. Garnishee
order issued in a single name does not apply to accounts in the joint names of judgement debtor
with other person(s). But if Garnishee order is issued in joint names, it will apply to individual
accounts also of the same debtors. When Garnishee Order is in the name of a partner it will not
apply to partnership account but when Garnishee order is in the name of firm, accounts of individual
partners are covered.
 Garnishee Order can be served on Head Office of the bank and it can take reasonable
time to communicate the same to its branches,
If amount is not specified in the order, then it will be applicable on the entire balance in the'
account. However, if it is for specific amount, the cheques can be paid from the balance
available after setting aside the amount as mentioned in the Garnishee order.
 Garnishee order is applicable on accounts of deceased persons but not applicable if depositor
declared insolvent.
 Garnishee order not applicable on fixed deposit taken as collateral security.
08. Income Tax Attachment Orders

 Income Tax Authorities issue Attachment Orders in terms of Section 226(3) of Income Tax Act,
1961. On receipt of this order, banker is required to remit the desired amount to income tax
authorities. A order without mentioning the amount is not a valid order. Attachment Order is
different from Garnishee order in following respects (i) Attachment order applies to money
deposited in the account after receipt of order also till it is fully satisfied whereas Garnishee order
does not apply to subsequent deposits. (ii) Attachment Order in single name applies to joint
accounts also proportionately unless the contrary is proved whereas Garnishee order in single
name does not apply to joint accounts.
 In case banker fails to comply with Attachment Order, it will be liable for the amount of order and
deemed as an assessee in default. However, right of set off is available to bank before applying the
order.
 When both Garnishee order and Attachment Order are received simultaneously, priority
should be given to attachment order.
ACCOUNTS OF CUSTOMERS
9. Accounts of Minors
1. A minor is a person who has not attained the age of 18 years. A person will become major at
the age of 18 whether guardian is natural or appointed by a court of law.
2. There could be three types of guardians — natural, testamentary and legal guardian. The guardian
appointed by will is called Testamentary Guardian and the one appointed by court is called legal
guardian.
3. As per section 11 of the Indian Contract Act, 1872 a minor is not competent to enter into a
contract. A minor cannot ratify an agreement after attaining majority.
4. A minor cannot appoint an agent. However, a minor can be appointed as an agent and he can
make principal liable by his actions. A minor can not delegate authority in his self operated
account.
5. Banks do not grant overdraft / loan to a minor, even if security is provided because a contract
with minor being void, the bank will not be able to recover the loan. Even when loan has been
raised on a term deposit in the name of a major person, his request for addition of the name
of the minor can not be entertained. However, if loan is given for necessity, it can be
recovered.
6. If a minor misrepresents age for raising a loan bank cannot recover loan from him.
7. Loan given to a minor is guaranteed then bank cannot recover loan from guarantor.
8. According to Section 26 of NI Act, a minor can draw or endorse or negotiate a cheque or a bill
but he cannot be held liable on such cheque or bill. However, other parties will be liable in their
respective capacities. 9. A minor can not appoint nominee. However, minor can be appointed
nominee.
10.As minor does not incur any personal liability, he can not be declared insolvent.
11.Minor as a partner: A minor cannot be partner in a partnership concern. As per Indian Partnership Act,
1932 a minor may be admitted to benefits of partnership with the consent of all partners. However,
the liability of the minor partner will be limited to his share in the business of the firm. On attaining
majority, a minor has to give public notice within six months of attaining majority or when it comes to
his knowledge after becoming major which ever i3 laser, whether he wants to continue as a partner. If
he chooses to become a partner, he will be held liable as a partner from the date he has been
admitted to the benefit of the partnership firm and his profit sharing ratio will continue as it
was existing before becoming major.
12.In case of Hindus, father is the natural guardian of a Hindu minor boy or an unmarried girl
and after him, the mother. In case of a married Hindu minor girl, her husband is the
natural guardian. If the husband is minor or
minor girl becomes widow, her father in law and after him the mother in law will be the
guardians. When guardian of a Hindu minor ceases to be a Hindu he/she ceases to be
natural guardian. Testamentary guardian will come into picture only on the death of father
as well as mother.
13. In case of Muslims, father is the natural guardian. A Muslim father can appoint a
testamentary guardian and even mother of a Muslim child can be testamentary guardian.
If the father dies without leaving behind a will, father's father i.e. paternal grandfather is
the guardian. On the death of paternal grandfather, the person appointed by the will of
the paternal grandfather will be guardian.
14.Accounts of a minor: A minor can have account under guardianship as well as self operated
account.
15.In the case of accounts under guardianship, the account will be operated by the guardian
during minority of the child and once the minor becomes major the debit in the account
will be allowed only with the consent of minor who has becorne major. If guardian dies
Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 10 | P a g e
during minority, next guardian will operate the account. In case the minor dies, the
balance in the account will be paid to the legal heirs of the minor.
16. Minor's Account with Mother as Guardian: RBI has allowed mother to open and operate all
types of deposit accounts even though the father is alive.
17.A minor can open self-operated deposit account provided he has completed the age of 10
years and is literate. He can not appoint nominee in this account. On his behalf nomination
will be done by a person legally competent to act on his behalf. Joint account is also
allowed in the name of two minors provided both are of 10 years of age, are literate,
belong to the same family and operation is jointly.
18. Minor's account can be a joint account with the guardian also. In jointly operated accounts
with minor, till attainment of majority by minor, guardian will sign for himself as well as on
behalf of minor_ When minor becomes major, account will be operated jointly by guardian
and minor who has become major.
19.A bearer cheque presented for cash payment by a minor may be paid as a minor can give
a valid discharge in the capacity of the payee.
20.Minor can obtain premature payment of FOR as he can give valid discharge but can not
raise loan against security of FDR.
10. Joint accounts

1. Joint accounts can be opened with various types of operating instructions like Either or
Survivor, Joint Operation or Former or Survivor or Either or Joint or Survivor. The position
in such cases as under:
2. Either or Survivor fE or S): It means anyone can operate the account till both are alive.
After the death of either of them, the bank can pay the balance to the survivor without
any formality.
3. To be operated jointly: Account will be operated by both jointly till both are alive and, if
one of the two expires, the bank would pay the final balance to the survivor, along with all
the legal heirs of the deceased.
4. Jointly or by Survivors: Account can be operated by both / all the person jointly during
their lifetime and, in the event of death of any one, the balance is payable to the surviving
persons jointly.
5. Former or Survivor: Till the first named person is alive, the second named person has no
right to withdraw/operate the account. After the death of the first named persbn, the
payment will be made to second named person.
6. In case of "either" or "either or survivor" or "joint" operation any one of the account
holders can stop payment of the cheque. The revocation in case of either or either or
survivor can be done by either but in case of joint operation, revocation has to be done by
all jointly. In case of Former or Survivor accounts, stop payment of cheque can be done by
Former and revocation of stop payment can also be done by Former.
7. In case of "either of survivor" alteration on the cheque can be confirmed by any of the
account holders.
8. Any authority to a third party has to be with the consent of all joint account holders.
9. Joint accounts are joint property. Therefore, unless there is clear mandate in the account
opening form that any one can undertake the following functions, these should be done by
all joint account holders jointly under signatures of all (a) opening the account (b) closure
of account (c) making or altering nomination (d) raising loan against term deposit (e)
premature payment of term deposit (1) addition or deletion of names.
10.1n case of joint accounts with either or survivor instruction, if any of the account holders
becomes insane, the balance will be paid jointly to the account holders other than who has
become insane and guardian of the insane minor appointed by court.
11.ln all types of joint accounts, Garnishee order issued in joint names will be applicable on
joint accounts but Garnishee order issued in the name of one of the account holders will
not be applicable on joint account.
11. Partnership Firms

1. As per section 4 of the Indian Partnership Act, 1932 partnership is the relation between
persons who have agreed to share the profits of a business carried on by all or any of
them acting for all.
2. Minimum partners: A partnership firm should have minimum 2 partners.
3. Maximum partners: As per Companies Act 2013, an association of more than 100 persons which is not
registered as Company or Society will be an illegal association. Therefore, maximum number of
partners can be 100. (As per Companies. Act 1956, maximum number of partners could be 20 for
any business other than banking and 10 for banking business).
4. In case of Limited Liability Partnerships, there is no limit on maximum number of partners.
5. Who can become a partner?:. Only a person competent to contract can become partner.
Minor, insolvent, insane cannot become partners A company and a firm can become partner
in another firm.
6. Who can not become a partner?: HUF can not become partner as per judgement of the Supreme
Court because HUF is neither a legal person nor a natural person and can not be liable for action of
others.
7. Partnership Deed: Partnership can be oral or in writing. Therefore, banks do not insist on
partnership deed while opening accounts of a partnership eencern.
8. Registration of Partnership: A partnership firm is registered with registrar of firms. Though,
it is not necessary that the firm be registered yet registration is ,preferred because an
unregistered firm can not sue others in its own name for recovery of its dues while others
can sue it in its name. Therefore, while granting loans banks prefer that the firm should be
registered one.
9. Implied authority of partner: As per section 19 of the Partnership Act, 1932, a partner of a firm
has implied authority to act on behalf of the firm for the normal business of the firm and bind the
firm. Alt actions of the partner in the ordinary course of business are actions of all partners.
However, in the absence of any usage or custom of the trade to the contrary, a partner's implied
authority does not cover '(a) admission of any liability in a suit against the firm (b) withdrawal of
any suit filed on behalf of the firm (c) acquire/transfer any immovable property on behalf of the
firm (d) submitting a dispute relating to the business of the firm to arbitration (e) opening a bank
account on behalf of the firm in his own name (f) compromising on behalf of a firm (g) entering
into partnership on behalf of the firm. But if all partners agree for these issues—and authorize
any one in this regard, these jobs can be undertaken by the said partner.
10.Liability of partner: As per section 25 of the Indian Partnership Act, 1932 every partner is liable,
jointly with all other partners and also severally, for all acts of the firm while he is a partner. Thus,
liability of a partner is unlimited. In case of Limited Liability Partnership, the liability of partner is
limited up to the amount agreed to be contributed by him.
11.Account of Partnership firm: For opening account of a partnership firm, all partners are
required to sign Account opening form except minor who is admitted for benefits of firm.
12.00erational Authority: In Partnership accounts operation authority is given by all partners. Any
change in the operational authority is also with the consent of all partners including those who
were earlier not authorized to operate. Every partner including a sleeping partner has authority to
stop payment of a cheque issued by another partner of the firm. The revocation of stop payment
of cheque will be as per operational authority._
13.As per section 18, a partner is the agent of the firm for the purpose of business-of the firm. Being
an agent, he can't delegate his authority to an outsider without the written consent of all other
partners.
14.Death, insolvency, insanity of partner: On the death, insolvency or insanity of a partner, the
partnership is dissolved and operations are stopped. The cheques signed by the deceased,
insane or insolvent partner will
not be paid. If the account is in credit, operations are allowed for winding up of the firm. In
such case operations are allowed on the basis of a fresh mandate. It the account is in
debit, operations in the account should be stopped to retain liability of the deceased
/insolvent partner or his/her estate and to avoid operations of the Clayton's rule.
12. Limited Liability Partnership
1. Limited Liability Partnership is governed by Limited Liability Partnership Act 2008.
2. It is registered with Registrar of Companies.
3. Minimum number of partners is 2 but there is no limit on number of partners. An individual
or a 15-Ody coporate can be a member of an LLP.
4. Liability of partner is limited to the extent of his contribution in the firm. A partner shall not
be personally liable.
13. Accounts of Limited Companies

1. A limited company is an artificial person with perpetual succession incorporated under the
Companies Act.
2. Number of members: As per Companies Act 2013, in the case of a private limited company,
minimum number of members should be 2 and maximum number of members excluding
employees can be 200. For public limited company minimum number of shareholders should
be 7 and there is no ceiling on maximum number
3. Number of Directors: Minimum Directors in a public limited company should be three, in a private
limited company 2 and in One Person Company one. Maximum directors in all types of companies
can be 15. However, company may appoint more than 15 directors by passing a special
resolution. An individual can not be director of more than 20 companies at one time out of which
public co should not be more than 10.
4. Shareholders are owners of the company, directors are agents of the company and
debenture holders are creditors of the company.
5. Documents for opening_ account: For opening account of a limited company bank should
obtain the following:
(a) Memorandum of Association: It contains name of the Company, its authorised capital,
registered office and liability of shareholders, objects of the company etc. Anything done by
the directors beyond the objects stated in the memorandum of association is called ultra-
vices the company and can't be ratified even in a general body meeting. Directors can
borrow only for the objects mentioned in the MOA. if any loan is given for objects other than
those mentioned in Memorandum of Association, company will not be liable for such loans.
(b) Articles of Association: lays down the internal working of the company like rights and
powers of the directors, rules of conducting meetings, borrowing power of directors etc.
(c) Certificate of incorporation : It is equivalent to birth registration certificate of the
company. This is the most important document. A company does not exist without it.
(d) Certificate of commencement of business: used to be issued by Registrar of
companies. Earlier it was required by public limited companies only. Now it is not
required by either public limited company or private limited company.
(e) Resolution of Board of Directors which is passed by the Board of Directors authorising
opening and operation of the account by named officials of the company. A copy of the
resolution should be attested by its Company Secretary and / or Chairman of the meeting at
which resolution was passed.
(f) While opening account of a limited company, no introduction is required as Certificate of
incorporation is sufficient for that purpose. However, KYC norms are required to be applied
on all persons authorized to operate the account of company.
6. As per doctrine of 'Constructive Notice' anybody dealing with company is assumed to have
knowledge of Memorandum and Articles of Association.
7. Operational Authority: The operational authority is decided by Board Resolution. Any change in
operational authority is also as per Board Resolution. Stop payment of a cheque and revocation of
stop payment will be as per operational authority. The directors can not delegate their authority
to any other person.
8. In case a director dies, the cheques signed by him presented for payment can be paid if
these are otherwise in order and are dated prior to his death.
9. Common Seal of the Company is to be affixed on documents as per Articles of Association
or Board Resolution.
10.Borrowing powers of Directors: The borrowing powers of company arise from Memorandum of
Association. The Borrowing powers of directors are given in the Articles of Association. If it is not
mentioned in Articles of Association, it is equal to paid up capital and reserves of the company. The
Board of Directors of a public limited company or a private limited company which is a subsidiary
of public limited company can't borrow in excess of its paid-up capital and free reserves. If the
directors want to borrow more than the paid up capital and reserves of the company, consent of
the shareholders is required in the General Body meeting.
11.Winding up of company: Winding up can be (a) voluntary (b) Compulsory by court (c)
through court supervision.
Registration of Charge
1. When to be registered: Under section 77 of the Companies Act, 1956, a charge other than
created by way of pledge or lien, by a company is required to be registered with Registrar
of Companies (ROC).
2. Modification: Whenever, there is a change in terms and conditions of the loan, then the
particulars of Modification of charge should be filed with the ROC.
3. Satisfaction: When loan is repaid, particulars of satisfaction of charge should be filed with
ROC , within 30 days of the satisfaction of charge.
4. ROC with whom particulars to be filed: The particulars of the charge should be filed with the
Registrar of companies in whose jurisdiction the Registered Office of the Company is
located.
5. Forms: For filing particulars of fresh charge, Form No. CHG 1 is required. Form used for
modification of the charge is same as that for fresh registration. For satisfaction of charge, Form
No. CHG 4 is to be submitted.
6. Period for filing particulars: Particulars of charge are required to be filed within 30 days of creation of
charge.
7. Extension of Period of Registration: ROC can grant extension of 270 days in filing particulars
of charge. The company will be required to pay additional fees not exceeding 10 times the
specified fees. Beyond this period permission is required from Company Law Board.
8. Duty to file particulars of charge: It is the primary duty of the company to get the charge /
modification of charge / satisfaction of the charge registered with ROC. However, if the company
does not get the charge registered, bank in its own interest can file particulars of charge.
9. Consequence of non filing the particulars: In case the particulars of charge are not filed, the
bank becomes the unsecured creditor against the official liquidator.
10.Priority of charge: The priority of the charge is reckoned from the date of creation of charge (i.e. date of
documents) and not from the date of registration if the charge is registered within the stipulated period.
14. Accounts of Hindu Undivided Family (HUF)
1. HUF is neither a legal person nor a natural person, It is not created by agreement. 1t is not incorporated
under any Act. It is from—a-eornmon ancestor and membership is by birth or adoption.
2. The eldest coparcener including daughter is the Karta and continues to be Kerte even when
he/she lives outside India.
3. Operational authority to operate the account is with Kerte. Karta can appoint any other
coparcener or third party to conduct bUsiness of HUF and/or operate the account. Co parcener can
not stop payment of the cheque unless he is authorized to operate the account.
4. In case of death, insanity or insolvency of Karta, next seniormost member of family becomes Kerte.
5. The liability of Karta is unlimited while that of co parceners is limited up to their share in the firm.
15. Account of Trusts

t Types of Trusts: Trusts can be of two types - private trusts where beneficiaries are certain specified
individuals or groups and public trusts where beneficiary is public at large. The document
creating a trust is called 'trust deed'. Public Trusts are registered with the Charity Commissioner.
2. Operational Authority: The operation and other aspects of the bank account are to be conducted as .per
the Trust Deed. Unless otherwise provided for in the trust deed, all trustees have to operate the account
jointly. Trustees can't delegate their powers to an outsider even by mutual consent.
3. Loan to a trust: Unless specifically provided for in the trust deed, no trustee can raise loan
against the security of the assets of the trust. Loan should be for the objects as mentioned in the
Trust Deed.
4. On the death of a trustee, the trust property is passed on to the next trustee while in the event
of death of sole trustee or last surviving trustee, the court can appoint a trustee.
5. Death or insolvency of a trustee does not affect the trust property -and the bank can pay cheques
issued by the deceased trustee prior to his death.
6. Stop payment of a cheque and revocation of stop payment as per operational authority.
16. Account of Executors and Administrators

1. An executor is a person named by the deceased in his will to mange his estate whereas an
administrator is appointed by the court of law for the same purpose where the deceased dies without
leaving behind a will.
2. Executors and administrators, are treated as one person. On opening a bank account, therefore,
executors/administrators can authorise any one or more of them to operate the account.
3. On the death of an executor or administrator, the surviving executor(s) or administrator(s) can
continue to operate the account unless otherwise provided for in the will or letter of
administration.
4. While opening the account of an executor, bank should obtain letter of probate, which is an
official confirmation of the will of the deceased by a court of law. For opening account in the name
of administrator(s), letter of administration is required which is issued by the court of law.
17. Societies and Clubs

1. Societies and Clubs are non-profit making organizations.
2. These can be registered under Societies Registration Act 1860 with Registrar of Societies.
3. Societies can also be registered with Registrar of Companies under section 25 of Companies Act
which pertains to non profit making companies.
4. Documents to be obtained while opening the account: (i) Copy of Registration Certificate (ii) Copy of
Bye laws which contain rules and regulations (iii) Copy of resolution passed by the Managing Committee
which should include authority to open the account and operational authority.
5. Cheques presented after death of Secretary or Office Bearer: An=y cheque signed by the
Secretary of Club or Society or any other office bearer who is authorized to operate the account
and presented after his death can be paid provided if is otherwise in order and dated prior to his
death.
18. Mandate and Power of Attorney

.
1. When an account holder authorises another person through a simple letter of authority, it is called
mandate. On the other hand, power of attorney is executed on stamped paper and may cover any
other transactions besides opening/operation of an account. Bank generally accept mandates.
However, Power of Attorney is also acceptable. A mandate does not require witnessing or stamping.
On the other hand, power of attorney is stamped as per the State Stamp Rules of the state where it
is executed. It must either be registered with a Registrar of Documents or attested by Notary Public.
2. The account holder can revoke mandate or power of attorney any time even if it is stated to be
irrevocable.
3. Any cheque signed by the agent and presented after cancellation of authority shall not be paid
irrespective of date on the cheque.
4. Any cheque signed by agent and dated prior to delegation of authority will not be paid.
Power of attorney or mandate is revoked by death, insanity, insolvency of the Principal. Any cheque signed
by the principal or agent presented after the death, insanity or insolvency of the principal will not be paid.
6. In case Cheque issued by the agent is presented for payment after his death, insanity or
insolvency, the same can be paid provided the same is dated prior to the date of death or insanity of
the agent.
19. Death of a Customer and Settlement of Claims
1. In the case of death of individual customer, operation in the account should be stopped.
2. The person named in the will or probate is called Executor. When a person dies without writing
will, he is said as having dies intestate.
3. For making payment of balance in the account of deceased customer to legal heirs of the
deceased, Succession certificate is not mandatory for any amount.
4. While delivering contents of locker or safe custody, inventory should be prepared. If some sealed
packet is found in the locker of safe custody, it should be delivered as it is without opening the
same.
5. The claim should be settled and payment should be made within 15 days from the date of receipt
of completed papers.
6. If any credit is received in the account after death of customer, it should be credited to a separate
account in the name of customer with the permission of legal. heir or nominee. Otherwise it
should be returned to remitter under intimation to the legal heir or-nominee.
7. Pre-mature payment of term deposit can be allowed but no loan can be allowed.
8. Interest in case of current account should be paid at Saving rate from date of death till date of
payment.
9. In case of term deposits, up to due date interest should be paid at contracted rate. For overdue
period. Interest should be paid at applicable rate on date of maturity if the death was before
maturity and at saving rate if the depositor died after maturity.
20. Know Your Customer (KYC) Guidelines

 These guidelines have been issued by RBI under Section 35A of the Banking Regulation Act, 1949.
 The objective of KYC guidelines is to ensure Anti Money Laundering (AML), Combating -of Financing
of Terrorism (CET) and Risk Management.
 For the purpose of KYC policy, a 'Customer' is defined as a person or entity that maintains an
account and/or has a business relationship with the bank.
 Banks have been advised to frame their KYC policies incorporating the following four key
elements: Customer Acceptance Policy; Customer Identification Procedures; Monitoring of
Transactions; and Risk management.
Customer Acceptance Policy

1. KYC norms are applicable on all accounts except Small accounts and on all persons authorized to
operate the account.
2. Customers should be categorised into low, medium and high risk. Examples of low risk customers-
could be salaried employees, people with small balances and low turnover, Government
Departments and Government owned companies, regulators and statutory bodies etc. Examples of
High risk customers include (a) nonresident customers; (b) high net worth individuals; (c) trusts,
charities, NGOs; (d) politically exposed persons (PEPs) of foreign origin;
3. Bank should review the risk profile of the customer at least once in six months.
4. Bank should obtain proof of identity, proof of address, and photograph of the prospective
customer. Banks should not insist on introduction for opening bank accounts of customers.
5. Banks obtain photograph while opening account for the purpose of identification.
6. If the address on the document submitted for identity proof by the prospective customer is same
as that declared by him/her in the account opening form, the document may be accepted as a
valid proof of both identity and address.
7. Documents for identity of the customer: (i) Passport (ii) PAN card (iii) Voter Identity card (iv)
Driving Licence (v) MANREGA Card (vi) Aadhar card
8. Documents for proof of address: Same as proof of identity except PAN card
9. Updation of Customer Identification Data: Banks should update customer identification data
(including photograph/s) once in ten years in case of low risk category customers and once in two
years in case of high risk and once in 8 years for medium risk category.
10.Small account: "Small account" means a savings account where- (i) the aggregate of all credits in
a financial year does not exceed rupees one lakh, (ii) the aggregate of all withdrawals and transfers
in a month does not exceed rupees ten thousand, and; (iii) the balance at any point of time does not
exceed rupees fifty thousand. Such account can be opened on production of a self-attested
photograph. A small account shall be opened only at Core Banking Solution linked branch. Foreign
remittances are not credited to a small account. Reporting to Financial Intelligence Unit - India Cash
Transaction Report ( CTR)
1. The Cash Transaction Report (CTR) for each month should be submitted to FIU-IND by 15th of' the
succeeding month. It should include transactions where cash receipt or payment is more than Rs
10' lakh and integrally connected sash transactions where cash debit or cash credit during the
month exceeds Rs 10 lakh.
2. All cash transactions, where forged or counterfeit Indian currency notes have been used as
genuine should be reported within seven working days from the date of occurrence of such
transactions (Counterfeit Currency Report — CCR).
3. While filing CTR, details of individual transactions below Rupees Fifty thousand need not be furnished.
4. CTR should contain. only the transactions carried out by the bank on behalf of their
clients/customers excluding transactions between the internal accounts of the bank.
Suspicious Transaction Reports (STR)
1. Banks should make STRs if they have reasonable ground to believe that the transaction involve
proceeds of crime generally irrespective of the amount of transaction and/or the threshold limit,
2. The Suspicious Transaction Report (STR) should be furnished within 7 days of arriving at a
conclusion that any transaction, whether cash or non-cash, or a series of transactions integrally
connected are of suspicious nature.
Non-Profit Organisation
The report of all transactions involving receipts by non- profit organizations of value more than
rupees ten lakh or its equivalent in foreign currency should be submitted every month to the
Director, F1U-IND by 15th of the succeeding month in the prescribed format.
Maintenance and Preservation-ef record
1. Transactions reported to FIU:C.ive- years from the date of transaction between the bank and the
client.
2. Records pertaining to the identification of the customer and his address (e.g. copies of documents
like passports, identity cards, driving licenses, PAN card, utility bills etc.): fiveyears after the business
relationship is ended.
21. Nomination Facilities in Customers' Accounts

1. Nomination facility was introduced on the recommendation of Talwar Committee.
2. Nomination facilities are available in deposit accounts (Sec 45 ZA & 45ZB of Banking Regulations Act),
articles deposited for safe custody with the bank (Sec 45ZC & 45ZD) and in locker accounts (45ZE &
45ZF).
3. Sections 45ZA, 45 ZC, 45ZE relate to nomination, change in nomination and cancellation of nomination.
Sections 45ZB, 45 ZD, 45ZF state that bank will be discharged of liability by making payment/delivery to
nominee.
4. Where facility is available: All types of deposit accounts like SB, CA, FD, RD, NRE, FCNR(B) and NRO.
5. Who can nominate: Individual, joint account of individuals or a sole proprietorship firm.
6. Who can not nominate: Partnership firm, HUF, clubs/societies/limited companies/trusts. A minor
can not appoint a nominee. On his behalf, nomination facility can be exercised by the person
legally competent to act on behalf of the minor.
7. Who can be nominee: Only an individual including minor. If nominee is a minor, the depositor has
to appoint a major person to receive deposit amount / articles in the safe custody / locker etc. on
behalf of the minor nominee.
8. Number of nominess: Deposit accounts — only one; Safe Custody — Only one but if articles are
deposited by more than one person, nomination facility is not available; Safe Deposit Locker - single
names or in joint names with either or survivor instruction only one; Locker in joint names with joint
operation - more than one nominee (max 2).
9. When does the right of nominee start?: In case of joint accounts, right of a nominee starts only
after death of all depositors. The only exception is the nominee(s) in case of jointly operated
lockers.
10.Status of nominee:The status of nominee is just like trustee of legal heirs.
11.Legal Heir versus nominee: bank will make payment to the nominee unless there is a court order
to make payment to legal heirs. Bank gets a valid discharge by payment to nominee.
12.1n case of term deposits, there is no need of fresh nomination in the case of renewal of FDR.
13.While making nomination, the thumb impression of the accountholder should be attested by two
witnesses. However, signatures of the accountholders in forms DA1, DA2 and DA3 need not be attested by
witnesses.
14.1n the case of accounts in the name of single persons, nomination must be obtained. If the depositor
does
not want to nominate anybody, he should give in writing.
15.Banks should incorporate the legend "Nomination Registered' on every pass book or deposit receipt. In
addition to the legend "Nomination Registered", banks should also indicate the name of the Nominee in
the Pass Books / Statement of Accounts / FDRs, in case the customer is agreeable to the same.
16.Nomination can be made any time. It can be cancelled and changed any time.
22. SETTLEMENT OF CLAIMS IN RESPECT OF MISSING PERSONS

As per the provisions of Section 108 of the Indian Evidence Act, presumption of death can be raised only after a
lapse of seven years from the date of his/her being reported missing, As such, the nominee / legal heirs have to
raise an express presumption of death of the subscriber under Section 107/108 of the Indian Evidence Act
before a competent court. If the court presumes that he/she is dead, then the claim in respect of a missing
person can be settled on the basis of the same.
23. Bank Ombudsman Scheme 2006
1. The Scheme was introduced in 1995 under Section 35A of Banking Regulation Act.
2. Scheme is applicable to all Scheduled Commercial Banks including private sector, public sector, foreign banks,
RRBs, Scheduled Co operative Banks throughout India including .3&K.
3. Ombudsman is appointed by RBI. The appointment will be for 3 years at a time.
4. The Chief General Manager / General Manager of RBI can be Banking Ombudsman.
5. The expenses of the Ombudsman will be borne by RBI.
6. Scope: Complaints relating to deficiency in service in deposit, ancillary services, non adherence of RBI
guidelines on advances, credit card, internet banking, non-adherence to the provisions of the fair practices
code for lenders or the Code of Bank's Commitment to Customers issued by the Banking Codes and
Standards Board of India (BCSBI).
7. Period for filing complaint: if no reply is received from the bank within one month of lodging the complaint
with bank or reply received is not satisfactory. Maximum period is 1 year from the date of receiving the reply
from the bank and 13 months from the date of making the complaint to the bank if reply not received.
8. Ombudsman will not entertain a complaint where (a) case is pending in the court (ii) case has already been
decided by the court (iii) similar case has already been decided Ombudsman.
9. The role of the Ombudsman is that of Arbitrator with mutual consent.
10. Amount of Award: actual loss suffered by the complainant subject to a maximum of Rs 10 lakh;
In case of credit cards, up to Rs 1 lakh.
11. Period for acceptance: 30 days of receipt of the copy of the award.
12. Period for implementation by bank: 1 month of receipt of acceptance from the complainant.
13. Appeal: Complainant can file an appeal to the Appellate authority (Deputy Governor, RBI) within 30 days of
the of the date of receipt of communication regarding award or rejection of the complaint. Bank may also file
appeal with Deputy Governor, RBI within thirty days from the date of receiving acceptance from complainant.
Appeal may be filed by a bank only with the previous sanction of the CMD or ED or CEO of the bank.
14.1f the bank does not implement the award it should inform Customer Service Committee of the
Board and also give a note to this effect in the Annual Report of the Bank.
15. The Scheme does not include certain banking transactions, such as, failure to honour bank
guarantee or letter of credit and misbehavior of staff.
24. Other issues relating to Customer service
1. Banks should sumit a statement of all the complaints received at the Head Office / Controlling Office level/
branch level. However, where the complaints are redressed within the next working day, banks need not
include the same in the statement of complaints.
2. Delays in Cheque Clearing: For local cheques credit and debit shall be given on the same day or at the
most the next day of their presentation in clearing. Timeframe for collection of cheques drawn on state
capitals / major cities / other locations to be 7/10/14 days respectively. If there is any delay in collection

beyond this period, interest at the rate specified in the Cheque Collection Policy of the bank, shall be paid.
3. Customer Committees: Branch level committees include their customers including senior
citizen. The Branch Level Customer Service Committee may meet at least once a month.
4. Cheque Drop Box: Both the drop box facility and the facility for acknowledgement of the cheques at the
regular collection counters should be available to customers and no branch should refuse to give an
acknowledgement if the customer tenders the cheque at the counters. Banks should invariably display on
the cheque drop-box itself that "Customers can also tender the cheques at the counter and obtain
acknowledgment on the.pay-in-slips". The above message should he displayed in English, Hindi and the
concerned regional language of the State.
25. Code for Banking Service : Salient features
 Changes in Fees & Charges: If bank increases any of charges or introduce a new charge, it will be notified
one month prior to the revised charges being levied / becoming effective.
 Changes to Terms and Con itions: (i) Normally, changes will be made with prospective effect giving notice
of one month. (ii) If any change is made without notice, bank will notify the change within 30 days. If such
change is to customer's disadvantage, customer may within 60 days and without notice, dose account or
switch it without having to pay any extra charges or interest. Bank will immediately update on its website,
any changes in the terms and conditions.
 Chapping customer's account: (a) If customer is not happy about choice of current / savings account,
within 14 days of making first payment into the account, he can switch to another account or Bank will give
customer's money back with any interest it may have earned. If customer decides to close his
current/savings account, Bank will close account within three working days of receiving customer's
instructions.
 Savings/Current Accounts: Bank will inform of any change in minimum balance to be maintained 30 days in
advance.
26. Consumer Protection Act
1. Consumer Protection Act was implemented with effect from April 15, 1987. The Act is not applicable in 3&.K.
2. A complaint can be filed by the consumer, voluntary consumer association, Central or State Government.
3. Objective: to address consumer's grievances against deficiency in the quality of goods or services for
consideration.
4. Limitation period for lodging the complaint is 2 years from the date of cause of action.
5. The Forum operates at three levels i.e. District, State or National. For claims up to Rs 20 lac, complaint will
be lodged with Distt. Forum, for claims over Rs 20 lac up to Rs 100 lac with State Commission and for claims
more than Rs 100 lac with the National Commission.
6. Admissibility of complaint to be decided within 21 days of the receipt of complaint; decision within
3 months without analysis and within 5 months with analysis.
7. Appeal from one forum to another can be made within 30 days of the order. For making appeal against
decision of District Forum to State Forum, amount to be deposited is 50% or Rs 25,000 whichever is less, to
National Forum it is 50% or Rs 35,000 whichever is less and for making appeal against decision of National
Commission to Supreme Court the amount to be deposited is 50% or Rs 50,000 whichever is less.
B. Punishment for FriVolous complaint: Imprisonment 1 month to 3 years and fine Rs.2000 to Rs.10000
Types of Accounts
27. Saving Account:
1. Saving account can be opened in the name of individuals and cannot be used for business purpose.
2. Generally, there is no limit on the amount of balance in such accounts.
1 With effect from 25th October 2011, RBI has deregulated the interest rate on saving deposit. Banks are free
to determine their savings bank deposit interest rate, subject to the condition that bank will have to offer a
uniform interest rate on savings bank deposits up to Rs.1 lakh, irrespective of the amount in the account
within this limit.
4. With effect from 1.4.2010, interest rate on saving bank is payable on daily product basis. It can
be credited at any interval.
5. Basic Saving Bank posit account: 'Basic Savings Bank Deposit Account' with following minimum common
facilities should be offered to all their customers: (i) This account shall not have the requirement of any
minimum balance; (ii) The services available in the account will include deposit and withdrawal of cash at
bank brandh as well as ATMs;
receipt/credit of money through electronic payment channels or by means of deposit/collection of cheques drawn
by
Central/State Government agencies and departments; (iii). There will be no limit on.the number of deposits that
can be made in a month, account holders will be allowed a maximum of four withdrawals in a month,
including ATM withdrawals; and (iv). Facility of ATM card or ATM-cum-Debit Card. The above facilities will be
provided without any charges. The 'Basic Savings Bank Deposit Account' would be subject to RBI instructions
on Know Your Customer (KYC). If such account is opened on the basis of simplified KYC norms, it would

additionally be treated as a 'Small Account'.
28. Inoperative Accounts:
1. Banks should make an annual review of accounts in which there are no operations for more than one year.
2. A savings as well as current account shOuld be treated as inoperative I dormant if there are no
transactions in the account for over a period of two years.
3. In case any reply is given by the account holder 'giving the reasons for not operating the account, banks
should continue classifying the same as an operative account for one more year.
4. For the purpose of classifying an account as 'inoperative' both the type of transactions i.e. debit as
well as credit transactions induced at the instance of customers as well as third party should be
considered.
29. Term Deposits
1. Minimum period as per RBI is 7 days. Maximum period as per IBA is 10 years. However, term
deposits in the name of minors or as per court orders can be opened for more than 10 years
2. Interest rate on term deposits is deregulated and is decided by Asset Liability Management Committee of
the bank. Bank can not discriminate among customers regarding payment of interest except for single
deposits of Rs 15 lac and above but the difference should be minimal.
3. If due date of term deposit is on a holiday, banks will make payment on next working day or thereafter and
will pay the interest for the holiday to depositor at contracted rate irrespective of when the payment is
taken.
4. In case of renewal of overdue term deposits, bank may decide the rate of interest payable for-the overdue
period. However, if the payment of a overdue term deposit is sought, interest for overdue period will be
paid at saving rate.
5. Depositor can request for addition or deletion of names in the deposit but at least one of the
original depositors must remain. If loan has been raised against term deposit, name of a minor
can be added only when loan has been adjusted.
6. As per Section 269 T of Income Tax Act, if the principal plus interest of term deposit is Rs 20,000 or above,
the payment should be made through credit to account or issuing account payee cheque or DD. It should
not be paid in cash. In case, bank pays such term deposit in cash, penalty will be equal to amount paid.
Similarly, payment of interest of Rs 10,000 and above should not be made in cash.
.
7. In case of premature payment of FDR, penalty will be decided by the bank. However, penalty can
not be charged in case of premature payment in case of death of depositor.
8. In case of death of depositor, interest for overdue period will be paid at saving rate if depositor died after
maturity date. If depositor dies before maturity of FDR, interest for overdue period will be paid at FD rate as
on date of maturity for the period overdue amount remained with the bank.
Non Residents and their Accounts

Resident: As per section 2(v) of the FEMA 1999, a person is called resident in India if he stays in
India for more than 182 days during the preceding financial year except those who have gone
out of India for taking up employment outside India or for carrying on a business or vocation
outside India or for any other purpose ndicating his intention to stay abroad for indefinite
period. NON Resident: Person resident outside India means a person who is not resident in
India. NRI has been defined in Income Tax Act. Definition of NRI: However, as per RBI
guidelines, a non resident Indian can be a person of Indian Jationality or a person of Indian
Origin.
Person of Indian Nationality (PIN): A Person of Indian Nationality is one who holds an Indian
passport at the time of opening the account.
Person of Indian Origin: A. Person of Indian Origin is one who is presently not a national of
Pakistan or Bangladesh and : (a) who at anytime held an Indian passport; or (b) he himself,
either of his parents or any of his grand parents was a citizen of India by virtue of Constitution
of India or the Citizenship Act,1955 ; or (c) the person is a spouse of Person of Indian
Nationality / Origin.
Overseas Corporate Bodies are those in which at least 60% shareholding is of NRI. OCBs are not
allowed to open NRI accounts.
Students who go abroad for studies have also been given the facility of opening NRI accounts.
Non resident accounts are of 3 types (a) Non Resident ordinary (b) Non Resident (External)
(c) Foreign Currency Non Resident (Bank) account. Salient features of these accounts are as
under:
FEATURES OF NRI DEPOSITS Foreign Currency Non-Resident (Bank) Account (FCNR —(B)
A/c) — (w.e.f. 15.5.1993)
I. Account holder : NRI of Indian nationality or origin (RBI approval for Bangladesh/Pakistan citizens).
2. Joint account : Can be of two or more NRIS. With close resident relatives, joint account (Former, or

Survivor) can be opened. Relatives can operate a/c as power of attorney holder for local withdrawals or
remittance abroad in name of account holder.
3. Currencies : Any convertible currency.
Type of account: FDR only (a) 1 year and above, less than 2 years (b) 2 years and above less than 3
years (c) 3 years and above less than 4 years (d) 4 years and above less than 5 years (e) 5 years
only. RD, SB or CA is not allowed.
5. Repatriation : Principal and interest permitted.
6. Source of funds: Foreign Inward remittance (FIR) or transfer from NRE-RA account (at TT selling
rate)
7. Interest rate and interest payment : Ceiling rate fixed by RBI (presently LIBOR + 2% (1 year
to less than 3 years) and LIBOR + 3% (for 3 years to 5 years w.e.f. 01.03.14). No interest payment if
cancellation before one year. For one year deposit,. no compounding of interest. For above one year,
compounding on 180 days basis. Interest payment on 360 days in year basis. On floating ROI, half-
yearly reset is allowed.
8. Fund or non-fund Rupee loan against FOR : Up to value of FDR with proper margin (Oct 12,
2012) to
depositor or 3rd party. Margin / interest rate bank discretion. Loans proceeds to be credited to NRO
account. Loans can be repaid from FCNR, NRE or NRO account balances. Banks should not mark any
type of lien, direct or indirect, against these deposits. Premature payment not allowed if loan is
granted. FC loan can be given in India or abroad.
9. Nomination facility is available.
10. Income Tax : Interest is not taxable. TDS not applicable.
11. Additional ROI not allowed to Staff (Jul 18, 2012)
12. At the request of the depositor, banks can permit remittance of the maturity proceeds to third
parties outside India, provided bank is satisfied about the bonafides of the transaction.
Non-Resident External (Rupee Account)

1. Account holder : NRIs of Indian nationality or origin (RBI approval for Bangladesh/Pakistan
citizens).
2. Joint account : Can be in the names of two or more NRIs. With close resident relatives, joint
account (Former or Survivor) can be opened. Relatives can operate a/c as power of attorney holder
for local withdrawals or remittance abroad in name of account holder.
3. Currencies : Indian rupee by converting foreign currency.
4. Type of account: Current, saving or FDR. FDR period at discretion of banks.
5. Repatriation : Principal and interest permitted.
6. Source of funds: Foreign Inward remittance (FIR) or transfer from FCNR-B account (at 'TT
buying rate) or transfer of repatriable funds from NRO account
7. Interest rate and interest payment : Bank discretion but not more than domestic deposit
(deregulated w.e.f. Dec 16, 2011).
8. Rupee loan : Same as in case of FCNR-B account.
10. Income Tax : Interest is not taxable. TDS not applicable.
11. Additional ROI not available to Staff w.e.f. Jul i8, 2012.
12. Important Notes (a) PoA holders cannot credit foreign currency notes and foreign travellers
cheques in NRE accounts. (b) Banks may credit the proceeds of account payee cheques/ demand
drafts / bankers' cheques, issued against encashment of foreign currency to the NRE account of the
NRI account holder where the instruments issued to the NRE account holder are supported by
encashment certificate issued by AD Category-I / Category-IL
Non-Resident Ordinary Account (NRO)

1. Account holder : NRIs or Person of Indian Origin (individuals & not entities from Bangladesh,
can be allowed without RBI permission w.e.f. 11.2.13 Pakistan citizen not to be allowed). Foreign
students can also open NRO accounts (RBI 20.09.13).
2. Joint a/c : Allowed with resident individuals.
3. Currencies Indian rupee.
4. Account: Current, saving, RD or FDR. FDR 7 days to10 years.
5. Repatriation : Interest and current income is permitted. Remittance, including of sale proceeds
of immovable property also allowed @ USD 1 million per financial year for bonafide purposes.
6. Source of funds: New account can be opened with Foreign Inward remittance. Existing account
of an NRI opened when he was resident, will be designated as NRO by the bank.
7. Interest rate: Bank discretion. Not more than domestic deposit interest rates.
9. Income Tax : Interest is taxable. TDS provisions applicable for all interest payments (FD/SB
account).
10. Transfer of repatriable amount from NRO to NRE permitted (May 8, 2012) within USD 1
million /FY subject to payment of tax, as applicable.
11. Additional ROI not allowed to Staff (Jul 18, 2012)
12. Rupee loan Up to value of FDR with proper margin to depositor or 3rd party. FC loan or loan
abroad, not permitted.
Power of attorney : The facility of operation of accounts by PA holder is permitted for local
withdrawals or remittance abroad in name of account holder.
Accounts of Foreign Students in India
NRO account can be opened on the basis of passport, photo and admission letter, for KYC purpose.
Local address proof to be provided within 30 days, when monthly withdrawal will be up to Rs.50000
and foreign inward remittance up to USD 1000. On receiving local address proof, normal operations
can be allowed.
NRO Accounts Of Foreign Nationals of Non- Indian Origin on a visit to India

NRO (current/savings) a/c max 6 months.
Source and use of funds: Funds remitted from outside India through banking channel or by sale
of forex brought into India. All payments' to residents exceeding INR 50,000 by means of
cheques / pay orders / demand drafts.
3. Remittance : The balance may be converted by AD bank into foreign currency for payment to
the account holder at the time of his departure from India provided the account has been
maintained for a period not exceeding 6 months and the account has not been credited with
any local funds, other than interest accrued thereon. If account maintained for more than 6
months, account holder to seek permission on plain paper from Regional Office of RBI.
Accounts of Foreign nationals resident in India Foreign nationals resident in India can open and
maintain a resident Rupee account in India in terms of Notification No.5/2000-RB dated May 3,
2000 viz., Foreign Exchange Management (Deposit) Regulations, 2000, as amended from time
to time.
Accounts for Nepal & Bhutan
When a person resident in- India leaves India for Nepal and Bhutan for taking up employment or
for carrying on business or vocation or for any other purpose indicating his intention to stay in
Nepal and Bhutan for an uncertain period, his existing account will continue as a resident
account and should not be designated as Non-resident (Ordinary) Rupee Account.
ADs may open and maintain NRE / FCNR (B) Accounts of persons resident in Nepal and Bhutan
who are citizens of India or of Indian origin, provided the funds for opening these accounts are
remitted in free foreign exchange. Interest earned in NRE / FCNR (B) accounts can be remitted
only in Indian rupees to NRIs and PIO resident in Nepal and Bhutan.
ADs may open and maintain Rupee accounts for a person resident in Nepal and Bhutan.
Accounts of residents Resident Foreign Currency Account (RFC)

Account holder: A resident in India who was earlier an NRI (at least one year stay abroad) and
became resident again on or after 18.04.92
Source of funds: (a) Forex received as pension/ superannuation /other benefits from employer
abroad (b) Realisation of assets held abroad (c) Forex acquired as gift or inheritance from
person who was NRI (d) Existing FCNR account or NRE-FD to be converted to RFC FD at
discretion of account holder before or after maturity.
3oint account : It can be single account. With close resident relatives, joint account can be
opened as FORMER or SURVIVOR account.
Type of account : Savings, Current, Fixed Deposit (min 7 days and max 10 years)
Repatriation is permitted.
Interest rates : The banks are free to determine ROI.
Use of funds: No restrictions
Resident Foreign Currency (Domestic) ) Account - RFC(D)

Account holder: Resident Individuals
2. Source of funds: Foreign exchange acquired, (a) while on a visit abroad (b) from any person on
visit to India or honorarium or gift or for services or settlement of any lawful obligation (c) by way of
honorarium or gift while on a visit abroad (d) representing unspent foreign exchange acquired during
travel abroad. Amount to be converted in rupees, latest by last day of next month.
3. Type of account : Only current account
4. Interest : No interest payable on this deposit
5. Use of funds : For all permitted transactions.
Exchange Earner's Foreign Currency Account (EEFC Account)

1. Account holder : Exporters of goods and services, resident in India
2. Source of funds : Up to 100% of forex earnings can be kept in the account. But amount to be
converted in rupees, latest by last day of next month.
3. Use of funds : Balance can be transferred to NRE/FCNR account on change of status from resident
to non-resident. Funds can be used for adjustment of pre-shipment loans.
4. Loan: No loan can be allowed against the balances In such account.
5. Type of account : Current account, single or joint (FORMER or SURVIVOR) with close resident
relatives. 6.Interest : No Interest is payable

Module – B
FUNCTIONS OF BANK
In India, the Banking Regulation Act, 1949 defines banking as "accepting for the purpose of lending or
investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by
cheque, draft and order or otherwise.
The Indian banking system classifies banks into scheduled and non-scheduled banks, public sector and
private sector banks, Indian banks and foreign banks, and commercial and cooperative banks. Banking
functions are classified as traditional functions and modern functions. Traditional or core functions relate to
deposit taking, lending, funds remittance and miscellaneous services, like safe deposit lockers, agency
and trustee business. Modern functions of banks encompass a wide range of financial services to meet
the customers' varied requirements under 'one umbrella' e.g. cross-border banking, merchant banking,
credit card business, factoring, leasing and insurance. Some of these services are outside the ambit of
commercial banking and fall under `Universal Banking'.
The modern features of banking include Core banking, tele banking, mobile banking, internet banking and
electronic payment and clearing system.
The retail lending in banks has, of late, grown by leaps ar d bounds. Of retail loans extended by banks,
home loans an consumer loans form a major percentage. Apart from being a delivery channel of the
banking services, credit cards issued by banks are also a good source of credit delivery. Due to
advancement of technology and easy accessibility to credit they provide for card users, they have gained
popularity and wide acceptance in the market today. It is, no doubt, a novel way of providing value added
services to bank customers. If used prudently, they offer a bundle of benefits to card users. To prevent the
customers from falling into a debt trap and consequent harassment from the recovery agents of the card
issuers, Reserve Bank of India has come out with well-documented policy guidelines called "Fair Practices
Code" for banks. This apart, the customers' rights in relation to card operations are protected. The card
issuing banks/NBFCs are responsible as the principal, for all acts of omission and commission of their
collecting/recovery agents. Clear-cut grievance redressal machinery and procedures are also put in place
by banks.
With the growth in employment and the per-capita income and savings, the demand for housing has
gone up. A hassle-free approach to buying a house for a salaried employee is to take a home loan
from banks or housing finance companies. The related procedures for raising a home loan and the
practices the banks follow, while sanctioning such loans are explained in this unit. Following the
home loans, the demand for consumer loans is increasing also corresponding to the increase in the
living standards of the people. So is the case with personal loans and the demand for credit cards.
The Banking Regulation Act 1949 (Section 5-c) defines a banker as a person, undertaking business of
banking. Banking means (Section 6) accepting deposits from public, for the purpose of lending,
repayable on demand or otherwise, withdrawable by cheque, draft, order or otherwise.
Definition of Bank & Banking: Bank is one which conducts business of banking. Banking has been
defined in Section 5 of Banking Regulation Act.
CUSTOMER : There is no legal definition of a bank customer. When customer tenders an account
opening form to open the a/c and banker accepts it, a contractual relationship is established. KYC
definition of customer: As per RBI, for KYC policy purpose, a 'Customer may be defined as
a person or entity that maintains an account with the bank and/or has a business relationship with the
bank;
FUNCTIONS OF A BANK:
Main functions: As per section 5 of the Banking Regulation Act, Banking means the accepting, for the
purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise,
and withdrawable by cheque, draft, and order or otherwise. The Act further says that any company
which is engaged in the manufacture of goods or carries on any trade and which accepts deposits of
money from public merely for the purpose of financing its business shall not be deemed to transact the
business of banking within the meaning of this clause.
Incidental business: As per Section 6 of the Banking Regulation Act, 1949, banks can engage in certain
classes of business which are incidental to the business of banking like Lockers, Safe custody, Collection of
cheques etc. Prohibitions: As per Section 8 of B R Act, a bank is prohibited from buying, selling or dealing in
goods except in connection with the realisation of a security held by it or for collection or negotiating bills of
exchange.
Main function of a bank are: (a) Accepting Deposits of money from public; (b) Granting loans and
advances Deposits
1. Deposit accounts is the core activity of the bank. Deposits are major resource of the bank.
2. Banks accept demand deposits which are withdrawable on demand, Saving Deposits,
Term deposits and open current accounts.
Loans and advances:
1. Banks grant advance through Overdraft, Cash credit, Demand Loan, Term Loans, Purchase or
Discounting of Bills.
2. Loans are given mainly to corporates, businessmen and small borrowers.
3. Loans are given against securities created from out of bank funds, personal security or goods,
movable or immovable in nature.
4. Type of advances: Advances on the personal security of the debtor, or and for which no tangible or
collateral security is taken; Advances which are covered by tangible or collateral security; Loans against
the security of Fixed Deposit receipts; Housing Loan; Educational Loan; Loans against
Shares/Securities/debentures; Loans against National Savings Certificates, KVPs, etc; Consumer
Loans; securitization of Loans; venture capital advances, gold loans, etc.
Other functions of banks:
1. Dealing in securities, on its own account or on behalf of its customers. .
2. Opening letters of credit/issuing guarantees.
3. Dealing in foreign -exchange.
4. Remittances: through demand drafts, RIGS, NEFT, etc.
5. Collection of cheques, drafts, pay orders, travellers cheques, dividend and interest warrants, tax refund
orders,
6. Collection of trade bills
7. Receipt of Foreign Contribution on behalf of the registered persons/Organization
8. Cash Management Product
9. Automated Teller Machines (ATMs)
10. Depository Participant (DP) Services
11. Handling Government Business
12. Acting as trustees and executors.
13. Merchant banking, i.e. acting as managers to a public issue, etc.
14. Safe-keeping Services
15. Lockers
16. Credit Cards/Debit Cards
17. Securitisation of future lease rentals
18. Derivatives
19. Prepaid Payment Instruments
Para Banking services performed by banks
1. Equippament Leasing, Hire Purchase and Factoring Services through subsidiary companies
2. Investment in Venture Capital Funds (V CFs)
3. Mutual fund business: sponsoring mutual funds and marketing the mutual fund units.
4. Money Market Mutual Funds (MMMFs) which come under the purview of SEBI regulations but RBI
approval required before approaching SEBI for registration.
5. Portfolio Management Services: Though banks can not undertake Portfolio Management Services on their
own, bank-sponsored NBFCs can offer PMS to their clients subject to following conditions - (a) Funds
accepted for portfolio management from their clients, should not be entrusted to another bank for
management; (b) 'PMS' should be in the nature of investment consultancy/management, for a fee, at the
customer's risk without guaranteeing, a pre-determined return.
6. Primary Dealership Business.
7. Retailing of Government Securities
8. Underwriting of Corporate Shares and Debentures
9. Underwriting of bonds of Public Sector Undertakings

10.Sponsors to Infrastructure Debt Funds (IDFs)
11.Insurance business: Through risk participation or Bancassurance or Insurance broking
12.Pension Funds Management through subsidiaries (not departmentally) with prior approval of RBI
and as per eligibility criteria prescribed by Pension Fund Regulatory and Development Authority
(PFRDA).
BANKING LOAN PRODUCTS
Loan against Gold Jewellery
1. Banks are prohibited from granting any advance against bullion/primary gold. However, loan can be made
against specially minted gold coins provided the weight of the coin(s) does not exceed 50 grams per
customer.
2. The purpose of the loan should be approved, and non- speculative.
3. The ownership of the gold ornaments to be verified before accepting them for pledge.
4. Gold ornaments should be assessed by approved assessors. Loans are given only on the basis of gold
content of ornaments. As per RBI, gold jewellery accepted as security/collateral will have to be valued at
the average of the closing price of 22 carat gold for the preceding 30 days as quoted by the Indian Bullion
and Jewellers Association Ltd. If the gold is of purity less than 22 carats, the bank should translate the
collateral into 22 carat and value the exact grams of the collateral.
5. Loan to Value (LTV) Ratio: Loans (including bullet repayment loans) sanctioned by banks against
pledge of gold ornaments and jewellery for non-agricultural purposes should not exceed 75 per cent
of the value of gold ornaments and jewellery.
Education Loan Scheme
1. Prepared by IBA on the recommendations of a group headed by Shri R.J.Kamath.
2. The scheme could be adopted by all scheduled commercial banks.
3. Eligible Courses would include School education including plus 2 stage; Graduation & Post
Graduation courses, professional courses, computer certificate courses etc.
4. Student Eligibility: Should be an Indian national and should have secured admission to professional /
technical courses through entrance test/selection process or secured admission to foreign university
/ institutions. If admission on management quota seat, not eligible for loan.
5. Expenses for Loan: Fee payable to college / school / hostel; Examination I library / laboratory fee; Purchase
of books / equipments / instruments / uniforms; Caution deposit / building fund / refundable deposit; Travel
expenses / passage money for studies abroad; Purchase of computers essential for completion of the
course; Other expense to complete the course like study tours, project work.
6. Maximum loan: No ceiling now.
7. Margin: Upto Rs.4 Iakh: No margin; More than 4 Iakh: Studies in India: 5%; Studies abroad: 15%
8. • Security: Upto Rs.4 lakh: Co obligation of parent; No security or Third party Guarantee. Loan more than
Rs 4 Iakh but up to Rs 7.5 lakh: Co obligation of parent and third party guarantee. Loan above Rs.7.5 lakh:
Co obligation of parent and collateral security of suitable value and/or third party along with the assignment
of future income of the student for payment of instalments.
9. Interest Rate: Linked to base rate. Simple interest during moratorium period. Interest concession of
1-2 per cent may be provided for loanees if the interest is serviced during the study period when
repayment holiday is specified for interest / repayment
10. Repayments: Moratorium period plus 10 to 15 years; For loans upto Rs 7.5 lakhs: upto 10 years; For
loans above Rs 7.5 lakhs: upto 15 years; Moratorium: Course period + 1 year from completion of
studies or 6 months after getting job, whichever is earlier. The accrued interest during the repayment
holiday period should be added to the principal and repayment in EMI fixed.
11. The joint borrower should normally be parent(s)/guardian of the student borrower. In case of a
married person, joint borrower can be either spouse or the parent(s)/parents-in-law.
12. Interest Subvention is available on the entire interest charged during moratorium period provided
annual parental/family income does not exceed Rs.4.50 lakhs.
Home Loans
Eligibility: Individuals or groups of individuals including co-operative societies, to purchase/construct the
dwelling unit or for repairs, to the damaged dwelling unit. Banks should not grant loans in respect of
properties which fall in the category of unauthorised colonies unless and until they have been regularised
Valuation of properties: The property against which the home loan is to be provided should be valued by
the approved valuer of the bank. Charges on account of stamp duty, registration and other
documentation charges should not be included in the cost of the housing property to be financed.
Maximum Loan to Value (LTV) ratio: Upto Rs 20 Lakh: 90 %; Above Rs 20 lakh & upto Rs75 lakh: 80%;
Above Rs 75 Iakh; 75%
Security: The property should be charged to the bank by way of equitable mortgage/registered
mortgage. There should be clear and unencumbered title to the property.
Repayment: The repayment is by EMIs.
Foreclosure Charges/Prepayment Penalty: No foreclosure charges/prepayment penalties should be
charged on floating rate home loans sanctioned to individual borrowers.
Vehicle Loans
Purpose of Auto loan: The loan can be sanctioned by the branch for the purchase of new Cars/used cars,
Multi
Utility Vehicles (MUVs) and Semi Utility Vehicles (SUVs) or two wheelers
Eligibility:People engaged in trade, commerce and business, professionals, proprietary/partnership
firms,
companiesland individuals (singly or jointly). The age of the individual should not be more than 65 years.
Loan tenure: Maximum 84 months.
Maximum Loan to Value Ratio (LTV): Generally 80% of 'on road price' of the car
Pre Payment penalty: Pre-payment penalty is waived.
Security: Branch should verify the original RC book for noting down the charges in favour of the Bank.
Insurance: The vehicle purchased is to be kept comprehensively insured for the market value or at least 10%
above the loan amount outstanding, whichever is higher, and the Bank's interest as a hypothecatee should be
noted in the Certificate of insurance and Insurance policy.
BANKING & TECHNOLOGY PRODUCTS

COMPUTER TERMINOLOGY
ATM: Automated Teller Machine '

SWIFT: Society for worldwide Interbank Financial Telecommunication
SFMS: Structured Financial Messaging System
OLTAS: Online Tax Accounting System
CBS: Centralized/ core Banking Solution
PIN: Personal Identification Number
LAN: Local Area Network (used in the same building)
MAN: Metropolitan Area Network (used in the same city)
WAN: Wide Area Network (used in different locations)
1DRBT: Institute for development & Research in Banking Technology
Banknet: Payment System Network established by RBI
NICNFT: National Informatics Centre Network (currency chest operation)
WWW: World Wide Web
HTTP: Hyper Text Transfer Protocol
URL: Uniform Resource Locator
VSAT: Very Small Aperture terminal
Firewall: Software programme that restricts unauthorized access to data and acts as a
security to private network
Booting: Starting of a computer
Hard Disk: A device for storage of data fitted in the processor itself
Modem: Modulator & Demodulator: A device used for converting digital signals to analog
signals & vice-versa
Encryption: Changing the data into coded form
Decryption: Process of decoding the data
Virus: Vital Information Resources Under Seize: Software programme that slows down
the working of a computer or damages the data. Main source of virus is internet (other sources are
floppy or CD)
Vaccine: Anti Virus Software programme used for preventing entry of virus or repairing the
same
Digital Sign: Authentication of. electronic records by a subscriber by means of electronic method
or procedure
Key used: For digital signatures, there is a pair of keys, private key & public key
RTGS: Real time Gross Settlement
ECS: Credit: One account debited, number of accounts credited
ECS: Debit: One account credited, number of accounts debited
Hacking: Knowingly concealing, destroying, altering any computer code used for computer
network
Address: The location of a file. You can use addresses to find files on the Internet and your
computer. Internet addresses are also known as URLs.
PAYMENTS SYSTEMS - RTGS System
1. "RTGS" stands for Real Time Gross Settlement. RTGS system is a funds transfer mechanism
where transfer of money takes place from one bank to another on a "real time" and on "gross"
basis.
2. This is the fastest possible money transfer system through the banking channel.
3. RTGS helps in preventing Systemic and Settlement Risks.
4. Minimum / maximum amount for RTGS transactions: The minimum amount to be remitted
through RTGS is Rs.2 lakh. There is no upper ceiling for RTGS transactions.
5. Time taken for effecting funds transfer from one account to another: The beneficiary bank has to
credit the beneficiary's account within two hours of receiving the funds transfer message. G.
6. Timing for RTGS: Customer's transactions from 8.00 hours to 16.30 hours on week days
including Saturday. However, the timings between these hours would vary depending on the
customer timings the branches have. Second & Fourth Saturday will be closed.
 For inter-bank transactions, the service window is available from 8.00 hours to 20.0 hours on
week days and from 8.00 hours to 15.30 hours on Saturdays.
7. Charges:
 a) inward RTGS— free; b) Outward transactions (i) Rs. 2 to 5 lakh — not exceeding Rs. 25
per transaction; Rs. 5 lakh and above — not exceeding Rs. 50 per transaction.(Service tax
extra). If after 3.30 PM then Rs 5 extra.
1. With effect from 1.8.08, all payment transactions above Rs. 10 lac by RBI regulated entities in
the RBI regulated markets would have to be mandatorily routed through electronic payment
systems like the Real time Gross Settlement (RTGS) System, National Electronic Fund Transfer
(NEFT) System and Electronic Clearing Service (ECS).
Real Time Gross Settlement Scheme –
Our bank is All type RTGS member and Y Shape structure. Funds and Investment Section Mumbai is
the gateway.RTGS-PI(Participant Interface) is installed at F & I section.Each branch has been allotted
an INDIAN FINANCIAL SECTOR CODE IFSC CODE.Bulk upload of RTGS outward messages
introduced(Cir 273/2012).Minimum amount `2 lakh. Wrong Credit to be returned as fresh RTGS
outward Message.Only Refer Cir 27/2015 : RTGS Transaction (Cir 210/09): If it is not possible to
credit the funds to the beneficiary customers‘account for any reason e.g. account does not exist,
account frozen etc. Funds to be returned to the originating RTGS member bank branch within one and
half hours of receipt of the payment at the PI (Participating Interface i.e. Funds and Investment
Section, Mumbai) or before the end of the RTGS Business Day, whichever is earlier, by way of R42
message format.
In case of delay in credit, delayed interest as below is to be paid. (318/2014).Delayed credit to the
beneficiary CURRENT REPO Rate PLUS 2%.Delayed return to the sending bank CURRENT REPO Rate
PLUS 2 %. The return payment has to be sent by the branch as a fresh inter-bank payment (IFN
298R42). Customer transactions should be sent through ‗Customer Bank Payment (R41) only and not
through "Inter Bank Payment". Routing customer transactions under "Inter Bank Payment" is violation
of RTGS discipline and would attract penalty under section 30 of the Payment and Settlement System
Act, 2007'.
RTGS customer transactions through 298 R41 message format. RTGS Charges:
Block ransaction time Transaction Transaction value Transaction
from time to above Rs 2.00 value above Rs
lakhs and upto 5.00 lakhs
Rs 5.00 lakhs
1 09.00 hours 12.00 hours Rs 25.00 Rs 50.00

2 After 12.00 15.30 hours Rs 26.00 Rs 51.00
hours
3 After 15.30 Rs 30.00 Rs 55.00
hours
* Applicable service taxes plus cess thereon shall be collected in addition to the above charges
to customers by debit of their account and KYC norms to be verified
National Electronic Funds Transfer (NEFT) System

1 National Electronic Funds Transfer (NEFT) system is a nation wide funds transfer system to
facilitate transfer of funds from any bank branch to any other bank branch.
2. Batches: The settlement of transactions is in batches. There are 12 hourly batches on weekdays
including Saturday ( 08.00 hrs to 19.00 hrs ); Second & Fourth Saturday will be
closed.
3. Settlement Timings: There are twelve settlements at 0800, 0900, 1000, 1100, 1200, 1300,
1400, 1500, 1600, 1700,1800, 1900 hours including Saturday ( 08.00 hrs to 19.00 hrs )
4. The beneficiary should get credit within 2 hours from the time of completion of batch i.e. on
B+2 basis on the same day.
5. Amount: There is no minimum or maximum amount to be remitted.
6. Processing Charges/Service Charges: Upto Rs 10,000: Maximum Rs 2.5; Upto Rs 1 lac:
Maximum Rs More than 1 lac up to Rs 2 lac: Max Rs 15; More than Rs 2 lac: Max Rs
25.(Service tax extra)
7. Difference between IFS Code and MICR: Indian Financial System Code (IFSC) is an alpha

numeric cod designed to uniquely identify the bank-branches in India. This is 11 digit code
with first 4 character representing the banks code, the next character reserved as control
character (Presently 0 appears in th, fifth position) and remaining 6 characters to identify the
branch. The MICR code has 9 digits to identify t1-1. bank-branch. IFSC code is printed on
cheques leaves issued to their customers.
 PARTIES TO FUNDS TRANSFER: The parties to a funds transfer under the NEFT system
are the sender, sending branch, Service branch of Sending Bank (Mumbai Clearing section for our
Bank), the RBI NEFT Centre (National Clearing Cell, RBI, Mumbai), beneficiary bank and the
beneficiaries. Branch should obtain an agreement as per format given in circular from each customer
before making available the facility of NEFT. For all NEFT transactions, the funds are to be credited
to our Clearing Section, Mumbai (DP Code : 136, IFSC: CNRB0MUMCLG). Our Bank uses SFMS as
the NEFT message carrier. Commission – NEFT : Charges for small value transactions(Cir 336/2014)
8.
Indo Nepal Remittance Scheme – Salient features
1. it is a cross-border one-way remittance facility scheme facilitating remittance from India to Nepal.
2. A remitter can transfer funds up to Indian rupees 50,000 from any of the NEFT branches to
Nepal. The beneficiary would receive funds in Nepalese rupees.
3. Charges: The charges have been revised with effect from 9.2.09. The details of the revised
charges are asa under: (i) Originating bank – Maximum Rs 51- per transaction – aligned with
NEFT. (ii) State Bank of India Rs 20/- per transaction. 5131 would share this Rs.20/- with NSBL
at Rs.10 each. NSBL would not charge any additional amount for crediting the beneficiary, if he
maintains an account with it. (iii) In case the beneficiary does not maintain an account with
NSBL then, an additional amount would be charged- Rs 50/- for remittances up to Rs 5,000/-
and Rs 75/- for remittance above 5,000/-. Originating branches of participating banks may
please note to recover the entire charges and pass on the appropriate amount to SBI after
retaining their share.
Any remitter is allowed to remit maximum of 12 remittances in a year under this Scheme.
Electronic Clearing Service (ECS) : Electronic Clearing Service is a mode of electronic funds
transfer from one bank account to another bank account using the services of a Clearing House.
There are two types of ECS called ECS (Credit) and ECS (Debit). ECS (Credit) is used for affording
credit to a large number of beneficiaries by raising a single debit to an account, such as dividend,
interest or salary payment. ECS (Debit) is used for raising debits to a number of accounts of
consumers/ account holders for crediting a particular institution. Amount: There is no Minimum or
maximum limit on the amount of individual transactions. Speed Clearing
1. Speed Clearing refers to collection of outstation cheques through the local clearing. It facilitates
collection of cheques drawn on outstation core-banking-enabled branches of banks, if they have
a net-worked branch locally.
2. When will the beneficiary get funds under Speed Clearing?: The local cheques are processed on
T+1 working day basis and customers get the benefit of withdrawal of funds on a T+1 or 2 basis. 'T
denotes transaction day viz. date of presentation of cheque at the Clearing House. So, the
outstation, cheques under Speed Clearing will also be paid on T+1 or 2 basis.
3. Availability and charges: Speed Clearing is currently available in 41 MICR centres. Collecting
banks will not charge any charges for collection of cheques up to Rs 1 lac in saving bank
accounts. For cheques of more than Rs 1 lac, bank discretion. For collection in current
accounts, bank discretion irrespective of amount of chque. The charges are inclusive of all
charges other than Service Tax.
Cheque Truncation
1. What is Truncation: Process of stopping the flow of the physical cheque issued by a drawer to
the drawee branch. The physical instrument will be truncated at some point en-route to the
drawee branch and an electronic image of the cheque would be sent to the drawee branch
along with the relevant information like the MICR fields, date of presentation, presenting banks
etc.
2. The electronic images of truncated cheques will be in gray scale technology. There will be three
images of the cheques i.e. front grey, front black & white and back black & white which will be
made available to member banks.
3. What type of cheques can be presented in the CTS?: All the local cheques can be presented
in the CTS.
PREPAID PAYMENT INSTRUMENTS : Eligibility : Banks who comply with the eligibility
criteria would be permitted to issue all categories of pre-paid payment instruments. Non-
Banking Financial Companies (NBFCs) and other persons would be permitted to issue only
semi-closed system payment instruments.
Capital requirements : Banks and Non-Banking Financial Companies which comply with the Capital
Adequacy requirements prescribed by Reserve Bank of India from time-to-time, shall be permitted
to issue pre-paid payment instruments. All other persons shall have a minimum paid-up capital of
Rs 100 lakh and positive net owned funds.
Safeguards against money laundering (KYC/AML/CFT) provisions
1. The maximum value of any pre-paid payment instruments (where specific limits have not been
prescribed including the amount transferred) shall not exceed Rs 100,000/-.
Deployment of Money collected: Non-bank persons issuing payment instruments are required to
maintain their outstanding balance in an escrow account with any scheduled commercial bank
subject to the following conditions:-
1. The amount so maintained shall be used only for making payments to the participating
merchant establishments.
2. No interest is payable by the bank on such balances.
Validity: All pre-paid payment instruments issued in the country shall have a minimum validity
period of six months from the date of activation/issuance to the holder. The outstanding balance
against any payment instrument shall not be forfeited unless the holder is cautioned at least 15
days in advance as regards the
expiry of the validity of the payment instrument. .
AUTOMATED TELLER MACHINE
1. What is ATM: ATM is a computerised machine that provides the customers of banks the facility
of accessing their accounts for dispensing cash and other financial transactions without the need
of actually visiting a bank branch.
2. Non receipt of cash from ATM: In case during the cash withdrawal process, cash is not
disbursed but the account gets debited for the amount, the customer may lodge a complaint with
the card issuing bank. This process is applicable even if the transaction was carried out at another
banks ATM. As per the RBI instructions, banks should re-credit such wrongly debited amounts
within a maximum period of 7 working days from the date of complaint. If there is a delay,
customer is eligible for compensation for delayed period at the rate of Rs 100/- per day. This
amount should be be credited to the account of the customer without any claim being made by
the customer. However, if customer does not make complaint within 30 days of the transaction,
he will not be entitled to compensation.
3. Free transactions at bank's own ATM: At least five free transactions (inclusive of financial and
non financial transactions) per month should be permitted to the savings bank account customers
for use of own bank ATMs at all locations.
1. Free transactions at ATMs of other banks: With effect from November 1, 2014, the number of
mandatory free ATM transactions (inclusive of both financial and non-financial transactions) at
other banks' ATMs has been reduced to three transactions per month for transactions carried out
at the ATMs located in six metro centres, viz. Mumbai, New Delhi, Chennai, Kolkata, Bengaluru
and Hyderabad. This reduction will, however, not apply to small / no frills / Basic Savings Bank
4.Deposit account holders who will continue to enjoy five free transactions. At other locations i.e.
other than the six metro centres mentioned above, the facility of five free transactions for savings
bank account customers shall remain unchanged.
5. Charges for ATM transactions: Beyond free transactions, there will be a ceiling / cap on
customer charges of Rs.20/- per transaction (plus service tax, if any).
6. ATMs for visually challenged: Banks should make ATMs friendly to physically handicapped
persons by constructing ramps and cash dispensation at lower height. The ATM should be
accessible to visually challenged persons also by providing brail key board. From July 1, 2014 all
new ATMs to be installed should be friendly to blind persons.
7. Banks have been permitted to install Off site ATMs without RBI permission subject to reporting
to RBI.
MOBILE BANKING TRANSACTIONS IN INDIA

1. What is Mobile Banking Transactions? : Undertaking banking transactions using mobile phones
by bank customers that involve credit/debit to their accounts.
2. Who can offer mobile ban ing services: Only banks which are licensed and supervised in India
and have a physical presence in India will be permitted to offer mobile banking services. Only
banks who have implemented core banking solutions would be permitted to provide mobile
banking services. Banks may also use the services of Business Correspondent appointed in
compliance with RBI guidelines, for extending this facility to their customers.
3. To whom this service can be offered: The services shall be restricted only to customers of
banks and/or holders of debit/credit cards issued as per the extant Reserve Bank of India
guidelines.
1. Type or transactions permitted: Only Indian Rupee based domestic services shall be provided.
Use of mobile banking services for cross border inward and outward transfers is strictly prohibited.
5. Transaction limit:
i.For fund transfer: No limit , (ii)For purchase of goods & services: No limit.
iii.Maximum value of cash transfers: Rs 10000/- per transaction subject to a maximum value of
Rs 25,000 per month per customer.
iv.Banks may also put in place monthly transaction limit depending on the bank's own risk perception
of the customer. Cash Withdrawal at Point-of-Sale (POS): RBI has decided to permit cash withdrawals
at POS terminals. To start with, :his facility will be available for all debit cards issued in India, upto
Rs.I000/- per day. The conditions subject to which this 'acility is being extended are given below: (i)
This facility is available only against debit cards issued in India. (ii) The liaximum amount that can be
withdrawn at POS terminals is fixed at Rs.1000/- per day. (iii) This facility may be made available at
any merchant establishment designated by the bank after a process of due diligence. (iv) The facility
is vailable irrespective of whether the card holder makes a purchase or not.
UNITS OF COMPUTER DATA
Computer data is stored in Bytes ,8 bits = 1 byte, 1024 bytes = 1 Kilobyte, 1024 KB = 1 Megabyte,
1024 MB = 1 Gigabyte, 1024 GB = 1 Terabyte, 1024 TB = 1 Petabyte, 1024 PB = 1 Exabyte,
1024 EB = 1 Zettabyte, 1024 ZB = 1 Yottabyte
BANKING & TECHNOLOGY - RELATED RBI POLICY CHANGES DURING

2015-16 : EXPECTED QUESTIONS
ISSUANCE OF EMV CHIP AND PIN CARDS

 The RBI has granted extension of time for issuance of all new EMV Chip and Pin cards – debit
and credit, domestic and international by banks.
 For cards issued under the Pradhan Mantri Jan-Dhan Yojana (PMJDY) / Basic Savings Bank
Deposit Account (BSBDA) / other Government schemes, the time is extended upto September 30,
2016 and for all cards other than these, the extended period is upto January 31, 2016.
 During the extended period, if any customer specifically requests for EMV Chip and Pin cards,
banks should promptly comply with request. Besides, all cards issued for international usage will
necessarily be EMV Chip and Pin cards. Further, the magnetic stripe cards issued would have to be
replaced by December 31, 2018 irrespective of the validity period of the card.
˜ INTERNET BANKING FOR CUSTOMERS:
The Reserve Bank of India has allowed state Co-operative Banks (StCBs) and District Central Co-
operative Banks (DCCBs) to extend the facility of Internet banking to their customers.
˜ INTERNET BANKING WITH TRANSACTIONAL FACILITY: All licensed StCBs, DCCBs and UCBs
which have implemented CBS and have also migrated to Internet Protocol Version 6 (IPv6) may offer
Internet banking with transactional facility to their customers with prior approval of the Reserve Bank,
subject to the following criteria:
 Net worth is ? 50 crore or more as on March 31 of the immediate preceding financial year;
 Capital to risk weighted assets ratio (CRAR) of not less than 10 per cent;
 Gross NPAs is less than 7 per cent and Net NPAs not more than 3%;
 The bank should have made a net profit in the immediate preceding financial year and overall,
should have made net profit at least in three out of the preceding four financial years;
 The bank should not have defaulted in maintenance of CRR / statutory liquidity ratio (SLR) during
the immediate preceding financial year;
 The bank has sound internal control system with at least two professional directors on the Board;
 The bank has a track record of regulatory compliance and no monetary penalty has been
imposed on the bank for violation of RBI directives / guidelines during the two financial years,
preceding the year in which the application is made.
Ä CHANGE IN RTGS TIME WINDOW:
The RBI has advised all participants of RTGS of the revised RTGS time window with effect from
September 1, 2015 as under:
Time Event Re ular days includin Saturdays, except 2nd and 4th
Saturdays of the Month
Open for Business 08:00 hours
InitialCut-off (Customer
transactions) 16:30 hours

FinalCut-off (Inter-bank
transactions) 19:45 hours
IDL Reversal 19:45 hours - 20:00 hours
End of Day 20:00 hours

ÄAUTHENTICATION FOR SVCP TRANSACTIONS
The Reserve Bank advised all scheduled commercial banks including regional rural banks / urban co-
operative banks / state cooperative banks / district central co-operative banks / authorised card
payment networks, that:
a) Relaxation for AFA requirement is permitted for transactions for a maximum value of Rs. 2,000/-
per transaction;
b) The limit of Rs. 2000/- per transaction is set across all categories of merchants in the country
where such contactless payments are accepted;
c) Beyond this transaction limit, the card has to be processed as a contact payment and
authentication with PIN (AFA) will be mandatory;
d) The contactless cards should necessarily be chip cards adhering to Europay, MasterCard and Visa
(EMV) compliant payment standard, so as to be acceptable across the existing card acceptance
infrastructure which are EMV compliant based on the earlier mandate in this regard.
PPI FOR MASS TRANSIT SYSTEM
 The RBI has issued the final guidelines on Prepaid Payment Instruments for Mass Transit System
(PPI-MTS) enabling the issuance of a separate category of semi-closed prepaid payment instruments
for mass transit systems.
The PPI-MTS can be used within the mass transit systems and will have a minimum validity of
six months from date of issue. Such PPIs will be reloadable instruments subject to an
outstanding limit of Rs.2,000/- at any point of time. Apart from the mass transit system, such
PPI-MTS can be used at other merchants whose activities are allied to or are carried on within
the premises of the transit system.
RECOVERY IN BANK
Banks aggressively build up their retail asset portfolios to expand business as retail assets are one of
the best revenue drivers in banking.
Risk in retail banking is well diversified because the customer base is large and heterogeneous in nature.
Retail asset portfolio of foreign banks, and new generation private sector banks as percentage of total
portfolio is much higher compared to public sector banks.
The retail portfolio of public sector banks used to be in the range of 30%.
While profits generated from retail portfolio are attractive, there is also risk of default.
The unsecured nature of retail assets like Personal Loans and Credit Card Receivables make the
portfolio more vulnerable for default.
The aggressive approach of banks towards retail loans has toned down due to the global financial crisis
and its impact across the globe though the same was relatively lesser in India.
Default:
Default is the occurrence of an event which happens due to non payment of agreed installments.
One of the major reasons for default has been change in interest rates.
Both in fixed pricing loans and variable pricing or floating rate loans, repricing takes place as per the reset clause.
The monthly installments also called as EMIs are fixed based on the rate prevailing at the time of availing the
loan and the agreed repayment period based on the servicing capacity of the borrower. An increase in interest
rate will increase the EMI which the customer may not be able to service resulting in default and subsequently
NPA.
Rescheduling: If a customer wants to continue with his existing EMI instead of increased EMI, the
repayment period is extended beyond the earlier committed repayment period. This phenomenon is
called as rescheduling of retail loans. In retail loans, rescheduling mainly happens in Housing Loans
as they are of long tenor and mortgage backed.
Reasons for default in Credit Cards and Personal Loans: (i) Genuine defaults which are due to reasons beyond
the borrower's control like personal set backs, job losses, unforeseen medical expenses etc. In this case,
intention to pay is intact but the ability to pay is affected and results in defaults. In this case, bank adopts a
customer oriented approach because the chances of recovery are bright. (b) Willful defaults where the
borrowers deliberately default with malafide intention. In willful defaults the approach of the banks will be on a
recovery basis.
RECOVERY PROCESS
1. Recovery process is a scientific tool for maintaining the quality of retail assets.
It is designed in such a way that it addresses both genuine defaulters as well as willful defaulters.
For genuine defaulters, the recovery process has to be gentle and professional. In case of willful
defaulters, the recovery process should be strict and very professional.
'Public Sector Banks' approach to recovery of loans is different from the strategies adopted by private sector
banks and foreign banks. While PSBs administer recovery management through their own staff in case of
retail loans, private and foreign banks outsource their recovery process and entrust the same to Recovery
Agents for end to end recovery management when the accounts become default.
RECOVERY AGENTS
RBI has framed guidelines prescribing the procedures for code of conduct for Recovery Agents because
the agents used coercive methods including threats, intimidation and forced recovery of assets financed.
The guidelines were issued in April 2008. Salient features are given below:
Engagement of Recovery Agents:

'Agent' would include agencies engaged by the bank and the agents/ employees of the concerned agencies.
Banks should have a due diligence process in place for engagement of recovery agents, which should
be so structured to cover, among others, individuals involved in the recovery process.
Banks should ensure that the agents engaged by them in the recovery process carry out verification of the
antecedents of their employees, which may include pre-employment police verification. Banks may decide
the periodicity at which re-verification of antecedents should be done.
Banks should inform the borrower the details of recovery agency firms / companies while forwarding default
cases to the recovery agency. Further, agent should also carry a copy of the notice and the authorization
letter from the bank along with the identity card issued to him by the bank or the agency firm / company.
Where the recovery agency is changed by the bank during the recovery process, the bank should notify the
borrower of the change and the new agent should carry the notice and the authorization letter along with his
identity card.
The notice and the authorization letter should, among other details, also include the telephone numbers of the
relevant recovery agency. Banks should ensure that there is a tape recording of the content I text of the calls
made by recovery agents to the customers, and vice-versa. Banks may take reasonable precaution such as
intimating the customer that the conversation is being recorded, etc.
The up to date details of the recovery agency firms / companies engaged by banks may also be posted
on the bank's website.
Where a grievance/ complaint has been lodgedr banks should not forward cases to recovery agencies till they
have finally disposed of any grievance / complaint lodged by the concerned borrower. However, where the
bank is convinced, with appropriate proof, that the borrower is continuously making frivolous / vexatious
complaints, it may continue with the recovery proceedings through the Recovery Agents even if a grievance /
complaint is pending with them. In cases where the subject matter of the borrower's dues is sub judice, banks
should exercise caution, in referring the matter to the recovery agencies.
Bank should have a mechanism to address borrowers' grievances with regard to the recovery process.
The details of the mechanism should be furnished to the borrower while advising the details of the
recovery agency.
Incentives to Recovery Agents: Banks should ensure that the contracts with the recovery agents do not
induce adoption of uncivilized, unlawful and questionable behaviour or recovery process.
Training for Recovery Agents

Banks should ensure that, the recovery agents are properly trained to handle with care and sensitivity, their
responsibilities, in particular aspects like hours of calling, privacy of customer information etc.
Indian Banks Association in consultation with Indian Institute of Banking and Finance (IIBF), has
formulated a certificate course for Direct Recovery Agents with minimum 100 hours of training.
Banks should ensure that over a period of one year all their Recovery Agents undergo the above training
and obtain the certificate from the above institute.
The service providers engaged by banks should also employ only such personnel who have undergone
the above training and obtained the certificate from the IIBF.
Taking possession of property mortgaged / hypothecated to banks

As per Supreme Court, the recovery of loans or seizure of vehicles could be done only through legal means.
Banks should rely only on legal remedies available under the relevant statutes while enforcing security interest
without intervention of the Courts.
Where banks have incorporated a re-possession clause in the contract with the borrower and rely on such re-
possession clause for enforcing their rights, they should ensure that the re-possession clause is legally valid,
complies with the provisions of the Indian Contract Act in letter and spirit, and ensure that such repossession
clause is clearly brought to the notice of the borrower at the time of execution of the contract.
3. The terms and conditions of the contract should be strictly in terms of the Recovery Policy and should contain
provisions regarding (a) notice period before taking possession (b) circumstances under which the notice
period can be waived (c) the procedure for taking possession of the security (d) a provision regarding final
chance to be given to the borrower for repayment of loan before the sale / auction of the property (e) the
procedure for giving repossession to the borrower and (f) the procedure for sale / auction of the property.
Use of forum of Lok Adalats:

The Supreme Court has observed that loans, personal loans, credit card loans and housing loans with
less than Rs.10 lakh can be referred to Lok Adalats organized by Civil Courts for recovery of loans.
Utilisation of credit counselors: Banks should utilise the services of the credit counsellors for providing
counselling to the borrowers when the case of a particular borrower deserves sympathetic
consideration. Complaints against the bank / its recovery agents
Banks, as principals, are responsible for the actions of their agents. Banks should ensure that their agents
engaged for recovery of their dues strictly adhere to RBI guidelines and including the BCSBI Code.
If complaints are received by RBI regarding violation of the guidelines, RBI may consider imposing a ban on a
bank from engaging recovery agents in a particular area, either jurisdictional or functional, for a limited period.
In case of persistent breach of above guidelines, Reserve Bank may consider extending the period of ban or
the area of ban.
Banks should, ensure that their employees also adhere to the above guidelines.
Periodical Review: Banks engaging recovery agents are advised to undertake a periodical review of the
mechanism to effect improvements.
SARFAESI ACT
Objective:
1. To provide a structured platform to the Banking sector for managing its mounting NPA and keep pace
with international financial institutions
2. To enable banks and Fls to realise long-term assets, manage problems of _liquidity, asset -liability
mismatches and improve recovery by taking possession of securities, sell them and reduce non
performing assets (NPAs) by adopting measures for recovery or reconstruction."
Provisions of the Act
The remedy was suggested by Committees like the Narasirnham Committee II and Andhyarujina Committee,
which considered the need for changes in the legal system to address the issue of NPAs.
The SARFAESI Act was passed in 2002 to legalise securitisation and reconstruction of financial assets and
enforcement of security interest. The act envisaged the formation of asset reconstruction companies (ARCs)
/Securitisation Companies (SCs).
The Act has made provisions for registration and regulation of securitisation companies or_reconstruction
companies by the RBI, facilitate securitisation of financial assets of banks, empower SCs/ARCs to raise
funds by issuing security receipts to qualified institutional buyers (QIBs), empowering banks and Fis to take
possession of securities given for financial assistance and sell or lease the same or to take over
management in the event of default.
The Act provides alternative methods for recovery of NPAs, namely securitization and asset reconstruction.
Securitisation
Securitisation means issue of security by raising of receipts or funds by SCs/ARCs.
A securitisation company or reconstruction company may raise funds from the QIBs by forming
schemes for acquiring financial assets.
The SCl/ ARC shall keep and maintain separate and distinct accounts in respect of each such scheme for every
financial asset acquired, out of investments made by a QIB and ensure that realisations of such financial asset
are held and applied towards redemption of investments and payment of returns assured on such
investments under the relevant scheme.
Asset Reconstruction
The SCs/ ARCs for the purpose of asset reconstruction should provide for anyone or more of the
following measures:
the proper management of the business of the borrower, by change in, or take over of, the management
of the business of the borrower.
the sale or lease of a part or whole of the business of the borrower.
rescheduling of payment of debts payable by the borrower enforcement of security interest in
accordance with the provisions of this Act.
settlement of dues payable by the borrower
taking possession of secured assets in accordance with the provisions of this Act.
Securitisation, and Reconstruction of Financial Assets and Enforcement of Security Interest Act
1. The Act was passed in 2002 with the objective of helping banks / Hs in recovery of their dues without intervention
of the court. The Act is applicable throughout India including Jammu & Kashmir.
2. The Act empowers the secured creditor to (i) take possession of the security (ii) sale or lease or assign the
right over the same (iii) Manage the same and/or appoint any person to manage the same (iv) Recover
money receivable from 3rd parties. The competent authority to enforce rights under SARFAESI is Chief
Manager and above. However, Board of the bank can also delegate authority to an officer below the rank of
Chief Manager.
3. A bank can exercise rights under the Act provided following conditions are
satisfied. (a) The asset to be acquired should be charged to the bank.
The recoverable dues should be more than Rs 1,00,000.
The Act is not applicable if 80% of the due amount has been'paid.
A notice of 60 days is required to be given to the borrower and guarantor under section 13(2) of the Act calling
upon them to discharge the liabilities failing which bank can acquire the assets
If loan has been raised from more than one bank/FI, consent of 75% of lenders by value is required
before initiating action under the Act
The Act does not cover agricultural land mortgaged to the credit institution. (However, other assets
charged to bank can be acquired).
The account should be NPA
The documents are within the limitation period
The security is not charged by pledge or lien
4. The Act was challenged before Supreme Court in the case of Mardia Chemicals Limited versus Union of India
and others (ICICI). While upholding the constitutional validity of the Act, the Court struck down a clause that
required borrower to deposit 75% of the claim amount before making an appeal before DRT against action
of the bank. Accordingly, the Act was revised in 2004 and the revised provisions are given in the subsequent
paragraphs.
5. If borrower has objection against the action of the bank, he can object to the bank and bank has to reply
within one week. If borrower is still not satisfied he can file application with the DRT within 45 days of the
taking over of possession by the bank and is not required to deposit any amount with DRT at this stage. If
bank or borrower is not satisfied with the decision of DRT, either party can make appeal to DRAT within 30
days of receiving the copy of judgement. However, if the borrower prefers an appeal with DRAT, he is
required to deposit 50% of the bank's claim which can be reduced to 25% by the Chairperson. •
6. If the bank wants to sell the acquired assets, 30 days notice is to be given to the borrower/guarantor. The sale
can be made by obtaining quotations or inviting tenders from public or by holding public auction. In case of
auctions or tenders, 30 days notice will be published in the newspaper, reserve price will be fixed by the bank
and sale at below reserve price will require consent of the borrower. Sale will be confirmed by _bank on
receipt of 25% of the amount immediately and balance in 15 days.
7. In the case of Transcore versus Union of India & Others, Supreme Court has decided that bank take
action simultaneously under SARFAESI and RDB Act (DRT Act)
CENTRAL ELECTRONIC REGISTRY UNDER THE SARFAESI ACT 2002

Government of India, Ministry of Finance has notified the establishment of the Central Registry. The objective of
setting up of Central Registry is to prevent frauds in loan cases involving multiple lending from different banks on
the same immovable property. The Central Registry of SRuritisation Asset Reconstruction and Security Interest
of India (CERSAI), a Government Company licensed under section 25 of the Companies Act 1956 has been
incorporated for the purpose of operating and maintaining the Central Registry under the provisions of the
SARFAESI Act. initially transactions relating to securitization and reconstruction of financial assets and those

relating to mortgage by deposit of title deeds to secure any loan or advances granted by banks and financial
institutions, as defined under the SARFAESI Act, are to be registered in the Central Registry. The records
maintained by the Central Registry will be available for search by any lender or any other person desirous of
dealing with the property. Availability of such records would prevent frauds involving multiple lending against the
security of same property as well as fraudulent sale of property without disclosing the security interest over such
property.
DEBT RECOVERY TRIBUNALS
DRTs are governed by provisions of the Recovery of Debt Due to Banks and Financial Institutions Act,
1993, also popularly called as the RDB Act.
DRTs are located across the country. Some cities have more than one Debt Recovery Tribunal located therein.
New Delhi and Mumbai have three benches in Debt Recovery Tribunal. Chennai and Kolkata have two
benches Debt Recovery Tribunal each. One Debt Recovery Tribunal each has been constituted at
Ahmedabad, Allahabad, Aurangabad, Bangalore, Chandigarh, Coimbatore, Cuttack, Ernakulam, Guwahati,
Hyderabad, Jabalpur, Jaipur, Lucknow, Nagpur, Patna, Pune, Ranchi and Vishakapatnam.
Each Debt Recovery Tribunal is presided over by a Presiding Officer. The Presiding Officer is generally
a judge of the rank of Dist. & Sessions Judge.
A Presiding Officer of a Debt Recovery Tribunal is assisted by a number of officers of other ranks, but none of
them need necessarily have a judicial back ground. Therefore, the Presiding Officer of a Debt Recovery
Tribunal is the sole judicial authority to hear and pass any judicial order.
Each Debt Recovery Tribunal has two Recovery Officers. The work amongst the Recovery Officers is
allocated by the Presiding Officer. Though a Recovery Officer need not be a judicial Officer, but the
orders passed by a Recovery Officer are judicial in nature, and are appealable before the Presiding
Officer of the Tribunal.
DRTs are fully empowered to pass comprehensive orders like in Civil Courts. The Tribunal can hear
cross suits, counter claims and allow set offs. However, they cannot hear claims of damages or
deficiency of services or breach of contract or criminal negligence on the part of the lenders.
DRTs can appoint Receivers, Commissioners, pass ex-parte orders, ad-interim orders, interim orders apart from
powers to Review its own decision and hear appeals against orders passed by the Recovery Officers of the
Tribunal.
Recording of evidence by Debt Recovery Tribunal is some what unique. All evidences are taken by way of an
affidavit. Cross examination is allowed only on request by the defense and that too if the Tribunal feels that
such a cross examination is in the interest of justice. Frivolous cross examination may be denied.
Debt Recovery Tribunals
DRTs are special types of courts for effecting recovery of dues of banks and financial institutions.
DRTs are established under the Recovery of Debts due to banks and financial institutions Act 1993
The Act is not applicable to J&K.
DRT is headed by a Presiding Officer. He is assisted by a Recovery Officer and one Registrar.
Type of Cases: Cases involving recoverable dues of banks and Fls of Rs 10 lees and above only are
filed with DRTs. Such cases can not be filed in the normal civil courts.
Once the case is decided in favour of the bank or FI, the DRT issues a Recovery Certificate. Recovery Officer
who has powers such as attachment etc. helps in recovery of dues through execution of the decree passed by
DRT.
Appeal against the order of the Recovery Officer can be made to DRT within 30 days of passing the order.
Any appeal against the judgement of DRT can be preferred with Debt Recovery Appellate Tribunal. The head of
DRAT is called Chairperson. The appeal is made within 45 days of the date of receipt of the order.
If borrower wants to appeal, 75% of the judgment amount is required to be deposited which can be
waived or reduced by the Chairperson of the DRAT even to nil.
Fee: for filing case with DRT- up to Rs 10 lac : Rs 12,000; For each additional Rs 1 lac or part thereof it is
Rs 1000. Maximum amount of fees is Rs 1,50,000.
For filing appeal with DRAT- Where the amount of debt is less than Rs 10 lakh- Rs 12,000;
For debts due between Rs 10 lakh to less than Rs 30 lakh- Rs 20,000;
For debts of Rs 30 lakh and more — Rs 30,000
For being appointed as DRT, a person should qualify to be District Judge and for being appointed as
DRAT, the person should qualify to be a Judge of the High Court.
BANKING LAW ( NI, RBI & BR ACT )
The Act deals with instruments that can be endorsed . Definition of NI: U/s 13, NI means and includes
promissory note (PN), bill of exchange (BOE) and cheque. Information Technology act. Has also been made
applicable to NI act and thus electronic Cheques & digital signatures statutory recognition. IT act will not
apply to bill of exchange & promissory note & thus these two can not be electronic means. It came into force
w.e.f. Mar 01, 1882 Last amendment in Dec 2002 ( implemented in Feb. 2003 ). Total sections 147
Applicable throughout India including J & K.
1. The Negotiable Instruments Act is applicable in whole of India including Jammu & Kashmir.
2. As per Section 13 of the Act, promissory notes, bills of exchange and cheques are the
negotiable instruments.
3. As per practice and usage and as per court decisions, certain instruments' such as Treasury
Bills, Certificate of Deposit, Commercial Paper, Govt. Promissory Note are also Negotiable
instruments.
4. Some instruments like Railway Receipt, Bill of Lading, Warehouse Receipt etc are also treated
as Negotiable instruments as per Section 137 of Transfer of Property Act.
5. The main feature of a negotiable instrument is that it is freely transferable and the title of the
transferee will be better than the transferor.
6. Promissory note: As per Sec 4, PN is in writing, containing unconditional undertaking or promise, signed
by the maker, to pay a certain sum of money to or to the order of a certain person or to the bearer thereof.
It requires payment of stamp duty and can be demand PN or usance PN. There are 2 parties (maker &
payee). Currency/bank notes are excluded from the definition of promissory notes. Writing the words "I
owe you Rs 1000' does not constitute PN bull owe you Rs 1000 payable on demand constitute PN.
7. Bill of exchange: As per Sec 5, BoE is an instrument in writing, containing an unconditional order, signed
by maker, directing a certain person to pay a certain sum of money only or to the order of a certain person
or to the bearer of the instrument In a Bill of Exchange, the person ordering for payment is called Drawer
and the person directed to pay is called Drawee. The beneficiary is called payee.
8. Cheque is defined in Sec 6 of NI Act.
9. Cheque is a bill of exchange but always payable on demand and drawee is always a banker. It also
includes truncated cheque and electronic cheque.
10. A cheque is similar to a bill of exchange.
11. Any bill of exchange which is payable on demand and in which drawee is a banker will be called cheque.
12. The promissory note or bill of exchange can be payable on demand or after some time. If no time is
mentioned then the same will be treated as Demand promissory note or Demand Bill of Exchange.
13. A negotiable instrument can be payable to bearer or order. If neither bearer nor order is written it is
treated as payable to order. if both bearer or order are written it is treated as payable to bearer.
14. As per Section 31 of RBI Act, no person other than Central Government or Reserve Bank of India or
any other person authorized in this behalf can issue bearer promissory notes and demand bills of
exchange payable to bearer.
15. Inchoate Instruments: As per section 20 of the NI Act, an instrument on which date, payee or amount
is not mentioned is called as inchoate or incomplete instrument. Incomplete cheque can be completed
by the Holder and the completion so made will not be treated as material alteration.
16. An instrument without signatures is not treated as an instrument at all.
17. Ambiguous instruments: As per section 17 of the NI Act, an instrument which can be bill of
exchange or promissory note. Holder can treat it either of these.
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18. Presumption: U/s 118 Nis are presumed to be (a) made for consideration, (b) bear date on which
they are made. (c) Every holder is a holder in due course.
19. Holder: defined in section 8 of the NI Act. Holder of a promissory note, bill of exchange or cheque
means any person entitled in his own name to the possession thereof and to receive the amount due
thereon from parties thereto.
20. Holder in Due Course: defined in Section 9 pf the NI Act. Holder in due course is a person who
became possessor of a NI for valuable consideration, in good faith, before becoming due, and without
having any reason to believe that the person transferring the instrument was not entitled thereto.
Transfer of a Negotiable Instrument and Endorsement
a. Transfer of a Negotiable instrument: by assignment (under Transfer of Property Act) or by
Negotiation (under NI Act).
b. Negotiation of a Bearer instruments: A bearer instrument is negotiated by mere delivery and no
endorsement is required.
c. Negotiation of an order instrument: An order instrument can be negotiated by endorsement
followed by delivery. It may be noted that legal heirs cannot complete the negotiation of a negotiable
instrument with endorsement by the deceased merely by delivery.
d. Endorsement: Signing of an instrument on the back or face thereof or on a slip of paper annexed
thereto for the purpose of negotiation is called endorsement (Section 15). The person who transfers
the instrument is called endorser and the person to whom it is transferred is called endorsee.
e. Blank Endorsement: In a blank endorsement the endorser just signs his name without indicating
endorsee. It can be converted into full by writing name of a person above signatures. The effect of an
endorsement in blank is that it makes an instrument dawn originally payable to order to bearer
instrument for the purpose of negotiation which can be further negotiated by mere delivery.
f. Endorsement in Full: When, the endorser indicates the name of the endorsee it is called full
endorsement.
g. Sans Recourse Endorsement: An endorsement in which endorser excludes his liability is termed 'sans
recourse' or without recourse endorsement. In case of dishonour of instrument, the amount cannot be
recovered from such endorser.
h. Facultative: An endorsement in which endorser waives the notice of dishonour is called Facultative
endorsement But this is not applicable to other parties to the instrument.
i. Restrictive endorsement: An endorsement which restricts further right of negotiation is called as
restrictive endorsement. For example if it is written in the endorsement as "Pay to Hari for my use" it
is restrictive endorsement.
j. Conditional Endorsement: When along with endorsement, condition is imposed by endorser. For
example, pay to C on completion of studies. Paying bank not to ensure compliance of condition.
Condition binds endorser and endorsee only.
k. Back to Back Endorsement: An endorsement in which the endorser himself becomes endorsee is
called as back to back endorsement and in such a case, the endorsee can recover the amount only
from parties prior to his own endorsement.
l. Negotiation Back: When the drawer of a cheque himself becomes endorsee, it is called "Negotiation
Back" and this cheque is treated as satisfied.
m. Partial Endorsement: The endorsement can be made only for full amount but in case part payment
has been received and a note to that effect is made on the instrument, then the same can be
endorsed for the balance amount.
n. Forged Endorsement: When endorsement is made by a person other than Holder by forging
signatures of Holder Title does not pass to any person on the basis of such endorsement. A person
getting instrument after such endorsement does not become holder.
o. Regularity of endorsement: Paying bank gets protection u/s 85(1) only when endorsement is
regular (may not be genuine).
Payment of cheques
a) A paying banker gets protection under Section 85 of the NI Act.
b) In the case of order cheques, protection is available under section 85(1) and for bearer cheques it is
available under section 85(2) of NI Act. In the case of drafts it is available under section 85A.
c) As per section 85(1) of the Act a paying banker has two duties i.e.. the endorsement should be
regular and payment should be in due course. Paying banker is not concerned about genuineness or
forgery of endorsement.
d) As per section 85(2) of the NI Act, in case of a bearer cheque the responsibility of paying banker is to
ensure that payment is in due course. If a bearer cheque is endorsed, the bank is not required to take
note of any such endorsement. Thus as per section 85(2), 'Once a bearer always a bearer'
e) Payment in Due Course: As per Sec 10, a payment would be considered in due course if: (a) Payment
as per apparent tenor of instrument; (b) Payment in good faith and without negligence; (c) Payment to
person in possession of instrument; (d) Payment under circumstances which do not afford a reasonable
ground for believing that he is not entitled to receive payment of the amount mentioned therein
f) Form of the cheque has not been given in the Act. It is simply as per practice. However, RBI has
prescribed format at centres where cheque truncation has started. RBI has prescribed the new
cheque standards "CTS-2010° and all banks providing cheque facility to their customers, will issue
only 'CTS-2010' standard cheques across the country by March 31, 2013.
g) Different ink: A cheque can be drawn in different inks, handwritings or different scripts. Thus, a
cheque presented with different ink, handwriting or script can be paid.
h) Language: The cheque should be written in Hindi, English or Regional language. Bank is within its
powers to return a cheque written in a language other than the language of that region.Signatures on
Back: When a cheque is presented for payment signatures of the presenter are taken on the back as a
witness of payment. If the presenter refuses to sign, the bank can take receipt on a separate paper.
Date on Cheque

i) Ante dated cheque: A cheque dated prior to its date of presentation is called ante dated cheque. It is
valid and can be paid.
j) Post dated cheque means a cheque which is dated subsequently to the date of presentation. It is
valid but can be paid only on date mentioned on cheque . If it is paid before date on cheque, it is not
a payment in due course.
k) Stale cheque: As per RBI guidelines issued under section 35A of B R Act, a cheque becomes stale
after 3 months of its issue. These guidelines are effective for cheques issued on or after 1.4.12. The
validity can be reduced by the drawer but it cannot be extended. On a cheque becoming stale, the
cheque can be revalidated up to 3 months at a time.
l) Impossible Date: A cheque with impossible date like 31.11.12 should be paid on the last day of the
month or within six months of the last day of the month.
m) Cheque dated prior to opening the account: A cheque dated prior to the date of
opening the account or issue of cheque book can be paid if otherwise in order.
n) Amount of Cheque : The amount should be written both in words and figures.
p. As per Sec 18 of the NI Act, if the amount written in words and figures differ, the amount written in
words should be paid.
q. The amount written in words is called legal amount and amount written in figures is called courtesy
amount.
r. If the balance in the account is just equal to the amount of the cheque, the cheque will be paid.
s. If the balance in the account is insufficient to pay the cheque, it should not be paid relying on the
balance in some other account or transferring the amount from other account unless there is an
arrangement to that effect.
t. If the number of cheques are presented at the same time and the balance is not sufficient to pay all
the cheques, but normally priority is given to cheques favouring revenue authorities, then to cheques
favouring public authorities. If balance is left, maximum number of cheques should be passed taking
care that cheque of very small amount is not dishonoured.
u. Banking Hours: The payment of a cheque should be made only during banking hours otherwise it
will not be a payment in due course. However, the payment of a reasonable amount can be made to
drawer even after banking hours.
v. Mutilation: if there is any mutilation of cheque, it should be confirmed by drawer or by collecting banker.
Alteration in Cheque
w. Material alteration: Any change in date, amount or name of payee is called material alteration.
x. The change from order to bearer, or cancellation of crossing or converting special crossing to
general crossing is also material alteration.
y. However, bearer to order or crossing a cheque or converting general crossing to special crossing or
completing an incomplete cheque is not material alteration.
z. If there is any material alteration on a cheque it can be paid only after confirmation from drawer
under his full signatures.
aa. In the case of joint accounts with "either or survivor" clause any of the account holders can confirm
material alteration but in jointly operated accounts signatures of all are required.
bb. Under Section 89 of the NI Act, 1881 paying banker gets protection in case of payment of materially
altered cheques if the alteration is not apparent at the time of payment and payment has been made in due
course.
cc. W.e.f. 31.12.10, CTS cheques with material alteration except in date will not be collected even if
confirmed by drawer.
dd. Payee: if the payee is fictitious person then the cheque can be paid to bearer if it is payable to
bearer but if the cheque is payable to order, it can be paid only to the drawer.
ee. Bearer or Order: if a cheque is payable to bearer or order, it can be paid to bearer. However, if
neither bearer nor order is written it is payable to order.
ff. Forged signatures: If there is a forgery in the signatures, such an instrument is null and void. Paying
banker will not get protection if it pays such a cheque even though the drawer might have been careless in
custody of the cheque book or bank might have sent statement of accounts and the customer did not
point out the mistake. However, if the cheque has been signed by the drawer himself but in a different
fashion, the banker will not be liable.
Crossing of a cheque or demand draft :
General Crossing: Crossing is of two types — General or special crossing. If there are two parallel
transverse lines on the face of cheque it is called General Crossing. The parallel lines can be with
words and company or & co or not contain any word. (Sec 123)
For General crossing parallel lines are must. Any other thing is not so material.
 A cheque on which name of some station like Indore is written between two parallel lines will be
called Generally crossed cheque.
 Crossing is direction of drawer to paying banker. According crossed cheque can be paid to or through a
bank only (in cash or through clearing) and not across the counter, to payee or holder. A cheque with
General Crossing should be paid only to a bank.
 Even if the name of a city is written between two parallel lines like "Indore", it will continue to be a
general crossing and the cheque can be paid to any bank. Such cheque dan be paid at any station to a
bank and not necessarily at Indore.
 A general crossing can be converted into a special crossing.
 Special Crossing: If name of a bank is written on the face of a cheque' with or without two parallel
transverse lines it is called special crossing (Section 124). Parallel line is not necessary. The name of a
bank can be written anywhere on the face of a cheque.
 Specailly crossed cheque can be paid only to the bank whose name is mentioned on the cheque or his
authorized agent for collection.
 A cheque crossed to two banks has to be returned unpaid unless crossed by one bank to another as his
agent for collection. Two branches of a bank for this purpose, are only one bank
 The special crossing is in favour of a bank and not in favour of a particular branch. Therefore, if a cheque
is favouring Canara Bank Patna, it can be paid to Canara Bank at any place.
 For special crossing it is not necessary that the cheque should bear two parallel lines.
 A generally or specially crossed cheque can be paid to a banker in cash also.
 If a crossed cheque is paid in violation of guidelines, it will not be a payment in due course and bank will be
liable to true owner of cheque i.e. payee or holder in due course.
 Provisions relating to crossing are applicable to cheques and drafts only and not to Promissory Notes or Bill
of Exchange. Therefore, if any Bill or Promissory note is having addition of two parallel lines or name of a
banker, it does not have any effect.
 Who can cross a cheque: The Crossing can be done by drawer, payee or holder or a banker.
 'Account Payee' crossing is not recognised by law but is a long standing practice amongst bankers.
 Account payee crossing is a direction to the collecting banker.
 Account payee cheque can be collected for credit of the named payee only and cannot be endorsed or
transferred.
 RBI has directed banks not to collect/ credit “Account payee “ cheques for any person other than the payee
as it is established practice.
 RBI has clarified that the practice of collecting third party account payee cheques on behalf of co-operative
credit societies who are their constituents can be allowed if the amount is up to Rs 50,000.
 Not Negotiable Crossing: It is defined in Section 130 of N I Act.
 Not negotiable crossing does not restrict transferability but it takes away the important element of negotiation
i.e. passing on better title to the transferee (transferee cannot become holder in due course). It is direction to
collecting bank Paying bank has to pay such cheques in normal course.
 if words 'Not negotiable' are written between two parallel lines or with the name of a bank, this cheque will
continue to be transferable. It can be endorsed. But the title of transferee will not be better than the title of
transferor.Cancellation of crossing can be done by drawer only under his full signatures by writing the words
crossing cancelled. In such cases, the payment is made in cash to a person known to the bank
 Paying bank gets protection on payment of crossed cheques U/S 128 by ensuring that the payment is
made in due course
When payment should not be made : Payment cannot be made in case of (a) death, insolvency, insanity of
customer or insolvency of partner or firm or liquidation of company (b) stop payment (c) receipt of
garnishee/attachment order (d) post dated cheque and (e) stale cheque. However, payment can be made in
case of death of agent (authorized signatory of a company, agent appointed by a customer, trustee, office
bearer of society or club etc.) where cheque is not dated prior to date of authority to the agent and subsequent
to date of death.
Protection to Collecting Banker
 Protection to collecting banker is available under Section 131 of the N I Act. For collection
of demand drafts/cheques,
 The protection is against risk of conversion i.e. dealing with others property without his consent
 Protection will be available only if (i) the cheque/draft is crossed (ii) the bank receives the payment for
its customer (iii) the bank acts as agent for collection and not holder for value (iv) it receives the
payment in good faith and without negligence.
 To get protection as a collecting banker the bank must ensure that there is no negligence involved.
Examples of negligence could be opening of accounts without proper, ignoring not negotiable
or 'account payee' crossing, collecting cheques payable to firm, Ltd Co, Trust, Institutions in the
personal accounts of partner, director, trustee or the office bearer.
PROTECTION TO BANKERS
85-1 Paying banker protected by payment in due course of order cheque that bears regular
endorsement. Genuineness of endorsement is not to be ensured by.the paying bank.
85-2 Protection to paying banker in case of a bearer cheque. Endorsement on a bearer cheque to be ignored.
85-A Protection to paying banker in case of Bank drafts.
89 Protection to paying bank for materially altered instrument.
128 Protection for payment in due course of crossed cheques
131 Protection to collecting bank for crossed cheques subject to compliance of conditions
131-A Protection to collecting bank for crossed bank drafts.
Dishonour of Cheques due to Insufficient balance

 As per Section 138 of the Act, if any cheque drawn by a person is returned by the bank unpaid,
either with the reason funds insufficient or exceeds arrangement or similar reason such person shall be
deemed to have committed an offence.
 As per judgements of the Supreme Court, the cheques which are dishonoured on account of stop
payment by the drawer or Account being closed will attract penalty prescribed under Sec 138 of the Act.
 Penalty as per section 138: in case of dishonour of cheque due to reasons stated above,
punishment can be imprisonment up to two year, or maximum fine up to twice the amount of the cheque,
or both.
 Conditions for invoking section 138: (a) the cheque has been presented to the bank within a
period of threemonths from the date on which it is drawn or within the period of its validity, whichever is
earlier. (b) the cheque had been received for consideration i.e. to discharge a liability or debt.
 Notice to Drawer: should be sent by the payee or the holder in due course within thirty days of the
receipt of information regarding dishonor of cheque
 When cause of action arise: If drawer of cheque fails to make the payment, to the holder in due
course, within fifteen days of the receipt of the said notice.
 Limitation period for making complaint: The complaint in such cases should be made in the court
of a metropolitan magistrate or a judicial magistrate of the first class or above within one month of the
date of the cause-of-action (i.e. if payment is not made within 15 days)
Bill of Exchange
Demand Bill: A bill Of exchange payable on demand or at sight or on presentment is called Demand Bill.
Usance Bill: A bill of exchange payable after some time is called Usance Bill.
Documentary bill: which is accompanied by document of title to goods like railway receipt, bill of lading, etc.
Clean bill: is one which is not accompanied by any document of title to goods.
Inland bill: which is drawn or made in India and is either payable in India or on a person resident in India.
Foreign bill: is one which is not an Inland Bill i.e. it is drawn outside India or if drawn in India is payable
outside India on a person resident outside India. Foreign Bills are issued in more than one part.
Accomodation Bill: means a bill issued without consideration and dealing in such bills is called kite flying.
Interest Rate: If in a bill of exchange or promissory note, interest rate is not mentioned, it will be 18% p.a.
Calculation of Due Date
o Usance bills should be presented for acceptance within a reasonable time.
o The reasonable time is given under section 105 of NI Act. As per section 105, reasonable time means
as per usage and practice of the area.
o The drawee is allowed 48 hours excluding public holiday to accept the bill.
o If a Usance bill is payable after date, its due date is calculated from date of the bill and if it is payable
after sight, its due date is calculated from the date of acceptance.
o As per section 22 of the N l Act, three days of grace are allowed in the case of Usance bills and
Usance promissory notes. But if the due date is fixed on a particular day or days of grace are
specifically prohibited, the same need not be given.
o Days of grace are allowed only in case of Usance Promissory Note or Usance Billof Exchange and not
in the case of demand bill or demand promissory note.
o As per Section 25 of the Act, if a bill or promissory note matures for payment on public holiday under NI
Act, 1881 (Sunday or any day declared to be public holiday by the Central Government) it falls due on
immediate next preceding business day. Since 26th Jan, 15th August and 2nd October are national
holidays and if the bill falls due on any of these dates, then preceding business day will be the due date.
o If the period of usance is given in days, then the day from which due date is to be calculated is excluded.
Due consideration should be given to leap year in which February has 29 days. •
o If the period of usance is given in months and there is no corresponding day in the month in which bill
matures, last day of the month is taken into account. For example, a bill dated 31stDec payable two
months after date will fall due on 31st Feb without grace period. But since February has only 28 days,
28th February will be considered and after 3 days of grace, 3td March will be due date.
Dishonour of a Bill, Noting and Protesting and Liability of Parties
 If the drawee does not accept the bill within stipulated period it is treated as dishonoured by non
acceptance.
 If a bill after being accepted is not paid on due date, it is said to have been dishonoured due to non
payment.
 When a promissory note or bill of exchange has been dishonoured by non-acceptance or non-
payment, it may be got noted or protested with Notary Public.
 Provisions relating to noting and protesting applicable only in case of dishonor of promissory note or
bill of exchange whether payable on demand or usance bill or usance promissory note.
 Noting and protest is optional in case of Inland bills.
 If a bill is dishonoured by non acceptance, then the drawer will be primarily liable on the bill.
 If a bill is dishonoured due to non-payment (it means it was accepted), acceptor (drawee) will be
primarily liable on the bill and drawer's liability will be secondary.
Banking Regulation Act, 1949

 Statutory Reserve: As per section 17 of B R Act, a bank should transfer to Reserve Fund 20%
of its net profits before declaring dividend or
bonus. As per current guidelines of RBI, a scheduled bank is required to transfer 25% of the
profit before providing for bonus and declaring dividend.
 As per Section 19 (2), a bank can not hold shares in a company either as owner or as pledge
more than 30% of the paid up share capital of that company or 30% of its own paid up share
capital and reserves, whichever is less. RBI has reduced this to 10%.
As per section 20, a bank can not grant loans or advances on the security of its own shares.
As per section 24, banks are required to maintain SLR (Statutory Liquidity Ratio)
 Banks should submit a return of all deposit accounts which have not been operated for the last
10 years. The return is submitted as on 31st December and within one month (Section 26).
 Section 45 Y: Power granted to Central Govt. to make rules for preservation of records.
Section 45Z: Return of paid instruments to customers after keeping a true copy of such instruments.
Customers receiving cheques have to preserve same as per Govt. Guidelines
Section 45ZA to 45 ZF relate to Nomination in deposits, safe custody and locker accounts
 47A RBI can impose penalty for various kinds of violations.
 49A Other than a banking company/RBI/SBI, no person can accept deposits of money
withdrawable by cheque .
 52 Central Govt. can make rules for all matter.
SCHEDULED BANK
 As per Sec 2(e) of RBI Act, a scheduled bank means a bank whose name is included in the 2nd
schedule of RBI Act 1934. A scheduled bank should satisfy the conditions laid down in Sec 42(6), which
include paid-up capital and reserves requirement of not less than Rs.5 lac, satisfaction of RBI that the
affairs will not be conducted by the bank in a way to jeopardise the interests of the depositors. It may be
a State Cooperative bank, a company defined in Companies Act 1956, an institution notified by Central
Govt. and a corporation or a company incorporated by or under any law in force. (commercial, rural and
many State Coop Banks are classified as Scheduled Banks). A bank that is not included in the 2nd
Schedule of RBI is called Non-scheduled Bank.
 Reserve Bank of India Act, 1934 : Reserve Bank of India Act, 1934 came into force on 01.04.1935.,RBI
was established on the recommendations of the Hilton Young Commission,Section 24: RBI can issue
bank notes of the denomination of 2, 5, 10, 20, 50, 100, 500, 1000, 5000,10000.,Section 31: No person
other than RB1/Central Govt. can draw, accept, make/issue Bill of Exchange, Hundi or promissory note
payable to bearer on demand,Section 42(1) deals with cash reserves ratio to be maintained by
scheduled commercial banks.Section 49 requires RBI to publish bank rate from time to time.
Banking Law Amendment Act 2012

The Banking Law (Amendment) Act, 2012 was notified on Jan 18, 2013 to amend the Banking
Regulation Act, 1949 (Act), the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.
Salient features : 1. Enhanced Regulatory Power to supersede Board of Directors: in consultation with
the Central Government, RBI can order to supersede the Board of directors up to 6 months. (can be
extericfei to a maximum of 12 months).
2. Inspection of associate enterprise: section 29 A confers power upon the RBI to call for information and
records relating to business of the company and/or its associate enterprises.
3. Investment limits: As per amended Section 3
of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 & 1980 Nationalized
Banks can issue bonus shares and rights issue and increase the authorized capital with the approval
from Central Govt. and RBI, without being limited by the ceiling of a maximum of Rs.3000 cr.
4. Depositor Education and Awareness Fund: Section 26 A provides to establish the Depositor
Education and Awareness Fund to create awareness among the customers.
5. Acquisition of Shares and Voting Rights: Prior approval of RBI is mandatory to hold 5% or
more of share capital or voting rights in a banking company. The RBI shall take a decision on the
application within 90 days.
6. Cooperative Societies: The cooperative societies should mandatorily obtain license from RBI to carry
on the banking business.
7. Penalties: It increases the penalty for contravening the provisions of the Act-
For providing false Information to RBI, the penalty would be INR 10 million;
or failure to provide account books or any requested information to RBI, the penalty would be INR
200,000 and if the default continues then an additional fine of INR 50,000 shall be imposed;
Defaults in complying with any of the requirement/obligation under the Act, a penalty up to INR 10
million or twice the amount involved in such contravention whichever is more; and
(iv) failure to furnish account books or any requested information, up to INR 2 million.
8. Voting rights : Private Sector Banks: It increases shareholders' voting rights from 10% to 26% in
private sector banks, making investment attractive for foreign players. Public Sector Banks: It enables
the government to raise voting rights in Public Sector Banks to 10% from the current 1%.
Call money rate is a weekly weighted average of call money market during the week. Week stands for
Saturday to Friday.
10-Year Government Securities Yield: 10-Year benchmark Government Securities Yield calculated by
Fixed Income Money Market and Derivatives Association of India (FIMMDA). Identification of
benchmarks security is being done by FIMMDA.
RBI Reference Rate: The Reserve Bank of India compiles on a daily basis and publishes reference
rates for four major currencies i.e. USD, GBP, YEN and EUR. The rates are arrived at by averaging the
mean of the bid/offer rates polled from a few select banks around 12 noon every week day (excluding
Saturdays). The contributing banks are selected on the basis of their standing, market-share in the
domestic foreign exchange market and representative character. The Reserve Bank periodically reviews
the procedure for selecting the banks and the methodology of polling so as to ensure that the reference
rate is a true reflection of the market activity.
Forward Premia: An important aspect of functioning of the foreign exchange market relates to the
behavior of forward premia in terms of its linkages with economic fundamentals such as interest rates and
its ability to predict future spot rates. Forward premia reflects whether a currency is at a premium/discount
with respect to other reserve currencies. Forward premia is particularly important for importers and
exporters who need to hedge their risks to foreign currency. The forward market in India is active up to
one year where two-way quotes are available.
COMP ANIES AMENDMENT BILL, 2014 Passed by the Lok Sabha on 17.12.2014.
Key features of this bill:
(i) Removal of restriction of the minimum paid up share capital requirements for companies;
(ii) Empowering Central Government to prescribe threshold beyond which the auditor is required to
make a report to Central Government;
(iii) Permitting clearances of Related Party Transactions by ordinary resolution;
(iv) Special courts to only try offences carrying a punishment of two years or more, and
(v) Removal of restrictions on grant of bail except in cases of fraud.
(vi) Revised Road Map for Implementation of Ind AS: India is committed to the convergence of
Indian Accounting Standards with the International Financial Reporting Standards (IFRS), and this will

be accomplished in phases. Adoption of the converged Indian Accounting Standards (Ind AS) is
voluntary in Financial Year 2015-16.
 Companies, other than Banking Companies, Insurance Companies, Non-Banking Finance
Companies (NBFC’s) etc. and having a net worth of Rs. 500 Crore and above are mandated to adopt
Ind AS from 2016-17 onwards.
 From the year 2017-18 and onwards, companies with a net worth of Rs. 250 Crore and above,
and those that are listed or in the process of listing, would also adopt Ind AS.
(vii) Cost Records and Audit Rules Amended: Various professional bodies have expressed concerns
over applicability of certain provisions of the Companies (Cost Records and Audit) Rules, 2014. After
examining the recommendations dated02.12.2014of the Expert Committee constituted in this regard by
the Ministry, the Companies (Cost Records and Audit) Rules, 2014, has been amended with effect from
31.12.2014.
The salient features of the amended rules are:
1.revision of coverage of sectors to enhance the scope of maintenance of cost accounting records and
cost audit;
2.rationalization of threshold limits for maintenance of cost accounting records and cost audit;
3.adoption of Central Excise Tariff Headings for products; and (iv) exemption of Small and Medium
Enterprises
Role Of Direct Selling Agent / Direct Marketing Agent in a bank

We have dealt with the concepts of direct selling and direct marketing and its relevance to
the banking industry in the current scenario. Banks have to, necessarily, diverge their
functions owing to changing and challenging customer needs, competition and international
market conditions. Likewise, the role of the banker has drastically changed, from desk
functioning to making available the various delivery channels through various technology
coupled functions. Though the task of creating and retaining customer relationship
management through a robust database is tough, it offers delightful benefits to the customer
and widens the market scope for the banker.
Bulk of the goods and services are sold through stores. Non-store retailing falls into four
major categories: direct selling, direct marketing (which includes telemarketing and internet
selling), automatic vending and buying services. The non-store jobs have slowly diversified
to the service sector, like banking and insurance companies.
Direct Selling: It is known as multi-level selling or network marketing. In this process a
sales person visits household or a group for door to door selling. The sales person
demonstrates and takes orders either from a buyer or group of prospective buyers who
watch the demohstration. Example: Amway.
Direct Marketing: An interactive marketing system using one or more than one media for
effecting considerable transactions. It uses consumer direct channels to reach and deliver
goods and services to customers without the middlemen. These channels include Direct
mail, catalogue, telemarketing, TV, Web sites and mobile devices.
Relevance of Direct Selling and Direct Marketing to Banks: The IT Revolution has
impacted considerably the banking marketing activities. The banks have changed their
attitude from being branch centric to technology centric enabling them to become more
customers oriented. The core banking system is an example. For maintaining good
customer relationship Banks often conduct award programs and club programs. Banks offer
various kinds of deposit productslvith different tags of his choice for convertibility, transfer
etc. The use of internet, email, mobile phones has enabled the banks to adopt direct
selling/marketing more effective and maintain good customer relations.
Banker as a DSA/DMA: The Branch Manager, Officers, Managers, Front office staff ,
Marketing Managers are the Direct Selling Agent or the Direct Marketing Agent in a Bank.
Their job is to collect information about the customer with all details and create a database,
create awareness among the customers about the various products of the bank, convince
them about the security aspects of their
deposits and other transactions.
Channels of Delivery in a Bank : The banks offer their services through the following
channels to Customers, ATM Counters, Net Banking Phone Banking, Mobile Banking, Real
Time Gross Settlement, SWIFT, Single Window System, On line trading account ,Cash
Management Schemes etc.
Code of conduct for DSA/DMA : Tele calling a prospective customer, Leaving messages
and contacting person other than the prospect ,No misleading
statements/misrepresentations permitted Tele marketing Etiquettes ,Must not accept any
gifts or bribes from prospects, Precautions to be taken on visits/contacts , Proper Dress
Code etc
Out Sourcing of Marketing activities through Service Providers : When outsourcing the
marketing operations, banks have to be extremely careful that the appointment of such
service providers does not compromise with the quality of the customer service and the
bank's ability to manage credit, liquidity and operational risk. Banks should ensure that
DSA/DMA do not transfer or misuse any customer information during marketing of Products.
Regulatory and Supervisory Requirements: In the outsourcing activity, the ultimate
responsibility lies with the bank :
-The bank will be directly responsible for all the actions of then DSAs/DMAs
-The Bank should retain ultimate control of the outsourced activity.
-The RBI has fixed vicarious liability on the Board of directors and Senior Management of
the bank in respect of the outsourcing policy.
Responsibilities of the Board of Directors/Sr. Management:
Approving a frame work to evaluate the outsourcing policy, Laying down appropriate
approval authorities for outsourcing based on the risk and materiality. Undertaking regular
review of their performance Evaluating the risks and materiality of all existing and
prospective outsourcing as per the approved frame work. Developing and implementing
sound and prudent policies, Periodical review of policies and procedures ,Regular
communication with the Board of Directors by the Sr Management on the outsourcing
activities, Ensuring independent review and auditing of the existing policy. If anything goes
wrong in the outsourcing activities, the Board of Directors and Sr Management of Bank will
be directly responsible.
Key Risk factors in outsourcing : Strategic Risk, Reputation Risk,Compliance
Risk,Operational Risk, Legal Risk, Exit Strategy Risk
The customer is the king is the present day slogan in the marketing activities. Without
customers no organization can exist. All the goods and services revolve around the
customers. It is the consumers who decide as to who is the leader in the market. Customer
behaviour is the most unpredictable thing. Hence planning of a marketing mix should be
customer-centric and focused on the needs and wants of the customers. In Bank marketing
also customer's choice, preferences, needs etc should be given due consideration while
formulating the plans. All these call for an understanding of the customer behaviour before
understanding the product development and management.
Consumer Behaviour: Customers' need as per Maslow's Theory of Hierarchy of Needs is
to be understood while considering the marketing of a product, whether a physical or a
service product, we must understand the customer's need as per Maslow's theory of
hierarchy of needs and human behavior:
Physiological needs - food, drink, oxygen, sleep
Safety needs - avoidance/protection from threatening situation and economic
securitySocial needs - friendship, affection and sense of belonging
Esteem needs self-respect, recognition, status and success
Self-actualization - self-fulfillment
Marketing : “Marketing is the science and art of exploring, creating, and delivering value to
satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and
desires. It defines measures and quantifies the size of the identified market and the profit
potential. It pinpoints which segments the company is capable of serving best and it designs
and promotes the appropriate products and services.”
Marketing is the process by which companies create value for customers and build strong
customer relationships in order to capture value from customers in return.
-Philip Kotler and Gary Armstrong “Marketing is an organisational function and a set of
processes for creating, communicating and delivering value to customers and for managing
customer relationships in a way that benefit theorganisation and its stakeholders”.
Focus of marketing;Initially the focus of marketing was on demand for products. But with the
passage of time it has shifted to the consumer and consumer requirements, which may be his
existing needs or the needs to be created to create demand for new products and services. In other
words the marketing strategy is driven by the customer and the market requirement.
Scope of marketing :In the present day situation, the scope of marketing extends to goods and
services, events, persons, places, properties, organization, information, ideas.
Marketing is a management function because a firm makes use of various tools and techniques in
an organized way to identify the current and future needs of target customers and based on that
information, creates goods and services. Marketing is also a philosophy because it is an approach
to achieve corporate objectives by creating value for the customer.
Marketing management : Marketing management stands for managing all activities from
identification of business opportunity to the customer satisfaction, leading to earning the projected
revenues. According to American Management Association, marketing management is the process
of planning and executing the concept, pricing, promotion and distribution of goods and services
and ideas with a view to create value (revenues) that satisfy the customer as well as the
organization objectives.
Functions in marketing management :Marketing management takes care of 4 important aspects
i.e. analysis, planning, implementation and control & monitoring.
1. Analysis is done for understanding the customer, --competition, .:trends, strengths and
weaknesses of the organization with a view to come out with appropriate marketing strategy.
2. Planning that include goals and target in measurable terms
3. Implementation of the strategic plans involving staffing requirement, task-allocation,
responsibility fixing, budgeting etc.
4. Control and monitoring: This involves review of implementation on a continuous basis
Marketing of Services : Banks and financial institutions do not produce goods. Instead they create
products in the form of financial services and services connected with finance. The need for
marketing of services is equally essential since there is lot of competition in this segment due to
increasing dependence of economic activity on the banking services and increase presence of
banks and financial institutions. In India, in particular, due to entry of new private banks, the
competition has increased substantially leading to lot of product and product delivery innovations.
Features of services :
A service can be defined as an activity or a series of activity intangible nature that does not result
in ownership of anything tangible. The important features of the service include:
 It is an activity or a series of activities and not goods and commodities. It is essentially
intangible.
 The creation of services takes place by interaction between the service provider and the
customer.
Characteristics of the service :A service has four important characteristics i.e. intangible,
inseparable, heterogeneous and perishable. These characteristics do not apply to all services
equally. Intangibility: This means a service has no physical form. For instance remittance facility
provided by the bank to the customer or attending to some class addressed by a learned speaker.
inseparable : The presence of the service provider and the customer is almost essential. The
production or rendering of service is complete only after interaction between them.
Heterogeneous: The service as an output, normally cannot be standardized. From customer's point
of view, it is difficult to judge the quality of service before actual purchase.
Perishable : The service can not be stored, it has to be rendered. If is not rendered, it is lost for
ever.
Distinction between goods and services

Goods Services
Goods are in tangible form and are Services are intangible and heterogeneous
Production and distribution are separate Production and distribution are
Core value in goods is produced in a Core value is produced during

production process the .interaction between the
Goods can be stored. Services cannot be stored.

Transfer of ownership takes place No transfer of ownership takes place
Features of financial services: in addition to all characteristics of services i.e. being intangible,
inseparable, heterogeneous, perishable, the financial services has the element of fiduciary
responsibility.
Fiduciary responsibility in the context of financial services stands for implicit responsibility which
the banks have in relation to management of funds and the financial advice they offer to the
customer.
Bank marketing :NIBM has defined bank marketing as the aggregate of functions directed at
providing services to satisfy customers' financial needs and wants more effectively that the
competitors keeping in view the organizational objective. The definition highlights the following
aspects:
 Banks provide mainly the financial service to the customers.
 Objective of providing these services is to satisfy the needs of the customer.
 Competition is the driving force for bank marketing.
 Through bank marketing, the banks achieve their organizational objectives.
Need for bank marketing :For achievement of their corporate objectives, the banks create, win and
keep customers by providing services that satisfy their financial requirements. The marketing of
banking services achieve both kinds of objectives of banks i.e. commercial objectives of earning
profits and social objectives.
Implications of characteristics of services in marketing
1 Services being intangible, customers find it difficult to evaluate and judge the price unless
they utilize the service and get satisfaction....
2 Being heterogeneous the services are difficult to be standardized. it is difficult to control their
design, production and delivery.
3 Due to their nature being perishable the financial service cannot be stored like physical
goods. If these are not rendered, these are wasted and do not earn any revenue.
4 Having the element of inseparability the production of financial services require
presence of the producer and of the customer also. As a result, it restricts the scale of
operations.
Market Mix : It is a set of marketing tools that a bank uses to pursue its marketing Objectives .in'
the target 'market. A number of marketing mix tools are available and one of such tools is Mc
Carthy's 4-P classification that include product, price, place and promotion. These are from
banker's point of view a seller to influence the decision of the buyer. These marketing mix tools can
be used for services also although these were originally developed for goods.
Product : It is the basic marketing mix tool. Banks may offer various products with various
features to different segments of the customers, in different geographical and economic
segments.
Price : Price is also an important marketing mix tool as through price offers of their products
(loans, deposits and other services), they can retain the existing customers, attract new
customers, earn revenues adequate to meet their corporate objectives.
Promotion : Banks undertake various activities to promote themselves, their products with a view
to reach the existing customers for new products and new customers for all old as well as new
products.
Place : Place is a key marketing mix tool on the basis of which the banks are able to deliver their
services. With use of information technology, the banks have been able to extend their reach
beyond geographical and physical boundaries, particularly by providing Internet banking.
Important aspect of 4-Ps
Product : Variety, quality, design, features, brand name, packing, size, warranties, returns.
Pricing : List price, discount, allowances, payment period, credit terms.
Promotion : Sales promotions, advertising, sales force, public relation, direct marketing.
Place : Channels, coverage, assortments, locations, inventory, transportation. Robert
Lauterborn's concept of 4C : Corresponding to 4P concept, Robert Lauterborn introduced the
concept of 4C in marketing of products and services. These 4Cs correspond to the 4Ps and include
1 customer needs and wants (corresponding to the product),
2 cost to the customer(corresponding to the price),
3 convenience (corresponding to the place) and
4 communication (corresponding to the promotion).
Market mix Concept of 7-Ps for services
Booms and Bitner propounded 7 P marketing mix model for services as the marketing mix tools
meant for product did not fully meet the requirement of service. These 7P for services include
product (i.e. service), price, promotion, place, people, physical evidence and process.
Important aspect of 7-Ps
Product: Range, quality standards, branding, service lines, warranty, after sales services.
Price : Discount, payment terms, perceived value, price/quality relationship, credit
terms, differentiation.
Promotion: Advertising,, personal selling, sales promotion, publicity, public relations, direct
marketing.
Place : Location; accessibility, coverage, channels. ".
People : Service employees, training, discretion, commitment, incentives, appearance,
interpersonal behaviour, attitudes, customer contact, customer interaction.
Physical evidence : Environment, furnishing atmosphere, layout, warranty, corporate identity,
peripheral evidence.
Process: Policies, procedures, systems, use of technology, customer involvement, work flow
standardization, employee discretion, quality control.
Servuction Process: This means simultaneous production and consumption of services.
Banking products :A banking product stands for a service or a package of services that are
provided to a particular customer or to a group of customers, by a particular bank or different banks.
A saving bank account of a customer with cheque book facility is one product and not two products.
The banks offer afferent kinds of products such as:
Regular accounts - saving- account, current account, anywhere banking account, senior citizen's-
account:
Deposit accounts-fixed deposit account, cumulative FD account, Recurring deposit account.
Loan accounts - vehicle loan, housing loans, personal loans, credit cards, gold credit card
Other services - bill payment, safe deposit lockers, demand drafts and mail transfers, demat
account.
Product planning : Product planning includes the process of developing and maintaining a portfolio
of products, that satisfy the requirements of the customer. The process consists of various elements
such as product line, product mix, branding, packaging and new product development.
Tasks in managing a product mix
 Appraisal of each product line and each product item
 Decision on packaging,
 Product differentiation and positioning
 Managing brands and developing brand equity
 New product development
Product life cycle :Products have limited life span and a product during this span moves
through different stages that constitute the life cycle of the product Each stage have
different challenges, opporturifies and problems and the revenue at different stages change.
Stages in the product life cycle : There are four stages in the product life cycle i.e.
 Introduction stage : This is period of low sale, low profits, low sales growth_ Home banking
through compilers/ internet is the example.
 growth stage : rapid safes growth, improvement in profits (Credit and debit cards)
 maturity stage : slowing down of sales growth, peaking of sales, stabilization of profits or decline
in profits Saving bank account)
 decline stage: considerable decline in sales, erosion of profits (Travellers' cheque in banks)
Product strategies : Marketing strategies that are based on the product element are called product
strategies. These strategies are of two kinds; strategy based on product mix and strategy based on
product life cycle.
Growth strategies : The firms are in the look out for increasing their volumes and profits. There are
various approaches for this. important among them are intensive growth, integrative growth and
diversification growth.
Intensive growth : The growth opportunities available to a bank for growth within the existing
business.
Integrated growth: The growth opportunities available to a bank by acquiring business related to
existing business.
Diversification growth: The growth opportunities available to add attractive business unrelated to
the existing business.
Market / product expansion grid
Market / product Existing product New product
Existing Market Market penetration Product development
New Market Market development Diversification
Stages of product development : Since the products have limited life cycle, the banks have to
develop new products to remain in business by attracting new customers and retaining the existing
one. The process of product development moves through 5 distinct stages i.e.
 idea screening (helps in removal of errors having long term implications), idea screening is
done by way of brainstorming, sessions, surveys for need, idea identification, suggestion scheme
for staff or others.
 concept testing (helps in determining the products of the competitors and customer target
segments). The objective is to test the product in authentic consumer setting, to learn size of the
market, to know as to how the consumer and dealers react to actual product
 product development (prototype of the product is made first embodying large no. of attributes
of the final product)
 test marketing (involves introduction of the product to the market to know the real reactions)
 commercial launch (when resources are committed). Before launch decision about timing for
launch, geographical reach, prospect consumer groups, market strategy are taken.
Brand in a product : Besides the core physical aspects, a product also is known by its brand
name and identified by its packaging. Brand is a name, term, sign, symbol, design or
combination of all these. We have a big brand name in financial services sector like SBI,
ICICI Bank. A powerful brand enjoys a high level of consumer confidence. To build a strong
brand, lot may efforts are required on the part of an organization. it is even more difficult it
maintaining the brand image. There could be several options for brand development
depending on the mix of product category.
In the context of a brand, the line extension strategy involves introduction of additional items in
the existing product category under the same brand name. (Say credit card in addition to debit
card)
As regards the multi-brand strategy introduction of additional brands in the existing product
category is involved.
Slogans Make Big Difference : Some of the slogans which are catchy
Polo : The mint with a hole
Coca Cola : Thanda Matlab Coca Cola
Idea : An Idea can Change your life
Surf : Daag Acche hain
Slogans of some of the banks

State Bank of India The Banker to Every Indian.
A llahabad bank A tradition of trust.
Bank of Baroda India's International Bank.
Bank of India Relationship beyond banking.
'MI bank HUM HAI NA.
Bank of Maharashtra One family, one Bank.
Central Bank of India Central to you since 1911 .
Social Media Marketing is important

 Social Media is a unique component of the consumer decision journey.
 It is the only form of marketing that can touch the consumers at each and every stage of
taking a purchasing decision on a brand or a product.
 The Banking industry has now started thinking and taken notice of the clients who are
migrating to Social Media for using it as tool for finding out products and services that can satisfy
their needs and wants including financial services.
Some of the banks are still found to be hesitant to adopt this new marketing channel and they are,
following a policy of "Wait and See Approach". This approach is likely to hurt banks when it comes
to leveraging social media channels and it will only enable the competitors, who have already
adopted the Social Media, as a tool for marketing, to gain considerable mileage in marketing.
The rural market presents a great opportunity for Indian banks. Properly targeted, they can serve as a
vast source of business while at the same time leading to the accelerated growth of the rural
economy. Technology initiatives can serve as allies in this matter and enable banks to reach
population groups which were till date denied the benefits of banking.
The Reserve Bank has been encouraging banks to use technology-based solutions for increased financial
inclusion. Credit delivery in rural areas has often been expensive for banks with large number of small
loan accounts to be serviced. Information and Communication Technology (ICT) enabled methods are
being looked into as the best alternative for rural credit delivery that can increase outreach and reduce
cost of delivery.
Permission to banks to appoint business correspondents (BCs) has opened possibilities of outreach
which were not available earlier. The use of appropriate technology by the BCs has the potential of
reducing operational costs and building up a powerful management information system (MIS) in
addition to creating rural employment. The use of technology combined with an effective use of BCs has
the potential of creating a banking outpost in every village, which can enhance the rural credit delivery.
 An ICT- enabled model for banking outreach is basically implemented as under: Banks carry out
KYC scrutiny and arrange for opening a savings bank account for the customer, after relevant
information is captured, such as his photograph, fingerprints and signature (optional). This information
is encrypted in the smart card.
 While handing over the card to the customer, the BC activates the card for the customer by
fingerprint identification. At the time of activation, the balance available in the bank account is
recorded on the smart card.
 A customer can withdraw and deposit money using his smart card at the terminal of the BC. Every
time a transaction is made, a print out is provided to the customer. Transactions cannot be undertaken
unless a biometric verification of the cardholder is done.
 Banking transactions are freed from branch timings and can be done whenever the BC is available
with a capture device.
 If a BC does not have requisite money to pay the customer, a print out will be given to him stating
that no cash is available at the customer's end. This information will be passed on to the bank through
the central processor to facilitate immediate replenishment of cash. Incidentally, this also acts as a
check to prevent business correspondents from denying service to customers.
 A central processor unit integrates village level terminals and identified merchant establishments
with the bank.
 The technology seamlessly integrates into core banking solutions of the banks concerned and
supports various types of deposits and loan accounts.
 Each hand held model can be used to service 500 to1000 accounts by a BC; the device
when seen in the context of servicing capabilities and range is very cost effective. Such
models have already been adopted by some private sector and public sector banks.

Module - C
CUSTOMER SERVICE IN BANKS (RBI guidelines )
The guidelines are only illustrative and not exhaustive
1. Business and working hours: All customers who enter the banking hall before the close of business
hours may be attended to by the branches. The working hours of the staff should be fixedly minutes
before the start of business hours at all branches in metropolitan and urban centres so that job can be
started at commencement of Banking Hours.
2. Display of time norms: Time norms for specified business transactions should be displayed
prominently in the banking hall. so that it attracts the customers' attention as well as that of the
employees for adherence.
3. Extension of business hours for non-cash transactions: Staff at the counters may undertake the
following. transactions during the extended business hours (branches to indicate the timings):
1. non-voucher generating transactions: (i).issue of passbook/statement of accounts; (ii) issue of
cheque book; (iii) delivery of term deposit receipts/drafts; (iv) acceptance of share application form;
and (v) acceptance of clearing cheques/bills for collection
2. voucher generating transactions: (i) issue of term deposit receipts (TDR); (ii) acceptance of cheques
for locker rent due; (iii) issue of travellers' cheques; (iv) issue of gift cheques; (v) acceptance of
individual cheques for transfer credit
4. Uninterrupted Service: No counter remains unattended during the business hours.
5. May I Help -You counter: All branches, except very small ones, should have "Enquiry" or "May I help
you" counters. Such counters may exclusively attend to enquiries or may be combined with other
functions depending upon the requirement. Such counters should be near the entry point to the banking
hall.
6. Ramps at Automated Teller Machines (ATMs)/branches: All existing ATMs/future ATMs to be provided with
ramps so that wheel chair users/persons with disabilities can easily access them. The height of the ATM
should be such that it does not create an impediment in its use by a wheelchair user_ Ramps to be provided
at the entrance of the bank branches, so that the person with disabilities/wheel chair users can enter the bank
branches and conduct business without much difficulty.
7. Identity badges: Each employee may wear on his person, identity badge with photograph and name.
B. Complaint box and book: A Complaint cum Suggestion Box may be kept in the bank premises at a
prominent place. Complaint Book with adequate number of perforated copies in each set may also be
maintained to instantly provide the complainant with an acknowledged copy of the complaint.
9. Advisory Services on deposit schemes: The banks should provide assistance/guidance to customers
in the area of investment of funds in the various deposit schemes vis-a-vis the requirement of the
customers
10. Brochures/pamphlets for guidance of customers: Banks may make available to the customers,
brochures/pamphlets in regional language/Hindi/English giving details of various schemes available and
terms and conditions thereof. Such brochures may also contain, among others, dos and don'ts for
smooth handling of day-to-day banking transactions.
11. Banking facilities to the visually challenged: All the banking facilities such as cheque book facility
including third party cheques, ATM facility, Net banking facility, locker facility, retail loans, credit cards etc to
be provided to the visually challenged without any discrimination. From 1.7.2014, 100% of the new ATMs
installed (earlier at least one third of new ATMs) as talking ATMs with Braille keypads.
12. Fair Practices Code - Display of Bank/Service Charges: Banks have the freedom to prescribe service
charges with the approval of their Boards. However, the charges should be reasonable and not out of line
with the average cost of providing these services. Banks should also take care to ensure that customers with
low volume of activities are not penalized.
13. Display of information - Comprehensive Notice Board: Banks should put-up on a notice board important
aspects or indicators on 'customer service information', 'service charges', 'grievance redresser and 'others'.
The notice board should be updated on a periodical basis. Banks should display information
relating to interest rates and service charges in their premises as well as post it on their websites, to enable the
customer to obtain the desired information at a glance. The banks should display at their offices/branches the
service charges relating to the following services in the local languages: (a) Services rendered free of charge;
(b) Minimum balances to be maintained in the SB account; (c) Charges leviable for non-maintenance of
minimum balance in SB account; (iv) Charges for collection of outstation cheques; (v) Charges for issue of
Demand Draft; (vi) Charges for issue of cheque books, if any; (vii) Charges for account statement; (viii)
Charges for account closure, if any; (ix) Charges for deposit/withdrawal at ATM locations, if any;
Cheque Drop Facility and the Facility for Acknowledgement of cheques: No branch should refuse to give an
acknowledgement on cheques being tendered by customers at their counters.Customers should be made
aware of both options available to them i.e., dropping cheques in the drop box or tendering them at the
counters.
Infrastructure provision: Banks should provide adequate space, proper furniture, drinking water
facilities, clean environment, (which include keeping the walls free of posters) etc., in their premises.
Term Deposit Maturity Intimation in Advance: Banks should send, as a rule, intimation for maturity
dates of term deposits well in advance to their depositors in order to extend better customer service.
Other areas in which RBI guidelines/operating instructions for the staff are issued:
1. Savings bank passbooks/statement of accounts
2. Furnishing remitter details in pass book/pass sheet/account statement for credits
3. Claims in respect of missing persons
4. Safe Deposit Lockers.
5. Enabled Financial Inclusion
6. Periodical visits by senior officials.
7. Security arrangements
8. Customer charges for use of ATMs for cash withdrawal and balance enquiry
9. Electronic Payment Products (RTGS, NEFT, NECS and ECS variants)
10. Collection of account payee cheques - Prohibition on crediting proceeds to third party account
11. Provision of Note Counting Machines on counters
12. Immediate Credit of Outstation Cheques
13. Time frame for collection of cheques
14. Additional Measures for Quicker Collection of Outstation Instruments
15. Issue of Cheque Books
16. Periodical Review and Monitoring
17. Issue of Duplicate Demand Draft
18. Nomination facility
19. Monitoring system of implementation of various instructions on customer service
20. Customer Service - Redressal of Grievances
ATM Transactions & Customer service
1. The message regarding non-availability of cash in ATMs should be displayed before the Transaction
is initiated by the customer.
2. The ATM ID may be displayed in the ATM premises to enable a customer to quote the same while
making a complaint/suggestion.
3. Banks should make available the forms for lodging ATM complaints within the ATM premises and
also display the name and phone number of the officials with whom the complaint can be lodged.
4. Banks should provide sufficient toll-free phone numbers for lodging complaints/reporting and
blocking lost cards.
5. Banks may proactively register the mobile numbers/e-mail IDs of their customers for sending alerts.
6. To prevent fraudulent withdrawal at ATMs, PIN entry should be must for each and every transaction,
including balance enquiry transactions. Time limits should be prescribed for completion of
transactions at ATMs. Time out sessions should be enabled for all screens/stages of ATM
transaction.
Latest Changes in area of Customer Service
1. Banks should not levy penal charges for non-maintenance of minimum balances in any inoperative
account.
2. Minor accounts: A savings/fixed/recurring-bank deposit account can be opened by a minor of any age
through his/her natural or legally appointed guardian. Minors above the age of 10 years may be allowed to
open and operate savings bank accounts independently. Banks may, fix limits in terms of age and amount
up to which minors may be allowed to operate the deposit accounts independently. On attaining majority,
the erstwhile minor should confirm the balance in his/her account and if the account is operated by the
natural guardian/legal guardian, fresh operating instructions and specimen signature of erstwhile minor
should be obtained and kept on record for all operational purposes. Banks are free to offer additional
banking facilities like internet banking, mobile banking, ATM/ debit card, cheque book facility etc., but minor
accounts should not be allowed to be overdrawn and that these always remain in credit.
Banks should leverage the technology available with them and the telecom service providers to ensure
that SMS alerts charges are levied on all customers on actual usage basis.
KNOW YOUR CUSTOMER (KYC)

The KYC principles, were issued by RBI (August 2002) under Section 35 (A) of the Banking Regulation
Act, 1949. These related to identification and verification of depositors with the objective to prevent banks
from being used, intentionally or unintentionally, by criminal elements for money laundering activities. The

guidelines are applicable to all accounts including foreign currency accounts/ transactions.
Review of guidelines: The guidelines were revised (Nov 29, 2004) in line with recommendations made by
the Financial Action Task Force (FATF) on Anti Money Laundering (AML) standards and on Combating
Financing of Terrorism (CFT).
Opening of Accounts
KYC procedure should be the key principle for identification of an individual/corporate while opening an
account. The customer identification/verification should be on the basis of documents provided by the
customer.
Introduction : As per RBI Cir dated Dec 10, 2012, introduction from existing account holder of a bank is
not mandatory.
Officially valid documents (OVD) for Customer Identity & Address Proof as per PML Act:
Passport, PAN card, Voter I-Card, driving license, UIDAI letter (including e-KYC process), MGNAREGA
job card.
 For low risk customers under simplified procedure, the documents can be (i) Identity Card
issued by Govt., Bank, PSU (ii) Letter issued by Gazetted Officer. (RBI July 17, 2014)
 If identity document contains address, separate document not to be taken for address proof.
 For low risk customers, if a/c is opened without appropriate KYC, complete verification of
identity, must be done within 6 months.
 Address can be current or permanent. If address changes fresh proof to be given within 6
months. If change is due to relocation, customer to inform within 2 weeks.
 No fresh KYC is required at transferee branch if it is completed at transferor branch.
Where simplified measures are applied for verifying proof of address and a prospective customer is
unable to produce any proof of address, the following shall be deemed to be OVD:
a) Utility bill max 2 months old of a service provider (electricity, telephone, post-paid mobile phone,
piped gas, Water bill);
b) Property or Municipal tax receipt;
c) Bank or Post Office savings bank a/c statement;
d) Pension or family pension payment orders issued by Govt. Deptt. or PSU, if they contain the
address;
e) Letter of allotment of house from employer issued by State or Central Govt. departments,
statutory or regulatory bodies, PSU, commercial banks, financial institutions and listed companies.
f) Documents issued by Govt. departments of foreign jurisdiction and letter issued by Foreign Embassy
or Mission in India.
Remittances-Non customer transactions : Banks are required to issue travellers cheques, demand
drafts, mail transfers, and telegraphic transfers for Rs.50,000 and above by following the proper due
diligence and only by debit to customers' accounts or against payee's account cheques and not against
cash.
Freezing of non-compliant accounts :If a customer fails to comply with the KYC requirement, partial
freezing (no debit) to be exercised after giving initial 3 months notice followed by a reminder of 3 months.
If compliance is not done even after 6 months, banks will disallow debits and credits till, KYC requirement
is complied with. Banks are open to close such accounts by following due process.
Permanent Account Number requirement PAN (Form 60/61 in the absence of PAN) is required for
opening of an account or for FD of Rs.50000 and above and for all non-customer (walk-in customer) cash
transactions of Rs.50000 and above such as issue of DD, travellers' cheques, wire transfers, sale of gold
coins, sale of third party Products.
SMALL ACCOUNT
“Small account” means a savings account in a banking company where-
1. the aggregate of all credits in a financial year does not exceed rupees one lakh,
2. the aggregate of all withdrawals and transfers in a month does not exceed rupees ten thousand,
and;
3. the balance at any point of time does not exceed rupees fifty thousand.
4. An individual who desires to open a small account in a banking company may be allowed to open
such an account on production of a self-attested photograph and affixation of signature or thumb
print, on the Account opening form.
5. Foreign remittance shall not be allowed to be credited into a small account unless the identity of the

client is fully established through the production of officially valid documents.
6. A small account shall be opened only at Core Banking Solution linked branch or in a branch where it
is possible to manually monitor and ensure that foreign remittances are not credited to a small
account and the stipulated limits on monthly and annual aggregate of transactions and balance in
such accounts are not breached.
7. A small account shall remain operational initially for a period of twelve months, and thereafter for a
further period of twelve months if the holder of such an account provides evidence before the banking
company of having applied for any of the officially valid documents within twelve months of the
opening of the said account, with the entire relaxation provisions to be reviewed in respect of the said
account after twenty four months.
Basic Saving Bank Deposit Account
In supersession of instructions dated Nov 11, 2005 on Financial Inclusion, banks have been advised by
RBI (Aug 10, 2012) to offer a 'Basic Savings Bank Deposit Account' to replace the no-frill account,
Which will offer following minimum common facilities to all their customers:
i. A/c is a normal banking service for alt.
ii. No requirement of any minimum balance.
iii. The services available include deposit and withdrawal of cash at bank branch / ATMs; receipt/ credit
of money through electronic payment channels or by means of deposit/collection of cheques drawn
by Central/State Govt. agencies and departments;
iv. There will be no limit on the no. of deposits but maximum 4 withdrawals will be allowed in a month,
including ATM withdrawals; and
v. Facility of ATM card or ATM-cum-Debit Card;
 No charges for the facility or for nonoperation/activation of in-operative Account.
 A/c is subject to RBI instructions on KYC / Anti-Money Laundering for opening of bank accounts. If
account is opened on the basis of simplified KYC norms, the account would be treated as a
'Small Account' and would be subject to conditions stipulated for such a/c.
 Holders of the Account will not be eligible for opening any other savings bank account in that bank.
If a customer has any other existing savings bank account in that bank, it wilt be required to be
closed it within 30 days from the date of opening a 'Basic Savings Bank Deposit Account'.
 The existing 'no-frills' accounts should be converted to 'Basic Savings Bank Deposit A/c'.
Fine for violation of KYC Norms : RBI has powers to impose fine under Section 47 A (1 ) (b) of the
Banking Regulation Act, 1949 for violation of KYC norms and for violation of extant guidelines of relating
to IPO financing.
Unique Customer Identification Code (UCIC) for Banks' Customers in India
Banks have been advised by RBI (Apr 2012) to allot UCIC number to all their customers while entering
into any new relationships in the case of all individual customers to begin with. The existing individual
customers may be allotted unique customer identification code by end-31.12.14 (RBI-26.06.14)
MONEY MULES & KYC :In a money mule transaction, an individual with a bank account is recruited to
receive cheque deposits or wire transfers and then transfer these funds to accounts held on behalf of
another person or to other individuals, minus a certain commission payment. When caught, they face
legal action for being part of a fraud. Many a times the address and contact details of such mules are
found to be fake or not up to date, making it difficult to locate the account holder. RBI has desired that
banks should strictly • adhere to the guidelines on KYC/AML/CFT to avoid money mules.
KYC procedure for Foreign Students in India RBI (Sep 02, 2013)
a) Other than for Pakistani nationality students where RBI permission is required, banks may open a
Non Resident Ordinary account on the basis of passport (with proper visa & immigration endorsement)
containing the proof of identity and address in the home country along with a photograph and a letter
offering admission from the educational institution.
b) Within a Reriod of 30 days, the student should submit, a valid address proof giving local address.
c) During the 30 days period, the account should be operated with a condition of allowing foreign
remittances not exceeding USD 1,000 into the account and a cap of monthly withdrawal to Rs. 50,000,
pendIng.verification of address.
d) On receiving proof of current address, a/c would be treated as'a normal NRO a/c.

MONEY LAUNDERING
Money laundering means acquiring, owning,possessing or transferring any proceeds of money of
crime or knowingly entering into any transaction related to proceeds of the crime either directly or
indirectly or concealing or aiding in the concealment of the proceeds or gains of crime, within or outside
India. It is a process for conversion of money obtained illegally to appear to have originated from
legitimate sources.
 Essential elements of money laundering (a) a crime is committed, (b) there are gains from the
crime, (c) proceeds have been received from crime and (d) there is some transaction in respect of
these proceeds or the gains.
 Legal set up in India
Indian Parliament passed 'The Prevention of Money Laundering Act 2002' during December 2002 for
prevention of money laundering.
 Offences and punishment :Offences are cognizable/non-bailable.
Punishment is imprisonment for not less than 3 years but up to 7 years and fine up to Rs.5 lac.
 Enforcement Directorate is the designated authority to track cases of money laundering, which has
far more powers than what was available to ED under FERA.
PREVENTION OF MONEY LAUNDERING ACT - OBLIGATIONS OF BANKS

With effect from July 01, 2005, in terms of the Rules, under the Prevention of Money Laundering Act
(PMLA), 2002, Section 12 there are certain obligations on banks to preserve and report customer account
information, for which RBI has issued directives (during Jan 2006) u/s 35A of Banking Regulation Act
1949 & Rule 7 of Prevention of Money-laundering Rules as under:
Maintenance of records of transactions
a. cash transactions of above Rs.10 lac or its equivalent in foreign currency;
b. series of cash transactions connected to each other, of below Rs.10 latch or its equivalent in foreign
currency within a month and the aggregate value of such transactions exceeds rupees ten Iakh;
c.cash transactions in forged or counterfeit currency notes or bank notes and where any forgery of a
valuable security has taken place;
d. suspicious transactions in cash or otherwise.
Preservation of records
Banks should maintain, for at least 5 years from the date of cessation of transactions between the bank
and the client, all necessary records (in hard or soft form) of transactions, both domestic or international,
which will permit reconstruction of individual transactions (including the amounts and types of currency
involved if any) so as to provide, if necessary, evidence for prosecution of persons involved in criminal
activity. As regards, the documents these are to be preserved for 5 years.
Reporting of transactions to FIU India

Transaction coverage Name of Report Period
LargeCash Transaction of CTR (Nil report if nothing is Within 15 days of close

above Rs.10 lac reportable) of each month
Suspicious transactions STR Within 7 days of confirmation
of suspicion
Counterfeit currency notes CCR Within 15 days of close
of each month
Monthly report of receipt in forex - Within 15 days of close
(cross border wire transfers) of of each month
Rs.5 lac and above by non-profit
organizations
KYC POLICY - NOVEMBER 2004

Banks/FIs should frame their KYC policies incorporating the following four key elements:
KYC standards: The policy should incorporate the key element of:
a) customer acceptance policy,
b) customer identifkation procedure,
c) monitoring of transactions and
d) risk management.

(a) Customer Acceptance Policy ( CAP ) :Banks should lay down policy on the following aspects of
customer relationship in the bank,
 No account is opened in anonymous fictitious/ benami name(s);
 Not to open an account or close an existing account where the bank is unable to verify the identity
and /or obtain documents required as per the risk categorisation due to non cooperation of the
customer or non reliability of the data/information furnished to the bank.
Customer profile : Banks may prepare a profile for each new customer based on risk categorization (it
will be a confidential document and details contained therein' shall not be divulged for cross selling or any
other purposes).
Risk Categorisation : The customer may be categorized into low and medium/high risk categories.
Low risk customers: Individuals (other than High Net Worth) and entities whose identities and sources of
wealth can be easily identified and transactions in whose accounts by and large conform to the known
profile, may be categorised as low risk (such as (a) salaried employees, (b) lower economic strata, (c)
Government departments & Government owned companies, (d) regulators and statutory bodies etc.). In
such cases, only the basic requirements of verifying the identity & location of the customer are to be met.
Medium/high risk customers. : Customers that are likely to pose a higher than average risk to the bank
may be categorized as medium or high risk. Banks may apply enhanced due diligence measures in case
of (a) non-resident customers, (b) high net worth individuals, (c) trusts, (d) charities, (e) NGOs and
organizations receiving donations, (f) companies having close family shareholding or beneficial ownership,
(g) firms with 'sleeping partners', (h) politically exposed persons (PEPS) of foreign origin, (i) non-face to
face customers, and (j) those with dubious reputation as per public information, etc.
Updation & Risk re-classification : Banks to do review at least once in 6 months.

Updation of customer ID is required at least once in 2 years in case of high risk customer, in 8 years for
medium risk customers and in 10 years for low risk customers.
The earlier requirement of positive confirmation (obtaining KYC related updates through e-
mail/letter/telephonic conversation/ forms/interviews/visits, etc.), to be completed every 2 years for
medium risk and every 3 years for low risk customers, stands withdrawn (02.09.2014).
Closure of accounts : Where the bank is unable to apply appropriate KYC measures the bank may
consider closing the account or terminating the banking/business relationship after issuing due notice to
the customer explaining the reasons for the decision. Such decisions need to be taken at a reasonably
senior level.
(b) Customer Identification Procedure (CIP) : Customer identification means identifying the customer
and verifying his identity by using reliable, independent source documents or data.
Kind of information : For customers that are natural persons, the banks should obtain sufficient
identification data to verify the identity of the customer, his address/location, and also his recent
photograph.
For customers that are legal persons or entities, the bank should (i) verify the legal status of the legal
person/ entity through proper and relevant documents (ii) verify that any person purporting to act on behalf
of the legal person/entity is so authorized and identify and verify the identity of that person, (iii) understand
the ownership and control structure of the customer and determine who are the natural persons who
ultimately control the legal person. If the bank decides to accept such accounts in terms of the Customer
Acceptance Policy, reasonable measures should be taken to identify the beneficial owner(s) and verify
his/her/their identity in a manner so that it is satisfied that it knows who the beneficial owner(s) is/are.
Appointment of Principal Officer

Banks may appoint a senior management officer to be designated as Principal Officer to be located at the
head/corporate office of the bank. He shall be responsible for monitoring and reporting of all transactions
and sharing of information as required under the law. He will maintain close liaison with enforcement
agencies, banks and any other institution which are involved in the fight against money laundering and
combating financing of terrorism.
Punishment for violation of Prevention of Money Laundering (Amendment) Act, 2012 : If it is found
that a reporting entity or its designated director on the Board or any of its employees has failed to comply
with the obligations, a fine on such reporting entity or its designated director on the Board or any of its
employees, can be imposed, which shall not be less than Rs.10000 but may extend to Rs.100000 for each

failure.
Intra-bank Deposit Accounts Portability : KYC once done by one branch of the bank should be valid
for transfer of the account within the bank as long as full KYC has been done for the concerned account.
The customer should be allowed to transfer his account from one branch to another branch without
insisting on fresh proof of address and on the basis of a self-declaration from the account holder about
his / her current address, subject to submitting proof of address within a period of six months. Periodical
updation of KYC data would continue to be done by bank as per prescribed periodicity.
CUSTOMER SERVICE & GRIEVANCES HANDLING MECHANISM

CUSTOMER GRIEVANCES HANDLING MECHANISM
TIME NORMS FOR COMPLAINTS
 All complaints/communications must be acknowledged immediately but in any case within 10 days
by sending interim reply, if final reply is not possible to be sent within 10 days. All complaints should be
recorded in a complaint register.
 VIP complaints should be resolved within 15 days in case of references from 131140, within 3 weeks
in case of communications from Ministers/MPs.
Different Committees for Customer Service Committee of Board of Directors
Banks to have a Committee of Board of Directors with experts and representatives of customers. The role
of such committee is deposit policy formulation and issues concerning customer service.
Standing Committee on Customer Service : On the recommendations of Committee on Procedures and

Performance Audit of Public Services, the previous Ad hoc Committees were converted into Standing
Committees on Customer Service (chaired by CMD/ED).
It serves as the micro level executive committee while the Customer Service Committee of the Board
would oversee and review / modify the initiatives. Thus the two Committees would be mutually reinforcing
with one feeding into the other.
Branch level Committees : The branch level committee is to submit quarterly
reports giving inputs / suggestions to the Standing Committee on Customer Service, enabling it to examine
them and provide relevant feedback to the Customer Service Committee of the Board for necessary policy /
procedural action. These committees to have members from all sections of staff. In addition customers
including senior citizens will be members.
Meeting: The Committee may meet at least once a month to study complaints/ suggestions, cases of
delay, difficulties faced / reported by customers / members of the Committee and evolve ways and means
of improving customer service.
Customers' day : Observed on 15th day of the month.
Disclosure of Complaints by Banks

Banks should disclose the brief details regarding the number of complaints along with their financial
results. Where the complaints are redressed within the next working day, banks need not include the same
in the statement of complaints.
Where the complaints are not redressed within one month, the concerned branch / controlling office should
forward a copy of the same to the concerned Nodal Officer under the Banking Ombudsman Scheme.
OTHER ISSUES RELATING TO CUSTOMER SERVICE
Delays In Cheque Clearing: (I) For local cheques credit and debit shall be given on the same day or at the most
the next day of their presentation in clearing. (ii) Timeframe for collection of cheques drawn on state capitals /
major cities / other locations to be 7/10/14 days respectively.
Customer Committees: Branch level committees include their customers too. Further a senior citizen may
preferably be included therein. The Branch Level Customer Service Committee may meet at least once a
month.
Both the drop box facility and the facility for acknowledgement of the cheques at the regular collection counters
should be available to customers and no branch should refuse to give an acknowledgement if the customer
tenders the cheque at the counters. On the cheque drop box it should be indicated that customer can deposit
the cheque at collection counter and obtain acknowledgement.
Banks should invariably offer pass book facility to all its savings bank account holders (individuals) and in case
the bank offers the facility of sending statement of account and the customer chooses to get statement of
account, the banks must issue monthly statement of accounts. The cost of providing such Pass Book or
Statements should not be charged to the customer.
Banks should mention the address / telephone number of the branch on the Pass Books / Statement of
accounts issued to account holders.
Unique Customer Identification Code (UCIC) for banks' customers in India: Banks should initiate steps for
allotting UCIC to all their customers while entering into any new relationships for individual customers to begin
with, and to existing individual customers by end-March 2014.
Intersol charges: Banks should follow a uniform, fair and transparent pricing policy and not discriminate
between their customers at home branch and non-home branches. If a particular service is provided free at
home branch the same should be available free at non home branches also. There should be no
discrimination as regards intersol charges between similar transactions done by customers at home branch
and those done at non-home branches.
Banks shbuld give an acknowledgment to customer at the time of receipt of Form 15-G/15-H.
CUSTOMER GRIEVANCES HANDLING MECHANISM (OUT SIDE)

Now let us have a recap of what we have discussed both in respect of the Consumer Protection Act, 1986
and the Banking Ombudsman Scheme 2006.
The Constitution of India aims at achieving justice, social, economic and political to all its citizens.
Towards this end, the Consumer Protection Act, 1986, is an important piece of welfare legislation which
seeks to achieve social and economic justice by protecting the interest of the consumers through the
establishment of Consumer Disputes Redressal agencies.
Since this Act has to deal with goods and services and there again banking is one of the very many
service industries, a need was felt to form redressal machinery for bank complaints alone. Thus Banking
Ombudsman Scheme came into being in 1995, which was revised in 2006.
The Consumer Protection Act prescribes a three-tier quasi judicial forum at the National, State and District
levels. The word Consumer has been defined separately for the purpose of goods and services. For
service, to be a Consumer three conditions are to be fulfilled:
 Services should have been rendered to him;
 Services should be hired by him; and
 He should have paid consideration
 A complaint must be instituted within two years from the date on which the cause of action has
arisen.
The pre-requisite for filing a complaint with the Ombudsman is that the complainant should have first filed
a complaint with the bank in writing and either the bank had rejected the complaint or the complainant had
not received any satisfactory reply within a period of two months.
The Banking Ombudsman's powers and duties will be:
 To receive complaints relating to the provision of banking services
 To consider such complaints and facilitate their
 i Satisfaction or
 Settlement by agreement or
 By making a recommendation or
 Award
BANKING OMBUDSMAN SCHEME 2006
RBI notified the Banking Ombudsman Scheme 2006 (on Dec 26, 2005), in partial modification of its
Banking Ombudsman Scheme 2002 to enlarge the extent and scope of the authority and functions of the
Ombudsman, u/s 35A of Banking Regulation Act, 1949. The scheme that comes into force wef Jan 01,
2006 covers all commercial banks, regional rural banks and scheduled primary co-operative banks.

Objective: To facilitate the resolution of complaints relating to Banking services through conciliation and
mediation between the bank and the aggrieved parties OR by passing an Award.
Who can be Ombudsman : CGM/GM —RBI (not exceeding 3 years at a time). Cost borne by RBI.
Who can file a Complaint : A person himself /his authorised representative (other than an advocate)
can file the complaint on paper OR through electronic media (entail) OR forwarded by RBI or Central
Govt. (For Credit card jurisdiction with reference to Ombudsman having jurisdiction over the billing
address of the card holder).
Conditions: Complaints can be made when:
a: the complaint was made to the bank and bank had rejected it OR no reply was received within a
period of one month OR the complainant is not satisfied with the reply given by the bank;
b: period of more than one year has not lapsed after receipt of bank reply.
c: the complaint is not for issues already settled/dealt with Ombudsman OR for which proceedings
before court, tribunal or arbitrator or any other forum is pending or a decree or Award or order has
been passed;
d: the complaint is within limitation period under Indian Limitation Act 1963.
Rejection of Complaint by Ombudsman Ombudsman can reject a complaint where it is frivolous,
vexatious, beyond jurisdiction of Ombudsman etc. Customer can appeal against grounds of rejection
to Appellate Authority within 30 days of receipt of communication regarding rejection.
Process of redressal of grievance
By sending copy of the complaint to the bank and endeavour shall-be made for a settlement by
agreement through conciliation or mediation. The proceedings shall be summary in nature.
Award by the Ombudsman : Where a complaint is not settled by agreement within a period of one
month from the date of receipt of the complaint, Ombudsman may pass an Award or reject the complaint,
on the basis of evidence, the principles of banking law and practice, directions and guidelines issued by
RBI.
Amount of award : Award shall specify the amount, to be paid by bank as compensation, not more
than actual loss suffered as direct consequence of act of omission or commission of the bank OR Rs.10
lac, whichever is lower. A copy of the Award shall be sent to the complainant and the bank.
Effect of award : Award shall be binding on a bank only if the complainant sends acceptance of in full
and final settlement, within 15 days from the date of receipt of the Award. Ombudsman may extend this
period up to 15 days.
Implementation: Customer is to send acceptance of the award within 30 days of date of receipt of
the award. Bank is to implement the award .within one month from the date of receipt of the
acceptance from the complainant and intimate compliance to the Banking Ombudsman.
Rejection of complaint : Rejection can be at any stage if it appears to be frivolous, vexatious,
maiafide; OR without sufficient cause; OR not pursued by the complainant with diligence; OR there
is no loss or damage or inconvenience caused to the complainant; or is beyond the pecuniary
jurisdiction of Ombudsman. Apeal : The customer file an appeal Appellate Authority (Dy. Governor
RBI) within 30 days of the date of receipt of the Award (could be extended by 30 days by Appellate
Authority). For bank 30 days period begins from date of receipt of customer's acceptance.. The
appeal by banks should be filed with sanction of the CMD /ED / CEO. The Appellate Authority may
dismiss/allow the appeal; OR set aside the Award; OR remand the matter to Ombudsman for fresh
disposal or modify the Award or pass any order as it may deem fit.
Display of salient features of the scheme : The banks shall prominently display in all offices/branches
of the bank and the name/address of Ombudsman. The banks shall appoint Nodal Officers at their
RO/ZO and inform the the Ombudsman, who shall represent the bank/furnish information to the
Ombudsman.
Ground of complaint : A complaint may relate to following aspects including loans and advances
alleging deficiency in banking or other services:
a non-payment or inordinate delay in the payment or collection of cheques, drafts, bills etc.;
b non-acceptance of small denomination notes tendered for any purpose, and fo'r charging of commission in
respect thereof;
c non-acceptance, without sufficient cause, of coins tendered and for charging of commission in respect
thereof;
d non-payment or delay in payment of, inward remittances ;
e f a ilu r e o r d e l a y t o is s u e of d r af t s, pa y o r d e r s o r b a n k e r s ' c h e q u e s ; f n on -
a d h e r e n c e t o p r e s c ri b e d wo r k in g h o u r s ;
g failure to honour guarantee or letter of credit commitments ;

h failure/dealy to provide a banking facility (other than loans) promised in writing by a bank or its direct
selling agents;
i delays, non-credit of proceeds to parties' accounts, non-payment of deposit or non-observance of RBI directives,
applicable to rate of interest on deposits in any savings, current or other a/c
j delays in receipt of export proceeds, handling of export bills, collection of bills etc., for exporters provided the said
complaints pertain to the bank's operations in India;
k complaints from NRIs having a/cc in India for their remittances from abroad, deposits and other bank
related matters;
I refusal to open deposit a/c without any valid reason for refusal;
rn levying of charges without adequate prior notice to the customer;
n non-adherence by the bank or its subsidiaries to the instructions of RBI on ATM/Debit card
operations or credit card operations: non-disbursement or delay in disbursement of pension
(to the extent the grievance can be attributed to the action on the part of the bank
concerned, but not with regard to its employees);
p refusal to accept or delay in accepting payment towards taxes, as required by Reserve
Bank/Government;
q refusal to issue or delay in issuing, or failure to service or delay in servicing or redemption of
Government securities;
r forced closure of deposit a/cwithout due notice/sufficient reason;
s refusal to close or delay in closing the accounts;
t non-adherence to fair practices code as adopted by the bank;
Complaints pertaining to loans and advances
a non-observance of RBI Directives on interest rates;
b delays in sanction, disbursement or non-observance of time schedule for disposal of loan applications;
c non-acceptance of application without furnishing valid reasons
d non-observance of any other direction of RBI.
Non-implementation of award: Customer Service Committee of the Board -
Banks have been advised by RBI to ensure that the Awards of the Banking Ombudsmen are
implemented immediately and with active involvement of Top Management. With a view to
enhancing the effectiveness of the Customer Service Committee, banks have been advised by RBI
to place all the awards before the Customer Service Committee to enable them to address issues of
systemic deficiencies existing in banks, if any, brought out by the awards. Further, banks are to
place all the awards remaining unimplemented for more than 3 months, before the Customer
Service Committee to enable the Customer Service Committee to report to the Board such delays in
implementation without valid reasons and for initiating necessary remedial action.
CONSUMER PROTECTION ACT ( COPRA )

The Act was initially enacted during 1986 and implemented wef April 15, 1987 to enable the
consumers to enforce rights as consumer through a simple legal procedure (not applicable in J&K). A
comprehensive amendment (The Consumer Protection (Amendment) Act 2002) has been passed on
Dec 17, 2002 (implemented wef March '15, 2003, the World Consumer Rights Day): The major
provisions of the amended Act are as under:
Who is a consumer ? A person who buys goods or hires services for consideration for his/her use (and
not for resale) is a consumer. Any user of such goods and services, with the permission of the buyer, is
also a consumer.
Coverage : All goods and services including banking, insurance, transport, processing, electricity,
physicians etc. in private, public and cooperative sector, are covered under the Act. All banking services
are covered due to their being essential services)
Who can file a complaint - A consumer individually or jointly, any voluntary consumer organisation,
central or state Govt.
Limitation period :Two years from the date of cause of action.
Pecuniary (financial) jurisdiction of different authorities is as under:
Distt Forum (Distt. Judge)+ Up to Rs. 20 lac President (qualified to be a Distt. Judge)
& two other members
State Commission Up to Rs. 100 lac President (has/had been High Court Judge &
(High Court Judge)+ 2 other members

National Commission Above Rs. 100 President (has/had been judge of Supreme
(Supreme Court Judge)+ lac Court & 4 other members
+ Powers of President of the forum equal to

Time limits- Endeavour to be made to decide the complaint within the following time frame:
21 days
Admissibility of the complaint from date of receipt of the complaint
Without analysis or testing of commodities 3 months
With anal sis or testin of commodities 5 months
National and State Commission 3 months
Decision on appeals 90 days
*Powers of President of the forum equal to
Requirement to file a complaint : A written complaint in duplicate, with name and address of the
complainant and opposite party, facts of the complaint, copies of supporting documents and relief
sought, is enough. No court fee is charged. Engaging- -a - lawyer in not compulsory. Consumer or
any one can represent his case. To protect his rights, a consumer should obtain proper receipt/cash
memo for purchase made and guarantee/warranty card duly stamped and signed by the seller, wherever
applicable.
Relief : Relief includes removal of defect from goods, removal of deficiencies in services, replacement
by new goods free from defect, refund of price/charges, award of compensation for loss of injury
suffered, discontinuance/non-repetition of unfair and restrictive trade practices, prohibition of sale of
goods of hazardous nature and providing for adequate cost to party.
Penalty for frivolous nature or for non-compliance of orders : Imprisonment for not less than one
month and up to three years or fine not less than Rs. 2000 and up to Rs. 10000 or both.
Appeals - The period for appeal is limited to 30 days from date of order in all cases. The party
liable to make the payment, as per decision, to deposit the following at the time of appeal:
Appeal to State Commission against Distt. Forum 50% or Rs.25000, whichever less
Appeal to National Commission against State 50% or Rs.35000, whichever less
Commission
Appeal to Supreme Court against National 50% or Rs.50000, whichever Less
Commission
Fee Schedule
UP to Rs.1 lac Rs.100
Above Rs.1 lac up to Rs.5 lac Rs.200
Certain other important aspects

Objective of CPA enactment : Better protection of the interests of the consumers.
Who is a consumer : A person who buys goods or hires and services, for payment / consideration.
What are various councils under the Act : Central Consumer Protection Council, known as Central
Council. One at each State level called State Council and another at District level called District
Council.
Who can be president of Distt. Forum and what is composition : Person qualified to be Distt.
Judge is the President. There are two members, one of them being a woman.
 Where the complaint can be made : Within local limits of the Distt. Forum where the opposite party
resides, carries on business or cause of action has arisen.
Whether transfer of a complaint once admitted is allowed : It is permitted by National
Commission.
What is composition of State Commission : President, who is or has been Judge of High Court and
two members, one of whom to be a woman.. Age criteria for the President is 5 years or till age of 67
years, whichever is earlier.

In how much period, the appeal can be disposed off : Within 90 days of its admission.
What is composition of National Commission : President, who is or has been Judge of Supreme
Court and four members, one of whom to be a woman.
 Who makes appointments at Distt forum, State Commission and National Commission : State
Govt., State Govt. and Central Govt. respectively.
 Can a complaint be entertained after the expiry of limitation period : At the discretion of Distt.
Forum, State Commission or National Commission, if sufficient cause is shown for delay.
If a persons fails to comply with the order, what are powers of the consumer courts : Property of
the person not complying with the order, can be attached. On request of the person entitled to the
amount, the consumer court issues a certificate to the Distt. Collector. Distt. Collector recovers the
amount as arrears of land revenue.
CUSTOMER RELATION & INTER PERSONAL SKILLS
Communication is basic to human existence People need one another to get their needs met; for this
they have to relate with one another. They thus spend most part of their time talking or listening to
others, reading or writing, using language or through expressions and gestures, depending upon the
need. Communication invariably involves exchange of facts and views and interaction between
people. When we relate/interact, we establish a sort of interrelatedness with others by seeking to
transmit our understanding about the reality to the other person, who in turn figures out the meaning
intended to be conveyed. Thus the process of communication is between two or more people, i.e
interpersonal.
The process of communication starts with conceiving the message by one person and culminates with
understanding of the message by the other person. In interpretation of meaning created by the sender
and sought to be transmitted to the other person, the sender's personal factors invariably come into
play. So is the case with the receiver, who in his own way, tries to make meaning in the message.
When this interaction takes place in a climate of openness, sender of the message solicits
reactions/feedback about what was sought to be conveyed and the receiver of the message makes
available his response in an objective way. Giving and receiving of feedback enriches the
communication process because both sender and receiver share their views freely, in a mutually
beneficial manner. Thus communication builds bridges amongst people. Remember, understanding is
the shortest distance between two people. And, communication helps achieve this goal.
People engage in communication for various purposes. Main objectives of communication are
information and persuasion. In an organization, people placed at different hierarchical levels
interact with one another. Seniors need to oversee the performance of the subordinates.
Control and motivation are, therefore, the major objectives of downward communication. The
subordinates in turn, report on the progress of work and may approach their seniors with
requests whenever they feel aggrieved. Both downward and upward communication is more
common in an organization. Even then, lateral communication serves a useful purpose and is
better suited for discussion, cooperation and coordination. Whenever an employee feels
strongly about a matter, his communication would carry emotions. Good managers do not
therefore miss out on such expression of feelings and emotions.
A number of factors, within the person and in the environment, affect communication. Person-
specific factors like perception and values are powerful factors that continuously influence our
communication process. When these factors have a negative impact, they are seen as
barriers. Barriers occur mainly because people do not take their act of communication
seriously and do not make efforts to overcome shortcomings in their communication skills and
attitudes. Barriers come in many forms and they fall into three categories: language -related,
psycho-sociological and external. Language related barriers are very common but psycho-
sociological barriers are deep-rooted and more difficult to tackle.

The ability to listen well is as important as the ability to speak well. Effective listening is one
of the critical skills. It is a developed skill. Hearing and listening are not the same. There are
different types of listening and they are independent of each other. The most effective type of
listening is Active Listening. There are many barriers to this and an active listener has to
overcome them.Active Listening involves listening with intensity, empathy, acceptance, and a
willingness to take responsibility for completeness. Active listening requires Comprehension,
Appreciation and Evaluation

Module - D
BANKING CODES AND STANDARDS BOARD OF INDIA
In November 2003, RBI constituted the Committee on Procedures and Performance Audit of Public
Services under the Chairmanship of Shri S. S. Tarapore (former Deputy Governor RBI) to address the
issues relating to availability of adequate Banking Services to common man. The mandate to the
Committee included identification of factors that inhibited the attainment of best customer services and
suggesting steps to improve the quality of banking services to individual customers. The Committee felt
that in an effort to continuously upgrade the package of services that banks offered to their customers
there was a need of benchmarking of such services. After in depth study at the grass root level the
Committee concluded that there was an institutional gap for measuring the performance of banks against
a bench mark reflecting the best practices (Code and Standards). Therefore, the Committee
recommended setting up of the Banking Codes and Standards Board of India broadly on the lines of
Banking Codes and Standards Board functioning in U.K.
Members: The Board was set up as a Society, under the Societies Registration Act, 1860. Commercial banks,
RRBs and Urban Coop Banks are its members. RBI was funding the entire cost of operations of the Board for
the initial 5 years. Thereafter the Board has been levying an affiliation fee annually on all registered members.
Governing body: A Governing Council of the BCSBI looks after its financial affairs and managerial policies. The
tenure of the Council is 5 years and the appointment of the Council after 5 years would be with the concurrence
of the RBI. Objectives: The main objectives of the BCSBI is to plan, evolve, prepare, develop, promote and
publish voluntary comprehensive codes and standards for banks for providing fair treatment to their customers. It
shall carry out its activities on the basis of contract entered into with individual banks (the process of registration).
Code of Banks' Commitment: A comprehensive Bankers' Fair Practice Code prepared by an IBA Working
Group is used as a standard by BCSBI. This Code would be a covenant between the BCSBI and the Banks
joining as members of the BCSBI. Through the covenant, the member banks bind themselves for implementing
the Code and supervision by the Board.
1. Banking Codes and Standards Board of India (BCSBI) has been set up on the recommendations of
Tarapore Committee on Customer Service
2. The Banking Codes and Standards Board of India functions as an independent and autonomous body.
3. Membership of BCSBI is voluntary and open to scheduled banks. Initially the membership of BCSBI
was open to scheduled commercial banks and has now been extended to include Regional Rural
Banks and select Urban Co-operative Banks.
4. Objectives of the BCSBI: (a) To plan, evolve, prepare, develop, promote and publish comprehensive
Codes and Standards for banks, for providing for fair treatment to their customers; (b) To function as an
independent and autonomous body to monitor, and to ensure that the Codes and Standards adopted by
banks are adhered to, while delivering services to their customers.
5. Types of Codes: BCSBI has in collaboration with the Indian Banks' Association (IB A), evolved two
codes — (a) Code of Bank's Commitment to Customers and the Code of Bank's Commitment to
Micro and Small Enterprises.
6. Basic theme of Codes: Codes set minimum standards of banking practices for member banks to
follow when they are dealing with individual customers and micro and small enterprises. These
Codes are subject to periodical review and revision.
7. Objective of Codes: Promoting good banking practices, setting minimum standards, increasing
transparency, achieving higher operating standards and promoting a cordial banker-customer relationship.
8. Nature of Codes: (a) The Codes lay emphasis on transparency and full information to the customer
before a product or service is sold to him; (b) The Codes are not only commitments of banks to their
customers but also in a sense a Charter of Rights for the common person; (c) By setting the
minimum standards of customer service, the Codes make the customer aware of what he can expect
from banks.
9. Methods for Monitoring of Codes by BCSBI: (a)Obtaining an Annual Statement of Compliance (ASC)
from member banks; (b) Visiting branches to find out the status of ground-level implementation of Codes;
(c) Studying complaints received from customers and orders/awards issued by Banking Ombudsmen/

Appellate Authority to find out whether there is any system-wide deficiency; (d) Organizing an annual-
Conference with Principal Code Compliance Officers of the Member banks to discuss implementation
issues.
10. Other activities by BCSBI: (a) undertakes campaigns and initiatives to spread awareness of the Codes
amongst customers and banks; (b) provides faculty support to training establishments of banks; (c)
participates in on-location workshops held by/for member banks to increase coverage; (d) associates with
customer awareness programmes conducted by Banking Ombudsmen; (e) provides credit counselling
services in Mumbai; (f) publishes quarterly newsletter entitled' Customer Matters', containing matters of
interest to-customers
11 Complaint Redressal by BCSBI: BCSBI is not a forum for redressal of individual grievances. BCSBI
examines each complaint to identify any systemic issue that may exist and takes up the matter with the
respective bank to ensure that systems and procedures are suitably amended so that such complaints do
not recur.
 Among the existing institutional structures, the Scheme of Banking Ombudsman, which has been
functioning for quite some time, does not look into systemic issues with a view to enforcing a
prescribed quality of service. Ideally, such a function should be performed by a Self Regulatory
Organisation (SRO) but in view of the existing framework of the banking sector in India, it was felt
that an independent, autonomous Board will be best suited for the function. Therefore, Dr. Y.V.
Reddy, Governor, Reserve Bank of India, in his Monetary Policy Statement (April 2005) announced
setting up of the banking Codes and standards Board of India in order to ensure that comprehensive
code of conduct for fair treatment of customers was evolved and adhered to.
 The Banking Codes and Standards Board of India has been registered as a separate society under
the Societies Registration Act, 1860. Therefore, it would function as an independent and
autonomous body.
 The Banking Codes and Standards Board of India is not a Department of the RBI. Reserve Bank
has agreed to lend it financial support for a limited period. It is an independent banking industry
watch dog to ensure that the consumer of banking services get what they are promised by the
banks.
 To ensure that the Board really functions as an autonomous and independent watchdog of the
industry, the Reserve Bank also decided to extend financial support to the Board by way of meeting
its full expenses for the first five years. This was to enable the Board to reach its economic critical
mass that will make it truly independent in its functioning and take a view on any bank without its
existence coming under any threat. On its part, RBI would derive supervisory comfort in case of
banks which are members of the Board. In substance, the Board has been set up to ensure that
common man as a consumer of financial services from the banking Industry is in a no way at a
disadvantageous position and really gets what it has been promised
Relationship between RBI and BCSBI

The Board has been set up as an independent and autonomous organization. But it is strongly supported
by RBI as RBI would bear the financial cost of this institution in the initial period of five years in the best
interests of the entire banking system and more particularly the interests of the common person as
customer. Although the membership of BCSBI is optional, RBI is expected to have more intensive
oversight on banks that do not become members of BCSBI.
Functions of BCSBI
The initiative to establish the Board is driven by the banks themselves as this would lead to the
empowerment of their customers for a higher level of satisfaction with regard to the services offered,
through a significant and enduring improvement in customer services. Internationally, such codes are
developed by associations of bankers as self-regulatory exercises. The IBA and the BCSBI have drawn up
the voluntary codes in general terms and the codes will be followed by detailed Guidance Notes on each
of the code.
The adherence to the codes by banks will be monitored by BCSBI. The central task of the Board would,
therefore, be to ensure that the subscriber banks file detailed compliance reports to the Board on
observance of voluntary codes and that they are followed rigorously.
If, after a thorough assessment the Board is still not satisfied with the compliance, the Board could
contemplate sanctions which may include the following :

1. Follow "Name & Shame" policy. That is publication by the Board of the bank's name and details
of the breach;
2. Inclusion of details of the breach in the Board's Annual Report;
3. Issue of instructions to banks on remedial action;
4. Warning or reprimand;
5. Public censure; and
6. Cancellation of registration with the Board.
While provisions for penal action exist, the basic approach of BCSBI is to take collaborative remedial
action rather than through penal measures.
Of the 79 scheduled commercial banks, 70 banks have enrolled as members of the BCSBI and have
voluntarily adopted the 'Code of Bank's Commitment to Customers'.
SET UP OF BCSBI
The Banking Codes And Standards Board of India has been registered as a separate society under
the Societies Registration Act, 1860 and functions as an autonomous body, to monitor and assess the
compliance with codes and minimum standards of service to individual customers to which the banks
agree to. The name of the Society is "The Banking Codes And Standards Board Of India"
The Registered office of the society is situated in the State of Maharashtra at Reserve Bank of India,
C- 8/9, Bandra-Karla Complex, Bandra (East), Mumbai - 400 051.
The Society may change the place of Registered Office after following the procedure prescribed by law.
HOW CAN CONTACT BCSBI

Members of public can contact the BCSBI either on its website or at its postal address. The address of the
BCSBI is as under:
The Banking Codes And Standards Board of India, Reserve Bank of India Building
C-7, 4th Floor, Bandra Kuria Complex, Mumbai -400 051.
Ph. No. 022- 26573715, 26573724 Fax No. 022- 26573719.
Website address: www.bcsbi.org.in helpdesk : help.bcsbi@rbi.org.in
AIMS AND OBJECTIVES OF BCSBI
 To plan, evolve, prepare, develop, promote and publish voluntary comprehensive Codes and
Standards for banks, for providing for fair treatment to their customers.
 To function as an independent and autonomous watch dog to monitor and to ensure that the banking
Codes
 and Standards voluntarily adopted by banks are adhered to, in true spirit by banks in delivering the
services, as promised, to their customers.
 To conduct and undertake research of the Codes and Standards currently in vogue in and outside
India.
 To enter into covenants with banks on observance of the codes and standards and for that purpose
to train employees of such banks about the Banking Codes.
 To help people affected by natural calamities.
Other Aims and Objects:

 To advertise and publish promotional literature in newspapers and otherwise about the Codes and
Standards for the guidance and knowledge of the public through Web site, advertisements in the
newspapers, magazines, journals, TV/Radio, hoardings or any other mode which the Society may
deem fit.
 To take up specific assignments, if any, in the areas coming under the Society's objects as projects,
turnkey solutions or on any other terms of contracts with in-house resources or with the
participation of outside agencies in order to fully implement the Code.
 To organize teaching and training courses, conferences, seminars, lectures and similar other
activities relating to the Codes and Standards or implementation of the said Codes and Standards.
 To publish journals, reports, pamphlets, books, booklets, research papers in furtherance of the
objects of the Society.
 To maintain close contacts with Indian Banks' Association, other similar institutions, Boards and
organizations having similar objects or allied objects by way of subscription, enrolment as a
member thereof, financial or other kind of assistance, collaboration, cooperation and in any
manner as the Society may deem fit.
 To initiate, establish and participate in collaborative activities with other institutions/organizations
having similar objects within and outside the country.
 To establish, acquire, maintain and manage facilities such as offices, other accommodation, library,
computer centers, etc.
 To institute and award fellowships, scholarships, prizes and medals to meritorious persons, in
accordance with the Rules framed by the Society.
 To undertake any project or activity in furtherance of the objects of the Society.
 To do any or all other lawful things as the Board may deem fit for the attainment of all or any of its
main or other objects
Based on the overall score of the banks, a rating has been awarded from out of 4 categories. These
ratings are placed by BCSBI in Public Domain.
Score 85 and above 1 High level compliance
Score 70 to less than 85 2 Above average level of compliance
Score 60 to less than 70 3 Average level of compliance
Score below 60 4 Below average level of compliance
W H AT AR E T H E S E C O D E S AB O U T
The codes represent each member bank's commitment to minimum standards of service to individual
customers in relation to products and services offered by the bank. The Codes do not replace or
supersede regulatory or supervisory instructions of the Reserve Bank of India (RBI) but only attempt
to improve these. The codes are implemented by all banks which choose to become members of
BCSBI. The redressal of individual complaints is not done by BCSBI but such complaints are to be
referred to Banking Ombudsman (BO)
The codes represent each member bank's commitment to minimum standards of service to
individual customers in relation to products and services offered by the bank, like:
 Deposit accounts
 Safe deposit lockers
 Settlement of accounts of deceased account holders Foreign exchange services
 Remittances within India
 Loans and advances and guarantees
 Credit cards
 Internet banking In addition, the Code of Bank's commitment to MSEs is also applicable to
Letters of Credit, Bills, Factoring services and CODES Merchant Services. In these areas the
codes, inter alia, dwell Interest rates
 Tariff schedule
 Terms and conditions governing relationship between the bank and the customer
 Compensation for loss, if any, to the customer due the acts of omission or commission
on the part of the bank
 Privacy and confidentiality of the information relating to the customer
 Norms governing advertisements, marketing and sales by banks,
APPLICABILITY OF CODES TO BANKS

Banks will be required to register themselves with BCSBI as members and have the Codes
adopted by their respective boards (Any Scheduled Commercial Bank, Scheduled Urban Co-
operative Bank and Regional Rural Bank, which agrees to adhere to the Code and sign the
covenant and pays a non refundable registration fee of Rs 10000 to the BCSBI may apply for
membership). Thereafter, when they are ready to implement the commitments contained in

the Codes, the banks will enter into a covenant with BCSBI, binding them to monitoring by
BCSBI as far as implementation of the codes is concerned. The banks would also be required
to make necessary changes in certain policy and procedural aspects around their products
and services. With the adoption of 'Code of Bank's Commitment to Customers' by member
banks who are members of BCSBI, the following voluntary codes of IBA would not be
applicable to them:
(a) Bankers' Fair Practice Code - w.e.E June 2004
(b) Fair Practice Code for Credit Card Operations
(c) Model Code for Collection of Dues and Repossession of Security
(c) However, member banks who are not members of BCSBI or eligible to become members of
BCSBI would continue to follow these codes.
(d)W hether a particular bank is a member or not can be ascertained by a customer
from his bank. The information is also be available on the website of the BCSBI and
IBA and also made available on request
CODES VS RBI INSTRUCTIONS TO BANKS
The Codes do not replace or supersede regulatory or supervisory instructions of the

Reserve Bank of India (RBI) and member banks will comply with such
instructions/directions issued by RBI from time to time. Provisions of the Codes may set
higher standards than what is indicated in the regulatory instructions and such higher
standards will prevail as the Codes represent best practices voluntarily agreed to by banks
as their commitment to customers
KEY COMMITMENTS UNDER THE CODES
As per the codes of BCSBI, the member banks have undertaken some key commitments to the
target customers. These are:
(a) To act fairly and reasonably in all their dealings with target customers.
(b) To help customers to understand how bank's financial products and services work.
(c) To help customers use their account or service.
(d) To deal quickly and sympathetically with things that go wrong.
(e) To treat all personal information of the customers as private and confidential.
(f) To publicise the Code.
(g) To adopt and practice a non-discrimination policy.
DIFFERENCE BETWEEN THE OMBUDSMAN AND BCSBI
The Banking Ombudsman is a redressal mechanism to attend to disputes between banks and its
customer as also to attend to individual complaints relating to deficiencies in banking services. On
the other hand, the BCSBI (Board) is an industry watch dog to oversee compliance with the "Code
of Bank's Commitment to Customers" and "Code of Bank's Commitment to MSEs". It is not a
redressal mechanism and will look into an individual complaint only to the extent it points to any
systemic failure in compliance with the Codes.
CODES BROUGHT OUT BY BCSBI

BCSBI has 2 codes : Codes of Bank's Commitment to customers (2014) & Codes of Bank's commitment
to Micro and Small Enterprises(2015)
BANKS' CODE FOR CUSTOMER SERVICE
Banking Codes and Standards Board of India, (on July 03, 2006) released the Banks' Code for Customer Service
which is a voluntary Code. The code sets minimum standards of banking practices for banks to
follow when banks are dealing with individual customers. It provides protection to the customers
and explains how banks are expected to deal with the customers for their day-to-day operations.
Objectives of the Code

The Code has been developed with a view to:
a. promote good and fair banking practices by setting minimum standards in dealing with the
customers;
b. increase transparency so that the customers can have a better understanding of what they can
reasonably expect of the services;
c. encourage market forces, through competition, to achieve higher operating standards;
d. promote a fair and cordial relationship between the customers and their bank;
e. foster confidence in the banking system. Application of Code
a: Current /savings account, term deposits, recurring deposit, PPF accounts and all other deposit
accounts.
b: Payment services such as pension, payment orders, remittances by way of Demand Drafts and
wire transfers.
c: Banking services related to Government transactions.
d: Demat accounts, equity, government bonds.
e: Indian currency notes exchange facility.
f: Collection of cheques, safe custody services, safe deposit locker facility
g: Loans and overdrafts.
h: Foreign exchange services including money changing.
i: Third party insurance and investment products sold through our branches.
j: Card products including credit cards, debits cards, ATM cards and services (including credit
cards offered by our subsidiaries/companies promoted by us).
Important time schedules under BCSBI Code Summary of key time commitments
01 Change in terms of deposit a/cs-notice : 1 month
02 Notification of change without notice : 30 days
03 Switching from one a/c to another :14 days
where the account does not suit
04 Closure of a/c on customer request : 5 days
05 Transfer of account to other branch : 2 weeks
operationalisation at new branch
06 Acknowledgement of complaint : 1 week
07 Redressai of customer complaint (max) : 6 week
OS Closure of account by bank - Notice : 30 days
10 Change in fee/charges - notice period : 1 months
11 Designating an account as dormant, : 3 months
inoperative or unclaimed - prior notice
12 Closure/shifiting of branch - notice
where no other bank has branch: 3 months
where other bank has a branch: 2 months
13 Change in credit card terms - notice : 1 months
14 Loan recovery - time to visit customer : 7am-7pm
CUSTOMER SERVICE RELATED ISSUES
a: Draft should be valid uniformly in banks : 3 months

b: Banks should issue DD without non-payment advice up to Rs. 5000
c: Duplicate DD should be issued within :14 days
d: If duplicate DD not issued timely, intt : FDR rate
payment should be made at
e: Immediate credit - Outstation instruments: Bank discretion
and immediate credit to be given within..
f: Rate of interest payable in case of : ---do--
delay in collection of outstation cheque
g: Composition of branch level customer service committee: BM, representatives of all staff
categories
h: Customer day celebrated on : 15th each month
i: Employees working hours begin 15 min before customer service hours — Goiporia committee
Banks' Code for MSEs

Banking Codes and Standards Board of India prepared voluntary code put in place in 2008. It sets
minimum standards of banking practices for banks to follow, while dealing with MSEs.
Code and Regulatory guidelines: Where code sets higher standards than indicated in the RBI
instructions, such higher standards will prevail. Changes in interest rates: Banks will inform the
change within 7 days, by writing to MSEs, placing notice at the branch and on website. Changes in
Fees & Charges : Notify change 30 days prior to revised charges becoming effective. Changes to
Terms & Conditions: It is to be conveyed within 30 days. If it is to. MSE's disadvantage, MSE
may within 60 days and without notice, close /switch the account without paying extra charges or
interest. If banks make many minor changes in any one year, banks should give MSEs, a copy of
terms & conditions. Additional information : MSE to be contract for additional information within 7
working days from receipt of application.
Processing fee : No fee will be recovered for loans up to Rs.5 lakh if the loan is not sanctioned.
Amount of bank limit: The banks will provide working capital limits computed at minimum of 20 %
of projected annual turnover.
Sanction: Banks will supply authenticated copies of all the loan documents executed with. The
banks will permit pre-payment of loans up to Rs.5 lakh without levying any prepayment penalty.
Disbursement : Within 2 working days from the

date of compliance with all terms and conditions. Drawing power: Banks will grant increase in the
DP within 24 hours of lodgment of security. Transfer of accounts and release of securities: Banks
will convey their consent or otherwise, within 2 weeks of receipt of a request for transfer of the
borrowal account and release all securities on receiving repayment of loan immediately and in any
case not later than 2 weeks.
Financial Difficulties: Banks will consider a debt restructuring program if a/c remains substandard
for over 6 months or MSE unit is considered to be sick. Banks will work out a package and
implement it within a maximum period of 60 days from the date of receipt of request.
Recovery: Bank representatives will contact MSEs between 0700 hrs and 1900 hrs.
Complaint: The banks will send final response within 6 weeks of receipt of complaint.
Banking Ombudsman Scheme: Within 30 days of lodging a complaint with the bank, if MSEs do
not get a satisfactory response from a bank and MSEs wish to pursue other avenues it may
approach Banking Ombudsman
IBA's BANKING PRACTICES GUIDELINES (for deposit a/cs)

IBA's comprehensive set of guidelines on Code for Banking Practices, is a bid to promote a healthy
relationship between banks and their customers, (implemented from Sept 01, 1999). The code replaces
the Ground Rules and Code of Ethics (GRACE).
Major features of the code

Deposit schemes of banks - Promotional schemes approved by the Board may be launched within RBI's
regulatory framework.
Current Accounts /FD of Chit Funds - Banks while opening the accounts should not encourage or lend
their names to promote speculative ventures of any nature.
Prize and gift - Banks should see that the cost of such gift does not exceed Rs.250 per piece.
Overdraft in saving bank account - Overdraft in saving banks account should not be permitted on a regular

basis.
Customer logo - Customer's logo/advertisement shall not be printed on cheque leaves, except of
dividend/intt. warrants.
Collection of term deposit -Term deposit receipts received for collection from other banks shall be paid to
collecting bank only and not delivered to the customer.
Maturity value certificate - Maturity value certificate shall not to be issued to any person who approach
bank branches with offer to procure substantial rupee deposits.
No. of days for interest payment - Interest will be paid for no. of days on the basis of 365 days in a year
(366 days for leap year) where deposit is payable in less than 3 months or where terminal quarter is
incomplete.
Open term deposits - Banks cannot issue incomplete term deposit.
IBA's MODEL POLICY ON BANK DEPOSITS
IBA's policy document outlines the guiding principles for formulation of various deposit products offered
by the Banks.
Operation of Joint Account
Joint Account can be operated by single individual or by more than one individual jointly. The mandate
for operating the account can be modified with the consent of all account holders. The Savings Bank
Account opened by minor jointly with natural guardian / guardian can be operated by natural guardian
only.
Renewal of term deposits
Account holders can give instructions with regard to closure of deposit account or renewal of deposit for
further period on the date of maturity. In absence of such mandate, the Bank will seek instructions from
the depositor/s as to the disposal of the deposit by sending an intimation before 15 days of the maturity
date of term deposit.
MINORS' ACCOUNTS
The minor can open Savings Bank Account. It can be operated by the natural guardian or by minor, if
he/she is above the age of 10 years. The account can also be opened jointly with natural guardian or
with mother as a guardian.
On attaining majority, the erstwhile minor should confirm the balance in his/her account.
Account of Illiterate / Blind Person Banks may at its discretion open deposit accounts other than
Current Accounts of illiterate person. The account of such person may be opened PROVIDED HE/SHE
CALLS ON THE BANK PERSONALLY ALONG WITH WITNESS WHO IS KNOWN TO BOTHE THE
DEPOSITORS & THE BANK.
Nomination Facilities in Customers' Accounts
10. Nomination facility was introduced on the recommendation of Talwar Committee.
11. Nomination facilities are available in deposit accounts (Sec 45 ZA & 45ZB of Banking Regulations Act),
articles deposited for safe custody with the bank (Sec 45ZC & 45ZD) and in locker accounts (45ZE &
45ZF).
12. Sections 45ZA, 45 ZC, 45ZE relate to nomination, change in nomination and cancellation of nomination.
Sections 45ZB, 45 ZD, 45ZF state that bank will be discharged of liability by making payment/delivery to
nominee.
13. Where facility is available: All types of deposit accounts like SB, CA, FD, RD, NRE, FCNR(B) and
NRO.
14. Who can nominate: Individual, joint account of individuals or a sole proprietorship firm.
15. Who can not nominate: Partnership firm, HUF, clubs/societies/limited companies/trusts. A minor
can not appoint a nominee. On his behalf, nomination facility can be exercised by the person
legally competent to act on behalf of the minor.
16. Who can be nominee: Only an individual including minor. If nominee is a minor, the depositor
has to appoint a major person to receive deposit amount / articles in the safe custody / locker etc.
on behalf of the minor nominee.
17. Number of nominess: Deposit accounts — only one; Safe Custody — Only one but if articles are
deposited by more than one person, nomination facility is not available; Safe Deposit Locker - single
names or in joint names with either or survivor instruction only one; Locker in joint names with joint
operation - more than one nominee (max 2).
18. When does the right of nominee start?: In case of joint accounts, right of a nominee starts only
after death of all depositors. The only exception is the nominee(s) in case of jointly operated
lockers.
10.Status of nominee:The status of nominee is just like trustee of legal heirs.
11.Legal Heir versus nominee: bank will make payment to the nominee unless there is a court order
to make payment to legal heirs. Bank gets a valid discharge by payment to nominee.
12.1n case of term deposits, there is no need of fresh nomination in the case of renewal of FDR.
13.While making nomination, the thumb impression of the accountholder should be attested by two
witnesses. However, signatures of the accountholders in forms DA1, DA2 and DA3 need not be attested by
witnesses.
14.1n the case of accounts in the name of single persons, nomination must be obtained. If the depositor
does
not want to nominate anybody, he should give in writing.
15.Banks should incorporate the legend "Nomination Registered' on every pass book or deposit receipt. In
addition to the legend "Nomination Registered", banks should also indicate the name of the Nominee in
the Pass Books / Statement of Accounts / FDRs, in case the customer is agreeable to the same.
16.Nomination can be made any time. It can be cancelled and changed any time
COMPULSORY NOMINATION
Nomination is compulsory in all single name accounts. Where the account holder is not willing to
nominate, he is to give his refusal in writing. If he refuses to give the refusal in writing, the bank officials
are required to record the fact of such refusal on account opening form itself.
Name of Nominee on pass-book or FDR

As per RBI Master Circular dated Nov 03, 2008 on Customer Service, banks have been advised to
introduce the practice of recording on the face of the passbooks/FDRs the position regarding availment of
nomination facility with the legend "Nomination Registered". RBI has further advised the banks that in
addition to the legend "Nomination Registered", they should also indicate the name of the Nominee in the
Pass Books / Statement of Accounts / FDRs, in case the customer is agreeable to the same.
Witness in nomination forms
The nomination forms (DA1, DA2 and DA3) under Nomination Rules, inter alia, prescribe that the thumb
impression of the account-holder is required to be attested by two witnesses. Some banks also insist on
attestation of signature by witnesses. RBI has clarified that signatures in forms DA1, DA2 and DA3 need
not be attested by witnesses
Safe custody of Articles
Nomination is available where articles are held in single name (not available for joint name) of individual
accounts. Only one nominee can be appointed. Separate nomination is required for each lodgement.
Safety lockers
Nomination is available for single and joint name locker holders. For single name and joint either/
survivor or F/S accounts, only one nomination is allowed. But for jointly operated lockers, the maximum
no. of nominees, can be two.
In case of joint operation lockers, the contents are deliverable to surviving locker holders along with the
nominee of the deceased locker holder.
PASS –BOOK & STATEMENT OF ACCOUNT

Issuance of Passbooks to Savings Bank Account holders (Individuals) : Banks are required to
invariably offer pass book facility to all its savings bank account holders (individuals) and in case the bank
offers the facility of sending statement of account and the customer chooses to get statement of account,
the banks must issue monthly statement of accounts. The cost of providing such Pass Book or
Statements should not be charged to the customer.
Updating passbooks: (i) Wherever pass-books are held back for updating, because of large number of
entries, paper tokens indicating the date of its receipt and also the date when it is to be collected should
be issued.
(ii) Whenever a passbook is tendered for posting after a long interval of time or after very large number of
transactions, a printed slip requesting the depositor to tender it periodically, be given.
Entries in passbooks / statement of accounts: With a view to avoiding inconvenience to depositors,
banks should ensure that brief, intelligible particulars are invariably entered in passbooks / statement of
account.
Precautions in maintenance of savings bank pass books: Negligence in taking adequate care in the
custody of savings bank pass books facilitates fraudulent withdrawals from the relative accounts.
i) Branches should accept the pass books and return them against tokens.
ii) Pass books remaining with the branches should be held in the custody of named responsible officials.
iii) While remaining with the branch, pass books should be held under lock and key overnight.
Providing monthly statement of accounts
i) Banks should adhere to the monthly periodicity while sending statement of accounts.
ii) The statements of accounts for current account holders may be sent in a staggered manner instead
of sending by a target date every month. The customers may be informed about staggering of the
preparation of these statements.
iii) Further, banks should advise their Inspecting Officers to early out sample check at the time of
internal inspection of branches to verify whether the statements are being despatched in time.
Printing of MICR code and IFSC code on passbook / statement of account: Banks are to print this
information in all passbook / statement of account of their account holders.
FDRs against local instruments: Interest can be paid from the date, the bank received credit in its
account with RBI/SBI in clearing.
Conversion of a term deposit, daily deposit or recurring deposit for reinvestment : The bank should
pay interest in respect of such a term deposit without reducing the interest by way of penalty provided that
the deposit remains with the bank after reinvestment for a period longer than the remaining period of the
original contract. Payment to legal heirs in case of deceased depositor - If on request from legal heir/s
a bank agrees to split the amount/ term of term deposits and issues two or more receipts individually in
their name, it shall not be construed a pre-mature withdrawal, provided the period and aggregate amount
do not change.
Premature withdrawal — It can be allowed, by paying interest at the same rate or lesser than the interest
rate payable for the period deposit remained with the bank, wef May 09, 1998. For deceased accounts, no
penalty is to be recovered. Loan against term deposits -Loan wherever allowed to be given, would be
subject to levy of normal rate, if the term deposit is got cancelled before completion of minimum period.
Margin on loan- Discretion of banks.
INTEREST RATE ON DEPOSITS: RBI DIRECTIONS

1. RBI is empowered to issue guidelines on Interest Rates as per Sections 21 and 35 A of the Banking
Regulation Act, 1949,
2. Applicability: To every Scheduled Commercial Bank {including Regional Rural Banks(RRBs)} in
India. Not applicable to operations of foreign branches of Indian banks.
3. Definitions:
(i) “Bulk Deposit” means: Single Rupee term deposits of Rupees one crore and above for Scheduled
Commercial Banks other than Regional Rural banks. Single Rupee term deposits of Rupees fifteen lakhs
and above for RRBs.
(ii) “Composite Cash Credit” means a type of loan product having a cash credit limit with a fully savings
module designed to take care of farmer’s interest.
(iii) “Member of the bank’s staff” means a person employed on a regular basis, whether full-time or
part-time, and includes a person recruited on probation or employed on a contract of a specified duration
or on deputation and an employee taken over in pursuance of any scheme of amalgamation, but does
not include a person employed on casual basis.
(iv) “Retired member of the bank’s staff” means an employee retiring whether on superannuation or
otherwise as provided in the bank’s Service/Staff Regulations.
4. Interest Rate framework
(a) There shall be a comprehensive policy on interest rates on deposits duly approved by the Board of
Directors or any committee of the Board to which powers have been delegated.
(b) The rates shall be uniform across all branches and for all customers and there shall be no
discrimination in the matter of interest paid on the deposits, between one deposit and another of similar
amount, accepted on the same date, at any of its offices.
(c) All transactions, involving payment of interest on deposits shall be rounded off to the nearest rupee
for rupee deposits and to two decimal places for FCNR (B) deposits.
(d) Deposits maturing on non-business working day: (i) If a term deposit is maturing for payment on a
non-business working day, Scheduled Commercial Banks shall pay interest at the originally contracted

rate on the original principal deposit amount for the non-business working day, intervening between
the date of the maturity of the specified term of the deposit and the date of payment of the proceeds of
the deposit on the succeeding working day. (ii) In case of reinvestment deposits and recurring
deposits, Scheduled Commercial Banks shall pay interest for the intervening non-business working
day on the maturity value.
(e) Consequence of transfer of branch of one bank to another bank: Deposits accounts transferred from
one bank branch to another bank branch on account of takeover of bank branches in rural and semi-
urban centres shall adhere to the following conditions: (i) deposit accounts shall deemed to be
transferred to the new bank and will continue to be governed by the terms of contract agreed to between
the customer and the bank branch that is being taken over. (ii) the same rate of interest shall be payable
till maturity on such transferred deposits, as was payable at the time of takeover of the branch.
5. Interest rate on domestic Current Account: No interest shall be paid on deposits held in current
accounts. However, balances lying in current account standing in the name of a deceased individual
depositor or sole proprietorship concern
shall attract interest from the date of death of the depositor till the date of repayment to the claimant/s at
the rate of interest applicable to savings deposit as on the date of payment.
6. Interest Rate on domestic Saving Deposits: Interest on domestic rupee savings deposits shall be
calculated on a daily product basis. A uniform interest rate shall be set on balance up to Rupees one
lakh, irrespective of the amount in the account within this limit. Differential rates of interest may be
provided for any end-of-day savings bank balance exceeding Rupees one lakh.
7. Interest Rates on domestic Term Deposits: Interest rates on term deposits shall vary only on account
of one or more of the following reasons:
(i) Tenor of Deposits: Banks shall have the freedom to determine the maturity/tenor of the deposit
subject to the condition that minimum tenor of the deposit offered shall be seven days.
(ii) Size of Deposits: Differential interest rate shall be offered only on bulk deposits i.e. single deposits of
Rs 1 crore and above However, differential interest shall not be applicable on deposit schemes framed on
the basis of the Bank Term Deposit Scheme, 2006 or the deposits received under the Capital Gains
Accounts Scheme, 1988.
(iii) Non- availability of Premature withdrawal option: Banks shall have the freedom to offer term deposits
without premature withdrawal option. However, all term deposits accepted from individuals (held singly or
jointly) for amount of Rupees fifteen lakh and below shall have prematurewithdrawal-facility.
(b) Payment of Interest on pre-mature withdrawal: The interest rates applicable on term deposits
withdrawn before the maturity date shall be paid at the rate applicable to the amount and period for which
the deposit remained with the bank and not at the contracted rate. No interest shall be paid, where
premature withdrawal of deposits takes place before completion of the minimum period of 7 days. Banks
will decide amount of penalty at their discretion.
8. Payment of Additional Interest on domestic deposits
(a) Banks, at their discretion, may allow additional interest of 1% p.a., over and above the rate of
interest mentioned in the schedule of interest rates on savings or a term deposits of bank’s staff and
their exclusive associations as well as on deposits of Chairman, Chairman & Managing Director,
Executive Director or such other Executives appointed for a fixed tenure, subject to the following
conditions:
(i) The additional interest is payable till the person continues to be eligible for the same and in case of
his ceasing to be so eligible, till the maturity of a term deposit account.
(ii) In case of employees taken over pursuant to the scheme of amalgamation, the additional interest is
allowed only if the interest at the contractual rate together with the additional interest does not exceed the
rate, which could have been allowed if such employees were originally employed by the bank.
(iii) In the case of employees taken on deputation from another bank, the bank from which they are
deputed may allow additional interest in respect of the savings or term deposit account opened with it
during the period of deputation.
(iv) In the case of persons taken on deputation for a fixed tenure or on a contract of a fixed tenure, the
benefit will cease to accrue on the expiry of the term of deputation or contract, as the case may be.
(v) Bank Employees’ Federations, in which bank employees are not direct members, shall not be
eligible for additional interest.
(vi) The additional interest may be paid on the following deposits after obtaining a declaration from the
depositor concerned, that the monies deposited or which may be deposited from time to time into such
account belong to the depositor: member or a retired member of the bank’s staff, either singly or jointly
with any member or members of his/her family; or the spouse of a deceased member or a deceased
retired member of the bank’s staff; and an Association or a fund, members of which are members of the

bank’s staff;
(b) Scheduled Commercial Banks shall, at their discretion, formulate term deposit schemes specifically
for resident Indian senior citizens, offering higher and fixed rates of interest as compared to normal
deposits of any size. However, this facility is not offered on the term deposit standing in the name of an
HUF or the Karta of the Hindu Undivided Family (HUF), even if the Karta is a resident Indian senior
citizen.
(c) Scheduled Commercial Banks shall, at their discretion, give their resident Indian retired staffs,
who are senior citizens, the benefit of additional interest rates as admissible to senior citizens over and
above the additional interest payable to them by virtue of their being retired members of the banks’
staff.
9. Interest on overdue domestic deposits
(a) The rate of interest to be paid on renewal of overdue term deposits shall be as per policy decided by
the bank.
(b) If a Term Deposit matures and proceeds are unpaid, the amount left unclaimed with the bank shall
attract rate of interest as applicable to savings deposits.
10. Floating rate domestic term deposits: Floating rate domestic term deposits shall be linked to a
directly observable and transparent market determined external benchmark.
11. Periodicity of payment of Interest on domestic savings deposits:
(a) Interest on savings deposit shall be credited at quarterly or shorter intervals.
(b) Interest on savings bank accounts, including those frozen by the enforcement authorities, shall be
credited on regular basis irrespective of the operational status of the account.
12. Interest payable on the domestic deposit account of deceased depositor: The rate of interest on
matured deposits standing in the name of a deceased individual depositor, or two or more joint
depositors, where one of the depositors has died, shall be as per policy of the bank.
13. Discretion to pay interest on the minimum credit balance in the composite cash credit account of a
farmer: Interest on the minimum credit balance in the composite cash credit account of a farmer during
the period from the 10th to the last day of each calendar month shall be paid, as per policy framed by
the bank.
14. Penalty on premature withdrawal of domestic term deposit: (a) There shall be a comprehensive
policy on penalties for premature withdrawal of term deposits approved by the Board of Directors or any
committee of the Board to which powers have been delegated. (b) The components of penalty shall be
clearly brought to the notice of the depositors at the time of acceptance of deposits. If not, no penalty
shall be levied. (c) In case of splitting of the amount of term deposit at the request from the claimant/s of
deceased depositors or Joint account holders, no penalty
for premature withdrawal of the term deposit shall be levied if the period and aggregate amount of the
deposit do not undergo any change. (d) No penalty for premature withdrawal shall be levied, where
depositors of the branch desires premature withdrawal of deposit consequent to the transfer of business
to another bank.
Cash Payment of term deposits
Term deposited cannot be paid in cash if the amount is Rs.20000 or more (Section 269-rof IT Act).
These can be paid only by way of credit to bank account or by way of account payee crossed demand
draft. Similarly in case of interest amount exceeding Rs.10000 no cash payment is to be made u/s 40.
Renewal of FD frozen by Govt.
If there is request letter from the depositor for renewal, banks may renew the deposit accordingly. In case
the depositor does not exercise his option of choosing the term for renewal, banks may renew the same
for a term equal to the original term. No fresh FDR should be issued and the Govt. should be informed
accordingly (RBI — Aug 12, 2009).
RUPEE DEPOSITS OF NON-RESIDENTS

15. Interest rates on Rupee Deposits-Non-Residents
(a) Interest rates on savings deposits under Non-Resident (External) Rupee (NRE) Deposit / Ordinary
Non-Resident (NRO) Deposits shall be in accordance with rules applicable to domestic deposits.
(b) Interest rates on NRE/NRO term deposits shall vary only on account of one or more of the following
reasons:
(i) Tenor of Deposits: Banks shall have the freedom to determine the maturity/tenor of the deposit
subject to the condition that minimum tenor of NRE term deposits shall be one year and that of NRO
term deposits shall be seven days.
(ii) Size of Deposits: Differential interest rate shall be offered only on bulk deposits

(c) Interest rates on NRE/ NRO deposits shall not be higher than those offered by the banks on
comparable domestic rupee term deposits.
(d) The benefit of additional interest rate on deposits on account of being bank’s own staff or senior
citizens shall not be available to NRE and NRO deposits.
(e) Interest on savings deposits shall be credited at quarterly or shorter intervals.
(f) If an NRE account holder, immediately on return to India, requests for conversion of the NRE term
deposit into Resident Foreign Currency Account (RFC), interest shall be paid as under: (a) if the NRE
deposit has not run for a minimum period of one year, interest shall be paid at a rate not exceeding the
rate payable on savings deposits held in RFC accounts. In all other cases, interest shall be paid at the
contracted rate.
16. Prohibition on marking lien: Banks shall not mark any type of lien, direct or indirect, against NRE
saving deposits.
17. Penalty on premature withdrawal of NRE deposits: (a)This will be as per policy of the bank which will
be brought to the notice of the depositors at the time of acceptance of the deposits.
(b) No penalty shall be levied for premature withdrawal of NRE term deposits for conversion into
Resident Foreign Currency (RFC) Account.
(c) Penalties for premature withdrawal shall be levied for conversion of NRE deposit into FCNR (B)
deposit and vice versa.
(d) No penalty for premature withdrawal shall be levied, where depositors of the branch desires
premature withdrawal of deposit consequent to the transfer of business to another bank.
18. Interest payable on the NRE term deposit account of deceased depositor: In case the claimants of an
NRE term deposit account of a deceased depositor are residents, the deposit on maturity shall be
treated as a domestic rupee term deposit and interest shall be paid for the subsequent period at a rate
applicable to a domestic term deposit of similar maturity.
FOREIGN CURRENCY DEPOSITS

19. FCNR (B) Scheme
(a) The interest rates shall be decided as per policy of the bank. Interest rates on term deposits under
the FCNR (B) scheme shall vary only on account of one or more of the following reasons:
(i) Tenor of deposits: The maturity period for term deposits under the FCNR (B) scheme shall be as
under: (a) One year and above but less than two years; (b) Two years and above but less than three
years; (c) Three years and above but less than four years; (d) Four years and above but less than five
years; (e) Five years only. However, a bank shall not accept or renew FCNR (B) deposits over five years
and no recurring deposits shall be accepted under the FCNR (B) Scheme.
(ii) Size of deposits: Banks shall, at their discretion, decide the currency-wise minimum quantum on
which differential rates of interest may be offered.
(b) The interest rates on all deposits, including where differential rates of interest are offered, shall be
subject to the overall ceiling prescribed below.
(c) Interest on floating rate deposits shall be paid within the ceiling of swap rates for the respective
currency/ maturity and in case of fixed rate deposits, interest shall be paid within the ceiling of LIBOR
rates for the respective currency/ maturity.
(d) The interest reset period shall be six months for all floating rate deposits.
(e) The LIBOR/SWAP rates as on the last working day of the preceding month shall form the base for
fixing ceiling rates for the interest rates offered effective in the following month.
(f) The interest rates ceiling on FCNR (B) deposits shall be as under: (a) 1 year to less than 3 years:
LIBOR/ Swap plus 200 basis points; (b) 3 years and above upto and including 5 years: LIBOR/ Swap plus
300 basis points. The LIBOR / Swap rates quoted/displayed by Foreign Exchange Dealers Association of
India (FEDAI) shall be used as the reference for arriving at the interest rates on FCNR(B) deposits.
20. Manner of calculation of interest on FCNR(B) deposits: Interest on the deposits accepted under the
scheme shall be calculated on the basis of 360 days to a year. The interest on FCNR (B) deposits shall
be calculated and paid at intervals of 180 days each and thereafter for the remaining actual number of
days. However, there will be option with the depositor to receive the interest on maturity with
compounding effect.
21. Calculation of interest on renewal of FCNR (B) deposits: If the period from the date of maturity till the
date of renewal (both days inclusive) does not exceed 14 days, the rate of interest payable on the amount
of the deposit so renewed shall be the appropriate rate of interest for the period of renewal as prevailing
on the date of maturity or on the date when the depositor seeks renewal, whichever is lower. In all other
cases of renewal, interest rates for the overdue period on the renewed amount shall be determined by
treating it as a fresh term deposit. If, after renewal, the deposit is withdrawn before completion of the

minimum stipulated period under the scheme, banks may, at their discretion, recover the interest paid for
the overdue period i.e. period beyond the original date of maturity.
22. Interest payable on the deposit of a deceased FCNR(B) depositor: (a) If paid on the maturity of the
deposit, interest shall be paid at the contracted rate; (b) If the deposit is claimed before the maturity date,
interest shall be paid not at the contracted rate but at the rate applicable to the period for which the
deposit remained with the bank and without charging penalty for pre-payment; (c) In case the depositor
dies before the date of maturity of the deposit but the amount of the deposit is claimed after the date of
maturity, interest shall be paid at the contracted rate till the date of maturity and simple interest at the
applicable rate
operative on the date of maturity for the period for which the deposit remained with the bank beyond
the date of maturity. In case of death of the depositor after the date of maturity of the deposit, the
interest rate operative on the date of maturity in respect of savings deposits held under Resident
Foreign Currency (RFC) Account Scheme shall be paid from the date of maturity till the date of
payment. In case the claimants are residents, the maturity proceeds shall be converted into Indian
Rupees on the date of maturity and interest shall be paid for the subsequent period at the rate
applicable to a domestic term deposit of similar maturity.
23. Payment of interest on FCNR (B) deposits of NRIs on return to India: Banks may, on receipt of the
request from the depositor, allow FCNR (B) deposits of persons of Indian nationality/origin who return to
India for permanent settlement to continue till maturity at the contracted rate of interest subject to the
conditions that: (a) The rate of interest as applicable to FCNR(B) deposits shall continue; (b) Such
deposits shall be treated as resident deposits from the date of return of the account holder to India; (c)
The FCNR (B) deposits on maturity shall be converted into Resident Rupee Deposit Account or RFC
Account (if eligible) at the option of the account holder; (d) The rate of interest on the new deposit
(Rupee account or RFC Account) shall be the relevant rate applicable for such deposit account.
24. Conversion of FCNR (B) Accounts of Returning Indians into RFC Accounts/Resident Rupee
Accounts - Payment of interest: A Bank shall pay interest at the time of conversion of FCNR(B) Account
into RFC/Resident Rupee Account even if the deposit has not completed the minimum maturity period.
However, the rate of interest shall not exceed the rate payable on savings bank deposits held under
RFC Account Scheme.
25. Premature withdrawal of deposits in case of FCNR (B): Banks shall, on request from the depositor,
permit premature withdrawal of deposits under the FCNR(B) Scheme. If the premature withdrawal of
FCNR(B) deposits takes place before completion of the minimum stipulated period no interest shall be
paid .
26. Penalty on Premature Withdrawal of deposits: As per policy of the bank. Penalty shall be levied on
premature withdrawal of FCNR(B) deposits (a) when the depositors return to India for permanent
settlement; (b) for conversion of FCNR (B) deposits into NRE deposits or vice-versa. In case of splitting
of the amount of term deposit at the request from the claimant/s, no penalty for premature withdrawal of
the term deposit shall be levied if the period and aggregate amount of the deposit do not undergo any
change. Banks shall, at their discretion, levy penalty to recover the swap cost in the case of premature
withdrawal of FCNR(B) deposits. No penalties shall be levied in the case of premature conversion of
balances held in FCNR (B) deposits into RFC Accounts by Non-Resident Indians on their return to
India.
27. Resident Foreign Currency Accounts Scheme: Bank shall have the freedom to determine interest on
deposits of money accepted by it or renewed by it under the Resident Foreign Currency Account Scheme
as per policy on interest rates on deposits.
PROHIBITIONS AND EXEMPTIONS

(a) Banks shall not offer prize/lottery/free trips (in India and/or abroad), for mobilizing deposits. However,
inexpensive gifts costing not more than Rupees 250/- at the bank’s discretion, be given to depositors at
the time of accepting deposits.
DEPOSIT INTEREST RATES
Commercial banks in India can pay interest on deposits in accordance with RBI guidelines. A summary of
important guidelines (RBI Master Cir July 01, 2013), is provided as under:
Compounding of interest: Banks can pay interest at shorter than quarterly intervals (RBI-Nov 29, 2013)
Rounding of the amount: All transactions/ interest payments are to be rounded off to the nearest rupee.
Cheques issued by clients containing fraction of a rupee should not be rejected or dishonoured.
Payment of additional interest
Additional interest can be paid by banks in following cases :

 Army Group Insurance Directorate, Naval
Group Insurance Fund and Air-Force Group Insurance Society - 1.28 % p.a. (by Public Sector Banks)
on FD for 2 years and above only, if such deposits are not in any way linked with payment of
insurance premix by the bank.
 Current accounts maintained by RRBs with sponsor banks — Discretion of the bank.
 Min credit balance in composite cash credit account of a farmer — Discretion of the bank
 Deposit Scheme for Senior Citizens - as above.
 Regional Rural Banks/Local Area Banks may,at their discretion, allow additional interest of half
percent per annum on savings deposits.
Deposits of bank's staff and their associations Banks can pay additional interest up to I% p.a. to a
member or a retired member of the banks staff, either singly or jointly with any member or members of
his/her family; OR the spouse of a deceased member or a deceased retired member of the bank's
staff; OR an Association or a fund, members of which are the members of the bank's staff OR
Chairman, Chairman & Managing Director, Executive Director or such other Executive appointed (for a
fixed tenure only during the period of their tenure).
Organisations/bodies where Saving Bank account can be opened and interest paid
 Primary Co-operative Credit Society which is being financed by the bank.
 Khadi and Village Industries Boards.
 Agriculture Produce Market Committees.
 Societies registered under Societies
Registration Act, 1860 or any other corresponding law in force.
 Companies governed by Companies Act, 1956 which have been licensed by Central Govt. u/s 25
and permitted not to add to their names the words -Limited- or the words 'Private Limited'.
 Institutions whose entire income is exempt from payment of Income-tax under the Income-Tax Act,
1961.
 Govt. departments / bodies / agencies in respect of grants/ subsidies released for implementation of
various programmes / Schemes sponsored by Central Govt. / State Governments subject to
production of an authorization from the respective Central / State Government departments to
open savings bank account.
 Development of Women and Children iri Rural Areas (DWCRA).
 Self-help Groups (SHGs), registered or unregistered, which are engaged in promoting savings habits
among their members.
 Farmers' Clubs (Vikas Volunteer Vahini).
Interest in accounts of deceased depositor/s death & payment before maturity -
For payment before the maturity date, the bank should pay interest without charging the penalty;
a) Payment after maturity - For death of the depositor before maturity if amount of is claimed after the
date of maturity, the bank should pay interest at the contracted rate till the date of maturity. From the date
of maturity to the date of payment, the bank should pay simple interest at the applicable rate operative on
the date of maturity, for the period for which the deposit remained with the bank beyond date of maturity.
b) Death after maturity - The bank should pay interest at savings deposit rate operative on the date of
maturity from the date of maturity till the date of payment;
c) Split of deposit by claimants — Such split should not be construed as premature withdrawal of term
deposit provided the period and aggregate amount of the deposit does not change.
d) Balances in Current accounts - In case of deceased individual depositor/sole proprietorship
concern, interest should be paid only from 1st May 1983 or from the date of death of the depositor,
whichever is later, till the date of payment to claimants at interest rate applicable to savings deposit as on
the date of payment.
e) NRE Deposit & Resident claimants - In the case of NRE deposit, when the claimants are residents,
the deposit on maturity should be treated as domestic rupee deposit and interest be paid for the
subsequent period at a rate applicable to the domestic deposit of a similar maturity.
Prohibitions on Payment of Interest

 ' Banks not to pay interest in following transactions:
 Current Account (including on margin money kept in current account) except where specifically

allowed by RBI (i.e. deceased depositor, RRBs)
 Countervailing interest on any current accounts maintained with it by its borrowers;
 No bank is to pay brokerage in the form of commission or gift or incentives on deposits in any
manner or in any other form to any individual, firm, company, association, institution or any other
person (except commission paid to agents
 employed to collect door-to-door deposits under a special scheme; inexpensive gifts costing not
more than Rs.250/-; and incentives granted to staff members as approved by RBI).
 Banks cannot employ/engage any individual, firm, company, association, institution or other person
for collection of deposit or for selling other deposit linked products on payment of remuneration or
fees or commission in any form or manner, except to the extent permitted as above.
 Banks cannot launch prize/lottery/free trips (India or abroad), oriented deposit mobilisation
schemes.
 Banks cannot pay interest on "deposit at call" receipts issued by it to the tenderers (contractors) for
submission to Government Departments/SemiQuasi Government bodies, local bodies, etc.
against the money held in current account.
 Banks cannot accept interest-free deposit other than in current a/c or pay compensation indirectly.
 Banks cannot accept deposits from/at instance of private financiers or unincorporated bodies under
any arrangement which provides for either issue of FDRs favouring client/s of private financiers
or giving of an authority by power of attorney, nomination or other-wise, for clients receiving such
deposits on maturity.
 Banks cannot grant advances against fixed deposit receipts or other term deposits of other banks.
 Banks cannot open a SB account in name of Govt. Deptt./bodies depending upon budgetary
allocations for their functions/Municipal Corpn/ Committees/ Panchayat Samitis/State Housing
/Water and Sewerage/Drainage Boards/State Text Book Corpn/Societies/ Metropolitan Dev.
Authority/State/ District Level Housing Co-op Societies, etc. or any political party or any
trading/business or professional concern, whether such concern is a proprietary/ partnership firm
or a corn an or an association.
Instructions for SB Accounts
Interest Rate on Saving Bank Accounts RBI advised banks (24.04.09) that payment of interest on
savings bank accounts by scheduled commercial banks would be calculated on a daily product basis
with effect from April 1, 2010.
Deregulation of Savings Bank Interest Rate RBI deregulated SB deposit interest rate w.e.f. from Oct
25, 2011 and gave freedom to banks to fix their SB deposit rate, subject to following 2 conditions:
1) Banks will offer a uniform interest rate up to Rs.1 lakh, irrespective of amount In the a/c within this
limit..
2) For deposits over Rs.1 lakh, banks may provide differential rates subject to the condition that banks
will not discriminate in the matter of interest paid, between one deposit and another, of similar amount,
accepted
on the same date, at any of its offices.
Banks can pay interest on Rupee savings and term deposits at intervals shorter than quarterly intervals
(RBI Nov 29, 2013).
Non-maintenance of minimum balance
As per RBI instructions (Nov 20, 2014), w.e.f. 1.4.15 banks can levy charges for not maintaining
minimum balance fixed by a bank and notified to customers, after giving a notice of one month, if the
minimum balance is not restored. The charges should be as fixed percentage of amount of difference
between actual balance and minimum stipulated balance. These charges should not be out of line with
average cost of providing the service.
Resident Bank A/c - Joint Holder
In terms of RBI circular an 09, 2014 banks may include an NRI close relative in existing / new resident
bank accounts as joint holder with the resident account holder on "Either or Survivor or Former or
Survivor" basis subject to the following conditions:
a. Such account will be treated as resident account.
b. Cheques, instruments, remittances, cash, card or any other proceeds belonging to the NRI shall not
be eligible for credit to this account.
C. The NRI shall operate such account only for and on behalf of the resident for domestic payment and
not for creating any beneficial interest for himself.
d. If non-resident account holder becomes the survivor of such an account, it shall be categorized as

Non-Resident Ordinary Rupee (NRO) account.
Model Compensation Policy of IBA

The summary of the policy is as under:
Withdrawal of RBI instructions to banks on time frame for collection of outstation cheques, payment of
interest on delayed collection of outstation cheques/ instruments, w.e.f Nov 01, 2004, had offered banks
further opportunities to increase their efficiency for better performance. 1.Unauthorised / Erroneous Debit:
In case such debit has resulted in a financial loss by way of reduction in the minimum balance applicable
for payment of interest on savings bank deposit or payment of additional interest to the bank in a loan
account, the bank, will compensate the customer for such loss. In case verification of the entry reported to
be erroneous by the customer does not involve a third party, the banks shall complete the verification
process within 7 working days from the date of reporting by the customer. If verification involves a third
party, bank shall complete the process within I month.
2. ECS direct debits/other debits to a/c : Where it is established that the bank had issued and activated a
credit card without written consent of the recipient, the bank would reverse the charges immediately and
pay a penalty amounting to twice the value of charges reversed (RBI guidelines). 3. Payment of Cheques
after Stop Payment : if a cheque is paid after stop payment instruction is acknowledged by the banks, the
banks shall reverse the transaction and give value-dated credit to protect the interest of the customer.
Any consequential financial loss to the customer will be compensated as provided above. Such debits will
be reversed within 2 working days of the customer intimating the transaction.
STOP PAYMENT INSTRUCTIONS

A customer has the right to countermand (stop) the payment of the cheque, before it is paid.
 Such instructions are accepted from the drawer of a cheque and not from the payee or endorsee
(bank has contractual relationship with drawer only). If a payee or endorsee reports loss of cheque to the
bank, bank can advise them to get stop payment instruction issued from drawer.
 Stop payment instructions can be given after business hours even and should preferably in writing.
Oral instructions or telephonic or telegraphic requests are accepted if followed by written confirmation. If
there are more than one persons authorised to operate the account, stop payment instructions, given by
any one of them shall be treated as valid.
 The instructions are valid only when these are received before the payment of the cheque has
actually been made. Payment shall not be deemed to have been made when token has been issued but
amount has not been handed over, debit entry has been made in the account but the amount is yet to be
paid, cheque has been presented through clearing and time of returning the cheque has not elapsed and
cheque has been paid by way of,transfer entry from customer's account to payee's account but credit
advice has not been issued to the payee and payee is unaware of this credit.
 Failure of bank - When the banker fails to take proper precautions and pays a countermanded
cheque, even by mistake, the payment will not be considered to be in due course. Bank cannot debit
customer's account in such circumstances nor claim the money from the holder whose rights to the
amount of cheque are unaffected.
 Validity period - Stop payment instruction is valid till the time the cheque is returned by the bank
marked payment countermanded.
Inoperative & Dormant Accounts

As per its Circular of Oct 1, 1977 banks were advised by RBI that deposit accounts which have not been
operated upon over a period, say 2 years should be segregated and maintained in separate ledger/s. In
view of the increase in the amount of the unclaimed deposits with banks, year after year and the inherent
risk associated with such deposits, RBI has issued following revised instructions (on Aug 22, 2008) to be
followed by banks for playing pro-active role.
i) Banks should make an annual review of accounts in which there are no operations (i.e. no credit or
debit other than crediting of periodic interest or debiting of service charges) for more than one year. The
banks may approach the customers to ascertain the reasons.
ii) A savings /current account should be treated as inoperative / dormant if there are no transactions in
the account for over two years.
iii) In case any reply is given by the account holder giving the reasons for not operating the account,
banks should continue classifying the same as an operative account for one more year within which

period the account holder may be requested to operate the account. If account holder still does not
operate during the extended period, banks should classify the same as inoperative after expiry of the
extended period.
iv) For classifying an account as 'inoperative', debit as well as credit transactions induced at the
instance of customers as well as third party should be considered.
(RBI clarified on 30.10.09 that SB account can be treated as inoperative account only after 2 years from
the date of the last credit entry of interest on Fixed Deposit account, where FD interest is being credited
to SB account or where dividend on shares is being credited).
[RBI clarified (Sep 17, 2013) that accounts for crediting cheques/Direct Benefit Transfer/Electronic
Benefit Transfer/Scholarships for students, Zero Balance Accounts, etc. opened for the beneficiaries
under various Central/State Govt. schemes should be allotted a different "product code" in their CBS so
that the stipulation of inoperative/dormant account due to non-operation does not apply. Accounts of
students are exempted from minimum balance and total credit limit]
v) There should not be any charge for activation of inoperative account.
vi) Interest on savings bank accounts should be credited on regular basis whether the account is
operative or not. If FD matures and proceeds are unpaid, the amount left unclaimed with the bank will
attract savings bank rate of interest.
Unclaimed Deposits In-Operative (10 Years And Over) :Except for drafts, cash orders, RTC/Gift
cheques all other accounts in in-operative (others) category remaining in-operative for further
period of 7 years or more, are to be transferred to In-operative (10 years and over) on 1st day of
December each year. An annual report is also required to be sent to RBI as on Dec 31, u/s 26 of Banking
Regulation Act, within 30 days.The banks are to display the list of unclaimed deposits/inoperative
accounts which are inactive / inoperative for 10 years or more on their
websites. Such list must contain the names of the account holder(s) and his/her address. The names
of customers who have claimed balances in their account, should be deleted. It should be updated on
monthly basis (Feb 02,2015).
Minimum Balance in inoperative accounts : Banks are not permitted to levy penal charges for non-
maintenance of minimum balances. (RBI 15.05.14)
Depositor Education and Awareness Fund

RBI promoted the Depositor Education and Awareness Fund (DEAF) Scheme, 2014 (Mar 21,
2014), u/s 26A of the Banking Regulation Act, 1949 and established the Depositor Education and
Awareness Fund.
Amount : The amounts will be deposited in a specified account maintained with RBI. The
amounts to be credited shall be the credit balance in a deposit account (such as SB, FD, CA etc.) with
banks not operated upon for 10 years or more, or any amount remaining unclaimed for 10 years or
more.
Amount payable in foreign currency to be converted into Indian Rupees at the exchange
rate prevailing on that date. In case of claim, only Indian Rupees received by the Fund will be refunded.
Transfer of amount: Banks shall transfer to the Fund the amounts becoming due in each calendar
month.
Preservation of records : At least 5 years from the date of refund from the Fund.
Refunds and Interest:
(i) In case of demand from a customer whose unclaimed amount was transferred to Fund, banks
shall repay the customer, along with interest (4%) if applicable, and lodge a claim for refund from the Fund
for an equivalent amount paid to the customer/depositor. from the date on which the balance in an
account was transferred to the Fund to the date of payment to the customer.
ii) For a claim for refund of part amount by the depositor whose unclaimed amount/inoperative
deposit had been transferred to the Fund, the account will be revived and will become operative. The
bank shall claim the entire amount transferred to the Fund in respect of such depositor along with
interest payable, if any, from the Fund.
iii) Refunds made by a bank in each calendar month should be claimed for reimbursement from the
Fund on the last working day of the subsequent month.
Returns: Banks to furnish returns prescribed by RBI on Form-1 & 2 (clubbed), Form-3, Form-4 & Form-
5.
Utilisation of Fund : Fund shall be utilised to promote depositors' interests and for such other purposes
which may be necessary for promotion of depositors' interest as may be specified by RBI.
Committee of the Fund
There shall be a Committee to administer and manage the Fund. It shall consist of an ex-officio
Chairperson and maximum 6 members headed by Dy Governor RBI (holding office for 2 years).
Secretariat and necessary infrastructure and manpower to assist the Committee is provided by RBI, The
Committee shall meet at least once in a quarter. The quorum for each meeting shall be at least the
Chairman and one-third of its total members.
BEST PRACTICES CODE (BPC)

The BPC relates to detailed procedural rules for entering into transactional relations within the banks. The
main objective is that such procedures, especially those in all fraud-prone areas, should be well
documented, compared with national and international best practices, experimented with, and improved
upon in the light of the experience gained.
RBI guidelines : Based on the recommendations of Mitra Committee, RBI issued the following guidelines
(Mar 15, 2004) for keeping in view while preparing the BPC.
Comprehensiveness : The BPC should be a comprehensive and homogenous document.
Recommendations of various committees : BPC should cover / highlight recommendations of the Ghosh
Committee, Ivlitra Committee, relevant recommendations of the Narang Committee (large value frauds),
Narasimham Committee on Banking Reforms, recommendations of Estimates' Committee on Prevention
of Frauds in public sector banks.
Minimum coverage : The BPC should, at a minimum, cover all the functional areas like cash, safe
custody of other valuables (DD/TT/LC/Guarantee forms, etc.), deposit accounts, investment portfolio,
credit portfolio, foreign exchange transactions, treasury operations, bills portfolio, remittances, cash
receipts and payments, issue/payment of demand drafts, clearing transactions, government transactions,
LCs/ Guarantees, etc.
Revision : It should be periodically revised.
FAIR PRACICES CODE FOR LENDER’S LIABILITY

RBI Circulated the following broad guidelines to be adopted for framing the Fair Practices Code by banks
by April 1, 2003.
Loan Application forms & acknowledgement : Loan Application forms should be comprehensive to
include information about rate of interest (fixed / floating) and manner of charging (monthly / quarterly /
half-yearly / yearly rests), process fees and other charges, penal interest rates, pre-payment options and
any other-- matter which affects the interest of the borrower, so that a meaningful comparison with that of
other banks can be made and informed decision can be taken by the borrower.
Disposal of applications - Banks should verify the loan applications within a reasonable period of time
and should state specific time period from the date of acknowledgement, within which a decision on the
loan request will be conveyed to the borrowers. In case of rejection of any loan application, lenders should
convey in writing, specific reasons for all accounts.
Assessment of Credit requirements - The credit limit, to be sanctioned, to be mutually settled.
Terms and conditions - Terms and conditions governing credit facilities such as margin and security
should be based on due diligence and credit worthiness of borrowers.
Post disbursement supervision by lenders, particularly for loans up to Rs.2 lakh, should be constructive
with a view to taking care of any" lender-related" genuine difficulty that the borrower may face.
Transfer of account: In case of receipt of request for transfer of borrowal account, either from the
borrower or from a bank/financial institution, which proposes to takeover the account, the consent or
otherwise i.e., objection of the lender, if any, should be conveyed within 21 days from the date of receipt of
request.
Copy of loan documents to borrower: A copy of the loan agreement along with a copy each of all
enclosures quoted in the loan agreement should be furnished to the borrower.

MEMORY BASED RECALLED QUESTIONS
LATEST POLICY RATES ( Please make changes in answer )
BANK RATE 7.00% Base Rate of ma or Banks 9.30-9.70%
CRR 4.00% FOREX RESERVES- Rs. Billion 24 607.2
SLR 21.00% FOREX RESERVES US $ Million 3,71,279.8
REPO RATE 6.50% SCB Total De osits - Rs. in Cr. 98 559.6
Reverse REPO 6.00% SCB Total Credit - Rs. Cr. 73,242.0
MSF 7.00% CREDIT- DEPOSIT RATIO 74.31%
BANKING LAWS INCLUDING NI, BR & RBI ACT AND PRACTICES

Nomination
1. A & B are having joint a/c with ‘e or s’ operation with x as nominee. A dies: The deposit on
maturity payable to B.
2. A person having locker has expired. The nominee comes. A sealed cover is found. What will you
do ? : It will be delivered to him as part of locker contents without opening the packet.
3. A person of 65 years of age can not nominate which of the following persons: Trust
4. For making nomination in term deposits how many witness signature required? Nil but if
depositor is illiterate then two witness
5. If a customer makes nomination, the bank is required to register in its books the nomination,
and should give acknowledgement to the depositor in writing. The bank should also indicate the
fact of nomination on the face of passbook/deposit receipt with the legend (a) Nomination
Registered (b) Nomination marked (c) Nomination done (d) Nomination acknowledged:
Nomination Registered
6. If a depositor dies, payment to nominee or legal heirs should be made within: 15 days of
completion of formalities.
7. In case of a Deposits account customer wants the Nomination in his account. What is mentioned
on Pass book Ans > Nomination Registered
8. In case of a jointly operated joint account, the nominee can obtain payment, : when none of the
account holder is alive
9. In case of minor account under Guardianship, nomination can be given by: Natural Guardian.
10. In the context of Nomination, which is correct statement?:Signatures of nominee not required on
nomination form. Nominee's name should be mentioned on FDR if agreed by the customer
11. Loan was raised from the bank against NSC by Mr. X and noting to this effect was recorded in
the issuing Post Office. X dies. The nominee approaches post office for payment of NSC. Who
will have priority i.e. bank or nominee?: Bank will have prior claim against NSC.
12. Nomination - Minor can be a nominee.
13. Nomination facility for deposit accounts is available under: 45ZA & 45 ZB of the BR act
14. Nomination facility is not available in the case of : Trust A/c. (facility of nomination is available
only in the case of individual(s).
15. Nominee can claim payment when: Only after the death of depositor (account holder) as a
trustee on behalf of the legal heirs.
16. Provisions relating to Nomination are given in : Banking Regulation Act (Sec 45 ZA to 45 ZF)
17. There is a joint account in the name of A & B payable to either or survivor. On the death of A,
the amount will be payable to B, the survivor.
18. What is the status of Nominee? Trustee of Legal heirs
19. When a NRI customer who had maintained NRE/FCNR depositor dies, how the balance in the
account will be given to his Nominee?: If nominee is resident in India then after observing usual
formalities but if nominee is non-resident residing abroad, then deposit proceeds cannot be
repatriated without obtaining prior permission from RBI.
20. Whether Minor can nominate ? no. On his behalf nomination will be done by a person legally
competent to act on his behalf.

21. Who can be a nominee?: Only an individual
22. Who can make nomination in the deposit account of a minor?: Guardian on behalf of the minor.
Ombudsman
1. A Bank can prefer appeal on the award passed by Banking Ombudsman to Deputy Governor
within _____ from the date on which the bank receives letter of acceptance of Award by
complainant: 30 days
2. Banks are required to implement the award of Ombudsman unless a decision is taken to appeal
against the same within one month from the date of receipt of acceptance of the award by the
complainant
3. For its implementation, the complainant should accept the award given by Ombudsman within:
30 days of the receipt of the copy of the award.
4. If a complainant is not satisfied with the award or his complaint is rejected by the Banking
ombudsmen, he can prefer an appeal to Deputy Governor, RBI within: 30 days of the of the date
of receipt of communication regarding award or rejection of the complaint.
5. Ombudsman Award - Max for credit card: Rs. 1,00,000.
6. Total number of Banking Ombudsman in India: 15
7. Under Ombudsman scheme, the authority for appeal is: Dy Gov. RBI
8. Under Ombudsman scheme, which type of case not entertained?: advocate representing the
customer
9. Under the Ombudsmen scheme, the Bank has to reply to the objection of the complainant
within: one month
10. What is the maximum amount of Award that can be given by an Ombudsman under RBI's
Ombudsman scheme? Rs. 10 lacs.
11. When an order passed by Banking Ombudsman is accepted by the complainant, the same should
be complied within: 1 month from the date of receipt of acceptance from the complainant.
12. Whether a customer can approach Ombudsman without first approaching the Bank :
Approaching the bank first is a pre-condition
13. Who is appointed to tackle public complaints against the public authorities : Ombudsman
14. Within how many days of filing a complaint with the bank, the complainant can approach the
Ombudsman: One year from the date of the receipt of the reply from the bank. If no reply
received then it is one year and one month.
Negotiable Instruments Act
1. A bearer cheque of Rs.7,000/- was presented. The cashier informed that the cheque can not be
passed as the balance is less by Rs.700/-. The tenderer credited the amount of shortfall and the
cheque was paid. Customer disputed the transaction. Whether bank is liable?: Yes. For disclosing
balance to third party, bank is liable to account holder for breach of secrecy.
2. A cheque crossed specially to a bank is presented by the same bank to paying bank for cash
payment. What should the paying bank do? Bank can make cash payment.
3. A cheque is presented for payment in which amount in figures is mentioned as Rs 10,000
whereas the amount in words is mentioned as Rs Ten lakh only. In terms of section 18 of the N I
Act, what should the bank do?: The amount written in words should be paid as per Sec 18 of NI
Act..
4. A cheque is written in English and Regional Language. Whether it can be paid?: Yes. A cheque
written in different language can be paid if otherwise in order.
5. A cheque signed by agent has been presented after his death for payment. What should the
bank do?: The cheque will be paid if otherwise in order.
6. A cheque was stolen and its payment was taken by forging the signatures of the drawer. The
signatures were so cleverly forged that it was very difficult to detect the forgery. Under which
section of N I Act, paying banker will get protection?: No protection to paying bank
7. A Cheque with forged signatures is presented for payment and is paid. Bank will be liable to:
Customer (Drawer of the cheque)
8. A Cheque with material alteration was paid as alteration was not visible. Under which section of
N I Act, paying banker will get protection?: section 89 of NI Act
9. A cheque written in different inks and handwriting is presented, for payment : it will be paid if

otherwise in order
10. A customer can deposit cheque on counter instead of depositing in cheque drop box should
be mentioned at: on box itself
1.A has granted Irrevocable Power of Attorney in favour of B for one year. After 3 months, A
revokes the Power of Attorney. A cheque signed by B is presented for payment_ What will you
do? The cheque will not be paid because POA can be withdrawn before maturity and once it is
revoked, no cheque signed by agent can be debited to account of Principal
11. A post dated cheque is passed in the account of a customer. But another cheque which was in
order was dishonoured due to insufficient funds. What is the liability of the Banker?: Bank is
liable to the drawer for paying post dated cheque as bank is not justified in paying post dated
cheque. The bank will be liable to drawer for damages on account of wrongful dishonour of
cheque.
12. A, having SB a/c with you, deposited Rs.25000. A public Prosecutor sent notice to bank
informing that Mr A is involved in forgery and requested not to permit withdrawal in the a/c. In
between one cheque of Rs.20000 has been presented for payment. What should be done by the
bank?: Pay the cheque as Public Prosecutor is not authorized to freeze the a/c.
13.Account payee cheque paid in cash to agent of collecting bank. Whether it is in order?: It is in
order as collecting bank will credit to account of payee.
14. An authority has been granted in an account You have received information about the death of
the Principal. Today, you receive a cheque signed by the agent which is dated prior to the death
of the Principal. What should the bank do? : Cheque can not be paid as authority of agent comes
to end with the death of the Principal.
15. Ante dated cheque like cheque dated 15.12.07 is presented for payment on 1.1.08 whereas_ the
account was opened on 20.12.07 : Cheque should be passed
16. As per section 26 of the Negotiable Instruments Act, a Minor can draw, endorse, accept a
negotiable instrument but he can not : bind himself
17.As per Section 31 of N I Act, in case of wrongful dishonor of cheque, bank will be liable to:
Drawer of cheque and not liable to payee.
18. Bank can charge collection charges of not more than for _outstation cheques of Rs10000 to Rs 1
lac in saving bank: Rs. 100
19. Banks print cheque books having similar particulars. The format of cheque is prescribed by which
Act : Not defined in any Act. It is as per practice
20. Bearer uncrossed cheque can be paid to whom : To the bearer
21. Cheque Drop Facility – Message for depositing cheques either at counter of by dropping in
box should be displayed in: English, Hindi and the concerned regional language of the State.
22. Cheque has been defined in: Section 6 of N I Act
23. Cheque issued by director of a company and presented after his death will be: Passed if in order
24. Cheque issued without balance what penalty: No penalty (Only on dishonour, Court
Proceedings).
25. Cheque received in clearing signed by whom will not be passed out of the following: signed by a
person who has been declared insolvent.
26. cheque truncation means: converting physical cheque to electronic image and stopping physical
flow of a paper cheque.
27. Collecting bank protection under which Sec of NI Act: Sec 131 of N.I. Act.
28. Credit of Rs.20,000/- was taken as Rs.2000/- and as a result a cheque was returned in the
account for want of funds. Bank has already sent statement of account to the depositor who
has acknowledged receipt of the statement of account. Whether bank is liable?: Yes. Liable
to drawer of cheque.
29. Crossed cheque payment across the counter to the authorized Officer of collecting Bank - can be
made and there are no violation as per NI Act.
30. CTPS stands for: Cheque Truncation payment system
31. Current account operated by finance director dies. Cheque signed by him: Will be paid
32. Current balance is Rs.6000/-. A cheque of Rs.18,000/- is presented. Branch passed the cheque
by allowing TOD. After few days, fixed deposit of the same party matured and TOD was cleared
by crediting the proceeds to CA. Customer disputes the transaction. Whether bank is having
right in doing so? : Normally no without specific request of the party. However, if bank has a
specific clause in the account opening form to allow overdraft in such cases and customer has
consented to such clause, then temporary overdraft can be allowed and recover the same from
the account holder even if there is no specific request from the party.
33. Facilities granted to visually impaired person: All facilities including cheque book, ATM,
34. Format of Cheque has been prescribed in which Act?: None because it is as per Practice and

Usage
35. If a cheque is dishonoured due to insufficient funds, then as per section 138 of N I Act, court
may award imprisonment up to: 2years
36. If date on a cheque is prior to the date of its presentation, it is called: Ante Dated cheque
37. If on a Bill-of Exchange, two parallel lines are drawn and not negotiable is written between the
lines, what kind of the crossing will be there: Provisions relating to crossing are not applicable to
Bill of Exchange
38. If on a cheque words "Account Payee" is written between two parallel lines or with the name of a
bank, then: the cheque can not be endorsed.
39. If time is not mentioned on a promissory note or Bill of Exchange, when it will be payable? It is
payable on demand;
40. In an account Mr. X Gives irrevocable power of attorney to Y for 1 yr. After 4 Month, X withdraw
the irrevocable power of attorney. What is action of the Bank? Bank will rely the revocable
application of the Hence the cheque signed by Y returned.
41. In an account of Club with you, cheque has been been presented for payment signed by the
secretary who has died. What should the bank do?: It will be paid if it not dated subsequent to
date of death.
42. In case of Cheque Drop Box facility, out of the following, which is not correct: a) Under No
Circumstances, branches shall refuse to accept the cheques over the counter b) Branches shall
give proper acknowledgement when cheques are tendered across the counters c) Customers
shall not be forced / compelled to drop the cheques in the Drop Box d) Customers are asked to
put a small Round Stamp of the Bank on counterfoils as Proof of receipt: Ans is D (Customers
are NOT asked to put a small round stamp)
43. In the case of dishonour of a cheque due to insufficient funds, for enforcing rights under section
138 of the Negotiable Instruments Act 1881, the holder should send a notice to the drawer
within: 30 days from the date of receipt of notice regarding dishonour of the instrument.
44. In the case of Wrongful dishonour of cheque, to whom the bank is liable?: Drawer
45. In which of the following situations bank will not be a holder in due course?: When bank credits
the account of the customer after receipt of funds on account of cheque sent for collection
46. Maximum amount of fine under section 138 of N I Act for dishonour of cheque due to insufficient
funds is: twice the amount of cheque.
47.Noting of Negotiable Instrument refers to: Bill of Exchange and not Cheques.
48. On the face of a cheque, the name of a bank is written without two parallel lines. This will
amount to : special crossing
49.Paying Banker will get protection in case of payment of cheques under section 85 of N I Act
provided payment is made in: good faith and without negligence
50. Payment in due course is defined under which Act: Sec 10 of N.I. Act.
51. Payment of cheque can be stopped by: only Drawer of the cheque
52. Position of bank if stop payment cheque is paid: Not a payment in due course as per Sec 10 of
NI Act.
53. Protection in case of payment of cheques with Material alteration available under: Sec 89 of NI
Act.
54. Protection is available to the collecting banker in case of : Crossed cheques
55. Protection to the Collecting bank is available under which Sec of NI Act: Sec 131 of N.I. Act.
56. Special crossing banker protection Section: 124 of NI Act.
57. The crossing on a cheque is required to be cancelled. Who can do so: Drawer
58. The drawer of a cheque wants that the endorsee should not get a defect free title when he
receives an endorsed cheque. What type of crossing would be required : Not-negotiable crossing.
59. The iimitation period for filing case in case of dishonour of cheque due to insufficient funds is: 1
month from the date of cause of action.
60. The true owner of a cheque has been deprived his right by collection of the cheque for a different
person. This is called : Conversion
61. There are certain instruments defined as negotiable instruments under law and certain
instruments used as negotiable instruments as per practice. Which of the following is not a
negotiable instrument as per NI Act: Dividend warrant
62. There is a joint account in the name of A &B. A cheque is drawn by A but the alteration in the
amount is authenticated by B. Whether bank can pay the cheque: Yes provided the operation is
either or survivor.
63. There is an SB a/c in the name of A & B .They have given power of Attorney to 'C' for operation
in A/C, The cheque signed by the 'C' is presented in the bank after death of 'B' : cheque will not
be passed
64.Time limit to sue in case of cheque return due to insufficient funds: 1 month from date of
cause of action. That is 1 month from 15th day on which notice of dishonor received by
drawer
65. Two cheques have been presented to you as paying banker. One is dated prior to opening the
account and other is dated prior to issue of cheque book. What will you do as paying banker?:
Both cheques will be paid.
66. What are the two digits for Current account under MICR cheque: 11
67. What is a bill of exchange - unconditional undertaking/ unconditional order: unconditional
order.
68.What is a General crossing?: Drawing two parallel lines on face of a cheque
69. What is a promissory note?: Unconditional promise to pay.
70.What is a sans recourse endorsement – conditional endorsement, restrictive endorsement,
facultative endorsement, per pro endorsement, none of these: None of these. In sans
recourse endorsement, endorser excludes his liability.
71. What is conversion: Interference with the legal rights of true owner: Cheque in favour of the Co
being credited in the personal account of the director.
72.What is full form of CRAR?: Capital to Risk weighted assets ratio
73. What is material alteration?: When a change is made in a cheque in such a way that it
speaks a different language than which it originally spoke.
74. What is Noting: Getting dishonoured B/E noted from notary. The certificate is called Protest.
75. What is special crossing: Writing name of a bank on a cheque with or without two parallel
lines.
76. What is the effect of 'Not Negotiable Crossing'?: Transferee does not get better title than the
transferor.
77.What is the impact of Not negotiable crossing on a cheque?: Title of Transferee will not be
better than title of transferor.
78.What is the maximum imprisonment that can be awarded on dishonour of a cheque due to
insufficient funds?: 2 years
79. WHEN CHEQUE DISHONOURED, NOTICE TO BE SENT BY PAYEE TO THE DRAWER WITHIN: 30
DAYS.
80. When no time or date is mentioned on bill of exchange, then it will be payable: On demand.
81. When only image of cheque is sent to the paying bank while sending cheque for collection
instead of sending the physical cheque, the process is called: Cheque Truncation
82. When proceeds of cheque are given before clearance of the cheque the banker will be called:
Holder for Value.
83. Which crossing is a Special Crossing : Name of Bank is written in the cheque with or without
parallel lines
84. Which crossing takes away the feature of assumption of defective free title available to the
transferee : Not negotiable crossing
85. Which is not a General Crossing: Name of a bank written between two parallel lines
86. Which of the following can be done by a minor?: A minor may draw, indorse, deliver and
negotiate a promissory note, bill of exchange or cheque so as to bind all parties except himself.
87. Which of the following cheques can not be paid by the bank? : A cheque on which signatures of
drawer have been forged irrespective of the cleverness in forgery and though these appear to be
same as that of the drawer.
88.Which of the following is a General Crossing – Two parallel lines on back of cheque; single line on
face of cheque, name of a bank without parallel lines, Not negotiable written on face of a
cheque: Two parallel lines on face of a cheque
89.Which of the following is material alteration? Converting order cheque to bearer
90. Which of the following is not a disadvantage of CC account? Issuance of cheque book
91.Which of the following is not a material alteration: Adding crossing on an open cheque
92.Which of the following is not a material alteration?: Bearer to Order
93.Which of the following is not a negotiable instrument – cheque, promissory note, bill of
exchange, FD: FD
94. Which of the following is not a valid cheque for payment by the bank-l)different ink &
handwriting 2) cheque with prior date 3) cheque with impossible date 4) Mutilated cheque:
Mutilated cheque
95. Which type of crossing is required to be done if the drawer wants that in case of endorsement,
the title of transferee of the cheque should not be better than the title of the transferor: Not
Negotiable Crossing
96. While paying a bearer cheque, signatures are obtained on the back side of the cheque. Why ? :
As evidence of payment
97.Who is primarily liable on bill which has not been accepted: Drawer
98. X presented a cheque drawn by A in favour of the Bank to credit the proceeds to X account: Can
be credited if there is specific direction from the drawer
RBI
1. Angular bleed line is not present in notes of which denomination?: Rs.50
2. As per RBI guidelines, which denomination notes printed prior to 2005 should be exchanged by
banks for both customers and non customers up to 31st December 2015 – (a) More than Rs 500
only; (b) Rs 500 and Rs 1000 only; (c) All notes up to Rs 500; (d) All notes: All notes printed
prior up to 2005
2. As per which Act, DD cannot be made payable to bearer?: Section 31 of RBI Act.
3. Bank rate is decided by: RBI
4. CAPITAL ADEQUACY RATIO RELATED TO? : CRAR
5. CRR is decided by___ and how much interest is paid on CRR balance: RBI, No interest is paid.
6. CRR is maintained as per: Sec 42(1) of RBI Act
7. Monetary & Credit policy is issued by: RBI
8. Money market is regulated by: RBI
9. No noting on currency note, directions issued by RBI under section 35A of BR Act.
10. Rate at which RBI lends funds to Commercial Banks against Government Securities is - (i) REPO
(II) Reverse Repo (iii) SLR (IV) Bank Rate: Repo Rate
11. Rate at which RBI rediscounts bills of commercial banks is called – Bank Rate, Base Rate, PLR:
Bank Rate
12. RBI Act was enforced from: 1st April 1935
13. RBI controls money supply through: change in CRR
14. RBI exercise monetary control through: CRR, SLR, Repo
15. RBI has allowed banks to grant loan to its own director against the security of - Gold Jewellery;
Quoted shares; Life Insurance Policy: Life Insurance Policy
16. RBI injects liquidity in system by? Repo transaction or reduction in CRR;
17. RBI will increase the size of numeric of which currency note? Rs 100, Rs 500, Rs 1000, Rs 50
18. Section 45 ZA to 45ZE of Banking Regulation Act relate to?: Nomination in case of
deposits, safe deposit and lockers.
19. SLR is calculated on the basis of – Net Demand and Time liability; Total deposit; Total advance:
Net Demand and Time liability.
20. Supervision of banks is done by RBI under which act: RBI Act / BR Act / Jilani Committee Report
/ NI Act: Banking Regulation Act
21. The rate at which RBI rediscounts the usance bills of banks is called: Bank Rate
22. Validity period of cheque reduced to 3 months from 1.4.12 as per : RBI Guidelines under sec 35A
of B R Act
23. What are d monetary tools to manage liquidity: SLR, CRR
24. What are RBI guidelines for use of ATM by visually handicapped person? : ATM facility to be
allowed. From July 1, 2014, 100% of ATMs should be friendly to visually impaired
persons
25. What is Bank Rate at present?: 7.00%
26. What is Repo transaction?: Sale of Govt securities by banks to RBI with a promise to
repurchase after sometime.
27. What is the current rate of interest paid on CRR?: NIL
28. What is the floor and cap limit of CRR as per RBI Act?: No such limit
29. What is the latest RBI directives for issuing DD for amount of Rs. 20,000 and above: It should
Account Payee only.
30. What is the maximum and minimum limit for maintenance of CRR?: No minimum or maximum
as per RBI Act. It is decided by RBI.
31. What is the present rate of SLR?: 21.25% of NDTL
32. What is the rate of Marginal Standing facility? 7.00%
33. What should be the minimum share of Govt in a public sector bank or in a public sector company
or Govt company?: 51%
34. What would be the action of central bank in recession?: create liquidity by decreasing CRR and
lower the repo rate.
35. When banks purchase Govt Security form RBI, it is called: Reverse Repo
36. Which of the following is not added in the demand and time liabilities for calculation of SLR?:
Capital and reserves, inter bank deposits for maturity up to 14 days, borrowings from RBI and
refinance from NABARD, SIDBI.
37. Which of the following is not decided by RBI – SLR; (b) Repo Rate; (c) Bank Rate; (d) Inflation:
Inflation
38. Which of the following is not true about RBI (a) RBI announces credit and monetary policy (b)
RBI maintains forex reserves (c) RBI allows ways and means advance to central Govt (d)
Banking Secretary of Union Govt is the Governor of RBI Ans is (d)
39. Which of the following is the main function of RBI?: Management of Liquidity and Monitoring
of banks (To formulate, implement and monitor the monetary policy with the objective
of maintaining price stability and ensuring adequate flow of credit to productive
sectors)
40. Which of the following rates is not decided by RBI – Bank Rate; CRR; Interest Rate on FD; Repo
Rate: Interest Rate on FD
41. Which rate not decided by RBI – Repo Rate; Reverse Repo Rate; Interest Rate on Saving
deposits: Interest rate on SB deposits
42. Who is the RBI Deputy Governor who was appointed in place of Subir Gokarn?: Dr Urjit Patel
MISC.
1. ˜Bank is not required to produce original book of records but true copy can be submitted when
court has demanded as per which Act: Bankers Book Evidence Act.
2. A public limited company can start business after receiving from Registrar of
Companies. Certificate of commencement of business. ( Not required as per Companies Act 2013
)
3. A bank branch receives a counterfeit note of Rs.1000, which customer wants back. What the
bank should do : Impound the currency note but credit full amount to customer. Receipt not to
be issued to depositor.
4. A bill issued without consideration is called: Accomodation Bill
5. A bill was presented on 10.5.2005 and accepted on 12.5.2005. The bill was due for payment on
29.07.2005 and was returned. The last date for filing suit in this case is : 29.07.2008
6. A crossed DD was paid by cash. What risk is there for the Bank: Bank will be liable to true owner
of the DD if payment made to a person other than true owner (Section 129 of N I Act).
7. A Garnishee order is issued by the court on behalf of _______: Judgment Creditor
8. A listed bank has to prepare and publish balance sheet on quarterly basis as per: SEBI guidelines
9. A minor is aged 15 years, who is illiterate. Which type of self operated a/c can be opened -SB/
RD / FD none
10. A person wants to open a joint account with his wife in such a way that the account can be
operated by him only during his lifetime and she should be able to operate the account only after
his death. The account has to be opened with the instructions: 'Former or survivor'.
11. A solicitor has account in his name and in the name of his client. Garnishee order is received in
the name of the solicitor. Whether the same will be applicable in the name of client also: No
because two accounts are not in the same right and same capacity.
12. Account holder A & B want to substitute their name with the name of their sons C & D in the
account. What should the bank do?: Substitution of all names is not allowed. At least one of the
original account holder should be retained in the account.
13. Administrator is appointed in case of: to realize assets and pay off liabilities of a person who has
died without writing a will.
14. An endorsement in which endorser excludes his liability is called : sans recourse
15. Articles of Association mentions: directors' powers
16. As per Consumer Protection Act, the period for filing appeal to State Commission against
decision of the District Forum is: maximum 30 days
17. As per KYC guidelines, the periodicity of obtention of photograph and latest address proof for Low Risk. Customers is__
Medium Risk___years and High Risk Customers is__ : 10 years, 8 years 2 years.
18. As per Prevention of Money laundering Act, preservation of records relating to closed accounts
upto: 5 yr from date of closure of account.
19. As per RBI guidelines, all banks are required classify business in various business segments with
effect from 31-03-2008. The segments are: (a) Treasury (b) Corporate / Wholesale Banking, (c)
Retail Banking, (d) Other Banking Business. The geographical segments are 'domestic' and
'international'.
20. As per recent RBI/Govt. guidelines, pensioners can open account jointly with: spouse, to be

operated as either or survivor or former or survivor.
21. Bank Guarantees are issued as per provisions of : Indian Contract Act
22. Banks can provide information about the customer to another Bank: General in nature, without
any responsibility
23. Can Karta of HUF appoint Agent or delegate the powers to other co-parcener: Yes, he can do so.
24. Charged created by Bailment of goods to secure payment of a debt is called: Pledge
25. Charges for Speed Clearing: Nil -for collecting outstation cheques in local clearing for amount up
to Rs 1 lac in case of SB customers. For cheques of more than Rs 1 lac or any amount now -NIL
irrespective of amount of cheque
26. Committee on Procedures and Performance Audit of Public Services (CPPAPS) was headed by:
S.S. Tarapore
27. Counterfeit notes returned after police verification, the same has to be preserved for 3 years
subject to half yearly verification.
28. Customer of your bank asks for cash payment of crossed DD. What would you do? Generally
payment only through bank account. However, bank can pay after duly satisfying the
genuineness of the draft and payee but bank will continue to be liable to true owner if recipient is
not true owner.
29. Customer service code has been mentioned in : Banking Codes and Standards Board of India.
30. customer service Committee meeting held on : Monthly basis
31. Customer-bank relationship in locker account: Lessee-Lessor
32. DD can be revalidated within: any time (practice may differ In different banks)
33. Direct Impact of increase in CRR is : Controlling Liquidity
34. FIU stands for : Financial Intelligence Unit (India)
35. For Speed Clearing, no charges should be levied for cheques up to ___: Rs.1,00,000 and account
should be credited within 48 hours
36. Foreign currency paid to taxi driver, shop keeper, can be accepted by: Authorised persons.
37. Full form of BCBS is Basel Committee on Banking Supervision.
38. Garnishee order is applicable for: credit balance in OD and not for cheque sent for collection.
39. Garnishee order is not applicable on: (a)cash received after two hours of receipt of Garnishee
order (b) amount received for safe custody (c) undrawn balances in cash credit accounts
40. Garnishee order is not applicable to: Unutilised portion of the Cash credit limit
41. Grace Period is allowed in the case of : Usance Bills and Usance Promissory Notes
42. Guarantee is defined in: Indian Contract Act
43. Guardian appointed by will of the father is called: testamentary guardian
44. How can be the transferability of Bill of exchange can be restricted? By making restrictive
endorsement
45. How much charges are charged in addition to normal collection charges and out of pocket
expenses for providing instant credit facility for outstation cheques:Nil
46. If Power of Attorney is executed outside India it should be stamped within:90 days of its fi ist
arrival in India
47. If time is not mentioned on a Bill of Exchange, it will be payable: on demand
48.In a Saving Bank Account A has given authority to X. X dies. A cheque signed by X is presented
for payment. What should the bank do?: Bank should make payment.
49.In Bimonthly policy review, RBI does not consider which of the following - Repo Rate, Bank Rate,
Saving Bank rate?: Saving Bank deposit rate
50. In case a forged note is detected in the cash tendered at bank counter, what should the bank
do?: The Note should be impounded and not returned to the tenderer.
51. In the case of individuals and HUF, tax will be deducted at source if the interest on term deposit
in a financial year is : more than Rs 10,000
52. Indian Banks are required to maintain minimum Capital Adequacy Ratio of : 9%
53. Inoperative accounts: 2 Years & above not operated.
54. Introducers liability / responsibility in case of an account holder defrauding Bank is : To assist
the Bank in locating the a/c holder - does not have legal liability
55. KYC and FIU in India are associated with: preventing money laundering
56. Loan given to a director can be waived: after permission of RBI.
57. Locker can be broken open after notice to the hirer if the same is not operated for: more than
three years for mediur-n risk category or one year for a higher risk category, and the locker-
hirer does not respond nor operates the locker.
58. Locker should be broken open if it is not operated for _ year in case medium risk and _ year in
case of high risk customers: (3,1).
59. Maximum amount of deposit which a bank may ask while allowing locker facility to a customer:
Advance rent for 3 years and locker breaking charges
60. Maximum time within which reply must be given under Right to information act? 30 days
61. May I help you counter is to be provided by bank branches other than : Small branches
62. Money deposited after receiving order may be attached in the case of: attachment order
63. On, other than a negotiable instrument, what is the time period for payment of stamp duty, if
the document is executed outside India : 3 months
64. Original & duplicate draft presented simultaneously for payment: Duplicate should be paid &
original should be returned.
65. Payments of a forged draft. Who will lodge FIR paying or collecting bank: Paying Bank.
66. Penalty for delay is per day if information is not furnished within prescribed time under Right to
Information Act: Rs. 250 per day and maximum Rs. 25000.
67. Provision on standard assets to be shown in balance sheet in other liabilities and provisions.
Provision for NPA is deducted from gross advances.
68. Purpose of star series notes: To replace defectively printed notes
69. Revival of limitation for recovery of a time barred loan is possible by: obtaining fresh promise to
pay under provisions of Indian Contract Act.
70. RTI Act - party seeking information need not disclose the reasons for which the information
sought for.
71. Safe deposit vault is governed by provisions of: Transfer of Property act
72.Tax at Source is deducted on interest on fixed deposit if interest paid / payable on a fixed
deposit in a financial year is above Rs. 10,000. This is as per: Section 194A of Income Tax
Act.
73. The aggregate limit for capital market exposure of a Bank is: 40 0/0 of net worth at the end of
previous year
74. The bill is dated 15/03/04, the date of acceptance: 20/03/04. The bill returned unpaid on
25/03/04. The limitation period will be available up to : 25/03/07
75. The Garnishee Order is applicable on the account of a customer when the relationship between
banker customer is: Debtor & Creditor.
76. The liability of the drawer of bills of exchange is prime till it is not accepted by the drawee
after that prime liability becomes of Drawee.
77. The term used for conversion or transfer of property derived from a criminal offense for the
purpose of concealing, or disguising, the illicit origin of the property is called: Money laundering
78. Under Prevention of Money Laundering Act, banks are required to send cash transaction report in
respect of cash deposit or withdrawal of more than Rs 10 lakh in a month from one account
within: 15 days from the close of the month.
79. Upto what amount District forum can be approached under Consumer Protection Act?: Rs.20
Lacs
80. What do we 'mean by Surrender Value of Life Insurance Policy?: Minimum amount payable by
the insurance company in case of foreclosure of the policy before maturity.
81. What is a Promissory Note: Unconditional promise to pay.
82. What is minor's liability in HUF Account: Minor is not liable
83. What is the relationship between bank and customer if he has left certain goods with the bank by
mistake: Bank is trustee and Customer is beneficiary
84. What is the time period for crediting proceeds of outstation cheques presented in Speed
Clearing: 48 hours.
85. When a letter is signed by the borrower and based on that letter bank delivers the document of
title to goods to the borrower, such letter is called as: Trust Receipt
86. When principal and interest of a fixed deposit receipt is Rs 20,000 or above, it can not be paid in
cash and has to be paid only through credit to some account or issue of account payee cheque.
This is as per provisions of which of the following Acts? Income Tax Act.
87. When rate of interest is expressed by adjusting the impact of inflation, this is called : Real rate
of Interest
88. Which of the following can open SB a/c? State Electricity Board/ Indian Bank Association/
Municipal corporation: Indian Bank Association.
89. Which of the following documents does not constitute document of title to goods:Airway bill
90. Which of the following does not match in banker/customer relation : Locker facility -
Bailee/Bailor
91. Which of the following un/under-stamped document can not be revalidated by paying penalty:
None of these as all documents can be revalidated. (However, as per question Demand
Promisory note cannot be revalidated).
92. Which type of preferential shares are treated as part of Tier I capital of the Bank?: Perpetual Non
Cumulative Preference Shares.
93. Who is called as Holder as per N I Act?: Who is entitled to possession of the instrument in his
own name (actual possession is not necessary).
94. Who can seek information under.Right to Information Act: Any citizen of India can ask for
information
95. Who is primarily liable on Bill of exchange which has been accepted?: Acceptor (Drawee) of the
Bill.
Recalled Questions on KYC/AML
1. Cash receipt or cash payment of more than Rs 10 lakh are reported to FIU on CTR statement which
should be sent to FIU within _____ from the close of the month: 15 days.
2. Suspicious Transaction report is sent to FIU within: 7 days from confirmation of suspicion.
3. In case of transactions carried out by a non-account based customer, that is a walk-in customer, where
the amount of transaction is equal to or exceeds rupees whether conducted as a single transaction or
several transactions that appear to be connected, the customer's identity and address should be verified:
fifty thousand
4. As per KYC norms, banks are required to periodical update data. In respect of High risk customers,
full KYC exercise will be required to be done at least every: two years
5. As per KYC norms, for how much period banks are required to preserve records in respect of
photograph and proof of address or identity?: 5 years from date of close of account
6. As per KYC norms, in the event of change in this address due to relocation or any other reason,
customers may intimate the new address for correspondence to the bank within: two weeks of such
a change
7. As per KYC norms, risk classification of customers should be reviewed in every: 6 Months
8. Banks are required to FIU, cash transactions which are integrally connected to each other and total
amount of receipt or total amount of payment in a month is more than: Rs 10 lac
9. Cash Transaction Report (CTR) in respect of cash receipt or cash payment of more than Rs 10 lac is to
be sent to Director – FIU. What is the periodicity of the report – Fortnightly, Monthly, Quarterly, half
yearly: Monthly, within 15 days of the close of the month.
10. FIR to be filed if number of Counterfeit notes in a single deposit is: 5 or above
11. If a customer does not comply with KYC requirements despite repeated reminders by
banks, banks should impose ‘partial freezing’ by allowing all credits and disallowing all
debits with the freedom to close the accounts after ____ months notice followed by a
reminder for further period of ____months. If the accounts are still KYC non-compliant
after _____months of imposing initial ‘partial freezing’ banks may disallow all debits and
credits from/to the accounts, rendering them inoperative: 3, 3, 6 months.
12. In a cash deposit made by a customer, one piece of counterfeit note is detected. What should the
bank do - (i) It should be impounded and acknowledgement to be issued(ii) Should be destroyed (iii)
Should be returned back: It should be impounded and acknowledgement to be issued to
depositor signed by cashier.
13. In case of counterfeit notes received in a deposit by a person with bank, FIR is not lodged and only
a monthly consolidated report is sent if counterfeit notes in one remittance is up to: 4
14. In case of Non-KYC compliant customer, after how much time notice, account should be freezed?: 3
months notice
15. In respect of Low Risk customers, KYC norms relating to obtaining photograph and proof of address
and ID should be applied once in: 10 Years
16. In respect of Medium Risk customers, KYC norms relating to obtaining photograph and proof of
address and ID should be applied once in: 8 Years
17. Process of making illegally-gained proceeds (i.e. "dirty money") appear legal (i.e. "clean") is called:
Money Laundering
18. RBI has allowed banks to accept at least _____ of the documents prescribed by RBI as activity proof
by a proprietary concern, for opening a bank account in respect of a sole proprietary firm: One
19. What is the Risk category of Trust account High/Low/medium risk?: High Risk
20. When in case of deposit of cash over counter, two counterfeit notes are detected by bank, what
should the bank do – (a) To be returned to customer, (b) impounded immediately, (c) call the police,
(d) destroy it: impound immediately and issue acknowledgement to tender signed by the
cashier
21. While opening bank account, as per KYC norms, what another document is taken by bank in addition
to proof of ID?: proof of address ( Both can be same also)
22. Relaxation in KYC norms is permitted if the depositor undertakes that the balance outstanding in his
account will not be more than and credits in a financial year will not exceed . Rs 50,000; Rs
100,000
23. Why KYC guidelines have been issued by RBI under section 35 A of the Banking Regulation Act: To
prevent Money Laundering -
24. The terms used for hiding money to avoid tax is : Money laundering
25. Money laundering: conversion of illegal money into legal through banking channels.
26. For the purpose of KYC rules any addition & modification on which recommendation: Financial Action
Task Force
27. Risk type for customer having political exposed person: High Risk
28. As per KYC Guidelines, Records of transactions to be maintained for at least ten years from the dateof
transaction, instead of _________from the date of cessation of transactions, and records pertaining
to identification of the customer and his address to be preserved for at least ten years after the
business relationship is ended: ten years
29. A customer who does not complete all KYC norms, what type of account is opened for him? No Frill
account in which cannot be more than Rs.50000 and credits in the Financial Year cannot be more
than Rs.100000.
30. There were three cash withdrawals of Rs 5.80 lac ,Rs 4.90 lac & 0.25 lacs from an account in a
month. Which of these transactions is/are will be reported to Financial Intelligence Unit as part of
CTR? Cash withdrawals of Rs 5.8 lac and Rs 4.9 lac.
31. Under Prevention of Money Laundering Act, banks are required to preserve records relating to
opening the account for how much period?: 10 years from date of closure of account.
32. Which of the following is not the key element of KYC policy a) Customer Acceptance Policy; b)
Customer Identification Procedures; c) Monitoring of Transactions; d) Risk Management e) Customer
Awareness Policy: Ans is E i.e. Customer Awareness Policy.
33. On whose recommendations, KYC norms came into force? (a) Goiporia Committee (b) Ghosh
Committee (c) FATF: Ans is FATF
34. Under KYC Norms, Documents relating to opening the account like proof of address and identity and
photograph should be taken again at what interval? (a) once in 10 years for low risk customer (b)
once in 8 years for medium risk customers (c) once in 1 year for high risk customers (d) Both (a) and
(b): Ans is (d)
35. Record of cash receipt and payment under KYC to be maintained if cash receipt or payment in a single
day from one account is more than Rs 10 lakh.
36. For Low Risk customers, periodical up-dation of KYC data: Once in 10 years.
QUESTION BANK ON DEPOSITS & MISC.

1) To open account for close relatives of low risk customers e.g. wife, son, daughter and parents etc.
who live with their husband, father / mother and son respectively, the _____ bills which are in the
name of close relatives can be accepted: (Utility)
2) For risk categorization of customers, the IBA has provided a _____ model containing several
parameters: (Hybrid)
3) Several parameters under risk categorization matrix on which accounts are being rated are
Customer Type, Customer Profession, Type of Business, Product Code, Account Status, Account
Vintage and ____: (Balance)
4) All customer profiles/accounts of NRIs, HNIs, PEPs, NGOs, Trusts, Co-operative Societies, HUF,
Exporters, Importers and Accounts having Beneficial Owners are to be invariably categorized as
_____: (High Risk)
5) Branches should categorize _____ and unclaimed deposits as High Risk at the time of blocking the
account itself: (Blocked accounts)
6) Accounts of dealers in Jewellery, gold/silver/billions, diamonds and other precious metals/stones
are to be categorized under ____: (High Risk)
7) Under vintage parameter, newly opened CASA accounts which have not completed ____ months
are to be classified as High Risk except Staff, ex-staff, Pensioners, Small accounts, financial
inclusion and Basic savings bank accounts: (6)
8) Penalty of not less than _____ extended upto one lakh rupees may be levied by RBI on any of the
employees for non-compliance of KYC/AML/CFT guidelines: (Rupees ten thousand)
9) Transactions using forged or counterfeit Indian Currency notes are to be reported under _____:
(Counterfeit Currency Report (CCR)).
10)Attempted transactions by customers are to be reported under _____ even if the transactions are

not completed by customers irrespective of the amount: (Suspicious Transactions Report
(STR)
11)Records of transactions to be maintained for at least ten years from _____, instead of ten years
from the date of cessation of transactions, and records pertaining to identification of the customer
and his address to be preserved for at least ten years after the business relationship are ended:
(The date of transaction)
12)Accounts of Trusts/Charities/Organizations, receiving foreign funding should be opened after
permission of Ministry of Home Affairs. Such accounts are treated as ____: (High Risk)
13)In case of High Net Worth Individuals the Average balance is maintained in SB/NRE SB is ____:
(Rs.2.00 lakh and above)
14)In case of High Net Worth Individuals the balance should be maintained in Term Deposit,
Domestic/NR is ____: (Rs.10.00 lakh and above)
15)In case of High Worth Net Individuals the balance of _____ and above should be maintained in
CA: (Rs.5.00 lakh)
16)Individuals enjoying fund based limits/term loans exceeding ____ are considered High Net worth
Individuals.(Rs.30.00 lakh)
17)Individuals with Salary credit of _____and above in a Super saving salary A/c are categorized as
HNI’s. (Rs.25,000/-)
Limited Liability Partnership
1) LLP is a ___ corporate form entity, combining the features of existing partnership firms and
limited liability companies: (Hybrid)
2) LLP is a body corporate & ____ entity separate from its partners: (Legal)
3) ____ or more persons can form a LLP whereas there is no upper limit on the number of partners
in an LLP. (Two)
4) _____and ____ cannot become a partner in LLP: (HUF, Minor)
5) LLP needs to be registered with . (Registrar of Companies)
6) The authorized signatories in LLP are called as ____: (Designated Partners)
7) In case where one or more partners are Body Corporate/Ltd Company , they should be
represented by their authorized signatory backed by ________of respective companies, certified
copy of which should be submitted to the bank. (resolution)
8) LLP cannot be converted into ______: (Company or Partnership firm)
9) A Private Company and an Unlisted Public Company can be converted into an LLP as per the
provisions of ___ Act: (LLP Act)
10) A partnership firm may be converted into an LLP in accordance with the provisions of the ___
schedule of LLP Act. (Second)
11) In case of credit facilities extended to LLP’s, the guarantee agreement shall contain a clause to the
effect that guarantee will continue notwithstanding the number of partners falling below ___.
(Two)
12) In case of change in constitutionof LLP due to Retirement/Death/Insolvency/Insanity of partners
, an LLP with more than ___ partners will continue to exist. (Two)
MISC
13) An NBFC-MFI is a non-deposit taking NBFC (other than a company licensed under Section 25 of
the Indian Companies Act, 1956) in which minimum net owned funds shall be _____ ` and not
less than 85% of its net assets shall be in the nature of Qualifying assets: (5 Crores)
14) For NBFC-MFIs registered in the North Eastern Region of the country, the minimum NOF
requirement shall stand at ____: (2 crore)
15) _____ are defined as total assets other than cash and bank balances and money market
instruments: (Net Assets)
16) Bank to obtain 10% of the limit as collateral security by way of Bank deposits for loans more
than ____ to NGO-mFIs/NBFC-mFIs: (Rs.1 crore)
17) The maximum amount of Housing finance to members of SHGs is Rs ___ per member:
(Rs.75000)
18) As per Damodaran Committee recommendation, there should be a ____________________ for
grievance redressal in every branch. (Chief Customer Service Officer CCSO).
19) The aggrieved party can approach CCSO if his complaint issue remains unresolved even after ___
month of filing complaint. (One)
20) The CCSO will resolve the grievances with in ___ days. (30)

21) The internal Ombudsman is retired ________ from other bank who has a vast experience in the
operations of the Banking Industry. (Chief General Manager)
22) Standing Committee on Customer Services is recommended by ______
and may be chaired by CMD orED and including non officials as its
members. (CPPAPS-Committee on Procedures and Performance Audit of Public Services).
23) Branch level Customer Service Committee should include customers especially ____. (Senior
Citizens)
24) Branch Level Committee should submit ____ reports to standing Committee on Customer Service.
(quarterly)
25) The CCSO will resolve the internal banking grievances within ____ days: (30)
26) As per RBI guidelines, banks are required to put in place various policies for customer service
which include Comprehensive Deposit Policy, ______ Collection Policy,______ Compensation
Policy and Grievances Redressal Policy. (Cheque;Customer)
27) Govt. of India has accepted ___________ as National Calender with effect from 22-03-1957. An
instrument written in Hindi having date as per Saka Samvat calendar is a valid instrument. (SAKA
SAMVAT)
28) With respect to Payment of Interest on Fixed Deposits If deposit is less than ____ months,
interest should be paid for the actual number of days, reckoning the year as 365 days: (3
months)
29) An account holder already enjoying credit facilities with any bank is not permitted by RBI to open
current account in some other bank and _____ is required from the existing bank for opening
current account in any other bank: (NOC)
30) In case of encashment of draft, Banks can permit encashment of drafts upto Rs _____ on the
basis of passport and postal identification. (25,000)
31) Banks should make atleast ____ of new ATM s installed as TALKING ATMs with Braille Key Pads:
(1/3rd)
32) Duplicate Draft in lieu of lost draft upto and including ____ may be issued without seeking non
payment advice: (5000)
33) Time frame for collection of cheques drawn on State Capitals/Major Cities / Other locations is to
be ____days respectively. (7/10/14)
34) Payment for interest for delays in Bills is ________(SB rate + 2%)
35) As per the recommendations of Goiporia committee the dishonoured Cheque is to be returned
within ___ hours. (24)
36) If instruments are lost in transit/Clearing by the Paying Banker, the onus
of such loass lies with the collecting banker and not the .
(Account Holder)
37) Where Lockers have remained un-operated for more than ____ years for medium risk customers
and ____ year for high risk customer, banks should contact the customer and advise him to
operate or surrender the locker, even if rent is paid regularly: (3,1)
38) With regard to guidelines for payment for interest for delays in bills, Time Limit for settlement of
Death Claim is not to be more than ___days. (15)
39) Banks should issue duplicate drafts within a _____ from the receipt of request. (Fortnight)
Partnership
43. A document was executed by three partners in different dates. When shall the limitation period
start?: The limitation period will start from the last date i.e. when the document was executed by
the last partner
44. A minor who was admitted to the benefits of partnership has become major. Within how much
period, he has to decide to remain partner in the firm or not?: within 6 months of attaining
majority or 6 months of knowing that he is the partner in the firm whichever is later.
45. A partnership firm conducting business other than the banking business has more than 100
members as partners. Whether this is allowed?: Such association is called illegal association as
per Companies Act
46. Account payee crossing defined in:-Not defined any where
47. HUF cannot be partner in a Partnership firm: HUF does not have any legal entity.
48. Implied authority of a partner does not allow ______ singly? Settle a dispute relating to the
business of the firm thru arbitration.

49. In Limited Liability Partnership account, who are not eligible for becoming partners: a) HUF b)
Minor c) body corporate?: Ans: a & b
50. Outstanding in a CC account is Rs.2.00 lakhs. One of the partner died and the operations were
continued in the account by the bank inspite of notice of the death given to the bank. Later
2.50 lakh deposited and 1 lakh was withdrawn? What is liability of legal heirs of the deceased
partner: NIL as per Claytons rule.
51. Position of minor on attaining the majority: He has to give public notice within 6 months on
attaining majority as to whether he wants to become partner or not. If he remains silent it is
presumed that he has accepted to become the partner and he will be liable for all transactions
since he was admitted for the benefit of the partnership firms.
52. Reasons for avoiding advance to Un-Registered Partnership Firm: Firm can not sue against
anyone for recovery of its debts but anyone can sue against the firm.
53. The consequence of non registration of Partnership - firm cannot sue others for its dues.
54. The liabilities of partners in Partnership is: Joint and several
55. Who can not be full fledged partner: Minor
56. Who cannot become a partner in a firm as per supreme court judgment HUF
Companies
23. A bank cannot acquire either as owner or as pledgee shares in a company more than:. 10 % of
paid capital of the company or 10% of the•paid up capital and reserves of the bank, whichever is
lower.
24. A limited company has registered office at Chennai whereas loan has been raised from bank
branch at Mumbai. The charge will be registered with the ROC at: Chennai
25. A private limited company with Registered office at Bangalore has raised loan from a branch
located at Mumbai. For creating equitable mortgage, title deeds can be deposited at: Mumbai,
Kolkatta, Chennal or any other notified place.
26. Board of Directors want to borrow money in excess of paid up capital and reserves of the
company: can be done through a resolution passed by shareholders in the general meeting
27. CIN in case of a company indicates: Corporate Identity Number.
28. Company is in liquidation, funds are at the disposal of : Liquidator
29. For formation of a company, Registrar of Companies will issue : certificate of incorporation
30. In the case of IPO, the company is required to allot shares or make refund within: 30 days of the
closure of the issue in case of fixed price public issues; 15 days in case of book built issues and
15 days in case of right issues
31. Objectives for which a company has been formed are given in: Memorandum of Association
32. On repayment of_debt of a company, satisfaction of charge shbuld be filed with ROC within: 30
days
33. The Articles of Association mention that the minimum quorum for passing a resolution is 5
directors. However a resolution is received which was signed by four directors only with a
request to open the current account: All the 5 Directors should sign the resolution for opening
of the account
34. The legal liability to file charges with ROC in case of lending to a Company is that of ______:
Borrowing Company
35. What is the Doctrine of Ultra Vires in the context of a limited company?: Any act by the directors
beyond the object of the company is considered ultra vires the company and company is not
bound by such act.
36.When a company is financed against the security of hypothecation or mortgage of its movable
property, the company is required to file particulars of charge with: Registrar of Companies
RTI
1. As per Right to Information Act (RTI), in how much time the information is to be provided to the
person seeking the information: 30 days.
2. In case of RTI, information related to life and liberty has to be provided within: 48 hrs.
3. While disposing-off the request under RTI Act, PIO is required to mention clearly the time limit of
_____ and address of the Appellate Authority to the complainant: 30 days.
TRUST
1. 1. You are maintaining current account in the name of the Trust. You receive notice of death of
one of the trustees. After this notice, a cheque signed by the deceased trustee is presented for
payment. What should the bank do?: Cheque may be paid, if otherwise in order.
2. A Trust Deed is silent about loans by the trust. The trustee approaches for a loan. Under these
circumstances what should the bank do?: No loan can be raised

TDS
1. E TDS - 26Q (tax deduction other salaries) to be filed for the month of September, before: 15th
October (Statement of TDS to be submitted within 15 days from close of quarter)
2. In case of payment of rent on property, tax is deducted at source when the payment of rent is
likely to be more than Rs 180,000 per annum. The rate of TDS in case of rent payable to an
individual or HUF is: 10%
3. In which type of fixed Deposits Account TDS not deducted: NRE and FCNR(B) only.
4. Penalty for non submission e-TDS : Rs. 200 per day
5. Quarterly statement for TDS on salary should be submitted on form 24-Q within: 15days of the
close of the quarter
6. Tax is not deducted at source in respect of which of the following income – (a) Interest on Bank
deposits (b) Rent on land and building (c) Brokerage (d) Dividend paid by listed company:
Dividend paid by listed company (However Dividend u/s 2(22)(e) is taxable for shareholder and
thus TDS rate on such dividend is 10%
7. TDS collected to be deposited with the Income Tax Deptt within: 7th day of succeeding month
during which it is collected.
8. TDS deducted for interest amt: above Rs 10,000/-.
9. TDS deduction on interest more than 20,000/- under IT Act : Sec. 194A
10. TDS not deposited in time. What is the interest payable?: _Bank to pay the amount with interest
© 1.5% per month simple.
11.A customer aged 66 years has a term deposit in your branch. He does not want the TDS to be
deducted, which declaration form will you ask him to submit: 15-H
12.Citizen below 60yrs is required to fill which forms for non deduction of tax at source in case
interest credited or likely to be credited on FD in a financial year is more than Rs 10,000 –
15G/15H/Form 60/Form 61: 15G
MISC
1. A customer Mr Sharma had credit balance 40,000 in his saving ac and also had an OD ac with
overdue Debit balance of 20,000.Bank debits his saving account and adjusts OD ac. The bank is
said to have exercised Right of: Set-off
2. A Minor has extended Guarantee to a loan. It can be ratified by whom? It cannot be ratified by
any one.
3. A savings account becomes inoperative when it not operated for: 2 years
4. A term deposit of a HUF has become due. At the time of renewal, the Karta of HUF informs that
he has become Senior Citizen. What rate of interest will be given on term deposit? : Normal
interest rate. No benefit of senior citizen to be given
5. Additional interest is paid to senior citizens on which time FD: All fixed deposits (may vary from
bank to bank)
6. After Nomination in an account, what is the status of the nominee?: Trustee of legal heirs
7. An account of a customer can be closed in normal course on the request of the customer.
What are the other methods for closing account of a customer – (a) By negotiation; (b) As per
provisions of law; (c) After notice to customer in respect of undesirable accounts: Ans is C
8. An Illiterate person is generally not allowed to open which account – saving, term deposit,
recurring deposit, small account, Current Account: Current account.
9. As per RBI guidelines, Demand draft of Rs 50,000 and above should be issued against : by debit
to account but not against cash
10.As per RBI guidelines, minimum amount of deposit to open BSBDA account is: NIL
11. As per Sukanya Samridhi Account (SSA) the tenure of deposit is for years from the date of
opening of the account: 21 years
12. Bank is not required to produce original book of records but true copy can be submitted when
court has demanded as per which act? a) Civil procedure code b) Registration act c) B.R. Act d)
RBI act e) Banker Books Evidence Act.
13. Banker Customer relationship for deposits is ____: Debtor – Creditor.
14. Banker customer relationship in Safe Custody: Bailee Bailor.
15. Banker customer relationship in standing instruction: Agent – Principal
16.Bankers prefer Saving Deposits than Term deposits. Why?: Because cost of deposits for SB is
less.
17. Banks can decide interest rates of NRI, NRO or Term Deposits: Yes
18. Banks can raise what type of deposits?: Term and Demand Deposits
19. Banks should have the responsibility of currency management entrusted to a nodal official of the
rank not less than that of a General Manager and will be accountable for the obligations cast

upon currency chests by the Reserve Bank.
20. BC work as : Bank’s Agent
21. Business Correspondent can be identified by whom?: BDO,Post Master, Head of Village
Panchayat, other BC.
22. Business correspondents for banking for : serving weaker sections of society
23. Call money deposit is part of the sector : Organised sector
24. Complaints under Consumer forum should be dealt with within (Where no testing of commodities
is required) : 90 days.
25. Customer OD A/c has overdrawn Rs 2000/-. Saving A/c has balance Rs 3000. The bank adjusts
the OD A/c by which right: Set off.
26. DD of Rs.50000/- in cash : not allowed
27. Death claim settlement in how many days?: 15 days
28. Deposits held in Joint accounts; b) Corporate Deposits; c)
Inter-Bank deposit; d) Deposits of HUFs: Ans is Inter-Bank deposits.
29. Deposits which are not claimed for__years are required to be transferred by banks to
RBI: 10 years
30. DICGC cover is available in which of the following cases a) Credit balance in Cash Credit Account
b) Overdue Deposit c) Deposit of Government Department?: A & B
31.Differential rate of interest can be paid on fixed deposit if single deposit is for: Rs.1.00 crore
and above
32. Direct Tax Code will replace which of the following – Income Tax Act, Corporate Tax Act: Income
Tax Act.
33. Encashment of FOR with interest - payment can be made in cash if it is less than Rs 20000
34. Financial Inclusion means: providing banking services at affordable cost to the poor/distressed.
35.FULL FORM OF CASA? : CURRENT ACCOUNT & SAVING ACCOUNT
36. Garnishee order is not applicable to: a) Savings b) Current c) FD d) CC/OD with debit
balance: CC/OD with debit balance.
37. Govt. has decided to demonetize all the coins of paise 25 and below w.e.f. 30-6-2011.
38.How much amount can be deposited in a small account in a financial year?: Rs one lac
39.How much amount can be withdrawn from a small account in a month?: Rs 10,000
40. If in Garnishee Order no amount is mentioned, what should the bank do? Full amount to be
attached.
41. If payment of Rs 20000/- is made in cash in case of FDR what is the penalty: equal to the
amount paid
42.Illiterate account holder, how many witness for nomination: two
43. In Basic Savings Bank Deposit Account in all their accounts taken together and the total credit in
all the accounts taken together is not expected to exceed _____ in a year has been simplified to
enable those belonging to low income groups without documents of identity and proof of
residence to open banks accounts: 1,00,000/-.
44. In case Fixed Deposits account the rate of interest fixed by whom: Board of Directors of
respective bank.
45. In case of a/c transfer, with in how many days the address proof has to be submitted in the
transferee branch? Six Months
46.In case of an illiterate customer, process of nomination requires witnesses by how many
persons?: Thumb impression requires 2 witnesses.
47. In case of Deposit Insurance whether it mandatory or not: It is Mandatory for all banks.
48.In case of Deposit Insurance, Insurance premium is paid to DICGC by bank and depositor in
which ratio?: Entirely by bank.
49.In case of insurance of deposits by DICGC, premium is paid by: Bank. 100% of the premium
is paid by the bank and not by depositor.
50.In case of insurance of deposits by DICGC, what is the premium sharing ratio between bank and
depositor?: 100% of insurance premium is paid by the bank.
51. In case of Minor what is wrong? Minor can make himself liable for his actions.
52.IN CASE OF TRANSFER OF ACCOUNT, WITHIN HOW MANY DAYS, THE ACCOUNT HOLDER
SHOULD ADVISE NEW ADDRESS?: TWO WEEKS
53. In how many years of no transaction does a saving and current account become inoperative? :
two years
54.In Limited liability Partnership what is the liability of partner?: Amount agreed to be
contributed by partner at the time of joining partnership.
55. In saving accounts, interest is calculated on the basis of: daily product basis.
56. In Senior Citizen Saving Scheme account, who can be joint account holder?:Spouse
57. In small accounts as per RBI- No min. balance, nil/minimal charges etc
58. In small accounts monthly withdrawals to be upto- Rs.10000/-
59. Insurance of deposit is done by DICGC up to: Rs 1 lac per depositor per bank.
60.Interest rate on Saving Deposit is decided by : Banks individually
61. Interest rate on Savings accounts: Not regulated by RBI
62.Max amt for tax saver FD: Rs 150000
63. Maximum amount of deposit in Tax Saving Scheme of the bank can be: Rs 1,50,000
64. Maximum deposit for allocating a locker: 3 year advance rent plus locker breaking charges
65. Maximum period of NRE deposit: Bank Discretion.
66. Minimum and Maximum amount that can be deposited in PPF account is _____: Minimum Rs.
500/- & Maximum Rs. 1.50 lacs.
67.Minimum Lock in period for Tax saver FDR: 5 Years
68. Minimum Maturity Period for Certificate of Deposit is : 7 days
69. Missing person treated as having expired if missing for: 7 years
70. No Frills Accounts are opened for: Financial Inclusion
71. No of digits in Aadhar : 12
72. Non Resident (External) fixed deposit is normally accepted for a period of (a) 1 year to 3 year
(b) 1year to 5 year (c) 1 year to 4 year (d) 1 year to 7 year (e) 6 months to 3 year: 1 year to 3
year (As per RBI it is minimum 1 year and maximum bank discretion)
73. OD in PMJDY account upto: Rs. 5,000/-.
74.On a cheque presented for payment, amount is written in words but all other items are written in
Regional Language. What should the bank do?: Pay the cheque
75. Pensioner account can be opened jointly with? Spouse as Either of Survivor or Former or
Survivor.
76.Rate of Interest in Sukanya Samridhi Account for 2015-16: 9.20% & 8.6% FOR 2016-17
77. Relation between bank and judgment debtor: debtor & creditor.
78. Safe custody of Articles comes under which Act: Indian Contract Act.
79. Star series note can be issued in denomination of Rs 100 also. (earlier only Rs 10, 20 & 50)
80. Super senior citizen after: 80 years of age
81.The balance in the account is Rs 15000. A cheque of Rs 30000 was sent for collection. Before it
is realized a cheque for Rs 20000 has been presented for payment. What should the bank do –
(a) Return with reason effects not yet cleared. Present again; (b) Pay the cheque; (c) Return
with reason exceeds arrangement; (d) Return with reason Refer to Drawer; (e) Return with
reason Insufficient Funds: Insufficient Funds
82. The minimum & maximum period of certificate of deposit is : 7 days, 12 months
83. There is a credit balance in the saving account and there is a overdraft in the current account
amounting to Rs 555. Both accounts are in the same name. Bank wants to adjust credit balance
of saving bank account towards payment of overdraft. As per which right, bank can do this?:
Right of Set Off.
84.Under Sukanya Samridhi Account (SSA) the maximum period upto which the deposits can be
made is for ___ years from the date of opening of the account: 14 years
85.Under Sukanya Samridhi Account (SSA) the minimum amount of deposit is Rs 1,000 and Under
Sukanya Samridhi Account (SSA), the bank account will be opened for a girl child upto the age
of: 10 years
86.Under Sukanya Samridhi Account (SSA), the current rate of interest on deposits is which is the
highest amongst all other Govt. Saving Schemes: 9.20% & 8.6% FOR 2016-17
87. What are the Service charges for using ATMs of other banks for balance enquiries: Rs.20 for
Financial & Rs. 10 for Non- Financial upto 5 transactions ( 3 at Metros)
88.What documents are required for opening a small account?: Self attested photo and address
89.What is the bankers-customer relationship in case of deposits? Debtor – Creditor
90. What is the distance criteria for office of Business Correspondent?: The distance between the
place of business of a retail outlet/sub-agent of BC and the base branch should ordinarily not
exceed 30 kms in rural, semi-urban and urban areas and 5 kms in metropolitan centers.
91. What is the maximum amount of loan that can be granted against FCNR deposit? No limit.
92. What is the periodicity of review of risk classification of customers?: Every six months
93.What is the rate of interest payable on an overdue FD for overdue period if customer demands
payment and does not renew the same?: Saving Bank Rate
94. What is the special feature of Basic banking Account? Account can be opened with nil or very
small amount and there are no requirement of minimum balance.
95. What type of account can be opened in the name of NRI jointly with residents? NRO /NRE/FCNR

(earlier only NRO)
96. What type of activity can be performed by Business Correspondent - (a) processing and
submission of applications to banks; (b) disbursal of small value credit, (c) recovery of principal /
collection of interest (iv) collection of small value deposits: All of these
97.When a person wants to open an account with a bank but does not have proof of identification
and address, what type of account can be opened?: Small account
98. When Letter of Administration issued: When the person dies without leaving the Will- Intestate.
99. Whether “WILL” has to be registered? Not required.
100. Which form is used for cancellation of nomination in deposit accounts?: DA -2
101. Which is not a proof of Identity?: Ration card.
102. Which is the most important document for opening a Trust Account?: Trust Deed
103. Which of the following forms will be used for allowing exemption to a depositor aged 61
years : Form 15 H
104. Which of these rates are periodically reviewed by RBI?: Repo rate, Bank rate, but not
Savings Bank Rate.
105. While opening account, a bank, in addition to observing various provisions of Indian
Contract Act should also – exercise utmost care and attention; look at profitability from account;
exercise due diligence: Due diligence
106. While opening the account with a bank, prospective customer is required to submit – PAN
No or Form 60 or 61
107. Who are eligible for preferential rate of interest under NRE deposits: a) Staff b) Senior
citizen c) Staff cum Senior Citizen d) none of these?: None of these
108. Who can do nomination in the account of a Minor?: Can be done by guardian not
by minor
109. Who of the following can exercise nomination – HUF, limited company, trust, Partnership
firm, sole proprietorship firm?: Sole Proprietorship firm.
BANKING & TECHNOLOGY

Cheque Truncation
1. Converting a physical cheque to electronic form and sending only image of the cheque to the paying
bank is called: Cheque Truncation
2. CTPS stands for: Cheque Truncation payment system
3. Truncated Cheque means: a cheque, the image of which is prepared by collecting bank to collect the
money from paying bank.
4. What is Cheque Truncation?: converting physical cheque into electronic form through scanning.
RTGS/NEFT
5. What is the benefit of RTGS: Safe , speedy & client can use the funds same day.
6. RTGS - timings for customers - Monday to Saturday : 9.00 to 4.30
7. Real Time Gross Settlement System (RTGS) takes care of which types of risks?: Systemic & Settlement risk.
8. What are the charges that can be charged by banks for Inward RTGS / NEFT I ECS transactions: NIL
These transactions are provided free of cost.
9. What are the Charges for RTGS of Rs 2 lac to Rs 5 lac : Not exceeding Rs.25 plus service tax
10. PI in RTGS is: Gateway of participating bank
11. What is the minimum amount that can be remitted through NEFT: No Minimum and no Maximum
is prescribed.
12. What is the minimum amount that can be remitted through RTGS?: Rs 2 lac
13. NEFT- National Electronic Fund Transfer
14. Charges for remittance through NEFT is : Upto Rs 10,000: Rs 2.5; Upto Rs 1 lac- Rs 5; More than
Rs 1 lakh up to Rs 2 lakh – Rs 15; More than Rs 2 lakh – Rs 25.
15. Neft settlement: 12 Hrly settlement on weekdays & 2nd & 4th Saturdays
16. Penal rate if RTGS credit not given in 2 hours: Repo Rate + 2%
17. Limit for sending remittances to Nepal by NEFT: Rs.50,000/ per transaction.
18. Amount below 2 lac can be remitted from one bank to other bank within India by – RTGS, NEFT,
SWIFT, Money Transfer scheme: NEFT
19. Full form of IFSC: Indian Financial System Code
20. Full form of Neft: National Electronic Fund Transfer
21. In case of delay in credit on account of RTGS/NEFT/NECS/ECS, compensation to be paid at the rate
of: Repo Rate+2%
22. LIMIT FOR SENDING REMITTANCES TO NEPAL BY NEFT: Rs. 50000/-
23. No of digits in IFSC code: 11
24. RBI has advanced business hours in respect of RTGS from 9.00 hours to _____ and extend closing
time of RTGS to 20.00 hours on week days: 19.45 hours
25. Under NEFT, how many times in a day on week day i.e. Monday to Friday, transactions are settled?:
12 times in a day at every hour (First settlement at 8 AM and last at 7 PM)
26. What are RTGS timings for customer transactions and inter bank transactions on Monday to Friday?:
For customers – 8 AM to 4.30 PM and for inter bank transactions – 8 AM to 8 PM
27. What are the timings for RTGS for customer on weekdays and working Saturdays?: 8 AM to 4.30 PM
28. What is full form of IFSC: Indian Financial System Code
29. What is full form of RTGS?: Real Time Gross Settlement System.
30. What is the Code required for transfer of funds from one bank account to another bank account in
India through NEFT/RTGS – (a) IFS code; (b) MICR code; (c) Pan code: IFS Code;
31. What is the full form of M in MTSS: Money ( Money Transfer Service Scheme)
32. What is the meaning of S IN RTGS: Settlement
33. What is the minimum and maximum amount that can be remitted under RTGS?: Rs 2 lac and no
limit
34. Which of the following is a feature of RTGS? Transactions processed and settled
individually on real time basis.
ATM
1. ATM cash not dispensed - customer complaint to be redressed with in 7 working days
2. For setting up of White Label ATMs, the corporate body’s net worth must be _____Rs.100 cr.
3. Full form of PIN which is used in ATM? Personal Identification Number
4. If a customer uses other bank’s ATM for any transaction in excess of permitted free transactions,
what is the maximum charge that can be levied by the bank per transaction?:Rs.20/- per
transaction.
5. In case of failed ATM transaction customer’s account should be recredited within how many days of
the complaint?: 7 working days.
6. In case of failed ATM transactions, banks must reimburse to the customers, the amount
wrongfully debited on account of failed ATM transactions within a maximum period of ____ days
from 01-07-2011. Otherwise, Bank has to pay compensation of Rs. per day for the period of
delay: 7 working days;100/-per day
7. In Credit Card, what type of Benefits available for the card holder?: Purchase Now & Pay Later.
8. In which cities on non bank atm 3 free transactions rule will not be applicable: pune and jaipur (
it is applicable in Delhi, Kolkatta, Chennai, Mumabi, Bangaluru, Hyderabad)
9. In which Max Risk weight applies - 1. Smart Card 2.Debit Card 3. Credit Card 4. ATM Card 5.
POS: Credit Card.
10. Minimum Net worth for installing White Label ATMs by a company: Rs.100.00 crore
11. Tata and Muthoot have been given license for which activity recently?: For installing White Label
ATMs
12. What are the Service charges for using ATMs of other banks for balance enquiries: Nil upto 5
transactions ( 3 at Metros)
13. What is National Financial Switch (NFS)?: Largest network of shared automated teller machines
(ATMs) in India run by the National Payments Corporation of India (NPCI).
14. What is Rupay: Indian domestic card scheme conceived and launched by the National
Payments Corporation of India (NPCI)
15. What is the minimum age for allowing ATM, internet banking facility to a customer?: Generally
10yrs (some banks have fixed higher age limits)
16. What is White Label ATM?: ATM installed and operated by other than banks
17. White Label ATMs are installed and operated by: Non-bank entities called White Label ATM
Operators (WLAO) They will provide the banking services to the customers of banks in India, based
on the cards (debit/credit/prepaid) issued by banks.
18. White plastic is called : Counterfeit card
GENERAL
1. A company wants to electronically pay the dividend to large no. of its shareholders, which include
small amounts also : Electronic Clearing Services - Credit (ECS-Credit)
2. A company wants to electronically pay the dividend to large no. of its shareholders, which include
small amounts also : Electronic Clearing Services - Credit (ECS-Credit)
3. A computer software that provides services to software applications beyond those available from
the operating system is called: Middleware. It is not part of an operarting system, not a database
management system nor part of software application.

4. A customer can deposit cheque on counter instead of depositing in cheque drop box should be
mentioned at: on box itself
5. Application under ASBA can be applied for: a) IPO b) Right Issue c) Mutual fund: Ans: All of these.
6. Charges for Speed Clearing: Nil -for collecting outstation cheques in local clearing for amount up
to Rs 1 lac in case of SB customers. For cheques of more than Rs 1 lac or any amount now -NIL
irrespective of amount of cheque.
7. Cheque Drop Facility – Message for depositing cheques either at counter of by dropping in box
should be displayed in: English, Hindi and the concerned regional language of the State.
8. Converting physical shares to electronic form is called: Dematerialisation.
9. Credit card and Debit Card is called: Plastic money
10. ECS: Electronic clearing service
11. For opening Demat account with Depository Participant, what type of ID proof is mandatory?: PAN
Card
12. For repayment under global credit card of an NRI, which account can be debited : NRE
13. Full form of USSD: Unstructured Supplementary Service Data
14. In a network where all nodes connected to one wire/cable: Star Topology.
15. In Local area network, different computers which are connected are called: Work Stations or
Nodes.
16. In the case of network topologies, when a network consists of one central switch, hub, or
computer, which acts as a conduit to transmit messages, it is called: star network.
17. Investors Protection Fund is maintained by –NSE/ BSE
18. Main server of Swift in India is located at : Mumbai
19. MAX CASH WITHDRAWAL THRU POS, MERCHANT ESTABLISHMENT? : Rs. 1000 PERDAY PER CARD
IN TIER I & TIER II CENTRES AND RS 2000 PER DAY AT OTHER CENTRES
20. National Financial Switch of IDRBT (now with National Payment Corp of India): ATM network.
21. Number of digits in IFSC Code: 11
22. PROCESS OF COVERTING PHYSICAL SHARES INTO ELECTRONIC FORM –
DEMATERIALIZATION
23. Recently SEBI permitted to FII for Short selling –What is short selling- Selling of share without
holding the same.
24. Rupay card is issued by which company: National Payment Corporation of India
25. SMS alert should be sent to customer in case of Credit Card/ Debit card/ POS transaction for how
much amount?: For any amount.
26. Technology that allows an electronic device to exchange data wirelessly over a computer network
is called: Wi fi.
27. The _____ provides a network that enables financial institutions worldwide to send and receive
information about financial transactions in a secure, standardized and reliable environment: Society
for Worldwide Interbank Financial Telecommunication (SWIFT)
28. Under Cheque Truncation system, to meet legal requirements, the presenting banks which truncate
the cheques need to preserve the physical instruments for a period of: 10 years.
29. Validity period of Gift card recently increased to: 3 years
30. Virus refers to: Program which infects the system.
31. What are the two digits for Current account under MICR cheque: 11
32. What is full form of MICR?: Magnetic Ink Character Recognition
33. What is full form of NPCI?: National Payment Corporation of India.
34. What is full form of PSTN?: Public Switched Telephone Network
35. What is Phising: To steal the customers personal / confidential data like Bank a/c number, Credit Card
Number, PIN or Password over internet & access their accounts.
36. What is the code of saving cheque no in the last 2 digit of MICR Band: 10
37. What is the purpose of Disaster Recovery Plan: Alternate Server installed for smooth functioning of
systems in case of failure of Main Server.
38. What is the purpose of Disaster Recovery Plan: Alternate Server installed for smooth functioning of
systems in case of failure of Main Server.
39. What is the time period for crediting proceeds of outstation cheques presented in Speed Clearing: 48
hours.
40. Which of the following functions is undertaken by RBI inter se among banks – (a) arbitration (b)
ombudsman (c) payment and settlement: payment and settlement
41. Which of the following is withdrawn by RBI: a) EFT, b) NEFT, c) RTGS, d) ECS, e) ABB: EFT.
42. Which type of delivery channel for delivery of banking services is most cost effective – (a) Mobile
Banking; (b) Net Banking; (c) ATM; (d) Door Step Banking; (e) Branch Banking: Net Banking.

TEST YOUR SELF
PRACTICE TEST PAPERS

(BASED ON IIBF TEST PATTERN)
Certificate Examination in Customer

Service & Banking Codes and Standards

TEST YOUR SELF
KNOW YOUR CUSTOMER & MONEY LAUNDERING
01 KYC guidelines have been issued by RBI under the provisions of:
a Section 35 of Banking Regulation Act
b Section 35-A of RBI Act
c Section 35-A of Banking Regulation Act
d Section 35-A Prevention of Money Laundering Act
02 What is the minimum balance that the banks can stipulate in a basic saving bank deposit account:
a no such condition can be imposed
b Rs.10 ,
c Rs.100
d Rs.200
03 In a basic saving bank deposit account which
of the following 'service can be allowed: (1) deposit and withdrawal of cash at bank branch as well as
ATMs; (2) receipt/credit of money through electronic payment channels (3) by means of
deposit/collection of cheques drawn by Central/State Government agencies and departments
a 1 only b 1 and 2 only
c 1 to 3 all d 2 and 3 only
04 As per KYC policy of RBI, which of the following instruments can be issued in cash if the amount is
Rs.50000 or above:
a travellers' cheque, demand drafts
b demand drafts, mail-transfers
c mail transfers, telegraphic transfers
d none of the above
05 PAN is required to be quoted, as per RBI's KYC guidelines if the amount of transaction in cash is:
a above Rs.50000
b Rs.50000 or above less than Rs.50000
d Rs.10000 and above
06 Banks are to keep a close watch on large size cash debit or credit transactions in deposit or loan
accounts and keep a record of such transactions. For this purpose, the large size transaction means,
where the amount is :
a Rs.10 lac and above
b above Rs.10 lac c. less than Rs.10 lac d all the above
07 KYC guidelines take into account the recommendations of an international Financial Action Task Force
(a) on anti-money laundering standards (b) on combating financing of terrorism (c) on manipulation of
economic offences:
a a and b only ,b b and c only a and c only d a to c all
08 KYC policy of the banks, as per RBI directives should provide for (a) customer acceptance policy (b)
customer identification procedure (c) monitoring of transactions (d) risk management
a a, b and c only
b a, c and d only
c b, c and d only
d a to d all
09 For KYC policy, the customer has been defined to include (a) a person or entity that maintains an
account and/or has a business relationship with the bank (b) one on whose behalf the account is
maintained (i.e. the beneficial owner) (c) beneficiaries of transactions conducted by professional
intermediaries, such as Stock Brokers, Chartered Accountants, Solicitors etc. as permitted under the
law, (d) any person or entity connected with a financial transaction which can pose significant
reputational or other risks to the bank, say, a wire transfer or issue of a high value demand draft as a
single transaction.
a a, b and c only , b a, c and d only , c b, c and d only, d a to d all
10 Under KYC guidelines, where a customer does not comply with the KYC requirement, his account
can be closed. (a) decision to close the account should be taken at a high level (b) account should
closed after giving due notice to the customer (c) account should be closed after explaining the
reasons to the customer:
a a to c all correct
b a and c only correct
c a and b only correct
d b and c only correct
11 Which of the following customer does not fall under low risk category under KYC guidelines :
a salaried employees
b persons from lower strata of the society
c govt. departments
d trusts
12 Which of the following customers fall under
the high risk category customers from KYC purposes (a) politically exposed persons of foreign origin
(b) companies having close . shareholding (c) firms having sleeping partners (d) high net worth
individuals.
a a to d all , b a to c only c b to d only d a, b and d only
13 As per KYC guidelines, the banks cannot have correspondent arrangements with 'Shell Banks'. For this
purpose, the 'Shell Bank' mean:
a a bank having no existence but on paper only
b a bank incorporated outside India and having a branch in India
c a bank incorporated in a country where it has no existence and it is not regulated by a regulating
authority
d a bank incorporated outside India and banned by UNTO to have operations other than in country of
incorporation.
14 As per Prevention of Money Laundering Act, the banks are required to maintain record of
transactions for a period offrom date of cessation of the transaction:
a 2 years b 5 years 10 years d 20 years
15. As per Prevention of Money Laundering Act, the banks are required to maintain record of transactions
of below Rs.10 lac even, if the aggregate of such transactions is Rs. during days/weeks/ months:
a. Rs.10 lac, one month, b.above Rs.10 lac, one month, c.above Rs.10 lac, a single day
d. Rs.10 lac, a single day
16.As per Prevention of Money Laundering Act the banks are required to submit to Financial Intelligence
Unit-India, monthly statement of large cash transactions called, CTR. It is to be submitted for transactions
of Rs. and within of close of the month: a.Rs.10 lac, 7 days, b.above Rs.10 lac, 7 days
c.above Rs.10 lac, 15 days, d.Rs.10 lac, 5 days
17.As per Prevention of Money Laundering Act, the banks are required to submit to Financial Intelligence
Unit-India, statement on suspicious transactions, called, STR. It is to be submitted for transactions of Rs.
and within of arriving at conclusiori : a.Rs.10 lac, 7 days, b.above Rs.10 lac, 3 days
c.any amount, 7days, d.any amount, 15 days.
18. Which of the following is the document for proof of customer identity and address under KYC:
a.telephone bill, b.Aadhaar number, c.electricity bill, d.all the above
19.Which of the following is an important feature of small deposit accounts?:
a. where the maximum balance shall not exceed Rs.50000
b.total of credit entries in the account would not exceed Rs.I lac during an year
c. monthly withdrawal is not more than Rs.10000, d. a to c all, e. a and b only
20.In a basic saving bank deposit account what is the maximum no. of deposit and cash
withdrawal (including ATM) transactions: a no ceiling, b. 2, c 4 d 10
21 Punishment for offences under Prevention of Money Laundering Act is prescribed as
a fine up to Rs.3 lac and imprisonment ranging b between 3 to 5 years.
b fine up to Rs.3 lac and imprisonment ranging between 3 to 7 years.
c fine up to Rs.5 lac and imprisonment ranging between 3 to 5 years.
d fine up to Rs.5 lac and imprisonment ranging between 5 to 7 years.
22 To open account in the name of a proprietorship firm, which of the following documents can be used for
proof of name and address. (a) certificate / registration document issued by sales tax (b) certificate /
registration document issued by service tax (c) certificate / registration document issued by professional
tax authorities (d) IEC number issued by DGFT
a a and c only, b a, b and c only, c b and d only, d a to d any
23.X has a current account with the bank and he agrees to receive a cheque of Rs. 10 lac from B and on
the strength of this amount of Rs.10 lac, he issues 5 cheques of Rs.1.90 each in the name of 5 different

persons and retains the balance amount as his commission. Such type of transaction is known as:
a money agency transaction , b money pipe transaction
c money mule transaction, d money flow transaction
24 Monthly cash transactions report (CTR) is to d be submitted by the bank to FIU within:
a 45 days of close of the'rnorith
b 30 days of close of the month
c 25 days of close of the month
d 20 days of close of the month
e 15 days of close of the month
25 In case of high risk customers, full KYC is required to be done by the bank:
a not less than 5 years, b not less than 3 years
c. not less than 2 years, d.not less than 1 years
26.Risk category review under KYC has to be undertaken by banks:
a.not less than once in 2 years, b.not less than once in 1 years
c. not less than once in 6 months, d.not less than once in 3 months
27.In case of low risk customers, full KYC is required to be done by the bank: a. not less than 2 years
b.not less than 5 years, c.not less than 10 years, d.not required
28. Which of the following group of customers, will be categorized as a low risk customer, as per
provisions of :
a.Govt. Deptt., a joint stock company, b. partnership firm, a salaried employee , c. a salaried
employee, govt. deptt., d. all the options are correct
29.As per KYC policy, the banks should not allow opening and/or holding of an account on behalf of a
client/s by professional intermediaries, like Lawyers and Chartered Accountants, etc., :
a. who refuse to disclose true identity of the owner of the account/funds due to any professional obligation
of customer confidentiality.
b.who do not disclose true identity of the owner of the account/funds due to any professional obligation of
customer confidentiality.
c.who are unable to disclose true identity of the owner of the account/funds due to any professional
obligation of customer confidentiality.
d. all the above
30.If a basic saving bank deposit account is opened as a small account as per KYC guidelines of RBI,
which of the following conditions, will not be applicable (1) max balance can be Rs.50000 (2) max credit in
a financial year can be Rs.1.00 lac (3) per month withdrawal or transfer is restricted to Rs.10000
a.no such condition is applicable only 1 and 2, b. only 2 and 3, c. d 1 to 3 all
31 Reporting under KYC is to be made for Cash Transactions and Suspicious Transactions to Financial
Intelligence Unit (True / False)
32 Punishment for offences under Prevention of Money Laundering Act is prescribed as fine up to Rs.5 lac
and imprisonment ranging between 3 to 5 years. (True / False)
33 As per KYC, a bank can close account of a deposit customer, where bank is unable to apply KYC
measures (True / false)
Answer
1 C 2 A 3 C 4 D 5 B 6 B 7 A 8 D 9 D 10 A
11 D 12 A 13 C 14 B 15 B 16 C 17 C 18 B 19 D 20 C
21 D 22 D 23 C 24 E 25 C 26 C 27 C 28 C 29 C 30 D
31 T 32 F 33 F
TEST YOUR SELF : LATEST QUESTIONS
1) The Government had amended the Prevention of Money Laundering (Maintenance of Records) Rules,
2005, for setting up of the :
a) Central KYC Records Registry (CKYCR).
b) Centralised KYC Records Registry (CKYCR)
c) Core KYC Records Registry (CKYCR)
d) Common KYC Records Registry (CKYCR)
2) The _______ would receive, store, safeguard and retrieve the KYC records in digital form of a client, for
which necessary amendments to the Rules have been made. The KYC records received and stored could
be retrieved online by any reporting entity across the financial sector for the purpose of establishing an
account based relationship:
a) CRILC b) CKYCR c) CERSAI d) None
3) The Government of India has authorised the _______ to act as, and to perform the functions of the
Central KYC Records Registry (CKYCR). All Regulated Entities (REs) shall capture KYC information
for sharing with the CKYCR in the manner prescribed for ‘individuals’ and ‘Legal Entities’:
a) Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI)
b) Reserve Bank of India.
c) Banking Codes and Standards Board of India (BCSBI)
d) Financial Action Task Force (FATF)
4) RBI has decided to modify the procedure for exchanging mutilated / imperfect notes in order to
improve customer service and enhance customer protection. Where the number of notes presented by a
person is up to ___ pieces with a maximum value of ____per day, banks should exchange them over the
counter, free of charge:
a) 10 pieces; Rs.5,000 b) 20 pieces; Rs.5,000
c) 15 pieces; Rs.3,000 d) 20 pieces; Rs.4,000
5) Where the number of mutilated / imperfect notes presented by a person exceeds 20 pieces or
Rs.5,000 in value per day, banks may accept them, against receipt, for value to be credited later. Banks
may levy service charges as permitted in the extant guidelines. In case tendered value is above _____
banks are expected to take the usual precautions:
a) Rs.10,000 b) Rs.20,000c) Rs.40,000 d) Rs. 50,000
6) Where the number of mutilated / imperfect notes presented by a person is up to ____ pieces per day,
non-chest branches should normally adjudicate the notes and pay the exchange value over the counter.
a) 3 b) 5 c) 8 d) 10
7) If the non-chest branches are not able to adjudicate the mutilated notes, the notes may be received
against a receipt and sent to the linked currency chest branch for adjudication. The probable date of
payment should be informed to the tenderers on the receipt itself and the same should not exceed ____.
Bank account details should be obtained from the tenderers for crediting the exchange value by
electronic means:
a) 10 days b) 20 days c) 30 days d) 40 days
8) Where the number of mutilated / imperfect notes presented by a person is more than 5 pieces not
exceeding _____ in value, the tenderer should be advised to send such notes to nearby currency chest
branch by insured post giving his / her bank account details (a/c no, branch name, IFSC, etc) or get them
exchanged thereat in person:
a) Rs. 20,000 b) Rs. 15,000 c) Rs.10,000d) Rs.5,000
9) The Reserve Bank has decided that in addition to previous limits, banks will be
permitted to reckon
government securities held by them up to another ___ of their Net Demand and Time Liabilities (NDTL)
under Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) within the mandatory Statutory
Liquidity Ratio (SLR) requirement as level 1 High Quality Liquid Assets (HQLA) for the purpose of
computing their Liquidity Coverage Ratio (LCR). Hence, the total carve-out from SLR available to banks
would be ____ of their NDTL:
a) 1%;11% b) 2%;11% c) 3%;12% d) 4%;12%
10) As per the Reserve Bank of India guidelines for ‘On Tap’ Licensing of Universal Banks in the Private
Sector’, the Eligible Promoters include Individuals / professionals who are ‘residents’ and have _____ of
experience in banking and finance at a senior level.
a) 8 years b) 9 years c) 10 years d) 11 years
Sector’, the entities/groups in the private sector that are ‘owned and controlled by residents’ and have a
successful track record for at least 10 years, provided that if such entity/group has total assets of Rs. 50
billion or more, the non-financial business of the group does not account for ____or more in terms of total
assets/in terms of gross income are eligible for application.
a) 20% b) 25% c) 30% d) 40%
Sector’, Existing non-banking financial companies (NBFCs) that are ‘controlled by residents’ and have a
successful track record for at least ______ years are eligible for application:
a) 5 years b) 10 years c) 12 years d) 15 years
Sector’, Individual promoters/promoting entities/converting entities that have other group entities, shall set
up the bank only through an NOFHC. Not less than _____ of the total paid-up equity capital of the NOFHC
shall be owned by the Promoter / Promoter Group:
a) 49% b) 50% c) 51% d) 55%
14) With regards to Licensing norms of Universal Banks in the Private Sector, the initial minimum paid-up
voting equity capital for a bank shall be______. Thereafter, the bank shall have a minimum net worth of
Rs. five billion at all times:
a) Rs.20 bn b) Rs.15 bn c) Rs.10 bn d) Rs.5 bn
15) As per RBI guidelines, the promoter/s and the promoter group / NOFHC, as the case may be, shall
hold a minimum of ___ of the paid-up voting equity capital of the bank which shall be locked-in for a period
of five years from the date of commencement of business of the bank:
a) 25% b) 35% c) 40% d) 45%
16) As per RBI guidelines as regards promoter group shareholding, the promoter group shareholding
shall be brought down to ____ within a period of _____ from the date of commencement of business of
the bank:
a) 10%; 10yrs b) 15%; 15 yrs c) 15%; 10 yrs d) 12%; 15yrs
17) With respect to RBI Guidelines relating to Foreign Shareholding in the Bank, the foreign shareholding
in the bank would be as per the existing foreign direct investment (FDI) policy subject to the minimum
promoter shareholding requirement. At present, the aggregate foreign investment limit is _____ per cent:
a) 62% b) 74% c) 78% d) 80%
18) With regards to licensing norms of Universal Banks in the Private Sector, the bank shall get its
shares listed on the stock exchanges within ___ years of the commencement of business by the bank:
a) 2 yrs b) 3 yrs c) 5 yrs d) 6 yrs
19) As per RBI guidelines relating to licensing norms of Universal Banks in the Private Sector, the bank
shall open at least ___ of its branches in unbanked rural centres (population up to 9,999 as per the latest
census):
a) 10% b) 20% c) 25% d) 30%
20) As per RBI guidelines relating to licensing norms of Universal Banks in the Private Sector, the validity
of the in-principle approval issued by the RBI will be ____ from the date of granting in-principle approval
and would thereafter lapse automatically:
a) 6 months b) 12 months c) 18 monthsd) 24 months
21) All branches of Banks in all parts of the country should provide which of the following customer
services, more actively and vigorously to the members of public so that there is no need for them to
approach the RBI Regional Offices for this purpose?
a) Issuing fresh / good quality notes and coins of all denominations on demand,
b) Exchanging soiled / mutilated / defective notes
c) Accepting coins and notes either for transactions or exchange.
d) All of these.
22) With a view to extending the facility for the benefit and convenience of public, all branches of banks
have been delegated powers under Rule 2(j) of _______ for exchange of mutilated / defective notes free
of cost:
a) Reserve Bank of India (Note Refund) Rules, 2008
b) Reserve Bank of India (Note Refund) Rules, 2009
c) Reserve Bank of India (Note Refund) Rules, 2010
d) Reserve Bank of India (Note Refund) Rules, 2011
23) A ______means a note which has become dirty due to normal wear and tear and also includes a two
piece note pasted together wherein both the pieces presented belong to the same note and form the
entire note with no essential feature missing:
a) Soiled Note b) Mutilated Note
c) Imperfect Note d) Defective Note
24) Which of the following statements is true with respect to RBI Guidelines relating to Soiled Notes?
a) These notes should be accepted over bank counters in payment of Government dues and for credit to
accounts of the public maintained with banks.
b) In no case, these notes should be issued to the public as reissuable notes and shall be deposited in
currency chests for onward transmission to RBI offices as soiled note remittances for further
processing.
c) Both of these. d) None of these.
25) A _______ is a note of which a portion is missing or which is composed of more than two pieces.
These notes may be presented at any of the bank branches and shall be accepted, exchanged and
adjudicated in accordance with Reserve Bank of India (Note Refund) Rules 2009:
a) Soiled Note b) Mutilated Note
c) Defective Note d) Deliberately Cut Note
26) Which of the following types of notes shall not be accepted by the bank branches for exchange.
Instead, the holders may be advised to tender these notes to the concerned Issue Office where they will
be adjudicated under a Special Procedure:
a) Turned extremely brittle b) Badly Burnt
c) Charred d) Inseperably stuck up together
e) All of the above.
27) Every Officer-in-charge of the branch i.e. the Branch Manager and every Officer-in-charge of the
Accounts or Cash Wing of the Branch shall act as _______ in each branch to adjudicate the notes
received at the branch for exchange in accordance with Reserve Bank of India (Note Refund) Rules,
2009:
) Prescribed Officer b) Exchange Officer
c) Settlement Officer d) Cash In charge
28) Which of the following points are true with respect to record keeping instructions for Mutilated Notes?
a) After adjudicating mutilated notes, the Prescribed Officer is required to record his order by subscribing
his initials to the dated 'PAY'/ 'PAID'/ 'REJECT' stamp.
b) Mutilated / defective notes bearing 'PAY'/'PAID' (or 'REJECT') stamp of any RBI Issue Office or any
bank branch, if presented for payment again at any of the bank branches should be rejected under
Rule 6(2) of Reserve Bank of India (Note Refund) Rules, 2009.
c) All bank branches have instructions not to issue notes bearing PAY/PAID stamps to the public even
through oversight.
d) The branches should caution their customers not to accept such notes from any bank or anybody else.
e) All of these.
29) Any note with slogans and message of a political nature written across it ceases to be a legal tender
and the claim on such a note will be rejected under _____ of Reserve Bank of India (Note Refund) Rules,
2009:
a) Rule 6(3) (i) b) Rule 6(3) (ii)
c) Rule 6(3) (iii) d) Rule 6(3) (iv)
30) The notes, which are found to be deliberately cut, torn, altered or tampered with, if presented for
payment of exchange value should be rejected _____of the Reserve Bank of India (Note Refund) Rules,
2009:
a) Under Rule 6(3)(i) b) Under Rule 6(3)(ii)
c) Under Rule 6(3)(iii) d) Under Rule 6(3)(iv)
31) With regards to disposal of notes adjudicated at bank branches, the full value paid notes have to be
remitted by all branches to the ______ with which they have been linked and there from to the Issue
Offices concerned together with the next soiled note remittance in the manner already laid down:
a) Chest Branches b) Circle Office
c) Head Office d) Zonal Office
32) The full value paid notes will be treated as chest remittance by the Issue Office while the half value
paid notes and rejected notes will be treated as notes tendered for _____and processed accordingly:
a) Settlement b) Adjudication
c) Exchange d) None of these.
33) All chest branches are required to submit to Issue Offices a _____ statement showing the number of
notes adjudicated during that period:
a) Fortnightly b) Monthly c) Quarterly d) Half Yearly
34) Which of the following points are correct with regards to agreement between RBI and commercial
banks relating to acceptance of coins in exchange of notes?
a) The bank branches should accept coins in exchange of notes.
b) They should accept coins of all denominations which are legal tender under the Indian Coinage Act,
2011 from any member of public without any restriction and pay the value in notes.
c) They should use Coin counting machines or accept coins by weight for large receipts to facilitate the
customers. d)Only a & b e) All (a), (b) & (c)
35) The coins of denomination of ____, issued from time to time, ceased to be legal tender for payments
as well as account with effect from June 30, 2011:
a) 20 Paise and below b) 25 Paise and below
c) 50 Paise and below d) All of these.
36) All coins of denomination of 25 Paise and below should be retained in the (SCDs) of the bank till
further advise from Reserve Bank of India. What does SCD stand for?
a) Small Coin Depots b) Small Currency Depots
c) Small Coin Deposits d) Small Currency Deposits’
37) The study of counterfeit currency has unearthed that fake Indian currency notes (FICN) worth Rs.
_____ crore are infused into the Indian market every year with agencies only being able to intercept one
third of them:
a) Rs. 50 Crore b) Rs. 60 Crore
c) Rs. 70 Crore d) Rs. 80 Crore
38) Which of the following points are true with respect to RBI guidelines relating to Detection of Counterfeit
Notes?
a) Banknotes tendered over the counter / received directly at the back office / currency chest through
bulk tenders should be examined for authenticity through machines.
b) No credit to customer’s account is to be given for counterfeit notes, if any, detected in the tender
received over the counter or at the back-office / currency chest.
c) In no case, the counterfeit notes should be returned to the tenderer or destroyed by the bank branches
/ treasuries.
d) Failure of the banks to impound counterfeit notes detected at their end will be construed as willful
involvement of the bank concerned, in circulating counterfeit notes and penalty will be
imposed for violation. e) All of these.
39) Notes determined as counterfeit shall be stamped as _______ and impounded in the prescribed
format. Each such impounded note shall be recorded under authentication, in a separate register.
a) Counterfeit note b) Fake note
c) Duplicate note d) Any of these.
40) When a banknote tendered at the counter of a bank branch/back office and currency chest or treasury
is found to be counterfeit, an acknowledgement receipt in the prescribed format must be issued to the
tenderer, after stamping the note. The receipt, in running serial numbers, should be authenticated by the
______ and ______. The receipt is to be issued even in cases where the tenderer is unwilling to
countersign it. a) Cashier, Branch Manager b) Cashier; Tenderer
c) Branch Manager; Tenderer d) None of these
41) For cases of detection of counterfeit notes upto ___ pieces, in a single transaction, a consolidated
report in the prescribed format should be sent by the Nodal Bank Officer to the police authorities or the
Nodal Police Station, along with the suspect counterfeit notes, at the end of the month.
a) 8 b) 6 c) 4 d) 3
42) For cases of detection of counterfeit notes of ____ pieces, in a single transaction, the counterfeit notes
should be forwarded by the Nodal Bank Officer to the local police authorities or the Nodal Police Station
for investigation by filing FIR in the prescribed format.
a) 8 or more b) 6 or more c) 5 or more d) 4 or more
43) A copy of the monthly consolidated report / FIR shall be
sent to the ____ constituted at the Head Office of the
bank (only in the case of banks), and in the case of the treasury, it should be sent to the Issue Office of
the Reserve Bank concerned.
a) Forged Note Vigilance Cell b) FATCA
c) Banking Ombudsman d) Financial Action Task Force
44) W.r.t. guidelines pertaining to counterfeit notes, acknowledgement of the police authorities
concerned has to be obtained for notes forwarded to them both as consolidated _____ statement and
FIR. If the counterfeit notes are sent to the police by insured post, acknowledgement of receipt thereof
by the police should be invariably obtained and kept on record.
a) Weekly b) Quarterly c) Monthly d) Bi-Monthly
45) The progress made by banks in detection and reporting of counterfeit notes to Police, RBI, etc. and
problems
thereof, should be discussed regularly in the meetings of which of the following State Level Committees?
a) State Level Bankers’ Committee (SLBC),
b) Standing Committee on Currency Management (SCCM),
c) State Level Security Committee (SLSC)
d) State Level Coordination Committee (SLCC)
e) Only (a), (b) & (c) f) All from (a) to (d)
46) The data on detection of counterfeit Indian notes at bank branches & treasuries should be included
in the ______ Returns forwarded to the Reserve Bank Issue Offices:
a) Fortnightly b) monthly c) Bi-monthly d) Quarterly
47) The banks should re-align their cash management in such a manner so as to ensure that cash
receipts in the denominations of _____and above are not put into recirculation without the notes being
machine processed for authenticity:
a) Rs. 20 b) Rs. 50 c) Rs. 100 d) Rs. 500
48) As per RBI guidelines, penalty at ____ of the notional value of counterfeit notes, in addition to the
recovery of loss to the extent of the notional value of such notes, will be imposed when counterfeit
notes are detected in the soiled note remittance of the bank and in the currency chest balance of a
bank during Inspection / Audit by RBI:
a) 50% b) 60% c) 80% d) 100%
49) The responsibility of ensuring the quality and genuineness of cash loaded at _______would be that
of the Sponsor Bank:
a) White Label ATM’s b) Brown Label ATM’s
c) Both (a) & (b) d) None of these.
50) Data on counterfeit notes detected by all the branches of the bank shall be reported in the
prescribed format, on a monthly basis. A statement showing the details of counterfeit notes detected
in the bank branches during the month shall be compiled and forwarded to the Issue Office of
Reserve Bank concerned so as to reach them by ___ of the next month:
a) 5th b) 6th c) 7th d) 8th
51) Under Rule 3 of Prevention of Money Laundering Rules, 2005, Principal Officers of banks are also
required to report information on cash transactions where forged notes have been used as genuine
note to The Director, FIU-IND, Financial Intelligence Unit- India, within _____ working days. A ‘nil’
report may be sent in case no counterfeit has been detected during the month.
a) 5 b) 7 c) 10 d) 14
52) All Counterfeit Notes received back from the police authorities/courts may be carefully preserved in
the safe custody of the bank and a record thereof be maintained by the branch concerned. These
Counterfeit Notes at branches should be subjected to verification on a _____ basis by the Officer-in-
Charge of the bank office concerned. They should be preserved for a period of ____years from the
date of receipt from the police authorities.
a) Half-yearly; 3 b) Yearly; 3
c) Quarterly; 3 d) Bi-monthly; 3
53) As per RBI guidelines, Counterfeit notes, which are the subject matter of litigation in the court of law
should be preserved with the branch concerned for a period of ____ years after conclusion of the
court case.
a) 1 year b) 2 years c) 3 years d) 4 years
54) As per RBI guidelines relating to reporting of Currency Chest Transactions, the minimum amount of
deposit into/withdrawal from currency chest will be ______ and thereafter, in multiples of Rs._____.
a) 50,000; 10,000 b) 1,00,000; 50,000
c) 1,50,000; 50,000 d) 2,00,000; 1,00,000
55) With regards to RBI guidelines relating to Time Limit for Reporting, the currency chests should
invariably report all transactions through ICCOMS on the same day by ______ by uploading data through
the Secured Website (SWS) to their respective link offices. Link offices should invariably report the
consolidated position to the Issue Offices latest by ____on the same day.
a) 7 PM; 9PM b) 8 PM; 10PM c) 9 PM; 11PM
d) 10 PM;12PM e) 11 PM; 12 PM
56) In the event of delay in reporting currency chest transactions, penal interest will be levied on the
amount due from the chest holding bank for the period of delay which will be calculated on _____basis.
However, Reserve Bank may at its discretion grant appropriate grace period in the matter of levy of penal
interest.
a) T+0 basis b) T+1 basis c) T+2 basis d) T+3 basis
57) Which of the following points are true with respect to levy of Penal interest on wrong reporting?
a) Penal interest will be levied in respect of all cases of wrong reporting in the same manner till the date
of receipt of corrected advice by Reserve Bank.
b) Penal interest will invariably be levied in all cases of wrong reporting in the Link Office Statements
even if the reporting was done correctly in the chest slips.
c) Both of these. d) None of these.
58) As per RBI guidelines, Soiled note remittances to RBI /diversion to other currency chest/s should

not be shown as withdrawal by chest/s / link offices. In case such remittances are wrongly reported as
'withdrawals', a penalty of ______ will be levied irrespective of the value of remittance and period of
such wrong reporting:
a) Rs. 25,000 b) Rs. 35,000c) Rs.50,000 d) Rs.75,000
59) Penal interest will be levied in all cases where the bank has enjoyed 'ineligible' credit in its current
account with Reserve Bank on account of which of the following reasons pertaining to transactions?
a) Wrong reporting / delayed reporting / non-reporting of transactions
b) Shortages in chest balances / remittances
c) Shortages due to pilferage / frauds
d) Counterfeit banknotes detected in chest balances /
e) Remittances as per the prevailing “scheme of Penalties”
f) All of the above.
60) Which type of cash balance is not eligible for inclusion in the Chest balances?
i) Cash held in the custody of joint custodians and 'freely available' to them.
ii) Cash kept for safe custody in sealed covers for whatever reasons.
iii) Cash in trunks/bins under the lock and key of any official/s other than the Joint Custodians or bearing
a third lock put by any official in addition to the two locks of the Joint Custodians:
a) All from (i) to (iii) b) (i) & (ii) only
c) (ii) & (iii) only d) (i) & (iii) only
61) Penal interest shall be levied at the rate of ___ over the prevailing Bank Rate for the period of delayed
reporting / wrong reporting/non-reporting / inclusion of ineligible amounts in chest balances:
a) 1% b) 2% c) 3% d) 4%
62) Representations made for reconsideration of the Reserve Bank's decision for levy of penal interest for
delayed reporting on account of genuine difficulties faced
by chests especially in hilly/remote areas and those affected by natural calamities, etc., may be made to
the Issue Office concerned through the Head / Controlling office of the bank concerned within ___ from
date of debit of the bank concerned:
a) A week b) A fortnight c) A month d) Two months
63) What is the Penalty to be imposed on banks for deficiencies in exchange of notes and
coins/remittances sent to RBI/operations of currency chests etc. with respect to shortages in soiled note
remittances and currency chest balances for notes in denomination upto Rs.50?
a) Rs. 50 per piece in addition to the loss
b) Rs.25 per piece in addition to the loss
c) Rs. 20 per piece in addition to the loss
d) Rs.10 per piece in addition to the loss
64) What is the penalty to be imposed on banks for deficiencies in exchange of notes and
coins/remittances sent to RBI/operations of currency chests etc. with respect to shortages in soiled note
remittances and currency chest balances for notes in denomination of Rs. Rs.100 & above?
a) Equal to the value of the denomination per piece in addition to the loss
b) Rs. 80 per piece in addition to the loss
c) Rs. 75 per piece in addition to the loss
d) Rs. 50 per piece in addition to the loss.
65) In case, mutilated notes detected in soiled note remittances and currency chest balances, the penalty
levied shall be _____per piece irrespective of the denomination.
a) Rs. 20 b) Rs. 50 c) Rs. 75 d) Rs. 100
66) In case, mutilated notes detected in soiled note remittances and currency chest balances, mutilated
notes of 100 pieces and above per remittance shall be debited immediately and penalty may be levied on
reaching a limit of ______ in a cumulative manner.
a) 50 pieces b) 70 pieces c) 100 pieces d) 125 pieces
67) In case of non-compliance with operational guidelines by currency chests is detected by RBI officials
such as Nonfunctioning of CCTV; Branch cash/documents kept in strong room; Non-utilization of NSMs
for sorting of notes the penalty of Rs. _____ shall be levied for each irregularity & same shall be enhanced
to Rs. _____ in case of repetition.
a) Rs. 2500; Rs. 5,000 b) Rs. 5,000; Rs. 10,000
c) Rs. 10,000; Rs. 15,000 d) Rs. 10,000; Rs. 20,000
68) As per RBI guidelines, appeal against the decision of the competent authority can be made with
regards to imposition of penalty for non-compliance with operational guidelines by the Controlling Office of
the currency chest/branch to the Regional Director of the Regional Office concerned, within _____ from
the date of debit, who may decide whether the same can be accepted/ rejected:
a) 2 months b) 1 month* c) 15 days d) 1 week
ANSWERS
1 2 B 3 4 B 5 D 6 B 7 C
8 D 9 10 C 11 D 12 B 13 C 14 D
15 C 16 B 17 B 18 D 19 C 20 C 21 D
22 B 23 24 C 25 B 26 E 27 28 E
29 C 30 B 31 32 B 33 B 34 E 35 B
36 37 C 38 E 39 40 B 41 C 42 C
43 44 C 45 E 46 B 47 C 48 D 49
50 C 51 B 52 53 C 54 B 55 C 56
57 C 58 C 59 F 60 C 61 B 62 C 63
64 A 65 B 66 C 67 B 68 B
TEST YOUR SELF

1) The decision to develop a Monetary Policy Framework follows from the recommendation of the
Expert Committee to Revise and Strengthen the Monetary Policy Framework or what is popularly
known as the committee report,
which had suggested that RBI target to bring down retail inflation to 8% by January 2015 and 6% by
January 2016.
a) Dr. Urjit Patel*. b) Dr. Usha Thorat, c) Dr. Nachiket Mor d) Vijaya Bhaskar
2) As per the Monetary Policy Framework, the objective of monetary policy is to primarily maintain
price stability, while keeping in mind the objective of growth. The monetary policy framework in India
shall be operated by the Reserve Bank of India. Inflation means :
a) The monthly change in the CPI-C expressed in percentage terms.
b) The year-on year change in the half yearly CPI-C expressed in percentage terms.
c) The year-on year change in the monthly CPI-C expressed in
percentage terms* d) None of these.
3) As per the Monetary Policy Framework, the Reserve Bank will aim to bring inflation below ____
percent by January 2016. The Target for financial year 2016-17 and all subsequent years shall be
____ % with a band of +/- ____%.
a) 5;4; 2 b)7;5; 3 c)7 ; 4; 2 d) 6;4;2*
4) As per the Monetary Policy Framework, once every six months, the Reserve Bank shall publish a
document explaining Sources of Inflation; Forecasts of Inflation for the period between _____ to
______ months from the date of the publication of the document; and Flexible inflation target. a) Six
; Eighteen* b) Five ; Fifteen, c) Four ; Ten d) Six ; Ten
5) As per the Monetary Policy Framework, the Reserve Bank shall be seen to have failed to meet the
target if inflation is more than ____ percent for three consecutive quarters for the financial year
2015-16 and all subsequent year; Less than ____ percent for three consecutive quarters in 2016-17
and all subsequent years. a) 8;4 b) 5;2 c) 6;2* d) 5;3
6) As per the Monetary Policy Framework, if the Reserve Bank fails to meet the Target it shall set
out in a report to the Central Government covering which of the following aspects:
a) The reasons for its failure to achieve the Target;
b) Remedial actions proposed to be taken by the RBI;
c) An estimate of the time-period within which the Target would be achieved pursuant to timely
implementation of proposed remedial actions.
d) All of the above*

7) The Government of India, Ministry of Housing and Urban Poverty Alleviation (MoHUPA), has
restructured the existing Swarna Jayanti Shahari Rozgar Yojana (SJSRY) and launched the ___.
a) National Urban Livelihood Mission (NULM)*, b) Prime Minister Rojgar Yojana., c) National
Rural Livelihood Mission (NRLM), d) Jan Dhan Yojana.
8) Under National Urban Livelihood Mission the maximum unit project cost for individual micro
enterprise cases is Rs.
_____: a) 4 lac b) 3 lac c) 2 lac* d) 5 lac
9) As per National Urban Livelihood Mission scheme, which of the following statement is incorrect:
a) Two sub components in terms of beneficiaries are covered namely: Individual Enterprises (SEP-I),
& Group Enterprises (SEP-G).
b) In case of Individual Enterprises (SEP-I), Banks are mandated not to accept any collateral security.
c) In case of Individual Enterprises (SEP-I), the banks may approach Credit Guarantee Fund Trust for
Micro and Small Enterprises setup by SIDBI and Government of India for the purpose of
availing guarantee cover for SEP loans as per the eligibility of the activity for guarantee
cover.
d) In case of Individual Enterprises (SEP-I), repayment schedule ranges from 5 to 7 years after initial
moratorium of 6-18 months as per norms of bank.
e) None of the above*
10) Under the Group Enterprises (SEP-G) component of National Urban Livelihood Mission scheme,
which of the following statement is incorrect:
a) A Self Help Group (SHGs) or members of an SHG constituted under SJSRY / NULM or a group of
urban poor desirous of setting up a group enterprise for self-employment can avail benefit of
subsidized loans under this component from any bank.
b) The group enterprise should have minimum 5 members with a minimum of 70% members from
urban poor families.
c) The maximum unit project cost for a group enterprise is 10,00,000 (Rs. Ten lakhs) and no
collateral to be obtained.
d) The repayment schedule ranges from 5 to 7 years after initial moratorium of 6-18 months as
decided by bank.
e) The target is Women – 30%; Disabled – 3%; and SC / ST – on Pro – rata to local population.
f) None of the above*
11) With respect to loan against shares, debentures and bonds, which of the following is incorrect as
per RBI guidelines:
a) Loans against the security of shares, debentures and bonds should not exceed the limit of Rupees
Ten lakhs per individual if the securities are held in physical form and Rupees Twenty lakhs per
individual if the securities are held in dematerialised form.
b) Banks should maintain a minimum margin of 50 percent of the market value of equity shares /
convertible debentures held in physical form.
c) In the case of shares / convertible debentures held in dematerialised form, a minimum margin of
25 percent should be maintained. These are minimum margin stipulations and banks may stipulate
higher margins for shares whether held in physical form or dematerialised form.
d) The margin requirements for advances against preference shares / non-convertible debentures and
bonds may be determined by the banks themselves.
e) None of the above.*
12) As per RBI directions, all Credit Institutions (CI’s) should become member of Credit Information
Companies (CICs) and submit data (including historical data) to them with in a period of ____
months.
a) 6 b) 2 c) 3 * d) 1
13) How many CIC’s have been granted Certificate of Registration by RBI ?
a) 4* b) 3 c) 2 d) 1
14) The one-time membership fee charged by the CICs, for CIs to become their members, shall not
exceed Rs._____ each and annual fees charged by the CICs to CIs shall not exceed Rs. ______
each.:
a) Rs.5,000; Rs.2,500 b) Rs.10,000; Rs.2,500, c) Rs.10,000*; Rs.5,000*d) Rs. 20000;
Rs.5,000
15) As per RBI guidelines to banks, a credit card a/c will be treated as NPA if the minimum amount
due, as mentioned in the statement, is not paid fully within ____ days from the next statement date
and the gap between two statements should not be more than one month. a) 90* b) 60 c) 50
d) 30
16) Reserve Bank of India has decided that the interest rates charged by an NBFC-MFI to its
borrowers will be the cost of funds plus margin, or the average base rate of the five largest
commercial banks by assets multiplied by____:
a) 5 b) 2.50 c) 2.75* d) 3.5
17) Securitisation Companies / Reconstruction Companies (SC / RCs) are permitted to convert a
portion of debt into shares of the borrower company as a measure of asset reconstruction provided
their shareholding does not exceed ____ of the post converted equity of the company under
reconstruction. a) 30% b) 20% c) 26%* d) 28%
18) Securitisation Companies / Reconstruction Companies (SC/RCs) are required to obtain, for the
purpose of enforcement of security interest, the consent of secured creditors holding not less than
____of the amount outstanding to a borrower as against ____hitherto. a) 30%, 75% b) 75%,
60% c) 60%,75%* d) 50%,75%
19) A person makes a draft payable in the name of another person from any particular bank for
an amount less than Rs.49,000/-. This person, on whose name the draft is made, further
endorses it in the name of another person in lieu of payment for purchase of goods or
services. The draft is used as a payment cheque without real money changing hands. In the
end, there is a specific group of people who deposits these drafts in their bank accounts, and
takes a commission of 1-2% to encash them. This process of conducting transactions is called:
a) Money Laundering b) Money Mules, c) Street Financing* d) Financial frauds
20)are individuals with bank accounts recruited by fraudsters to receive cheque deposit or wire
transfer for the purpose of money laundering. They receive cheque deposits or wire transfers and
then transfer these funds to a/cs held on behalf of another person or other individuals, minus a
certain commission.
a) Street Financing b) Money Mules*, c) Money Laundering d) Financial frauds
21) For Money Transfer Service Scheme, Indian Agent should be an Authorized Dealer Category-I
bank or an Authorized Dealer Category-II or a Full Fledged Money Changer with minimum Net Owned
Funds of ________:
a) 30 lakhs b) 35 lakhs c) 40 lakhsd) 50 lakhs*
22) A cap of ________has been placed on individual remittance under the Money Transfer Service
Scheme. Amounts up to Rs.50,000/- may be paid in cash to a beneficiary in India. Further, only 30
remittances can be received by a single individual beneficiary under the scheme during a calendar
year. a) US $2000 b) US $2500* c) US $ 3000 d) US $3500
23) The outstation cheques under Speed Clearing will be paid on T+1 or 2 basis within______:
a) 48 hrs* b) 24 hrs c) 6 hrs d) 12 hrs
34) Presenting branches are currently permitted to levy charges at a rate not exceeding _____per
cheque (inclusive of all charges other than Service Tax) for cheques of above Rs. 1 lakh presented
through Speed Clearing. No charges are payable for cheques of value up to Rs. 1 lakh from Savings
a/c customers. Banks would be free to fix charges for collection of other types of accounts for all
values and also from Savings a/c customers for cheque of value above Rs. 1 lakh.
a) Rs. 100 b) Rs. 150* c) Rs. 200 d) Rs. 250
24) For evaluation and ratings of banks, RBI uses the_______. The new system is termed as
_______. The new system to capture the risks that may cause a bank to fail. a) CAMELS;
INROADS* b) INROADS; CACS, c) CAMELS; CACS e) CRISIL; CARE
25) As per the new module advised by CERSAI, for delay condonation w.e.f. 1st December, 2014,
whereby any transaction which is filed after 30 days of creation of security and upto _____will
attract additional fee.
a) 45 days b) 60 days*, c) 90 days d) None of these
st th
26) If the registration on CERSAI is done from 31 to 40 day after the date of transaction, the
additional fee will be charged _______ if loan amount is upto Rs. 5 lakh. The amount of additional
fee will be ______if loan amount is above Rs. 5 lakh.
a) Rs. 500 & 1,000* b) Rs. 1000 & 1,500, c) Rs. 1,000 & 2000 d) Rs. 500 & 1,500
st th
additional fee will be charged ______ if loan amount is upto Rs. 5 lakh. The amount of additional
fee will be _______if loan amount is above Rs. 5 lakh.
a) Rs. 750 & 1,000 b) Rs. 1250 & 2,500*, c) Rs. 1,250 & 2000 d) Rs. 1000 & 1,500
st th
additional fee will be charged _________ if loan amount is upto Rs. 5 lakh. The amount of
additional fee will be if loan amount is
above Rs. 5 lakh. a) Rs. 2000 & 2500 b) Rs. 2000 & 3000, c) Rs. 2500 & 5000* d) Rs.
3000 & 5000
29) While doing Risk Rating, an asset is downgraded from A+ rating to A rating. What type of risk is
involved?
a) Market Risk b) Credit Risk*, c) Interest Rate Risk d) None of these
30) To help in the government's 'smart cities' programme, SEBI approved a new set of norms for

listing and trading of municipal bonds on stock exchanges, while channelising household
investments for urban infrastructure development. These municipal bonds, also known as _____
bonds. a) Muni Bonds* b) Corporation Bonds, c) Smart Bonds d) None of these
31) The Reserve Bank notified the decision to raise foreign direct investment (FDI) cap in the
Insurance sector to ____ from existing cap of 26%. a) 45% b) 49%* c) 50% d) 51%
32) As per new Foreign Trade Policy, value of Export Performance FOB / FOR for ‘Two Star Export
House’ category during current and previous 2 years is : a) 10 b) 15 c) 25* d) 20
33) As per new Foreign Trade Policy, value of Export Performance FOB /FOR for ‘Four Star Export
House’ category during current & previous 2 years is : a) 100 b) 500*, c) 1000 d) 2000.
Records of transactions to be maintained for at least _____from the date of transaction,
instead of ten years from the date of cessation of transactions, and records pertaining to
identification of the customer and his address to be preserved for at least ____ after the
business relationship is ended.
a) 10,10* b) 10,15 c) 15,10 d) 5,10
35) The Suspicious Transaction Report (STR) bank as a whole, should be furnished to the FIU–
IND, within _____ days of arriving at a conclusion that any transaction, including an attempted
transaction, whether cash or non-cash, or a series of transactions integrally connected are of
suspicious nature:
a) 10 days b) 7days* c) 15 days d) 5 days
36) Under Pradhan Mantri Suraksha Bima Yojana – Premium payable is Rs.____ per annum per
member and sum insured on death is ____and partial disability is ____. a) Rs.10; 2 lakhs; 1 lakh
b) Rs. 12; 2 lakhs; Rs. 50,000
c) Rs.25; Rs.1 lakh; Rs. 50,000 d) Rs.12; Rs.2 lakh; Rs. 1 lakh*
37) To be eligible for claim under PM Jeeven Jyoti Yojna, the age limit for all saving accounts holder
should be between:
a) 18 to 45 yrs b) 18 to 50 yrs* c) 18 to 55 yrs d) 18 to 60 yrs
38) The premium payable under PM Jeeven Jyoti Yojna, is _______ p.a. and assures benefits of Rs.
____ on death due to any reason. a) Rs. 330 & Rs. 2 lakh*b) Rs. 250 & Rs. 2 Lakhs, c) Rs.300 &
Rs. 2.50 lakhs d) Rs. 230 & Rs. 3 lakhs
39) The limit of Education loan for vocational purpose in India for course duration upto 3 months is
Rs. ________.
a) 20,000* b) 30000 c) 40000 d) 25000
40) What is the Full form of MUDRA?
a) Micro Units Development and Refinance Agency Ltd *, b) Modern Units Development and
Refinance Agency Ltd, c) Micro Units Development and Reconstruction Agency Ltd, d) None of
these
41) Which tax has been abolished in Budget 2015-16:- a) Goods and Service Tax b) Wealth Tax*,
c) Corporate Tax d) Property Tax
42) MUDRA is set up with a corpus of ___ and a credit
guarantee corpus of Rs 3,000 crore.
a) Rs.15,000 Crore b) Rs. 20,000 Crore*, c) Rs. 30,000 Crore d) Rs. 50,000 Crore
43) As per the new budget, Surcharge has been increased to ____ for individuals earning 1 crore and
above annually and on firms with an annual income of Rs. 10 crore or more. a) 10% b) 12%*
c) 14% d) 15%
44) The full form of GIFT City is:-
a) Gandhinagar International Finance Tec-City, b) Gujarat International Finance Tec-City*, c)
Gujarat Indian Financial Tec-City, d) Gandhinagar Indian Financial Tec-City
45) Full Form of CRILC City is:
a) Central Repository of Information on Large Credits*, b) Central Reserve of Information on Large
Credits, c) Central Repository of Information on, d) None of the above
46) Full form of MIBOR;
a) Mumbai Inter bank Offered Rate*, b) Mutual Inter bank Offered Rate, c) Mumbai
International Offered Rate
b) Mumbai Inter bank Offer & Bid Rate
47) The limit of Education loan for vocational purpose in India for course duration for 3 to 6 months is
______:
a) 40,000 b) 50000* c) 60000 d) 75000
48) The limit of Education loan for vocational purpose in India for course duration of 6 months to 1
year is ______:
a) 60,000 b) 85,000 c)1,00,000 d) 1,25,000*
49) The limit of Education loan for vocational purpose in India for course duration above 1 year is :
a) Rs.1.5 lakh* b) Rs. 2 lakhc) Rs.2.5 lakh d) Rs.3 lakh
50) Under SHG all the members of the group must be from BPL, however, a maximum of 20% in
general and 30% in exception can be from marginally above poverty line subject to the condition that
APL members not eligible for subsidy
a) 20%, 30%* b) 25%, 35%, c) 20%, 25% d) 15%, 25%
51) If the bank has raised an unauthorized/erroneous direct debit to an account and on verification of
the entry it is found to be erroneous and the customer does not involve a third party, the bank will
endeavor to complete the process of verification within a maximum period of _____ working days
from the date of reporting of erroneous debit. In case, the verification involves a third party or where
verifications are to be done at overseas centers, the bank shall complete the verification process
within a maximum period of _____ month from the date of reporting of erroneous transaction by the
customer.
a) 7 : one* b) 5; one c)14; two d) 10; three
52) The Bank will undertake to carry out direct debit / ECS debit instructions of customers in time. In
the event the bank fails to meet such commitments customer will be compensated to the extent of
on account of delay
in carrying out the instruction/failure to carry out the instructions.
a) Any financial loss the customer would incur* b) Rs. 1000/- c) Rs. 2500/- d) Rs. 5,000/
53) Where it is established that the bank had issued and activated a credit card without consent of
the recipient, the bank would not only reverse the charges immediately but also pay a penalty without
demur to the recipient amounting to _______ as per regulatory guidelines in this regard.
a) Twice the value of charges reversed*, b) Thrice the value of charges reversed, c) Value of
charges reversed
b) None of these
54) In case a cheque has been paid after stop payment instruction is acknowledged by the bank, the
bank shall reverse the transaction and give value-dated credit to protect the interest of the customer.
Any consequential financial loss to the customer will be compensated. Such debits will be reversed
within ____ working days of the customer intimating the transaction to the bank a) 3 b) 5 c) 2*
d) 7
55) The bank will compensate the customer for undue delays in affording credit once proceeds are
credited to the Nostro Account of the bank with its correspondent. Such compensation will be given
for delays beyond
week / weeks from the date of credit to Nostro Account/ due date after taking into account normal
cooling period stipulated. The compensation in such cases will be worked out keeping in view interest
for the delay in crediting proceeds and compensation for any possible loss on account of adverse
movement in foreign exchange rate.
a) One*, b) Two, c) Three, d) Four
56) As part of the compensation policy of the bank, the bank will pay interest to its customer on the
amount of collection instruments in case there is delay in giving credit beyond the time period specified
in banks cheque collection policy. Interest for delayed collection shall be paid at the Savings Bank rate
for the period of delay beyond ____, ____, _____ days as the case may be in collection of outstation
cheques.
a) 5/10/15 b) 7/10/14* c) 3/5/7d) none of these
57) The bank will pay interest to its customer on the amount of collection instruments in case there
is delay in giving credit beyond 14 days. Interest will be paid at the rate applicable for term deposit
for the corresponding respective period or Saving Bank rate, whichever is higher. In case of
extraordinary delay, i.e. delays exceeding ____ days interest will be paid at the rate of ___% above
the corresponding Term Deposit rate. a) 60;2 b) 30;3 c) 90; 2* c) 45;2
58)In the event the proceeds of cheque under collection was to be credited to an overdraft/loan
account of the customer, interest will be paid at the rate applicable to the loan account. For
extraordinary delays, interest will be paid at the rate of ____above the rate applicable to the
loan account. a) 4% b) 3% c) 2%* d) 2.5%
59) In line with the compensation policy of the bank, the bank will compensate the account holder in
respect of instruments lost in transit. In case intimation regarding loss of instrument is conveyed to
the customer beyond the time limit stipulated for collection_____, ____, _____ days as the case
may be) interest will be paid for the period exceeding the stipulated collection period at the rates
specified above. a) 4/8/12 b) 5/10/15 c) 7/10/14* d) 6/10/13
60)Issue of Duplicate Draft and Compensation for delays Duplicate draft will be issued within a
_______ from the receipt of such request from the purchaser thereof. For delay beyond the
above stipulated period, interest at the rate applicable forof corresponding period will be
paid as compensation to the customer for such delay.
a) Fortnight; Fixed Deposit* b) 10 days; Fixed Deposit, c) Fortnight; cumulative Deposit d) 30 days
/ Fixed Deposit
61)In addition, bank will pay interest on the amount of the cheque for a further period of
________ days at Savings Bank rate to provide for likely further delay in obtaining duplicate
cheque / instrument and collection thereof.
a) 15* b) 10 c) 7 d) 12
62)Violation of the Code by banks agent In the event of receipt of any complaint from the
customer that the bank’s representative / courier or DSA has engaged in any improper conduct
or acted in violation of the Code of Bank’s Commitment to Customers which the bank has
adopted voluntarily, the bank is committed to investigate the matter and endeavor to
communicate the findings to the customer within _____ working days from the date of receipt
of complaint and wherever justified, compensate the customer for financial loss, if any, as
contemplated under this policy.
a) 10 b) 7* c) 12 d) 15
In terms of the guidelines for lenders liability, and the Code of Bank’s Commitment to customers, the
bank would return to the borrowers all the securities / documents / title deeds to mortgaged property
within _____ days of repayment of all dues agreed to or contracted The bank will compensate the
borrower for monetary loss suffered, if any due to delay in return of the same. In the event of loss of
title deeds to mortgage property at the hands of the banks the compensation will cover out of pocket
expenses for obtaining duplicate documents plus a lump sum amount as decided by the bank.
a) 7 b) 15*, c) 21 d) 25
64) It is mandatory for bank to reimburse the customer, the amount wrongfully debited on account of
failed ATM within a maximum period of _____ working days from the receipt of the complaint. For
any failure to re-credit the customer’s account within the stipulated period from the date of receipt of
the complaint, bank shall pay compensation of Rs._____ - per day to the aggrieved customer. This
compensation shall be credited to the customer’s account automatically without any claim from the
customer, on the same day when bank affords the credit for the failed ATM transactions.
a) 5;100 b) 10;150, c) 14;150 d) 7;100/-*
65) Which of the following statement is incorrect?
a) The bank will not honour cheques drawn on current accounts maintained by other banks with it
unless arrangements are made for funding cheques issued. Issuing bank should be responsible
to compensate the cheque holder for non payment / delayed payment of cheques in the absence
of adequate funding arrangement.
b) The Bank would not compensate the customer for delays in collection of cheques designated in
foreign currencies sent to foreign countries as the bank would not be able to ensure timely credit
from overseas banks.
c) In the event a cheque or an instrument accepted for collection is lost in transit or in the clearing
process or at the paying bank’s branch, the bank shall immediately on coming to know of the
loss, bring the same to the notice of the account holder so that the account holder can inform the
drawer to record stop payment and also take care that cheques, if any, issued by him / her are
not dishonoured due to non-credit of the amount of the lost cheques / instruments. The bank
would provide all assistance to the customer to obtain a duplicate instrument from the drawer of
the cheque.
d) The bank would not compensate the customer for any reasonable charges he/she incurs in getting
duplicate cheque / instrument upon production of receipt. The instrument is to be obtained from
a bank/ institution who would charge a fee for issue of duplicate instrument.*
66) The Reserve Bank has set out a five-pillar framework to guide its developmental and regulatory
measures. Which of the following is not the regulatory pillar:
a) PILLAR – I: Clarifying and strengthening the monetary policy framework.
b)PILLAR – II: Strengthening banking structure through new entry, branch expansion, encouraging
new varieties of banks, and moving foreign banks into better regulated organisational forms.
c) PILLAR – III: Broadening and deepening financial markets and increasing their liquidity and
resilience so that they can help absorb the risks entailed in financing India’s growth.
d) PILLAR – IV : Expanding access to finance to small and medium enterprises, the unorganised
sector, the poor, and remote and underserved areas of the country through measures to foster
financial inclusion.
e) PILLAR – V: Improving the system’s ability to deal with corporate distress and financial
institution distress by strengthening real and financial restructuring as well as debt recovery.
f) None of the above*
68) Which pillar of RBI’s developmental and regulatory measures emphasizes on
Strengthening banking structure through new entry, branch expansion, encouraging
new varieties of banks, and moving foreign banks into better regulated organisational forms. a) Pillar
I b) Pillar III c) Pillar II* d) Pillar V
69) Which pillar of RBI’s developmental and regulatory measures emphasizes expanding access to
finance to small and medium enterprises, the unorganised sector, the poor, and remote and
underserved areas of the country through measures to foster financial inclusion. a) Pillar I b)
Pillar IV* c) Pillar II d) Pillar V
90) On a review of the permitted transactions under the Rupee Drawing Arrangements (RDAs), the
Reserve Bank increased the limit of trade transactions from the existing Rs.5,00,000/- per transaction
to Rs._______ per transaction, with immediate effect.
a) 10,00,000 b) 12,00,000 c) 15,00,000*d) 17,50,000
91) The concept of a _______ account was introduced in the current framework as an important step
in fraud risk control.
a) Special Mention account. b) Red Flagged *, c) High Risk account. d) Early Mortality account.
92) A is one where suspicion of fraudulent activity is thrown up by the presence of one or more Early
Warning Signals (EWS). This concept has been introduced in the current framework as an important
step in fraud risk control. a) Red Flagged Account* b) Special Mention account., c) High Risk
account. ____________ d) Early Mortality account.
93) The threshold for Early Warning Signals and Red Flagged Account is an exposure of ________ or
more at the level of a bank irrespective of the lending arrangement (whether solo banking, multiple
banking or consortium). a) 100 million b) 250 million c) 500 million* d) 1000 million
94) The officer responsible for the operations in the account should be sensitized to observe and
report any manifestation of the Early Warning Signal promptly to the or any other group constituted
by the bank
for the purpose immediately.
a) Fraud Monitoring Group (FMG) *, b) Fraud Management Group (FMG), c) Core Monitoring
Group (CMG), d) Fraud Surveillance Group (FSG)
95) The Framework for fraud risk management in banks also includes broad guidelines relating to
the, which of the following?
(i) Reporting to the Central Repository of Information
on Large Credits (CRILC). a) Monitoring of critical areas
(ii) Lending under consortium or multiple banking arrangements
(iii) Staff accountability.
(iv) Filing complaints with law enforcement agencies.
(v) Penal measures for fraudulent borrowers
(vi) Central Fraud Registry.
a) (i) & (ii) only b) (iii) to (vi) only, c) All of the above* d) None of these
96) The Reserve Bank has advised all public sector banks and select private sector and foreign banks
to appoint an internal Ombudsman. The internal Ombudsman would be designated as :-
Chief Ombudsman Service Officer, B) Chief Customer Ombudsman Officer, C) Internal
Ombudsman Customer Service Officer, D) Chief Customer Service Officer*
97) The Reserve banks has directed all ______ and few to appoint Chief Customer Service
Officers. (Internal Ombudsman).
a) Public Sector Banks; Private Sector & Foreign Banks*
b) Private Sector Banks; Foreign Banks
c) Private Banks & Foreign Banks
d) Private Sector Banks; Public Sector Banks
98) As per the revised norms, the procedures for acquisition of accommodation on lease / rental
basis by all commercial
banks will now be determined by the____ :- a) State Govt. b) RBI, c) Banks themselves* d)
Ministry of Finance
99) P.J. Nayak Committee has prescribed seven broad themes to the Reserve Bank to advise all
public sector banks to suitably determine the agenda items and the periodicity thereof, keeping in
view that there is adequate focus on matters of strategic and financial importance. The seven themes
include business strategy, financial reports and their integrity, risk, compliance,_______, and
human resources.
a) Customer protection, Financial inclusion*
b) Customer awareness, Financial integrity
c) Customer awareness, Fraud management.
d) Strategic Marketing, Financial inclusion
100) The Reserve Bank had, in the first bi-monthly monetary policy statement 2015-16, proposed to
do away with the _____ and instead, replace it with the seven critical themes. b) Calendar of
Reviews*
c) Monitoring of strategic assets, D) Calendar of performance parameters
101) In order to enable Private Sector Banks to attract and retain professional directors, the Reserve
Bank has issued guidelines on compensation for non-executive Directors for implementation by
private sector banks, that will reflect market realities and will be within the parameters specified in
the Banking Regulation Act, 1949 and the Companies Act, 2013. Such compensation, however, shall
not exceed _____ per annum for each director. a) 1 million* b) 1.5 million c) 0.5 million d) 2
million
102) The Board may, at its discretion, provide for in the policy, payment of compensation in the form
of ______ to the non-executive directors (other than the Part-time Chairman), subject to the bank
making profits. a) Bonus b) Commission on profits*, c) Additional Shares d) None of
these
103) In addition to the directors’ compensation, the bank may pay _______ to the non-executive
directors and reimburse their expenses for participation in the Board and other meetings. a) Sitting
fees* b) Commission, c) Bonus d) Additional allowances
104) Banks in private sector would be required to obtain prior approval of the Reserve Bank for
granting _______ to the part-time non-executive Chairman. a) Bonus b) Commission, c)
Remuneration* d) Loans
105) The compensation policies of banks would be subject to supervisory oversight including review
under the Supervisory Review and Evaluation Process (SREP) under ______ framework.
a) Pillar 2 and Basel III framework
b) Pillar 3 and Basel III framework
C) Pillar 2 and Basel II framework* D) Pillar 1 and Basel II framework
106) Banks are required to make disclosure on remuneration paid to the directors on an ______
basis at the minimum, in their Annual Financial Statements. a) Semi annual b) Quarterly c)
Monthly d) Annual*
107) Under the revised criteria for opening of branches / extension counters / specialised branches
within the area of operation of the StCBs, Capital to Risk (Weighted) Assets Ratio (CRAR) should not
be less than :- a) 9 percent * b) 10 percent c) 8 percent d) 10.5 percent
108) Under the same revised criteria, net Non Performing Assets (NPA) should be less than ______:
a) 9 percent b) 5 percent*, c) 8 percent d) 6 percent
109) The Reserve Bank has relaxed its requirement of additional factor of authentication (AFA)
for across all merchant categories to enhance customer convenience while ensuring security in card
based transactions.
a) Low Value Card Present Transactions, b) High Value Card Present Transactions, c) Small Value
Card Present Transactions, d) None of the above.
110) The Reserve Bank has advised all scheduled commercial banks that relaxation for additional
factor of authentication (AFA) requirement is permitted for transactions for a maximum value of
______: a) Rs. 2000 per transaction* b) Rs. 2500 per transaction, c) Rs. 5000 per transaction
d) Rs. 10000 per transaction
111) For additional factor of authentication (AFA) beyond the transaction limit prescribed by RBI, the
card has to be processed as a contact payment and authentication with:- _ a) PAN (AFA) b) MICR
(AFA), c) PIN (AFA)* d) IFSC (AFA)
112) Even for transaction values below the limit prescribed by RBI, the customer may choose to
make payment as a contact payment. In other words, customers cannot be compelled to do a
________ payment.
a) On the spot b) Contactless* c) Cash less d) None
113) The Contactless cards should necessarily be chip cards adhering to _________ compliant
payment standard, so as to be acceptable across the existing card acceptance infrastructure.
a) Europay, MasterCard and Visa (EMV)*
b) RuPay, MasterCard and Visa (RMV)
c) Only MasterCard and Visa.d) Europay and RuPay only.
114) The Reserve Bank has advised all scheduled commercial banks, that with effect from ________,
all new cards issued – debit and credit, domestic and international by banks shall be EMV chip and
PIN based cards. a) 16-8-2015 b) 1-9-2015* c) 1-1-2016 d) 1-4-2016
115) The Reserve Bank has advised authorised dealer (category–I) banks that recognised non-
resident External Commercial Borrowing (ECB) lenders may enter into swap transactions with their
overseas bank which shall, in turn, enter into a back-to- back swap transaction with any AD Category-
I bank in India for mobilizing ______as per the prescribed procedure.
a) INR* b) $ c) Euro d) Discretion of the bank
116) On a review of the permitted transactions under the Rupee Drawing Arrangements (RDAs), the
Reserve Bank increased the limit of trade transactions from the existing Rs.5,00,000/- per transaction
to Rs. _______ per transaction, with immediate effect. a) 7,50,000 b)10,00,000 c) 12,50,000
d) 15,00,000*
117) Recently, which category of banks were advised by RBI under the framework for Revitalising
Distressed Assets in the Economy – Guidelines on Joint Lenders’ Forum (JLF) and Corrective Action
Plan:
a) All Scheduled Commercial Banks (excluding RRB’s), b) Exim Bank c) SIDBI d) NHB e) All of
these*
118) With a view to ensuring more stake of promoters in reviving stressed accounts and provide
banks with enhanced capabilities to initiate change of ownership in accounts which fail to achieve the
projected viability milestones, banks may, at their discretion, undertake a by converting loan dues
to equity shares.
a) Strategic Debt Restructuring (SDR)*, b) Corporate Debt Restructuring (CDR), c)
Organizational Debt Restructuring (ODR), d) Stressed Debt Restructuring (SDR)
119) At the time of initial restructuring, the JLF must incorporate, in the terms and conditions, an
option to convert the entire loan (including unpaid interest), or part thereof, into ______ in the
company in the event the borrower is not able to achieve the viability milestones and/or adhere to
‘critical conditions’ as stipulated in the restructuring package. a) Bonds b) Shares* c)
Debentures d) All above
120) If the borrower is not able to achieve the viability milestones and/or adhere to the ‘critical
conditions’ referred to above, the JLF must immediately review the account and examine whether the
account will be viable by effecting a change in_______.
a) Structure b) Ownership* c) Legal Statusd) None
121) The decision on invoking the Strategic Debt Restructuring (SDR) by converting the whole or
part of the loan into equity shares should be taken by the Joint Lenders’ Forum ( JLF) as early as
possible but within _______days from the above review of the account.
a) 60 b) 45, c) 30* d) 90
122) The decision on invoking the Strategic Debt Restructuring (SDR) should be well documented
and approved by the majority of the Joint Lenders’ Forum members which comprise of minimum of
______ percent of creditors by value and _____ percent of creditors by number.
a) 60, 50 b) 80, 50, c) 55, 60 d) 75, 60*
123) Post the conversion, all lenders under the Joint Lenders’ Forum must collectively hold ______
percent or more of the equity shares issued by the company. a) 49 b) 60 c) 51* d) 45
124) For accounts which have been referred by the JLF to CDR Cell for restructuring, JLF may decide
to undertake the SDR either directly or under the ______ Cell.
a) Strategic Debt Restructuring, b) Corporate Debt Restructuring*, c) Organizational Debt
Restructuring (ODR), d) Stressed Debt Restructuring (SDR)
125) On completion of conversion of debt to equity as approved under Strategic Debt Restructuring,
the existing asset classification of the account, as on the reference date, will continue for a period of
______ months from the reference date.
a) 15 months b) 18 months* c) 12 months d) 10 months
126) Banks should ensure compliance with the provisions of _______ and JLF should closely monitor
the performance of the company and consider appointing suitable professional management to run
the affairs of the company.
a) Banking Regulation Act* b) Companies Act, 2013, c) Reserve Bank of India Act. d)
SARFAESI Act
127) On divestment of banks’ holding in favour of a ‘new promoter’, the asset classification of the
account may be upgraded to ______ , subject to the prescribed conditions.
a) Special Mention Account. b) Sub Standard, c) Standard* d) None of the above
128) At the time of divestment of their holdings to a ‘new promoter’, banks may the existing
debt of the company considering the changed risk profile of the company without treating the
exercise as ‘restructuring’ subject to banks making provision for any diminution in fair value of the
existing debt on account of the refinance.
a) Refinance* b) Rephrasec) Reschedule d) Capitalise
129) The Joint Lender Forum must approve the Strategic Debt Restructuring (SDR) conversion
package within ___ days from the date of deciding to undertake SDR. a) 90* b) 45 c) 60
d) 30
130) Which of the following documents have been recently advised by RBI to be deemed to be
Officially Valid Documents (OVD’s) under simplified measures relating to KYC norms for ‘low risk’
customers for the limited purpose of proof of address where customers are unable to produce any
officially valid document:
i) Utility bill which is not more than two months old of any service provider (electricity, telephone,
postpaid mobile phone, piped gas, water bill);
ii) Property or Municipal Tax receipt;
iii) Bank account or Post Office savings bank account statement
iv) Pension or family pension payment orders (PPOs) issued to retired employees by Government
Departments or Public Sector Undertakings, if they contain the address;
v) Letter of allotment of accommodation from employer issued by State or Central Government
departments, statutory or regulatory bodies, public sector undertakings, scheduled commercial
banks, financial institutions and listed companies. Similarly, leave and license agreements with
such employers allotting official accommodation; and
vi) Documents issued by Govt. deptt. of foreign jurisdictions and letter issued by Foreign Embassy or
Mission in India.
a) Only (i), (ii), (iii)b) Only (iv), (v), (vi), c) All except (v) & (vi) d) All of the above*
131) The compensation policies of banks would be subject to supervisory oversight including review
under the Supervisory Review and Evaluation Process (SREP) under framework.
a) Pillar 2 and Basel III framework, b) Pillar 3 and Basel III framework, c) Pillar 2 and Basel II
framework*, d) Pillar 1 and Basel II framework
132) With a view to developing strong risk management capabilities to manage agri-commodity price
risk, the Reserve Bank advised all scheduled commercial banks (excluding regional rural banks) to
encourage by the agri-borrowers through agri-commodity derivatives. a) Speculation b)
Crystalisation c) Hedging* d) Forward sale
133) The Reserve Bank advised all-India Term Lending and Refinancing Institutions (AIFI) to make
certain disclosures in addition to the extant disclosure requirements in the Notes to Accounts in their
Annual Financial Statements relating to sale of ______ to Securitisation Companies /
Reconstruction Companies.
a) Fixed assets. b) Non-Performing Assets*, c) Intangiblesd) Investments.
134) On a review, the Reserve Bank allowed all scheduled commercial banks (excluding RRBs) to
invest in the
issued by other banks for financing of infrastructure and affordable housing. In order to prevent
double counting of regulatory exemptions allowed, such investments will be subject to prescribed
conditions. a) Long term debentures b) Long term loans
c) Long term bonds* d) Equity & preference shares
135) The RBI has continued to provide liquidity under overnight
a) Pension Life Certificates
repos at ____ per cent of bank-wise NDTL at the LAF repo rate and
liquidity under 14-day term repos as well as longer term repos of up to ____ per cent of NDTL of the
banking system through auctions. a) 0.50 ; 1 b) 0.25; 0.50 c) 0.25; 0.75* d) 0.50; 0.75
136) The Reserve Bank released the final guidelines for introduction of 6-year and 13-year cash
settled Interest Rate Futures (IRF) on Government of India Securities with residual maturity of
__________and _______respectively.
a) 4-8 years, 11-15 years* b) 6-8 years, 10-15 years, c) 7-8 years, 12-15 years d) 8-10 years,
12-5 years
137) Agency banks may also promote the use of among pensioners, which would eliminate the need
for physical presence at branches and issue of acknowledgement. b) Digital Life Policy, c) Pension
Life code _____________ d) Digital Life Certificate*
138) The Government of India has also launched a scheme for introduction of Aadhaar based digital
life certificates known as_________: a) Jeevan Life certificate, b) Jeevan Life code, c) Jeevan
Praman*, d) Jeevan Praman certificate
139) The RBI has permitted all banks authorised to deal in foreign exchange to allow remittances by
a resident individual up to _______ per financial year for any permitted current or capital account
transaction or a combination of both under Liberalised Remittance scheme. a) USD 1,50,000 b)
USD 2,00,000, c) USD 2,50,000* d) USD 1,75,000
140) As per the revised guidelines, the PAN Card is mandatory if the sale/purchase of Immoveable
property is valued excceding Rs. _____. Further, PAN is also needed if properties valued by stamp
valuation authority exceeds the amount of Rs. :
a) Rs 5 lakh and Rs 10 lakh b) Rs 10 lakh and Rs 10 lakh*, c) Rs 10 lakh and Rs 15 lakh d) Rs
10 lakh and Rs 20 lakh
141) Which of the following is correct regarding Time Deposit with a Banking Company w.r.t PAN
Card:
a) The PAN Card is mandatory if deposits aggregating is more than Rs. 5 lac during the year.
b) The PAN Card is mandatory even if depositor has an account with Co-op Banks, Post office, Nidhi,
NBFC companies.
c) The PAN Card is mandatory if deposits aggregating is more than Rs. 50,000/- during the year.
d) The PAN Card is mandatory if deposits aggregating is more than Rs. 1,00,000/- during the year.
a) Only a & b are true* b) All b & c are true
c) Only b & d are true d) All are true.
142) In case of deposits with Post office and Saving Bank, the PAN Card is mandatory if the amount
is exceeding Rs. _______: a) Rs 10,000 b) Rs 20,000, c) Rs 50,000 d) Discontinued*

143) In case of Sale or Purchase of securities, the PAN Card is mandatory if the contract of
sale/purchase value is exceeding Rs. ____: a) Rs 5 lakh b) Rs 4 lakh, c) Rs 2 lakh d) Rs 1
lakh*
144) Which of the following statement is correct regarding Opening of an account (other than time
deposit) with a Banking Company:
a) PAN Card is compulsory for all the new accounts that are being opened with the banking company.
b) In case of opening of Basic Saving Bank Account there is no requirement of PAN Card.
c) Co-operatives banks also need to comply with the guidelines on Pan.
145) As per the revised guidelines, for installation of telephone / cellphone connections, the PAN Card
is : a) Mandatory b) Discontinued*, c) Varies from State to State. d) None of above
146) In case of Hotel / restaurant bill(s), the PAN Card is required if the cash payment on account of
the bill is exceeding Rs. _____: a) Rs 30,000 b) Rs 40,000 c) Rs 50,000* d) Rs 60,000
147) In case of cash purchase of bank Drafts / Pay orders / Banker’s cheque, the PAN Card is
mandatory if the amount aggregating exceeds Rs. _______ in a day: a) Rs 25,000 b) Rs 50,000*
c) Rs 60,000 d) Rs 80,000
148) In case of Cash deposits with the Banking Company exceeding Rs. _____ in a day, then the
PAN Card is compulsory: a) Rs 50,000* b) Rs 30,000 c) Rs 25,000 d) Rs 40,000
149) PAN Card is mandatory if the cash payment in connection with foreign travel for fare, payment
to travel agent, purchase of foreign currency is exceeding Rs. _______ at any one time:-
a) 20,000 b) 50,000* c) 1,00,000 d) 5,00,000
150) In case of Mutual funds unit transactions, the PAN Card is compulsory if the payment for
purchase of mutual funds units exceeds Rs. _______: a) Rs 35,000 b) Rs 50,000* c) Rs 45,000
d) Rs 60,000
151) Which of the following statement is true regarding purchase/sale of Shares, Debentures, RBO
bonds w.r.t PAN Card:
a) PAN Card is required if the purchase/sale of 158) All penal inter est shares is exceeding
Rs. 1 lac per transaction.
b) PAN Card is required if a person opens a demat account.
c) PAN is mandatory in case of purchase of debentures/bonds, RBI bnds is exceeding Rs. 50,000/
d) All of above*
152) PAN Card is compulsory if the payment of the premium is exceeding Rs. _______ in a year:
a) Rs 20,000 b) Rs 30,000, c) Rs 45,000 d) Rs 50,000*
153) In case of Purchase or sales of goods and services, including jewellery/bullion PAN Card is
mandatory if the purchase/sale of any goods and services is exceeding Rs. _____ per transaction:
a) Rs 50,000 b) Rs 1 lakh, c) Rs 2 lakh* d) Rs 2.5 lakh
154) In case of Cash cards/Prepaid instruments issued under Payment and Settlement Act, PAN Card
is mandatory if the cash payment aggregating is more than ____ in a year:
a) Rs 30,000 b) Rs 40,000, c) Rs 50,000* d) Rs 60,000
155) The Reserve Bank in its Fourth Bi-monthly Monetary Policy Statement, 2015-16, announced on
Sept. 29, 2015, decided to reduce the policy Repo rate under the liquidity adjustment facility (LAF) by
50 basis points and now it stands at _______: a) 6.00% b) 6.25 % c) 6.75%* d) 7.00%
156) The RBI has decided to continue to provide liquidity under overnight repos at 0.25 per cent of
bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term
repos of up to 0.75 per cent of NDTL of the banking system through auctions and continue with daily
variable rate repos and reverse repos to smooth liquidity.
a) 0.25 %, 0.50 % b) 0.25%, 0.75 %*, c) 0.5%; 0.75% d) None of these
157) Consequent to the changes in the Repo rate, the Reverse Repo rate under the LAF stands
adjusted to ______, and the marginal standing facility (MSF) rate and the Bank Rate to _____. a)
5.75 %; 7.75%* b) 4.75 %; 6.75 %, c) 4.50%; 6.50% d) 5.50%; 7.50%
158) rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate stand
revised. Effective rate from 29th Oct 2013, the penal interest is Bank Rate plus _____ percentage
points or Bank Rate plus ____ percentage points depending upon the duration of the shortfalls. a)
1.0; 3.0 b) 3.2; 5.1 c) 3.0; 5.0* d) 2.5; 5
159) Government of India has approved the extension of the Interest Subvention Scheme for the year
2015-16 for short term crop loans. Interest subvention @ _____% per annum will be made
available to the Public Sector Banks and the Private Sector Scheduled Commercial Banks (in
respect of loans given by their rural and semi-urban branches) on their own funds used for short-
term crop loans up to Rs.______ lac per farmer provided the lending institutions make available
short term credit at the ground level at ____ % per annum to the farmers. a) 2 ; 3; 7* b) 3;
4; 7 c) 3 ; 5 ; 7 d) 3; 4; 8
160) The Interest Subvention of _______ will be calculated on the crop loan amount from the date of
its disbursement / drawal up to the date of actual repayment of the crop loan by the farmer or up
to the due date of the loan fixed by the banks whichever is earlier, subject to a maximum period of
one year. a) 1% b) 2 %* c) 4% d) 8%
161) Additional interest subvention @ _____% per annum will be available to the farmers repaying
the loan promptly from the date of disbursement of the crop loan up to the actual date of
repayment or up to the due date fixed by the bank for repayment of crop loan, whichever is
earlier, subject to a maximum period of one year from the date of disbursement. This also implies
that the farmers paying promptly would get short term crop loans @ _____% per annum during
the year 2015-16. This benefit would not accrue to those farmers who repay after one year of
availing of such loans. a) 3; 4* b) 4; 6 c) 5; 8 d) 7 ; 10
162) In order to discourage distress sale by farmers and to encourage them to store their produce
in warehouses against warehouse receipts, the benefit of interest subvention will be available to
small and marginal farmers having Kisan Credit Card for a further period of up to ______ months
post-harvest on the same rate as available to crop loan against negotiable warehouse receipt for
keeping their produce in warehouses. a) three b) five c) six* d) eight
163) To provide relief to farmers affected by natural calamities, the interest subvention of 2% for
short term crop loans will continue to be available to banks for the ______ on the restructured
amount. Such restructured loans may attract normal rate of interest from the second year onwards as
per the policy laid down by the RBI.
a) 3 months b) 6 months c) 9 months d) first year*
164) In respect of 2% interest subvention for short term crop loans, banks are required to submit
their claims on a
of which, the latter needs to be accompanied by the Statutory Auditor's certificate certifying the
claims for subvention for the entire year ended March 31, 2016 as true and correct.
a) Quarterly basis b) Half-yearly basis*, c) Yearly basis d) None of the above
165) is essentially a management process integral to the establishment of sound internal accounting
functions and effective controls and setting the tone for a vigilant internal audit to preclude the
incidence of serious errors and fraudulent manipulations.
a) Concurrent* b) Separate c) Monthly d) Quarterly
166) Which of the following statement is correct with respect to modified provisions of
Concurrent Audit?
a) New areas posing risk and Non-branch units may be brought under the purview of concurrent audit
and the branches with high risk are to be subjected to concurrent audit irrespective of their
business size.
b) All specialised branches viz., agriculture, small and medium enterprises(SME), corporate,
retail assets, portfolio management, treasury, forex, back office, etc., may be covered
under concurrent audit.
c) Certain areas where risk has reduced on account of computerisation, implementation of core
banking system may be excluded from the purview of concurrent audit.
d) All of the above *
167) Concurrent audit at branches should cover at least __ % of the advances and ____ per cent of
deposits of a bank.
a) 50,50* b) 40,60 c) 30,70 d) 60,40
168) Concurrent Audit should be conducted in:
a) Branches rated as high risk or above in the last Risk Based Internal Audit or serious deficiencies
found in Internal Audit;
b) All specialised branches like large corporate, mid corporate, exceptionally large/very large
branches (ELBs/VLBs), SME;
c) All centralised processing units like Loan Processing Units (LPUs), service branches, centralised a/c
opening divisions, etc.
d) Any specialised activities, such as, wealth management, portfolio management services, card
products division, etc., data centres, treasury / branches handling foreign exchange business,
investment banking, etc. and bigger overseas branches, critical head office departments.
e) Any other branches or departments where, in the opinion of the bank, concurrent audit is
desirable.
f) All of these *
169) The Reserve Bank has set up _______ to collect, store, and disseminate data on all borrowers’
credit exposures.
a) Central Repository of Information on Large Credits (CRILC)*, AMFI c) ICRA d) ICAI
170) Out of the following which points determine the scope of Concurrent Audit?
a) To supplement the efforts of the bank in carrying out simultaneous internal check of the

transactions and other verifications and compliance with the procedures laid down.
b) To cover certain fraud - prone areas, such as, handling of cash, deposits, advances, foreign
exchange business, off-balance sheet items, credit-card business, internet banking, etc.
c) To keep a check on high-risk transactions having large financial implications as opposed to
transactions involving small amounts.
d) Areas, where the Reserve Bank has specifically advised the banks to be covered under concurrent
audit, may also be part of the checklist of the concurrent auditor.
e) All of the above*
171) The option to consider whether concurrent audit should be done by bank’s own staff or external
auditors (which may include retired staff of its own bank) is left to the discretion of individual banks.
Appointment of an external audit firm may be initially for one year and extended upto ____ years,
after which an auditor could be shifted to another branch subject to satisfactory performance. a) 2
years b) 3 years* c) 4 yearsd) 5 years
172) If external firms are appointed and any serious acts of omission or commission are noticed in
their working, their appointments may be cancelled and the fact may be reported to:- a) RBI b)
ICAI, Bank’s Audit Committee of the Board of Directors (ACB), c) All of These e) Only a and b*
173) The Reserve Bank has further advised banks to review the present system of concurrent audit
immediately and incorporate necessary changes therein. The modified concurrent audit system of the
bank should then be placed before the .
a) ICAIb) Audit Committee of Board of Directors (ACB)*, c) Shareholders d) None of these
174) The Reserve Bank has advised Scheduled Commercial Banks (excluding regional rural banks) to
make use of the information available in Central Repository of Information on Large Credits (CRILC)
and not limit their due diligence to seeking no-objection certificate (NOC) from the bank with whom
the customer is supposed to be enjoying the credit facilities as per the declaration. Further banks may
also seek ‘No Objection Certificate’ from the ____ bank where the initial deposit to current account is
made by way of a _____ a) Drawee, Cheque* b) Drawer, Cash, c) Drawer, Cheque d) Drawee,
Cash.
175) The Reserve Bank has advised that banks which have capital to risk weighted assets ratio
(CRAR) of 10 per cent or more and have also made net profit as of March 31 of the previous year
need not approach the Reserve Bank for prior approval for equity investments in cases where after
such investment, the holding of the bank remains less than 10 per cent of the investee company’s
paid up capital, and the holding of the bank, along with its subsidiaries or joint ventures or entities
continues to remain less than ____ per cent of the investee company’s paid up capital. a) 10 %
b) 12.5 % c) 15% d) 20 %*
176) In order to streamline the existing processes and to obviate the need to approach the Reserve
Bank on case-tocase basis, the Reserve Bank has permitted commercial banks to grant loans and
advances to the
without seeking prior approval of the Reserve bank.
a) Chief Executive Officer / Whole Time Directors*, b) Chief Executive Officers / Managing Director,
c) Chief Financial Officer/ Managing Director, d) Chief Operating Officer / Whole Time Director
168) Which of the following category of loans can be granted to these officials:
a) Loan for purchasing of car, b) Loan for purchasing of personal computer, furniture, c) Loan for
constructing / acquiring a house for personal use., d) Festival advance and credit limit under
credit card facility, e) All of these*
179) Which of the following statements is true with regards to loans and advances to these officials?
a) The loans and advances should form part of the compensation / remuneration policy approved by
the Board of Directors or any committee of the Board to which powers have been delegated or
the Appointments Committee, as the case may be.*
b) Guidelines on Base Rate will be applicable on the interest charged on such loans.
c) The interest rate charged on such loans can be lower than the rate charged on loans to the bank’s
own employees. d)Other loan can also be sanctioned to Directors.
180) The Reserve Bank is issuing Banknotes in Mahatma Gandhi Series 2005 with a new numbering
pattern and special features for the visually impaired in ____, ____ and ______ denominations. a)
10, 50,100 b) 100, 500 and 1000 *, c) 50,100 and 500 d) 10, 500 and 1000
181) In the new Banknotes in Mahatma Gandhi Series 2005, in the numbering pattern, the numerals
in both the number panels of these denominations ____ in size from left to right, while the first ____
alphanumeric characters (prefix) remain constant in size. a) Ascend, 3* b) Descend, 3 c)
Ascend, 4 d) Descend, 4
182) With regards to special features for the visually impaired, in order to make it easier for them to
identify banknotes, the size of the identification mark in these denominations has been increased by
_____. a) 25% b) 50 %* c) 75 % d) 85%

183) The structure of Angular bleed lines in Banknotes in Mahatma Gandhi Series 2005 has been
introduced as
in 3 blocks in Rs. 500 & ____ lines in 4 blocks in Rs.1000 denominations. a) 1, 2, 3 b) 2,3,4
c) 3,4,5 d) 4,5,6*
184) The Reserve Bank has reviewed the procedure for detection of counterfeit notes in consultation
with the Government. Which of these points are true regarding these guidelines?
a) Banknotes tendered over the counter or received directly at the back office / currency chest
through bulk tenders should be examined for authenticity through machines and such of these
determined as a counterfeit one, shall be stamped as “COUNTERFEIT NOTE” and impounded.
b) When a banknote tendered at the counter of a bank branch or treasury is found to be counterfeit,
an acknowledgement receipt in the prescribed format must be issued to the tenderer, after
stamping the note.
c) No credit to customer’s account is to be given for counterfeit notes, if any, in the tender received
over the counter or at the
back-office / currency chest. d) All of these*
185) Customer charges, if any, levied on cash withdrawals shall not exceed ______ per cent of the
transaction amount at all centres irrespective of the limit of Rs.1000 / Rs.2000. a) 1 %* b) 1.5
% c) 1.75% d) 2%
186) The instructions on compensation to banks of the notional value of counterfeit notes detected
and reported and the system of lodging claims for compensation by Forged Note Vigilance Cell of
banks stand withdrawn and a penalty at__ of the notional value of counterfeit notes, in addition
to__the recovery of loss to the extent of the notional and ______ schemes as per the extant rates.
value of such notes, will be imposed. a) 40 % b)
60 % c) 80 % d) 100 %*
187) The Reserve Bank has reviewed and enhanced the limit for cash withdrawal at Point of Sale (POS -
for debit cards and open system prepaid cards issued by banks in India) from Rs.1000 to ________
per day in Tier III to VI centres.
a) Rs. 1500 b) Rs.2000* c) Rs. 2,500 d) Rs. 3000
188) The RBI has decided to pay agency commission to authorised banks for handling the work
relating to the _ Kisan Vikas Patra (KVP), 2014, Sukanya Samriddhi Account*
a) Kisan Vikas Patra (KVP), 2014, Atal Pension Yojana
b) Pradhan Mantri Jan Dhan Yojana & Atal Pension Yojana
c) PM Jeevan Jyoti Bima Yojana & PM Suraksha Bima Yojana
189) As part of the endeavour to smoothen the liquidity management operations, the Reserve Bank
has introduced STP in fixed rate Liquidity Adjustment Facility (LAF) Repo, fixed rate LAF Reverse Repo
and Marginal Standing Facility (MSF) operations. What does STP stand for? a) Short Term
Processing b) Straight Through Processing* c) Structured Total Processing d) None of these
190) Which of the following statement is correct with respect to the implementation of STP?
a) It will enable eligible participants to receive the credit or debit immediately on placement of the
bids or offers, subject to the availability of collateral or funds, within prescribed time window.
b) Through STP, Eligible participants can, as hitherto, place multiple bids/offers in the respective
liquidity facilities.
c) Settlement of the transaction will be automatic and immediate after the placement of the bid/offer.
The transactions undertaken by a participant will be final and request for cancellation of bids or
offers will not be entertained.
d) The automation of these facilities will, in no way, affect the discretionary character of these facilities
and the Reserve Bank will continue to determine the extent of liquidity injection / absorption
depending upon the prevailing liquidity conditions in
the system. e) All of these*.
191) The Reserve Bank has now allowed commercial banks (excluding regional rural banks and local
area banks) to slot their excess statutory liquidity ratio (SLR) securities and marginal standing facility
(MSF) eligible securities under the ______ bucket.
a) Day 1* b) 2-7 Days c) 8-14 Daysd) 15-28 Days
192) On a review, the Reserve Bank advised all scheduled commercial banks (excluding regional
rural banks) that a rate____ to the actual interest rate charged to the borrower before restructuring
may be used to discount the future cash flows for the purpose of determining the diminution in fair
value of loans on restructuring.
a) Less than b) Greater than, c) Equal to* d) None of these,
193) The existing overnight benchmark interbank rate in India is replaced from July 22, 2015 by a
new benchmark called the .
a) Financial Benchmarks India Private Ltd Overnight Mumbai Interbank Outright Rate (FBIL-

Overnight MIBOR)* b) LIBOR c) MIBOR d) None of these
194) The FBIL-Overnight MIBOR will be based on actual traded rates and will be administered by a
new company called the Financial Benchmarks India Private Ltd (FBIL). The existing rate called the
Overnight MIBID/MIBOR based on polled rates is set by . a) FIMMDA-BSE b) FIMMDA-NSE*,
c) FIMMDA-OTC d) FIMMDA-SHCIL
195) Financial Benchmarks India Private Ltd (FBIL) has been jointly formed as an independent
company for administration of benchmarks in financial markets by the which of the following
institutions?
a) Fixed Income Money Market and Derivative Association of India (FIMMDA)
b) Foreign Exchange Dealers’ Association of India (FEDAI)
c) Indian Banks’ Association (IBA) d) All of these*
196) To facilitate greater level of participation in Corporate Bonds by Stand alone Primary Dealers
(SPDs), the Reserve Bank has increased exposure ceiling limits in respect of single borrower/
counterparty from 25 per cent to _____ of latest audited Net Owned Funds (NOF) and in respect of
group borrower from 40% to of the latest audited NOF
only for investments in AAA rated corporate bonds. a) 50%; 65%* b) 40%; 50% c) 45%;55%
d) 40%;60%
197) The Gold Monetisation Scheme, 2015 will replace the existing . However, the deposits
outstanding under
the Gold Deposit Scheme will be allowed to run till maturity unless the depositors prematurely
withdraw them.
a) Gold Deposit Scheme, 1995, b) Gold Deposit Scheme, 1999*, c) Sovereign Gold Bond Scheme,
d) None of these
198) Which of the following are eligible to make deposits under Gold Monetization Scheme?
a) Resident Indians & HUF, b) Trusts including Mutual Funds / Exchange Traded Funds registered
under SEBI (Mutual Fund) Regulations, c) Companies. d) All of these*
199) The minimum deposit at any one time shall be raw gold (bars, coins, jewellery excluding stones
and other metals) equivalent to grams of gold of 995 fineness. a) 10 gm b) 20 gm c) 30 gm*
d) 40 gm
200) The maximum limit for deposit under the Gold Monetization Scheme is _______:- a) Rs. 1 lac
b) Rs. 5 lac c) Rs. 10 lac d) No limit*
201) Consequent to the reduction in the Repo rate on 29 th Sept, 2016, the reverse repo rate under
the LAF will be reduced to ____ per cent, and the marginal standing facility (MSF) rate and the Bank
Rate at ____ per cent. a) 5.75; 7.75* b) 6.75; 8.75 c) 6;8 d) 7; 8
202) The Govt has launched MUDRA Bank. Which of the following is not true about the MUDRA Bank:
b) a) It will provide credit of upto Rs.10 lac to small entrepreneurs, It will act as a regulator for micro
finance institutions (MFIs).
c) It will have a corpus of Rs. 20,000 cr.
d) It will have a Credit Guarantee corpus of Rs. 3,000 cr.
e) None of these.*
203) Which of the following is an objective of Monetary Policy?
a) Regulate capital market., b) Regulate insurance trade, c) Regulate commodity markets, d)
Accelerate economic growth with price stability and stabilization of exchange rates.*
204) Which amongst the following is an opposite activity of ‘SPECULATION’?
a) Arbitrage b) Securitisation, c) Short & Long positions d) Hedging*, e) Spread
199) Which of the following is an Indian credit rating agency? a) CRISIL* b) SIDBI c) CIBIL
d) IBA e) IDFC
205) Which of the following terms is NOT directly related to the functioning of the RBI?
a) Ombudsman b) Marginal Standing Facility, c) SENSEX* d) Foreign Exchange Reserves,
e) None of these
206) The Government is contemplating tariff rationalization to raise India’s share in global trade to
3.5 percent by 2020. What is India share in the global trade at present? a) 1 percent b) 1.5
percent c) 2 percent*, 2.5 percent e) 3 percent
207) The Reserve Bank of India has granted ‘in-principle’ approval to _____ applicants to set up
Payments Banks under the Guidelines for Licensing of Payments Banks. a) 10 b) 11*c) 12 d) 13
208) During the validity of ____ months of the ‘in-
principle’ approval, the applicants have to comply with the requirements under the guidelines and
fulfil the other conditions as stipulated by the Reserve Bank. a) 12 months b) 15 months, c)
18 months* ________________ d) 24 months
209) All scheduled and non-scheduled banks i.e public, private, foreign, cooperative, regional rural
and local area banks will observe public holiday on ____ and ____ Saturdays from September 1,
2015; and will observe full working days on Saturdays other than referred to as non working
Saturdays. a) 1st and 3rd b) 2nd and 3rd, c) 1st and last d) 2nd and 4th *
210) means shifting / part shifting some activities of a branch in any centre without seeking prior
approval of Reserve Bank.
a) Branch shifting b) Premises shifting, c) Para shifting of branches * d) Merger of
branches
211) The Reserve Bank has dispensed with the existing instructions permitting domestic scheduled
commercial banks (excluding regional rural banks) to undertake which of the following activities?
a) Merger b) Closure, c) Shifting or part shifting, d) Opening of extension
counters, e) All of these*
212) The new location for part shifting would have to be within ____ Kilometer / Kilometers of the
existing location. a) 1* b) 2 c) 3 d) 4
213) Banks are no longer required to report details of opening of a new place of business including
Mobile branch / Mobile ATMs / call centres, closure, merger, shifting or conversion of any existing
place of business including call centres to the Regional Office concerned. They may, however,
ensure to continue submitting within ____ days of every quarter, information relating to opening,
closure, merger, shifting and conversion of branches to RBI. a) 7 days b) 14 days* c) 21 days d)
28 days
214) The maximum unit project cost for individual micro enterprises cases is Rs. .
a) 2,00,000* b) Rs. 4,00,000, c) Rs. 6,00,000 d) Rs. 8,00,000
215) The maximum unit project cost for a group enterprise is Rs. : a) 5 lakh b) 7 lakh c) 10 lakh*
d) 15 lakh
216) For loans disbursed under NULM scheme, Repayment schedule ranges from 5 to 7 years after
initial moratorium of _____ as per norms of the banks. a) 6-12 months b) 10-15 months,
c) 6-18 months* d) 10-12 months
217) A self help group (SHG) or members of an SHG constituted under NULM or a group of urban
poor desirous of setting up a group enterprise for self-employment can avail benefit of subsidised
loans from any bank. The group enterprise should have minimum ________ members with a
minimum of 70 percent members from urban poor families.
a) 5* b) 7 c) 9 d) 10
218) In an effort to increase direct lending to agriculture, the target for direct lending to small and
marginal farmers under the recently revised Priority Sector Norms has been increased to
________ percent for 2015-16 and to percent for 2016-17. a) 6;7 b) 7;8* c) 7;9 d) 8;9
219) The Union Government has unleashed second generation banking reforms with a number of
measures collectively named as ________. a) Rainbow b) Indradhanush*, c) Modified
Reforms d) Revamped measures
220) These reforms include ____ point agenda to revitalize capital starved public sector banks.
a) 4 point b) 5 point c) 6 point d) 7 point*
221) The points included in reform plan include a series of proposals in alphabetical order staring
from Appointments, Bank Board Bureau, Capitalization, De-stressing, Empowerment, Framework
of Accountability and Governance reforms.
a) Appointments, Capitalization* b) Audit, Cost Cutting, c) Advances, Credit portfolio d)
Amalgamation, Capitalization
222) As per the reforms, the Government has decided to separate the post of Chairman and
Managing Director by prescribing that in the subsequent vacancies to be filled up the _____ will
get the designation of MD & CEO.
a) Chairman b) CEO*, c) Executive Director d) Director
223 ) The Bank Board Bureau ‘BBB’ will be a body of eminent professionals and officials and will
comprise of a Chairman and ____ more members of which ____ will be officials and _____ experts
(of which two would necessarily be from the banking sector). a) 6,2,4 b) 8, 4,4 c) 7,3,4 d)
6,3,3*
224) As per the revised guidelines, the PAN Card is mandatory if the sale/purchase of Immoveable
property is valued exceeding Rs. _____. Further, PAN is also needed if properties valued by stamp
valuation authority exceeds the

amount of Rs. ____ :- Rs 5 lakh and Rs 10 lakh, b) Rs 10 lakh and Rs 10 lakh*, c) Rs 10 lakh
and Rs 15 lakh, d) Rs 10 lakh and Rs 20 lakh
225) Which of the following is correct regarding Time Deposit with a Banking Company w.r.t. PAN
Card:
a) The PAN Card is mandatory if deposits aggregating is more than Rs. 5 lac during the year.
b) The PAN Card is mandatory even if depositor has an account with Co-op Banks, Post office, Nidhi,
NBFC companies.
c) The PAN Card is mandatory if deposits aggregating is more than Rs. 50,000/- during the year.
d) The PAN Card is mandatory if deposits aggregating is more than Rs. 1,00,000/- during the year.
a) Only a & b are true* b) All b & c are true, c) Only b & d are trued) All are true.
226) In case of deposits with Post office and Saving Bank, the PAN Card is mandatory if the amount
is exceeding Rs. _______:
a) Rs.10,000 b) Rs 20,000, c) Rs.50,000 d) Discontinued*
227) In case of Sale or Purchase of securities, the PAN Card is mandatory if the contract of
sale/purchase value is exceeding Rs. ____:- a) Rs 5 lakh b) Rs 4 lakh, c) Rs 2 lakh d) Rs 1
lakh*
228) Which of the following statement is correct regarding Opening of an account (other than time
deposit) with a Banking Company:
a) PAN Card is compulsory for all the new accounts that are being opened with the banking company.
b) In case of opening of Basic Saving Bank Account there is no requirement of PAN Card.
c) Co-operatives banks also need to comply with the guidelines on Pan.
229) As per the revised guidelines, for installation of telephone / cellphone connections, the PAN Card
is ________: a) Mandatory b) Discontinued*, c) Varies from State to State. d) None
230) In case of Hotel / restaurant bill(s), the PAN Card is required if the cash payment on account of
the bill is exceeding Rs. _____:- a) Rs 30,000 b) Rs 40,000, c) Rs 50,000* d) Rs 60,000
231) In case of cash purchase of bank Drafts / Pay orders / Banker’s cheque, the PAN Card is
mandatory if the amount aggregating exceeds Rs. _______in a day:- a) Rs 25,000 b) Rs
50,000*, c) Rs 60,000 d) Rs 80,000
232) In case of Cash deposits with the Banking Company exceeding Rs. _____ in a day, then the
PAN Card is compulsory: a) Rs 50,000* b) Rs 30,000, c) Rs 25,000 d) Rs 40,000
233) PAN Card is mandatory if the cash payment in connection with foreign travel for fare, payment
to travel agent, purchase of foreign currency is exceeding Rs. _______ at any one time:
a) 20,000 b) 50,000* c) 1,00,000 d) 5,00,000
234) In case of Mutual funds unit transactions, the PAN Card is compulsory if the payment for
purchase of mutual funds units exceeds Rs. _______:-
a) Rs 35,000 b) Rs 50,000*, c) Rs 45,000 d) Rs 60,000
235) Which of the following statement is true regarding purchase/sale of Shares, Debentures, RBO
bonds w.r.t. PAN Card:
a) PAN Card is required if the purchase/sale of shares is exceeding Rs. 1 lac per transaction.
b) PAN Card is required if a person opens a demat account.
c) PAN is mandatory in case of purchase of debentures/bonds, RBI bonds is exceeding Rs. 50,000/-
d) All of above*
236) PAN Card is compulsory if the payment of the premium is exceeding Rs. _______ in a year:-
a) Rs 20,000 b) Rs 30,000, c) Rs 45,000 d) Rs 50,000*
237) In case of Purchase or sales of goods and services, including jewellery/bullion PAN Card is
mandatory if the purchase / sale of any goods and services is exceeding Rs. _____ per transaction:-
b) Rs 1 lakh, d) Rs 2.5 lakh
238) In case of Cash cards/Prepaid instruments issued under Payment and Settlement Act, PAN Card
is mandatory if the cash payment aggregating is more than ____ in a year:- a) Rs 30,000 b) Rs
40,000, c) Rs 50,000* d) Rs 60,000
Note: (ANSWER is * )

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Certificate Examination

(A Very useful book for Day to Day Banking and all

Sanjay Kumar Trivedy (Divisional Manager )

1. ABOUT CERT. EXAM IN AML&KYC 02-03

7. MEMORY BASED RECALLED QUESTIONS 82-101

8. TEST YOUR SELF 102-128

Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 1|Page

MEDIUM OF EXAMINATION: Examination will be conducted in English only.

Cut-off Date of Guidelines / Important Developments for Examinations

DURATION OF EXAMINATION: The duration of the examination will be of 2 hours.

QUESTIONS MODELS : TYPES OF QUESTIONS

Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 2|Page

PERIODICITY AND EXAMINATION CENTRES

PROCEDURE FOR APPLYING FOR EXAMINATION

Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 3|Page

Definition of a customer – Banker- Customer relationship – Points of contact – Types

Modern day banking – Core Banking / Electronic Payments – phone banking –

Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 4|Page

CUSTOMERS & THEIR ACCOUNTS

Banker Customer Relationship and Accounts of Customers

DUTY TO MAINTAIN SECRECY OF CUSTOMER'S ACCOUNT

DISCLOSURE OF CUSTOMER'S ACCOUNT INFORMATION

Disclosure in the interest of bank

Information to Credit Information Companies Information can be given by banks without

07. Garnishee Order

08. Income Tax Attachment Orders

10. Joint accounts

11. Partnership Firms

13. Accounts of Limited Companies

15. Account of Trusts

16. Account of Executors and Administrators

17. Societies and Clubs

18. Mandate and Power of Attorney

20. Know Your Customer (KYC) Guidelines

Customer Acceptance Policy

21. Nomination Facilities in Customers' Accounts

22. SETTLEMENT OF CLAIMS IN RESPECT OF MISSING PERSONS

Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 17 | P a g e

Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 18 | P a g e

Non Residents and their Accounts

Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 19 | P a g e

Non-Resident External (Rupee Account)

Non-Resident Ordinary Account (NRO)

NRO Accounts Of Foreign Nationals of Non- Indian Origin on a visit to India

Accounts of residents Resident Foreign Currency Account (RFC)

Resident Foreign Currency (Domestic) ) Account - RFC(D)

Exchange Earner's Foreign Currency Account (EEFC Account)

Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 22 | P a g e

9. Underwriting of bonds of Public Sector Undertakings

BANKING & TECHNOLOGY PRODUCTS

ATM: Automated Teller Machine '

1 09.00 hours 12.00 hours Rs 25.00 Rs 50.00

National Electronic Funds Transfer (NEFT) System

Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 27 | P a g e

MOBILE BANKING TRANSACTIONS IN INDIA

BANKING & TECHNOLOGY - RELATED RBI POLICY CHANGES DURING

ISSUANCE OF EMV CHIP AND PIN CARDS

Compiled by Sanjay Kumar Trivedy, Divisional Manager, RSTC , Mumbai 30 | P a g e

IDL Reversal 19:45 hours - 20:00 hours

End of Day 20:00 hours

Engagement of Recovery Agents:

Training for Recovery Agents

Taking possession of property mortgaged / hypothecated to banks

Use of forum of Lok Adalats: