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Certificate Examination

in Anti-Money
Laundering & Know
Your Customer
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. PREVENTION OF MONEY LAUNDERING ACT 05-08

4. KNOW YOUR CUSTOMER 08-36


5. CUSTOMER SERVICE IN BANKS 36-38
6. BCSBI 38-40

7. MEMORY BASED RECALLED QUESTIONS 41-49

8. TEST YOUR SELF 50-76

Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 1|Page
About Certificate Examination in Anti-Money
Laundering & Know Your Customer Examination

IIBF AML & KYC Certificate Examination – OCT. 2016 & JAN 2017

OBJECTIVE
To provide advanced knowledge and understanding in AML / KYC standards and to
evelop the professional competence of employees of banks and financial institutions.

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 - 60 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.

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.

Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 2|Page
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
Examination Date TIME
16.10.2016 Sunday
Will be given in the admit Letter
29/01/2017 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 First Attempt 1150 1725
Aml/Kyc
Subsequent each attempt 1150 1725

Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 3|Page
Syllabus
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.

(i) Anti Money Laundering

Money Laundering - Origin - Definition - Techniques Impact on Banks - Structuring;


Integration, Preventive Legislations - International Co-operation - UK; USA; India -
Basel Committee - PMLA Objectives - RBI Guidelines - System Adequacy to Combat
Money Laundering - Antiterrorism finance - Financial Intelligence Unit (FIU)

The Financial Action Task Force (FATF) - IBA Working Group - Software for AML
Screening ,Money Laundering and Correspondent Banking - Exchange Companies –
Foreign Branches

(ii) Know Your Customer - Introduction and overview

Customer Profile - KYC Policies - Countries Deficient in KYC Policies, Initiatives by


the RBI - Organised Financial Crimes Customer - Definition under the KYC Principles –

Transaction Profile - Organisational Structure - Important KYC framework in RBI


prescriptions - Operating Guidelines.

Introduction of new accounts - Guidelines for Opening Accounts of Companies,

Trusts, Firms, Intermediaries etc., Client Accounts opened by Professional


Intermediaries - Trust / Nominee or Fiduciary Accounts - Accounts of Politically
Exposed Persons (PEPs) Residing Outside India, Accounts of ‘non-face-to-face’

Customers - Qualitative data - Joint accounts - Minor accounts - KYC for existing
accounts - KYC for low income group customers.

Monitoring Accounts - Customer research - Suspicious transactions

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PREVENTION OF MONEY LAUNDERING ACT (PMLA)
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.

The Prevention of Money Laundering Act, 2002 (PMLA) forms the core of the legal framework put in
place by India to combat money laundering. PMLA and the Rules notified there under came into force with
effect from July 1, 2005. Director, FIU-IND and Director (Enforcement) have been conferred with exclusive
and concurrent powers under relevant sections of the Act to implement the provisions of the Act. The
PMLA and rules notified thereunder impose obligation on banking companies, financial institutions and
intermediaries to verify identity of clients, maintain records and furnish information to PMLA defines money
laundering offence and provides for the freezing, seizure and confiscation of the proceeds of crime.
Applicability: Prevention of Money Laundering Act extends to the whole of India.
Offence of Money-Laundering (Section 3): Money Laundering has not been defined in the Act. However, as
per Section 3 of the Act, whosoever directly or indirectly attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime
and projecting it as untainted property shall be guilty of offence of money laundering.

Punishment for Money Laundering (Section 4): Whoever commits the offence of money-laundering shall be
punishable with rigorous imprisonment for a term which shall not be less than three years but which may
extend to seven years and shall also be liable to fine which may extend to five lakh rupees. However, if the
proceeds of crime involved in money-laundering relates to any offence under the Necrotic Drug and
Psychotropic Substances Act, 1985, the maximum punishment could extend to 10 years.
Obligations of Banking Companies, Financial Institutions and Intermediaries of securities market: (Section
12): Every banking company, financial institution and intermediary shall -
(a) maintain a record of all transactions, the nature and value of which may be prescribed, whether
such transactions comprise of a single transaction or a series of transactions integrally connected to
each other, and where such series of transactions take place within a month;
(b) furnish informatiori of transactions referred to in clause (a) to the Director within such time as may
be prescribed;
( c ) verify and maintain the records of the identity of all its clients, in such a manner as may be prescribed. The
records of transactions as required under (a) and (b) shall be maintained for a period of ten years from the date of
transactions between the clients and the banking company or financial institution or
intermediary. The records referred to in clause (c) shall be maintained for a period of ten years from the date of cessation of
transactions between the clients and the banking company or financial institution or intermediary.
Accordingly, banks should maintain for at least ten years from the date of transaction between the bank and
the client, all necessary records 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. Banks should ensure
that 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.) obtained while opening the account and during the course
of business relationship, are properly preserved for at least ten years after the business relationship is ended.
The Director appointed by Central Government, may call for records and may make such inquiry or cause such
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inquiry to be made, as he thinks fit. If the Director, finds that a banking company, financial institution or an
intermediary or any of its officers has failed to comply with the provisions contained in the Act, then, he may, levy
a fine on such banking company or financial institution or intermediary which shall not be less than ten thousand
rupees but may extend to one lakh rupees for each failure. The banking companies, financial institutions,
intermediaries and their officers shall not be liable to any civil proceedings against them for furnishing
information,

Records to be maintained (nature and value): Rule 3 of the Prevention of Money-laundering


(Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of
Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the
Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005
lays down following obligations for maintenance of records. Every banking company or financial
institution or intermediary, as the case may be, shall maintain the record of all transactions including the
record of:
(A) all cash transactions of the value of more than rupees ten lakhs or its equivalent in foreign currency;
(B) all series of cash transactions integrally connected to each other which have been valued below
rupees ten lakhs or its equivalent in foreign currency where such series of transactions have taken place
within a month and the aggregate value of such transactions exceeds Rupees Ten Lakh;
(BA) all transactions involving receipts by non-profit organisations of value more than rupees ten lakh, or
its equivalent in foreign currency;
(C) all cash transactions where forged or counterfeit currency notes or bank notes have been used as
genuine or where any forgery of a valuable security or a document has taken place facilitating the
transactions;
(D) all suspicious transactions whether or not made in cash and by way of
(i) deposits and credits, withdrawals into or from any accounts in whatsoever name they are referred to
in any currency maintained by way of :
(a) cheques including third party cheques, pay orders, demand drafts, cashiers cheques or any other
instrument of payment of money including electronic receipts or credits and electronic payments or
debits, or
(b) travellers cheques, or
(c) transfer from one account within the same banking company, financial institution and intermediary,
as the case may be, including from or to Nostro and Vostro accounts, or
(d) any other mode in whatsoever name it is referred to;
(ii) credits or debits into or from any non-monetary accounts such as d-mat account, security account in any currency
maintained by the banking company, financial institution and intermediary, as the case may be;
(iii) money transfer or remittances in favour of own clients or non-clients from India or abroad and to
third party beneficiaries in India or abroad including transactions on its own account in any currency
by any of the following:-
(a) payment orders, or
(b) cashiers cheques, or
(c) demand drafts, or
(d) telegraphic or wire transfers or electronic remittances or transfers, or
(e) internet transfers, or
(f) Automated Clearing House remittances, or
(g) lock box driven transfers or remittances, or
(h) remittances for credit or loading to electronic cards,
(i) any other mode of money transfer by whatsoever name it is called;

(iv) loans and advances including credit or loan substitutes, investments and contingent liability by
way of:
(a) subscription to debt instruments such as commercial paper, certificate of deposits, preferential
shares, debentures, securitized participation, interbank participation or any other investments in securities
or the like in whatever form and name it is referred to, or
(b) purchase and negotiation of bills, cheques and other instruments, or
(c) foreign exchange contracts, currency, interest rate and commodity and any other derivative
instrument in whatsoever name it is called, or
(d) letters of credit, standby letters of credit, guarantees, comfort letters, solvency certificates and any
other instrument for settlement and/or credit support;
(v)collection services in any currency by way of collection of bills, cheques, instruments or any other
mode of collection in whatsoever name it is referred to.
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Information contained in Records: The records shall contain all necessary information specified by the
Regulator to permit reconstruction of individual transaction including* the following information:-
(e) the nature of the transactions;
(f) the amount of the transaction and the currency in which it was denominated;
(g) the date on which the transaction was conducted;
(h) the parties to the transaction."
Procedure for maintaining information: Every banking company, financial institution and intermediary,
as the case may be, shall maintain information in respect of transactions with its client in accordance
with the procedure and manner as may be specified by its Regulator including RBI, SERI or IRDA from
time to time. Every banking company, financial institution and intermediary is required to evolve an
internal mechanism for maintaining transactional details in such form and at such intervals as may be
specified by the Reserve Bank of India, or the Securities and Exchange Board of India, or the
Insurance Regulatory Development Authority as the case may be, from time to time. It shall be the
duty of every banking company, financial institution and intermediary, as the case may be, to observe
the procedure and the manner of maintaining information as specified by its Regulator.

Reporting to Financial Intelligence Unit — India: Banks are required to report information relating to
cash and suspicious transactions and all transactions involving receipts by non-profit organisations of
value more than rupees ten lakh or its equivalent in foreign currency to the Director, Financial
Intelligence Unit-India (FIU-IND). The Cash Transaction Report (CTR) for each month should be
submitted to FIU-IND by 15th of the succeeding month. 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. While filing CTR, details of individual
transactions below Rupees Fifty thousand need not be furnished. 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. Banks
should not put any restrictions on operations in the accounts where an STR has been made. Banks
and their employees should keep the fact of furnishing of STR strictly confidential. 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, FIU-IND by 15th of
the succeeding month.
Verification of Records of Identity of Clients
Section 12 of the Prevention of Money Laundering Act, 2002 and rules thereunder require every
banking company, financial institution and intermediary to verify and maintain the records of the
identity of all its clients, in such manner as may be prescribed. Every banking company, financial
institution and intermediary shall at the time of commencement of an account-based relationship,
identify its clients, verify their identity and obtain information on the purpose and intended nature of
the business relationship. In all other cases, identity should be verified while carrying out (i)
transaction of an amount equal to or exceeding rupees fifty thousand, whether conducted as a single
transaction or several transactions that appear to be connected, or (ii) any international money
transfer operations. If it is not possible to verify the identify at the time of opening the account or
executing the transaction, the banking company shall verify the identity of the client within a
reasonable time after the account has been opened or the transaction has been executed. Every
banking company, financial institution and intermediary, as the case may be, shall determine whether
a client is acting on behalf of a beneficial owner , identify the beneficial owner and take all reasonable
steps to verify his identity. Beneficial -owner means the natural person who ultimately owns or controls
a client and or the person on whose behalf a transaction is being conducted, and includes a person
who exercise ultimate effective control over a judicial person... '
Documents needed for verification of various types of clients:

1. individuals: (a) One certified copy of an 'officially valid document' containing details of his identity
and address One recent photograph and such other documents including in respect of the nature
of business and financial status of the client as may be required by the banking company or the
financial institution or the intermediary. Photograph need not be submitted by a client who does
not have account-based relationship. Officially valid document means the passport, the driving
licence, the Permanent Account Number (PAN) Card, the Voter's Identity Card issued by the
Election Commission of India or any other document as may be required by the banking
company, or financial institution or intermediary. The Narega card and Adhar card issued by
UIDAI will also be officially valid documents.

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2. Company: Certificate of incorporation; Memorandum and Articles of Association; A resolution from the
Board of Directors and power of attorney granted to its managers, officers or employees to transact on
its behalf; and an officially valid document in respect of managers, officers or employees holding an
attorney to transact on its behalf.
3. Partnership Firm: Registration certificate; Partnership deed; and an officially valid document in
respect of the person holding an attorney to transact on its behalf.
4. Trust Documents: Registration certificate; Trust deed; and an officially valid document in respect of the
person holding an attorney to transact on its behalf.
5. Association of Persons (ADP) or Body of Individuals (BOI):Resolution of the managing body of such
association or body of individuals; Power of attorney granted to him to transact on its behalf; an
officially valid document in respect of the person holding an attorney to transact on its behalf; and
such information as may be required by the banking company or the financial institution or the
intermediary to collectively establish the legal existence of such an association or body of
individuals.

KNOW YOUR CUSTOMERS (KYC)


Know Your Customer (KYC) norms/Anti-Money Laundering (AML)
standards/Combating Financing of Terrorism (CFT)/Obligation of banks and financial
institutions under Prevention of Money Laundering Act, (PMLA), 2002.

A. Purpose

Banks and financial institutions (FIs) have been advised to follow certain customer identification procedure for
opening of accounts and monitor transactions of suspicious nature for the purpose of reporting the same to
appropriate authority. These ‘Know Your Customer’ (KYC) guidelines have been revisited in the context of the
recommendations made by the Financial Action Task Force (FATF) on Anti Money Laundering (AML) standards
and on Combating Financing of Terrorism (CFT). Detailed guidelines based on the recommendations of FATF and
the paper issued on Customer Due Diligence (CDD) for banks by the Basel Committee on Banking Supervision
(BCBS), with suggestions wherever considered necessary, have been issued. Banks/FIs have been advised to ensure
that a proper policy framework on ‘Know Your Customer’ and Anti-Money Laundering measures is formulated and
put in place with the approval of their Boards.

B. Application

• The instructions, contained in the Master Circular, are applicable to All


India Financial Institutions, all Scheduled Commercial Banks (including RRBs), Local Area Banks,/ All
Primary (Urban) Co-operative Banks /State and Central Co-operative Banks.
• These guidelines are issued under Section 35A of the Banking Regulation
Act, 1949 and Rule 9(14) of Prevention of Money-Laundering (Maintenance of Records) Rules, 2005. Any
contravention thereof or non-compliance shall attract penalties under Banking Regulation Act.

Introduction
The objective of KYC/AML/CFT guidelines is to prevent banks/FIs from being used, intentionally or
unintentionally, by criminal elements for money laundering or terrorist financing activities. KYC procedures also
enable banks/FIs to know/understand their customers and their financial dealings better and manage their risks
prudently.

Definitions
Customer
For the purpose of KYC Norms, a ‘Customer’ is 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.
Designated Director
“Designated Director" means a person designated by the reporting entity (bank, financial institution, etc.)
to ensure overall compliance with the obligations imposed under chapter IV of the PML Act and the Rules
and includes:-

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• the Managing Director or a whole-time Director duly authorized by the Board of Directors if the
reporting entity is a company,
• the Managing Partner if the reporting entity is a partnership firm,
• the Proprietor if the reporting entity is a proprietorship concern,
• the Managing Trustee if the reporting entity is a trust,
• a person or individual, as the case may be, who controls and manages the affairs of the reporting
entity, if the reporting entity is an unincorporated association or a body of individuals, and
• such other person or class of persons as may be notified by the Government if the reporting entity
does not fall in any of the categories above.
Explanation. - For the purpose of this clause, the terms "Managing Director" and "Whole-time Director"
shall have the meaning assigned to them in the Companies Act

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).
“Officially valid document” (OVD)
OVD means the passport, the driving licence, the Permanent Account Number (PAN) Card, the Voter's
Identity Card issued by the Election Commission of India, job card issued by NREGA duly signed by an
officer of the State Government, letter issued by the Unique Identification Authority of India containing
details of name, address and Aadhaar number, or any other document as notified by the Central
Government in consultation with the Regulator.
(i) Provided that where ‘simplified measures’ are applied for verifying the identity of the clients the
following documents shall be deemed to be OVD:
a) identity card with applicant’s Photograph issued by Central/ State Government Departments,
Statutory/ Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks,
and Public Financial Institutions;
b) Letter issued by a gazetted officer, with a duly attested photograph of the person.
(ii) Provided further that where ‘simplified measures’ are applied for verifying for the limited purpose of
proof of address the following additional documents are deemed to be OVDs :.
a) Utility bill which is not more than two months old of any service provider
(electricity, telephone, post-paid mobile phone, piped gas, water bill);
b) Property or Municipal Tax receipt;
c) Bank account or Post Office savings bank account statement;
d) Pension or family pension payment orders (PPOs) issued to retired employees by Government
Departments or Public Sector Undertakings, if they contain the address;
e) 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
f) f) Documents issued by Government departments of foreign jurisdictions and letter issued by
Foreign Embassy or Mission in India.
Person
In terms of PML Act a ‘person’ includes:
(i) an individual,
(ii) a Hindu undivided family,
(iii) a company,
(iv) a firm,
(v) an association of persons or a body of individuals, whether incorporated or
not,

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(vi) every artificial juridical person, not falling within any one of the above persons (i to v),
and
(vii) any agency, office or branch owned or controlled by any of the above persons (i to vi).
Transaction
“Transaction” means a purchase, sale, loan, pledge, gift, transfer, delivery or the arrangement thereof
and includes-
(i) opening of an account;
(ii) deposits, withdrawal, exchange or transfer of funds in whatever currency, whether in cash or by
cheque, payment order or other instruments or by electronic or other non-physical means;
(iii) the use of a safety deposit box or any other form of safe deposit;
(iv) entering into any fiduciary relationship;
(v) any payment made or received in whole or in part of any contractual or other legal
obligation; or
(vi) establishing or creating a legal person or legal arrangement.

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.

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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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 11 | P a g e
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 Within 15 days of close


above Rs.10 lac is reportable) of each month
Suspicious transactions STR Within 7 days of confirmation
of suspicion

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Counterfeit currency notes CCR Within 15 days of close
of each month
Monthly report of receipt in - Within 15 days of close
forex (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.
General
(a) Customer
identification means undertaking client due diligence measures while
commencing an account-based relationship including identifying and verifying the customer and
the beneficial owner on the basis of one of the OVDs. Banks/FIs need to obtain sufficient
information to establish, to their satisfaction, the identity of each new customer, whether regular or

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occasional, and the purpose of the intended nature of the banking relationship. The bank/FI must
be able to satisfy the competent authorities that due diligence was observed based on the risk
profile of the customer in compliance with the extant guidelines in place. Such risk-based
approach is considered necessary to avoid disproportionate cost to the banks/FIs and a
burdensome regime for the customers.
(b) Banks/FIs
should have a policy approved by their Boards which should clearly
spell out the Customer Identification Procedure to be carried out at different stages, i.e.,
(i) while establishing a banking relationship;
(ii) while carrying out a financial transaction;
(iii) when the bank/FI has a doubt about the authenticity or adequacy of the customer identification
data it has obtained;
(iv) when banks sell third party products as agents;
(v) while selling banks’ own products, payment of dues of credit cards/sale and
reloading of prepaid/travel cards and any other product for more than Rs. 50,000/-.
(vi) when carrying out transactions for a non-account based customer, that is a walk-in customer,
where the amount involved is equal to or exceeds Rs. 50,000/-, whether conducted as a single
transaction or several transactions that appear to be connected.
(vii) when a bank/FI has reason to believe that a customer (account- based or walk-in) is intentionally
structuring a transaction into a series of transactions below the threshold of Rs. 50,000/-.
(c) Banks/FIs may seek ‘mandatory’ information required for KYC purpose
which the customer is obliged to give while opening an account or during periodic updation. Other
‘optional’ customer details/additional information, if required, may be obtained separately after the account
is opened only with the explicit consent of the customer.

Customer Due Diligence requirements (CDD) while opening accounts


A. Accounts of individuals:
(i) For opening accounts of individuals, banks/FIs should obtain one certified
copy of an 'officially valid document' (as mentioned at paragraph 2.3 above) containing details of
identity and address, one recent photograph and such other documents pertaining to the nature
of business and financial status of the customer as may be required by the bank/FI.
(ii) E-KYC service of Unique Identification Authority of India (UIDAI) should also
be accepted as a valid process for KYC verification under the PML Rules. The information
containing demographic details and photographs made available from UIDAI as a result of e-KYC
process is to be treated as an ‘Officially Valid Document’. Under e-KYC, the UIDAI transfers the
data of the individual comprising name, age, gender, and photograph of the individual,
electronically to the bank/business correspondents/business facilitators, which may be accepted
as valid process for KYC verification. The individual user, however, has to authorize to UIDAI by
explicit consent to release her/his identity/address through biometric authentication to the
banks/business correspondents/business facilitator. If the prospective customer knows only
his/her Aadhaar number, the bank has to print the prospective customer’s
e-Aadhaar letter in the bank directly from the UIDAI portal; or adopt e-KYC procedure as mentioned
above. If the prospective customer carries a copy of the e-Aadhaar downloaded from a place/source
elsewhere, still the bank has to print the prospective customer’s e-Aadhaar letter in the bank directly from
the UIDAI portal or adopt e-KYC procedure as mentioned above or confirm the identity and address of the
resident through the authentication service of UIDAI
(iii) Since introduction is not necessary for opening of accounts under PML Act
and Rules or the Reserve Bank’s extant instructions, banks/FIs should not insist on introduction for
opening of bank accounts.
(iv) Simplified Measures for Proof of Identity:
If an individual customer does not have any of the OVDs (as mentioned at paragraph 2.3 (i) above) as
proof of identity, then banks/FIs are allowed to adopt ‘Simplified Measures’ in respect of ‘Low risk’
customers, taking into consideration the type of customer, business relationship, nature and value of
transactions based on the overall money laundering and terrorist financing risks involved. Accordingly, in
respect of low risk category customers, where simplified measures are applied, it would be sufficient to

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obtain a certified copy of any one of the documents referred to at proviso to paragraph 2.3 (i) above.,
which shall be deemed as an OVD for the purpose of proof of identity.
(v) Simplified Measures for Proof of Address:
The additional documents mentioned at 2.3(ii) above shall be deemed to be OVDs under ‘simplified
measure’ for the ‘low risk’ customers for the limited purpose of proof of address where customers are
unable to produce any OVD for the same.
(vi) Small Accounts
If an individual customer does not possess either any of the OVDs or the documents applicable in respect
of simplified procedure (as detailed at paragraph 2.3 above), then ‘Small Accounts’ may be opened for
such an individual. A ‘Small Account' means a savings account in which:
 the aggregate of all credits in a financial year does not exceed rupees one lakh;
• the aggregate of all withdrawals and transfers in a month does not exceed rupees ten
thousand and
• the balance at any point of time does not exceed rupees fifty thousand. A ‘small account’ maybe
opened on the basis of a self-attested photograph and affixation of signature or thumb print.
Such accounts may be opened and operated subject to the following conditions:
a) the designated officer of the bank, while opening the small account, certifies under his
signature that the person opening the account has affixed her/his signature or thumb print, as the
case may be, in her/his presence;
b) a small account shall be opened only at Core Banking Solution (CBS) linked branches or
in a branch where it is possible to manually monitor and ensure that foreign remittances are not
credited to the account and that the stipulated monthly and annual limits on aggregate of
transactions and balance requirements in such accounts are not breached, before a transaction is
allowed to take place;
c) 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;
d) a small account shall be monitored and when there is suspicion of money laundering or
financing of terrorism activity or other high risk scenarios, the identity of the customer shall be
established through the production of “officially valid documents” and
e) foreign remittance shall not be allowed to be credited into a small account unless the
identity of the customer is fully established through the production of “officially valid documents”.
(vii) A customer is required to submit only one OVD for both proof of identity and for proof of address as
part of KYC procedure. If the OVD submitted for proof of
identity does not have the proof of address (for e.g., PAN Card), then the customer is required to submit
another OVD for proof of address.
(viii) Similarly, a customer is required to submit only one OVD as proof of address (either current or
permanent) for KYC purpose. In case the proof of address furnished by the customer is neither the local
address nor the address where the customer is currently residing, the bank should take a declaration
from the customer of her/his local address on which all correspondence will be made by the bank with
the customer. No proof is required to be submitted by the customer for such address. This address,
however, should be verified by the bank through ‘positive confirmation’ such as acknowledgment of
receipt of letter, cheque books, ATM cards; telephonic conversation; visits to the place; etc. In the event
of any change in this address due to relocation or any other reason, customers should intimate the new
address for correspondence to the bank within two weeks of such a change.
(ix) In case the address mentioned as per ‘proof of address’ undergoes a change,
fresh proof of address is to be submitted to the bank/FI within a period of six months.
(x) In case of close relatives, e.g. husband, wife, son, daughter and parents, etc.
who live with their wife, husband, father/mother, daughter and son, who do not have officially valid
document for address verification, then, in such cases, banks/FIs should obtain OVD for proof of address
and identity of the relative with whom the prospective customer is living together with a declaration from
the relative that the said person (prospective customer) proposing to open an account is a relative and is
staying with her/him.
(xi) Banks are not required to obtain fresh documents of customers when

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customers approach them for transferring their account from one branch of the bank to another branch of
the same bank. Banks are advised that KYC verification once done by one branch of the bank should be
valid for transfer of the account within the bank if full KYC verification has been done for the concerned
account and is not due for periodic updation. The customers should be allowed to transfer their accounts
from one branch to another branch without restrictions, without insisting on fresh proof of address and/or
identity and on the basis of a self-declaration from the
account holder about his/her current address. Further, if an existing KYC compliant customer of a bank
desires to open another account in the same bank, there should be no need for submission of fresh proof
of identity and/or address.
(xii) Where a customer categorised as low risk expresses inability to complete the documentation
requirements on account of any reason that the bank considers to be genuine, and where it is essential
not to interrupt the normal conduct of business, the bank may complete the verification of identity within a
period of six months from the date of establishment of the relationship.
(xiii) For the purpose of verifying the identity of customers at the time of commencement of an account-
based relationship, banks/FIs may rely on a third party subject to the conditions that-
1) the bank/FI immediately obtains necessary information of such client due diligence carried out
by the third party;
2) the bank/FI takes adequate steps to satisfy itself that copies of identification data and other
relevant documentation relating to the client due diligence requirements will be made available
from the third party upon request without delay;
3) the bank/FI is satisfied that such third party is regulated, supervised or monitored for, and has
measures in place for compliance with client due diligence and record-keeping requirements in
line with the requirements and obligations under the PML Act;
4) the third party is not based in a country or jurisdiction assessed as high risk and
5) the bank/FI is ultimately responsible for client due diligence and undertaking enhanced due
diligence measures, as applicable.

(xiv) Accounts of non-face-to-face customers


With the introduction of phone and electronic banking, increasingly accounts are being opened by
banks for customers without the need for the customer to visit the bank branch. In the case of
non-face-to-face customers, apart from applying the usual customer identification procedures,
there must be specific
and adequate procedures to mitigate the higher risk involved. Certification of all the documents
presented should be insisted upon and, if necessary, additional documents may be called for. In such
cases, banks may also require the first payment to be effected through the customer's account with
another bank which, in turn, adheres to similar KYC standards. In the case of cross-border customers,
there is the additional difficulty of matching the customer with the documentation and the bank may
have to rely on third party certification/introduction. In such cases, it must be ensured that the third
party is a regulated and supervised entity and has adequate KYC systems in place.
(xv) Procedure to be followed in respect of foreign students
Banks should follow the following procedure for foreign students studying in India:
1) Banks may open a Non Resident Ordinary (NRO) bank account of a foreign student on the
basis of his/her passport (with visa & immigration endorsement) bearing the proof of identity
and address in the home country together with a photograph and a letter offering admission
from the educational institution in India.
2) Banks should obtain a declaration about the local address within a period of 30 days of
opening the account and verify the said local address.
3) During the 30 days period, the account should be operated with a condition of allowing foreign
remittances not exceeding USD 1,000 or equivalent into the account and a cap of monthly
withdrawal to Rs. 50,000/-, pending verification of address.
4) The account would be treated as a normal NRO account, and will be operated in terms of
instructions contained in the Reserve Bank of India’s instructions on Non-Resident Ordinary
Rupee (NRO) Account, and the provisions of Schedule 3 of FEMA Notification 5/2000 RB
dated May 3, 2000.
5) Students with Pakistani and Bangladesh nationality will need prior approval of the Reserve
Bank for opening the account.
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(xvi) Accounts of Politically Exposed Persons (PEPs) resident outside India
1) Politically Exposed Persons are individuals who are or have been entrusted with prominent
public functions in a foreign country, e.g., Heads of States/Governments, senior politicians, senior
government/judicial/military officers, senior executives of state-owned corporations, important political
party officials, etc. Banks should gather sufficient information on any person/customer of this category
intending to establish a relationship and check all the information available on such person in the
public domain. Banks should verify the identity of the person and seek information about the sources
of funds before accepting the PEP as a customer. The decision to open an account for a PEP should
be taken at a senior level which should be clearly spelt out in the bank’s Customer Acceptance Policy.
Banks should also subject such accounts to enhanced monitoring on an on-going basis. The above
norms should also be applied to the accounts of the family members or close relatives of PEPs.
2) In the event of an existing customer or the beneficial owner of an existing account
subsequently becoming a PEP, banks should obtain senior management’s approval to continue the
business relationship and subject the account to the CDD measures as applicable to PEPs including
enhanced monitoring on an ongoing basis. These instructions are also applicable to accounts where
a PEP is the ultimate beneficial owner.
3) Further, banks should have appropriate ongoing risk management systems for identifying
and applying enhanced CDD to PEPs, customers who are close relatives of PEPs, and accounts of
which a PEP is the ultimate beneficial owner.
B. Accounts of persons other than individuals:
(i) Where the customer is a company, one certified copy each of the following documents are required
for customer identification:
(a) Certificate of incorporation;
(b) Memorandum and Articles of Association;
(c) A resolution from the Board of Directors and power of attorney granted to its managers,
officers or employees to transact on its behalf and
(d) An officially valid document in respect of managers, officers or employees holding an attorney
to transact on its behalf.
Banks/FIs need to be vigilant against business entities being used by individuals as a ‘front’ for
maintaining accounts with banks/FIs. Banks/FIs should examine the control structure of the entity,
determine the source of funds and identify the natural persons who have a controlling interest and who
comprise the management. These requirements may be moderated according to the risk perception e.g.
in the case of a public company it will not be necessary to identify all the shareholders.
(ii) Where the customer is a partnership firm, one certified copy of the following
documents is required for customer identification:
(a) registration certificate;
(b) partnership deed and
(c) an officially valid document in respect of the person holding an attorney to transact on its
behalf.
(iii) Where the customer is a trust, one certified copy of the following documents is required for customer
identification:
(a) registration certificate;
(b) trust deed and
(c) an officially valid document in respect of the person holding a power of attorney to transact
on its behalf.
(iv) Where the customer is an unincorporated association or a body of individuals, one certified copy
of the following documents is required for customer identification:
(a) resolution of the managing body of such association or body of individuals;
(b) power of attorney granted to transact on its behalf;
(c) an officially valid document in respect of the person holding an attorney to transact on its
behalf and
such information as may be required by the bank/FI to collectively
establish the legal existence of such an association or body of individuals.
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(v) Proprietary concerns:
(1) For proprietary concerns, in addition to the OVD applicable to the individual (proprietor), any two of
the following documents in the name of the proprietary concern are required to be submitted:
(a) Registration certificate
(b) Certificate/licence issued by the municipal authorities under Shop and Establishment Act.
(c) Sales and income tax returns.
(d) CST/VAT certificate.
(e) Certificate/registration document issued by Sales Tax/Service Tax/Professional Tax
authorities.
(f) Licence/certificate of practice issued in the name of the proprietary concern by any
professional body incorporated under a statute.
(g) Complete Income Tax Return (not just the acknowledgement) in the name of the sole
proprietor where the firm's income is reflected, duly authenticated/acknowledged by the
Income Tax authorities.
(h) Utility bills such as electricity, water, and landline telephone bills.
(2) Though the default rule is that any two documents, mentioned above, should be provided as
activity proof by a proprietary concern, in cases where the banks are satisfied that it is not possible to
furnish two such documents, they would have the discretion to accept only one of those documents as
activity proof. In such cases, the banks, however, would have to undertake contact point verification,
collect such information as would be required to establish the existence of such firm, confirm, clarify
and satisfy themselves that the business activity has been verified from the address of the proprietary
concern.
(vi) Simplified KYC norms for Foreign Portfolio Investors (FPIs)
In terms of Rule 9 (14)(i) of the PML Rules, simplified norms have been prescribed for those FPIs who
have been duly registered in accordance with SEBI guidelines
and have undergone the required KYC due diligence/verification prescribed by SEBI through a
Custodian/Intermediary regulated by SEBI. Such eligible/registered FPIs may approach a bank for
opening a bank account for the purpose of investment under Portfolio Investment Scheme (PIS) for which
KYC documents prescribed by the Reserve Bank (as detailed in Annex II of the circular
DBOD.AML.BC.No.103/14.01.001/2013-14 dated April 3, 2014) would be required. Category I FPIs are,
however, not required to submit the undertaking that “upon demand by Regulators/Law Enforcement
Agencies the relative document/s would be submitted to the bank”. For this purpose, banks/FIs may rely
on the KYC verification done by the third party (i.e. the Custodian/SEBI Regulated Intermediary) subject to
the conditions laid down in Rule 9 (2) [(a) to (e)] of the PML Rules.
(vii) When the client accounts are opened by professional intermediaries: When the bank has
knowledge or reason to believe that the client account opened by a professional intermediary is on
behalf of a single client, that client must be identified. Banks may hold 'pooled' accounts managed by
professional intermediaries on behalf of entities like mutual funds, pension funds or other types of
funds. Banks, however, should not open accounts of such professional intermediaries who are bound
by any client confidentiality that prohibits disclosure of the client details to the banks. Where funds held
by the intermediaries are not co-mingled at the bank and there are 'sub-accounts', each of them
attributable to a beneficial owner, all the beneficial owners must be identified. Where such funds are
co-mingled at the bank, the bank should still look into the beneficial owners. Where the banks rely on
the 'customer due diligence' (CDD) done by an intermediary, they should satisfy themselves that the
intermediary is a regulated and supervised entity and has adequate systems in place to comply with
the KYC requirements of the customers. It should be understood that the ultimate responsibility for
knowing the customer lies with the bank.
A gist of documents that can be accepted as proof of identity and address for various categories is
furnished in Annex I
C. Beneficial ownership
When a bank/FI identifies a customer for opening an account, it should identify the beneficial owner(s)
and take all reasonable steps in terms of Rule 9(3) of the PML Rules to verify his identity, as per
guidelines provided below:
(a) Where the client is a company, the beneficial owner is the natural person(s), who, whether
acting alone or together, or through one or more juridical person, has/have a controlling
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ownership interest or who exercises control through other means.
Explanation- For the purpose of this sub-clause-
1. “Controlling ownership interest” means ownership of/entitlement to more than 25 per cent of
the shares or capital or profits of the company.
2. “Control” shall include the right to appoint majority of the directors or to control the
management or policy decisions including by virtue of their shareholding or management
rights or shareholders agreements or voting agreements.
(b) Where the client is a partnership firm, the beneficial owner is the natural person(s), who,
whether acting alone or together, or through one or more juridical person, has/have ownership
of/entitlement to more than 15 per cent of capital or profits of the partnership.
(c) Where the client is an unincorporated association or body of individuals, the beneficial
owner is the natural person(s), who, whether acting alone or together, or through one or more
juridical person, has/have ownership of/entitlement to more than 15 per cent of the property or
capital or profits of the unincorporated association or body of individuals.
(d) Where no natural person is identified under (a), (b) or (c) above, the beneficial owner is the
relevant natural person who holds the position of senior managing official.
(e) Where the client is a trust, the identification of beneficial owner(s) shall include identification of
the author of the trust, the trustee, the beneficiaries with 15% or more interest in the trust and
any other natural person
exercising ultimate effective control over the trust through a chain of control or ownership.
(f) Where the client or the owner of the controlling interest is a company listed on a stock
exchange, or is a subsidiary of such a company, it is not necessary to identify and verify the
identity of any shareholder or beneficial owner of such companies.
There exists the possibility that trust/nominee or fiduciary accounts can be used to circumvent the
customer identification procedures. In such cases, banks/FIs should determine whether the
customer is acting on behalf of another person as trustee/nominee or any other intermediary. If so,
banks/FIs should insist on satisfactory evidence of the identity of the intermediaries and of the
persons on whose behalf they are acting, as also obtain details of the nature of the trust or other
arrangements in place. The different categories of beneficiaries should be identified as defined
above. In the case of a 'foundation', steps should be taken to verify the founder managers/ directors
and the beneficiaries, if defined.
II. Introduction of New Technologies – Credit Cards/Debit Cards/ Smart
Cards/Gift Cards
Banks should pay special attention to any money laundering threats that may arise from new or
developing technologies including internet banking that might favour anonymity, and take
measures, if needed, to prevent the same being used for money laundering purposes. Many banks
are engaged in the business of issuing a variety of Electronic Cards that are used by customers for
buying goods and services, drawing cash from ATMs, and can be used for electronic transfer of
funds. Banks should ensure that appropriate KYC procedures are duly applied before issuing the
cards to the customers. Banks are required to ensure full compliance with all KYC/AML/CFT
guidelines issued from time to time, in respect of add-on/ supplementary cardholders also. Further,
marketing of credit cards is generally done through the services of agents. It is desirable that
agents are also subjected to due diligence and KYC measures.
III. Periodic updation of KYC
A. CDD requirements for periodic updation: Banks/FIs should carry out periodical updation of
KYC information of every customer, which should include the following:
(i) KYC exercise should be done at least every two years for high risk customers, every eight
years for medium risk customers and every ten years for low risk customers. Such KYC
exercise may include all measures for confirming the identity and address and other
particulars of the customer that the bank/FI may consider reasonable and necessary based
on the risk profile of the customer, taking into account whether and when client due diligence
measures were last undertaken and the adequacy of data obtained.
(ii) Banks/FIs need not seek fresh proofs of identity and address at the time of periodic
updation, from those customers who are categorised as ‘low risk’, in case there is no change
in status with respect to their identities and addresses. A self-certification by the customer to
that effect should suffice in such cases. In case of change of address of such ‘low risk’
customers, they could merely forward a certified copy of the document (proof of address) by
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mail/post, etc. Banks/FIs should not insist on physical presence of such low risk customer at
the time of periodic updation. The time limits prescribed at (i) above would apply from the
date of opening of the account/ last verification of KYC.
(iii) Fresh photographs to be obtained from minor customer on becoming major.
B. Freezing and closure of accounts
(i) In case of non-compliance of KYC requirements by the customers
despite repeated reminders by banks/FIs, banks/FIs may impose ‘partial freezing’ on such
KYC non-compliant accounts in a phased manner.
(ii) During the course of such partial freezing, the account holders can
revive their accounts by submitting the KYC documents as per instructions in force.
(iii) While imposing ‘partial freezing’, banks/FIs have to ensure that the option of ‘partial
freezing’ is exercised after giving due notice of three months initially to the customers to
comply with KYC requirements to be followed by a reminder giving a further period of three
months.
(iv) Thereafter, banks/FIs may impose ‘partial freezing’ by allowing all credits and
disallowing all debits with the freedom to close the accounts.
(v) If the accounts are still KYC non-compliant after six months of imposing initial ‘partial
freezing’ banks/FIs should disallow all debits and credits from/to the accounts thereby,
rendering them inoperative.
(vi) Further, it would always be open to the bank/FI to close the account of such
customers after issuing due notice to the customer explaining the reasons for taking such
a decision. Such decisions, however, need to be taken at a reasonably senior level.
In the circumstances when a bank/FI believes that it would no longer be satisfied about the true
identity of the account holder, the bank/FI should file a Suspicious Transaction Report (STR)
with Financial Intelligence Unit – India (FIU-IND) under Department of Revenue, Ministry of
Finance, Government of India.

Risk Categorisation

"Customer risk" in the present context refers to the money laundering and
terrorist funding risk associated with a particular customer from a Bank's
perspective.

This risk is based on risk perceptions associated with customer profile and level of
risk associated with the product & channels used by Customer.

For risk categorization of customers, the IBA has provided a hybrid model containing
seven parameters (,561/2015 ).Account are rated as per below mentioned 7 parameters
under the risk categorization matrix.Accounts are to be categorized basing on the
highest risk category under those parameters.
Customer Type
Customer Profession
Type of Business
Product Code
Account Status
Account Vintage
Balance
All customer profiles/accounts of NRIs, HNIs, PEPs, NGOs, Trusts, Cooperative
Societies, HUF, Exporters, Importers and Accounts having Beneficial Owners are to be
invariably categorised as High Risk
In case branch receive complaints from legal enforcement authorities or fraud is
reported against the customer ,such customers/accounts should be categorized unde
‗High Risk‘
Branches should categorise Blacked accounts and unclaimed deposits as High Risk at the
time of blocking the account itself.
Accounts of dealers in Jewellery,gold/silver/billions,diamonds and other precious metals/stones

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are to be categorized under High Risk.
Under vintage parameter,newly opened CASA accounts which have not completed 6
months are to be classified as High Risk except Staff, exstaff,Pensioners ,Small accounts,
financial inclusion and Basic savings bank accounts .
. Review and updation to be done once in every six months as on 15 th May and 15 th
November every year.
For Low Risk category ,KYC requirement of properidentification and verification of
proof of address would suffice.For medium risk category , higher due diligence is
required ,which includes customer‘s background , nature and location of activity ,country
of origin, source of funds and their client‘s profile etc.,besides identification.High Risk
category accounts require higher due diligence as per medium risk category and such
accounts require enhanced monitoring on an ongoing basis.

IV. Miscellaneous
A. At-par cheque facility availed by co-operative banks
Some commercial banks have arrangements with co-operative banks under which the latter open
current accounts with the commercial banks and use the cheque book facility to issue ‘at par’ cheques
to their constituents and walk-in- customers for effecting their remittances and payments. Since the ‘at
par’ cheque facility offered by commercial banks to co-operative banks is in the nature of
correspondent banking arrangement, banks should monitor and review such arrangements to assess
the risks including credit risk and reputational risk arising therefrom. For this purpose, banks should
retain the right to verify the records maintained by the client cooperative banks/ societies for
compliance with the extant instructions on KYC and AML under such arrangements.
In this regard, Urban Cooperative Banks (UCBs) are advised to utilize the ‘at par’ cheque facility only
for the following purposes:
(i) For their own use.
(ii) For their account holders who are KYC complaint provided that all transactions of
Rs.50,000/- or more should be strictly by debit to the customer’s account.
(iii) For walk-in customers against cash for less than Rs.50,000/- per individual.
In order to utilise the ‘at par’ cheque facility in the above manner, UCBs should maintain the following:
(i) Records pertaining to issuance of ‘at par’ cheques covering inter alia applicant’s name
and account number, beneficiary’s details and date of issuance of the ‘at par’ cheque.
(ii) Sufficient balances/drawing arrangements with the commercial bank extending such
facility for purpose of honouring such instruments.
UCBs should also ensure that all ‘at par’ cheques issued by them are crossed ‘account payee’
irrespective of the amount involved.
B. Operation of Bank Accounts & Money Mules
“Money Mules” can be used to launder the proceeds of fraud schemes (e.g., phishing and identity theft)
by criminals who gain illegal access to deposit accounts by recruiting third parties to act as “money
mules”. In order to minimise the operations of such mule accounts, banks should strictly adhere to the
guidelines on opening of accounts and monitoring of transactions.

C. Simplified norms for Self Help Groups (SHGs)


KYC verification of all the members of SHG need not be done while opening the savings bank account
of the SHG and KYC verification of all the office bearers would suffice. As regards KYC verification at
the time of credit linking of SHGs, no separate KYC verification of the members or office bearers is
necessary
D. Walk-in Customer
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 Rs. 50,000/-, whether conducted as a single
transaction or several transactions that appear to be connected, the customer's identity and address
should be verified. If a bank has reason to believe that a customer is intentionally structuring a
transaction into a series of transactions below the threshold of Rs.50,000/- the bank should verify the
identity and address of the customer and also consider filing a Suspicious Transactions Report (STR)
to Financial Intelligence Unit – India (FIU-IND).

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In terms of Clause (b) (ii) of sub-Rule (1) of Rule 9 of the PML Rules, 2005 banks and financial
institutions are required to verify the identity of the customers for all international money transfer
operations.

E. Issue of Demand Drafts, etc, for more than Rs.50,000/-


Banks should ensure that any remittance of funds by way of demand draft, mail/telegraphic transfer
or any other mode and issue of travellers’ cheques for value of Rs.50,000/- and above is effected
by debit to the customer’s account or against cheques and not against cash payment.
Banks should not make payment of cheques/drafts/pay orders/banker’s cheques if they are
presented beyond the period of three months from the date of such instrument.

F. Unique Customer Identification Code


A Unique Customer Identification Code (UCIC) will help banks to identify the customers, avoid
multiple identities, track the facilities availed, monitor financial transactions in a holistic manner and
enable banks to have a better approach to risk profiling of customers. Banks have been advised to
allot UCIC while entering into new relationships with individual customers as also the existing
customers.

Monitoring of Transactions
Ongoing monitoring
Ongoing monitoring is an essential element of effective KYC/AML procedures. Banks/FIs should
exercise ongoing due diligence with respect to every customer and
closely examine the transactions to ensure that they are consistent with the customer’s profile and
source of funds as per extant instructions. The ongoing due diligence may be based on the following
principles:
(a) The extent of monitoring will depend on the risk category of the account. High risk accounts have
to be subjected to more intensified monitoring.
(b) Banks/FIs should pay particular attention to the following types of transactions:
(i) large and complex transactions, and those with unusual patterns,
which have no apparent economic rationale or legitimate purpose.
(ii) transactions which exceed the thresholds prescribed for specific
categories of accounts.
(iii) transactions involving large amounts of cash inconsistent with the
normal and expected activity of the customer.
(iv) high account turnover inconsistent with the size of the balance
maintained.
(c) Banks/FIs should put in place a system of periodical review of risk categorization of accounts and
the need for applying enhanced due diligence measures. Such review of risk categorisation of
customers should be carried out at a periodicity of not less than once in six months.
(d) Banks should closely monitor the transactions in accounts of marketing firms, especially accounts
of Multi-level Marketing (MLM) Companies. Banks should analyse data in cases where a large
number of cheque books are sought by the company, there are multiple small deposits
(generally in cash) across the country in one bank account and where a large number of
cheques are issued bearing similar amounts/dates. Where such features are noticed by the bank
and in case they find such unusual operations in their accounts, the matter should be
immediately reported to Reserve Bank and other appropriate authorities such as FIU-IND.
Risk Management
Banks/FIs should exercise on going due diligence with respect to the business relationship with every
client and closely examine the transactions in order to ensure that they are consistent with their
knowledge about the clients, their business and risk profile and where necessary, the source of funds.
The Board of Directors should ensure that an effective AML/CFT programme is in place by establishing
appropriate procedures and ensuring their effective implementation. It should cover proper management
oversight, systems and controls, segregation of duties, training of staff and other related matters. In
addition, the following may also be ensured for effectively implementing the AML/CFT requirements.
(i) Using a risk-based approach to address management and mitigation of
various AML/CFT risks.

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(ii) Allocation of responsibility for effective implementation of policies and
procedures.
(iii) Independent evaluation by the compliance functions of bank/FI’s
policies and procedures, including legal and regulatory requirements.
(iv) Concurrent/internal audit to verify the compliance with KYC/AML
policies and procedures.
(v) Putting up consolidated note on such audits and compliance to the
Audit Committee at quarterly intervals.
(a) Banks/FIs should prepare a profile for each new customer based on risk categorisation. The customer
profile should contain information relating to customer’s identity, social/financial status, nature of business
activity, information about the clients’ business and their location etc. The nature and extent of due
diligence will depend on the risk perceived by the bank/FI.
(b) Banks/FIs should categorise their customers into low, medium and high risk category based on their
assessment and risk perception of the customers, identifying transactions that fall outside the regular
pattern of activity and not merely based on any group or class they belong to. The banks/FIs are advised
to have clear Board approved policies for risk categorisation and ensure that the same are meticulously
complied with to effectively help in combating money laundering activities. The nature and extent of due
diligence, may be based on the following principles:
(i) Individuals (other than High Net Worth) and entities, whose identity and source of
income, can be easily identified, and customers in whose accounts the transactions
conform to the known profile, may be categorised as low risk. Illustrative examples include
salaried employees and pensioners, people belonging to lower economic strata,
government departments and government owned companies, regulators and statutory
bodies, etc. Further, Non-Profit Organisations (NPOs)/ Non-Government Organisations
(NGOs) promoted by the United Nations or its agencies, and such international/ multilateral
organizations of repute, may also be classified as low risk customers.
(ii) Customers who are likely to pose a higher than average risk should be categorised as
medium or high risk depending on the background, nature and location of activity, country of
origin, sources of funds, customer profile, etc. Customers requiring very high level of
monitoring, e.g., those involved in cash intensive business, Politically Exposed Persons
(PEPs) of foreign origin, may, if considered necessary, be categorised as high risk.
The above guidelines for risk categorisation are indicative and banks/FIs may use their own
judgement in arriving at the categorisation for each account based on their own assessment and risk
perception of the customers and not merely based on any group or class they belong to. Banks may
use for guidance in their own risk assessment, the reports and guidance notes on KYC/AML issued by
the Indian Banks Association.

Correspondent Banking and Shell Bank


Correspondent banking is the provision of banking services by one bank (the “correspondent bank”) to
another bank (the “respondent bank”). These services may include cash/funds management,
international wire transfers, drawing arrangements for demand drafts and mail transfers, payable-
through-accounts, cheques clearing etc. Banks may take the following precautions while entering into a
correspondent banking relationship:
(a) Gather sufficient information to fully understand the nature of business of the
bank including information on management, major business activities, level of
AML/CFT compliance, purpose of opening the account, identity of any third party entities that will
use the correspondent banking services, and regulatory/supervisory framework in the bank’s home
country.
(b) Such relationships may be established only with the approval of the Board, or by a Committee
headed by the Chairman/CEO with clearly laid down parameters for approving such relationships, as
approved by the Board. Proposals approved by the Committee should be put up to the Board at its next
meeting for post facto approval.
(c) The responsibilities of each bank with whom correspondent banking relationship is established
should be clearly documented.
(d) In case of payable-through-accounts, the correspondent bank should be satisfied that the
respondent bank has verified the identity of the customers having direct access to the accounts and is
undertaking ongoing 'due diligence' on them.
(e) The correspondent bank should ensure that the respondent bank is able to provide the relevant

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customer identification data immediately on request.
(f) Banks should be cautious while continuing relationships with correspondent banks located in
jurisdictions which have strategic deficiencies or have not made sufficient progress in implementation
of FATF Recommendations.
(g) Banks should ensure that their respondent banks have KYC/AML policies and procedures in
place and apply enhanced 'due diligence' procedures for transactions carried out through the
correspondent accounts.
(h) Banks should not enter into a correspondent relationship with a “shell bank” (i.e., a bank which
is incorporated in a country where it has no physical presence and is not affiliated to any regulated
financial group).
(i) The correspondent bank should not permit its accounts to be used by shell banks.

Wire Transfer
Banks/FIs use wire transfers as an expeditious method for transferring funds between bank
accounts. Wire transfers include transactions occurring within the national boundaries of a country
or from one country to another. As wire transfers do not involve actual movement of currency, they
are considered as rapid and secure method for transferring value from one location to another.
(a) The salient features of a wire transfer transaction are as under:
(i) Wire transfer is a transaction carried out on behalf of an originator
person (both natural and legal) through a bank by electronic means with a view to making an
amount of money available to a beneficiary person at a bank. The originator and the beneficiary
could be the same person.
(ii) Domestic wire transfer means any wire transfer where the originator
and receiver are located in the same country. It may also include a chain of wire transfers that takes
place entirely within the borders of a single country even though the system used to effect the wire
transfer may be located in another country.
(iii) Cross-border transfer means any wire transfer where the originator and
the beneficiary bank or financial institutions are located in different countries. It may include any
chain of wire transfers that has at least one cross-border element.
(iv) The originator is the account holder, or where there is no account, the
person (natural or legal) that places the order with the bank to perform the wire transfer.
(b) Wire transfer is an instantaneous and most preferred route for transfer of
funds across the globe and hence, there is a need for preventing terrorists and other criminals from having
unfettered access to wire transfers for moving their funds and for detecting any misuse when it occurs.
This can be achieved if basic information on the originator of wire transfers is immediately available to
appropriate law enforcement and/or prosecutorial authorities in order to assist them in detecting,
investigating, prosecuting terrorists or other criminals and tracing their assets. The information can be
used by Financial Intelligence Unit - India (FIU-IND) for analysing suspicious or unusual activity and
disseminating the same. The originator information can also be put to use by the beneficiary bank to
facilitate identification and reporting of suspicious transactions to FIU-IND. Owing to the potential terrorist
financing threat posed by small wire transfers, the objective is to be in a position to trace all wire transfers
with minimum threshold
limits. Accordingly, banks/FIs must ensure that all wire transfers are accompanied by the following
information:
1. Cross-border wire transfers
(i) All cross-border wire transfers must be accompanied by accurate and meaningful originator
information.
(ii) Information accompanying cross-border wire transfers must contain
the name and address of the originator and where an account exists, the number of that account. In
the absence of an account, a unique reference number, as prevalent in the country concerned,
must be included.
(iii) Where several individual transfers from a single originator are bundled
in a batch file for transmission to beneficiaries in another country, they may be exempted from
including full originator information, provided they include the originator’s account number or
unique reference number as at (ii) above.
2. Domestic wire transfers
(i) Information accompanying all domestic wire transfers of Rs.50000/-
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(Rupees Fifty Thousand) and above must include complete originator information i.e. name,
address and account number etc., unless full originator information can be made available to the
beneficiary bank by other means.
(ii) If a bank has reason to believe that a customer is intentionally
structuring wire transfer to below Rs.50,000/- (Rupees Fifty Thousand) to several beneficiaries in
order to avoid reporting or monitoring, the bank must insist on complete customer identification
before effecting the transfer. In case of non-cooperation from the customer, efforts should be made
to establish his identity and Suspicious Transaction Report (STR) should be made to FIU-IND.
(iii) When a credit or debit card is used to effect money transfer,
necessary information as at (i) above should be included in the message.
(c) Exem ptions
Interbank transfers and settlements where both the originator and beneficiary are banks or financial
institutions would be exempted from the above requirements.
(d) Role of Ordering, Intermediary and Beneficiary banks
(i) Ordering Bank
An ordering bank is the one that originates a wire transfer as per the order placed by its customer. The
ordering bank must ensure that qualifying wire transfers contain complete originator information. The
bank must also verify and preserve the information at least for a period of five years.
(ii) Intermediary bank
For both cross-border and domestic wire transfers, a bank processing an intermediary element of a
chain of wire transfers must ensure that all originator information accompanying a wire transfer is
retained with the transfer. Where technical limitations prevent full originator information accompanying
a cross-border wire transfer from remaining with a related domestic wire transfer, a record must be
kept at least for five years (as required under Prevention of Money Laundering Act, 2002) by the
receiving intermediary bank of all the information received from the ordering bank.
(iii) Beneficiary bank
A beneficiary bank should have effective risk-based procedures in place to identify wire transfers
lacking complete originator information. The lack of complete originator information may be
considered as a factor in assessing whether a wire transfer or related transactions are suspicious and
whether they should be reported to the Financial Intelligence Unit-India. The beneficiary bank should
also take up the matter with the ordering bank if a transaction is not accompanied by detailed
information of the fund remitter. If the ordering bank fails to furnish information on the remitter, the
beneficiary bank should consider restricting or even terminating its business relationship with the
ordering bank.
Maintenance of KYC documents and Preservation period
PML Act and Rules cast certain obligations on the banks/FIs in regard to maintenance, preservation and
reporting of customer account information.
Banks/FIs are, therefore, advised to go through the provisions of the PMLA, 2002 and the Rules notified there
under and take all steps considered necessary to ensure compliance with the requirements of the Act and the
Rules ibid.
Maintenance of records of transactions
Banks/FIs should introduce a system of maintaining proper record of transactions prescribed under Rule
3 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PML Rules, 2005), as
mentioned below:
(i) All cash transactions of the value of more than Rupees Ten Lakh or its equivalent in foreign
currency;
(ii) Series of all cash transactions individually valued below Rupees Ten Lakh, or its equivalent in
foreign currency which are that have taken place within a month and the monthly aggregate which
exceeds rupees ten lakhs or its equivalent in foreign currency. It is clarified that for determining
‘integrally connected transactions’ ‘all accounts of the same customer’ should be taken into account.
(iii) All transactions involving receipts by non-profit organisations of value more than rupees ten lakh
or its equivalent in foreign currency [Ref: Government of India Notification dated November 12, 2009-
Rule 3,subrule (1) clause (BA) of PML Rules]
(iv) All cash transactions where forged or counterfeit currency notes or bank notes have been used as
genuine and where any forgery of a valuable security or a document has taken place facilitating the
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transaction and
(v) All suspicious transactions, whether or not in cash, made as mentioned in the Rules.
Banks/FIs are required to maintain all necessary information in respect of transactions prescribed under
PML Rule 3 so as to permit reconstruction of individual transaction, including the following information:
(i) the nature of the transactions;
(ii) the amount of the transaction and the currency in which it was denominated;
(iii) the date on which the transaction was conducted; and
(iv) the parties to the transaction.

Preservation of Records
Banks/FIs should take appropriate steps to evolve a system for proper maintenance and preservation of
account information in a manner that allows data to be retrieved easily and quickly whenever required or
when requested by the competent authorities

(i) In terms of PML Amendment Act 2012, banks/FIs should maintain for at least five years from the
date of transaction between the bank/FI and the client, all necessary records 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.
(ii) Banks/FIs should ensure that records pertaining to the identification of the customers and their
address (e.g. copies of documents like passports, identity cards, driving licenses, PAN card, utility bills,
etc.) obtained while opening the account and during the course of business relationship, are properly
preserved for at least five years after the business relationship is ended as required under Rule 10 of the
Rules ibid. The identification of records and transaction data should be made available to the competent
authorities upon request.
(iii) Banks/FIs may maintain records of the identity of their clients, and records in respect of
transactions referred to in Rule 3 in hard or soft format.
(iv) As mentioned in paragraph 3.3.1(i) of this Master Circular, banks/FIs are required to pay special
attention to all complex, unusual large transactions and all unusual patterns of transactions, which have
no apparent economic or visible lawful purpose. It is further clarified that the background including all
documents/office records/memorandums pertaining to such transactions and purpose thereof should,
as far as possible, be examined and the findings at branch as well as Principal Officer level should
be properly recorded. Such records and related documents should be made available to help
auditors to scrutinize the transactions and also to Reserve Bank/other relevant authorities. These
records are required to be preserved for five years as is required under PMLA, 2002.
Combating Financing of Terrorism
The United Nations periodically circulates the following two lists of individuals and entities, suspected of
having terrorist links, and as approved by its Security Council (UNSC).

(a) The “Al-Qaida Sanctions List”, includes names of individuals and entities associated with the Al-
Qaida. The Updated Al-Qaida Sanctions List is available at http://www.un.org/sc/committees/1267/aq
sanctions list.shtml.

(b) The “1988 Sanctions List”, consisting of individuals (Section A of the consolidated list) and entities
(Section B) associated with the Taliban which is available at http://www.un.org/sc/committees/
1988/list.shtml.

The United Nations Security Council Resolutions (UNSCRs), received from Government of India, are
circulated by the Reserve Bank to all banks and FIs. Banks/FIs are required to update the lists and
take them into account for implementation of Section 51A of the Unlawful Activities (Prevention)
(UAPA) Act, 1967, discussed below. Banks/FIs should ensure that they do not have any account in
the name of individuals/entities appearing in the above lists. Details of accounts resembling any of the
individuals/entities in the list should be reported to FIUIND.

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Freezing of Assets under Section 51A of Unlawful Activities (Prevention) Act, 1967
(a) The Unlawful Activities (Prevention) Act, 1967 (UAPA) has been amended by the Unlawful
Activities (Prevention) Amendment Act, 2008. Government has issued an Order dated August 27,
2009 (Annex II of this circular) detailing the procedure for implementation of Section 51A of the
Unlawful Activities (Prevention) Act, 1967 for prevention of, and for coping with terrorist activities. In
terms of Section 51A, the Central Government is empowered to freeze, seize or attach funds and
other financial assets or economic resources held by, on behalf of or at the direction of the individuals
or entities listed in the Schedule to the Order, or any other person engaged in or suspected to be
engaged in terrorism and prohibit any individual or entity from making any funds, financial assets or
economic resources or related services available for the benefit of the individuals or entities listed in
the Schedule to the Order or any other person engaged in or suspected to be engaged in terrorism.
(b) Banks/FIs are required to strictly follow the procedure laid down in the UAPA Order dated August 27,
2009 (Annex II of this Master Circular) and ensure meticulous compliance to the Order issued by the
Government.
Jurisdictions that do not or insufficiently apply the FATF Recommendations
(a) Banks/FIs are required to take into account risks arising from the deficiencies in AML/CFT regime of
the jurisdictions included in the FATF Statement. In addition to FATF Statements circulated by
Reserve Bank of India from time to time, banks/FIs should also consider publicly available information
for identifying countries, which do not or insufficiently apply the FATF Recommendations. It is clarified
that banks/FIs should also give special attention to business relationships and transactions with
persons (including legal persons and other financial institutions) from or in countries that do not or
insufficiently apply the FATF Recommendations and jurisdictions included in FATF Statements.
Banks/FIs should examine the background and purpose of transactions with persons (including legal
persons and other financial institutions) from jurisdictions included in FATF Statements and countries
that do not or insufficiently apply the FATF Recommendations. Further, if the transactions have no
apparent economic or visible lawful purpose, the background and purpose of such transactions
should, as far as possible be examined, and written findings together with all documents should be
retained and made available to Reserve Bank/other relevant authorities, on request.

Reporting Requirements
a) Reporting to Financial Intelligence Unit - India

(i) In terms of the Rule 3 of the PML (Maintenance of Records) Rules, 2005, banks/FIs are required to
furnish information relating to cash transactions, cash transactions integrally connected to each other,
and all transactions involving receipts by non-profit organisations (NPO means any entity or organisation
that is registered as a trust or a society under the Societies Registration Act, 1860 or any similar State
legislation or a company registered (erstwhile Section 25 of Companies Act, 1956 ) under Section 8 of the
Companies Act, 2013), cash transactions where forged or counterfeit currency notes or bank notes have
been used as genuine, cross border wire transfer, etc. to the Director, Financial Intelligence Unit-India
(FIU-IND) at the following address:
Director, FIU-IND,
Financial Intelligence Unit-India, 6th Floor, Hotel
Samrat,
Chanakyapuri,
New Delhi-110021
Website - http://fiuindia.gov.in/
(ii) FIU-IND has released a comprehensive reporting format guide to describe the specifications of
prescribed reports to FIU-IND. FIU-IND has also developed a Report Generation Utility and Report
Validation Utility to assist reporting entities in the preparation of prescribed reports. The Office
Memorandum issued on Reporting Formats under Project FINnet dated 31st March, 2011 by FIU
containing all relevant details are available on FIU’s website. Banks/FIs should carefully go through
all the reporting formats prescribed by FIU-IND.
(iii) FIU-IND have placed on their website editable electronic utilities to file electronic Cash Transactions
Report (CTR)/ Suspicious Transactions Report (STR) to enable banks/FIs which are yet to install/adopt
suitable technological tools for extracting CTR/STR from their live transaction data base. It is, therefore,
(iv) advised that in cases of those banks/FIs, where all the branches are not fully computerized, the
Principal Officer of the bank/FI should cull out the transaction details from branches which are not yet
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computerized and suitably arrange to feed the data into an electronic file with the help of the editable
electronic utilities of CTR/STR as have been made available by FIU-IND on their website
http://fiuindia.gov.in
(v) (iv) In terms of Rule 8, while furnishing information to the Director, FIU-IND, delay of each day in not
reporting a transaction or delay of each day in rectifying a misrepresented transaction beyond the time
limit as specified in the Rule shall constitute a separate violation. Banks/FIs are advised to take note of
the timeliness of the reporting requirements.
(vi) In terms of instructions contained in paragraph 3.4 (b) of this Master Circular, banks/FIs are required
to prepare a profile for each customer based on risk categorisation. Further, vide paragraph 3.2.2. (III), the
need for periodical review of risk categorisation has been emphasized. It is, therefore, reiterated that, as a
part of their transaction monitoring mechanism, banks/FIs are required to put in place an appropriate
software application to throw alerts when the transactions are inconsistent with risk categorization and
updated profile of the customers. It is needless to add that a robust software throwing alerts is essential
for effective identification and reporting of suspicious transaction.
b) Reports to be furnished to FIU-IND
1. Cash Transaction Report (CTR)
While detailed instructions for filing all types of reports are given in the instructions part of the related
formats, banks/FIs should scrupulously adhere to the following:
(i) The CTR for each month should be submitted to FIU-IND by 15 th of the
succeeding month. Cash transaction reporting by branches to their controlling offices should, therefore,
invariably be submitted on monthly basis and banks/FIs should ensure to submit CTR for every month to
FIU-IND within the prescribed time schedule.
(ii) All cash transactions, where forged or counterfeit Indian currency notes have been used as genuine
should be reported by the Principal Officer of the bank to FIU-IND in the specified format(Counterfeit
Currency Report – CCR), by 15thday of the next month. These cash transactions should also include
transactions where forgery of valuable security or documents has taken place and may be reported to
FIU-IND in plain text form.
(iii) While filing CTR, details of individual transactions below Rupees Fifty thousand need not be
furnished.
(iv) 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.
(v) A summary of cash transaction reports for the bank as a whole should be compiled by the Principal
Officer of the bank every month in physical form as per the format specified. The summary should be
signed by the Principal Officer and submitted to FIU-IND. In case of CTRs compiled centrally by banks
for the branches having Core Banking Solution (CBS) at their central data centre, banks may generate
centralised CTRs in respect of the branches under core banking solution at one point for onward
transmission to FIU-IND, provided the CTR is to be generated in the format prescribed by FIU-IND;
(vi) A copy of the monthly CTR submitted to FIU-India in respect of the branches should be available at
the branches for production to auditors/inspectors, when asked for; and
vii) The instruction on ‘Maintenance of records of transactions’; and
‘Preservation of records’ as contained above in this Master Circular at Para 6.1 and 6.2 respectively
should be scrupulously followed by the branches.
viii) However, in respect of branches not under CBS, the monthly CTR should continue to be
compiled and forwarded by the branch to the Principal Officer for onward transmission to FIU-IND.
2. Suspicious Transaction Reports (STR)
(i) While determining suspicious transactions, banks/FIs should be guided by
the definition of suspicious transaction as contained in PMLA Rules as amended from time to time.
(ii) It is likely that in some cases transactions are abandoned/aborted by
customers on being asked to give some details or to provide documents. It is clarified that banks/FIs
should report all such attempted transactions in STRs, even if not completed by the customers,
irrespective of the amount of the transaction.
(iii) Banks/FIs should make STRs if they have reasonable ground to believe that the transaction
involves proceeds of crime irrespective of the amount of the transaction and/or the threshold limit
envisaged for predicate offences in part B of Schedule of PMLA, 2002.
(iv) The STR should be furnished within seven days of arriving at a conclusion that any

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transaction, whether cash or non-cash, or a series of transactions integrally connected are of suspicious
nature. The Principal Officer should record his reasons for treating any transaction or a series of
transactions as suspicious. It should be ensured that there is no undue delay in arriving at such a
conclusion once a suspicious transaction report is received from a branch or any other office. Such
report should be made available to the competent authorities on request.
(v) In the context of creating KYC/AML awareness among the staff and for
generating alerts for suspicious transactions, banks may consider the indicative list of suspicious
activities contained in 'IBA's Guidance Note for Banks, January 2012’.
(vi) Banks/FIs should not put any restrictions on operations in the accounts where an STR has
been filed. Banks/FIs and their employees should keep the fact of furnishing of STR strictly confidential,
as required under PML Rules. It should be ensured that there is no tipping off to the customer at any
level.
3. 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, FIU-IND by 15th of the succeeding month in the prescribed
format.
Cross-border Wire Transfer
Cross-border Wire Transfer Report (CWTR) is required to be filed with FIU-IND by 15th of succeeding
month for all cross border wire transfers of the value of more than five lakh rupees or its equivalent in
foreign currency where either the origin or destination of fund is in India.
General Guidelines
(i) Confidentiality of customer information:
Information collected from customers for the purpose of opening of account is to be treated as confidential
and details thereof should not be divulged for the purpose of cross selling, etc. Information sought from
the customer should be relevant to the perceived risk and be non-intrusive. Any other information that is
sought from the customer should be called for separately only after the account has been opened, with
his/her express consent and in a different form, distinctly separate from the application form. It should be
indicated clearly to the customer that providing such information is optional.
(ii) Avoiding hardship to customers:
While issuing operational instructions to branches, banks/FIs should keep in mind the spirit of the
instructions issued by the Reserve Bank so as to avoid undue hardships to individuals who are otherwise
classified as low risk customers.
(iii) Sensitising customers:
Implementation of AML/CFT policy may require certain information from customers of a personal nature or
which had not been called for earlier. The purpose of collecting such information could be questioned by
the customer and may often lead to avoidable complaints and litigation. Banks/FIs should, therefore,
prepare specific literature/pamphlets, etc., to educate the customer regarding the objectives of the
AML/CFT requirements for which their cooperation is solicited.
(iv) Hiring of Employees
It may be appreciated that KYC norms/AML standards/CFT measures have been prescribed to
ensure that criminals are not allowed to misuse the banking
channels. It would, therefore, be necessary that adequate screening mechanism is put in place by
banks/FIs as an integral part of their personnel recruitment/hiring process.
(v) Employee training:
Banks/FIs must have an ongoing employee training programme so that the members of staff are
adequately trained in AML/CFT policy. The focus of the training should be different for frontline staff,
compliance staff and staff dealing with new customers. The front desk staff needs to be specially
trained to handle issues arising from lack of customer education. Proper staffing of the audit function
with persons adequately trained and well-versed in AML/CFT policies of the bank, regulation and
related issues should be ensured.
(vi) Provisions of FCRA
Banks should ensure that the provisions of the Foreign Contribution (Regulation) Act, 2010, wherever
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applicable, are strictly adhered to.
(vii) Applicability to overseas branches/subsidiaries
The guidelines in this circular apply to the branches and majority owned subsidiaries located abroad,
to the extent local laws in the host country permit. When local applicable laws and regulations prohibit
implementation of these guidelines, the same should be brought to the notice of the Reserve Bank. In
case there is a variance in KYC/AML standards prescribed by the Reserve Bank and the host country
regulators, branches/overseas subsidiaries of banks are required to adopt the more stringent
regulation of the two.
(viii) Technology requirements:
The AML software in use at banks/FIs needs to be comprehensive and robust enough to capture all
cash and other transactions, including those relating to walk-in customers, sale of
gold/silver/platinum, payment of dues of credit cards/reloading of prepaid/travel cards, third party
products, and transactions involving internal accounts of the bank.
(ix) Designated Director:
Banks/FIs may nominate a Director on their Boards as “designated Director”, as required under
provisions of the Prevention of Money Laundering (Maintenance
of Records) Rules, 2005 (Rules), to ensure compliance with the obligations under the Act and Rules.
The name, designation and address of the Designated Director may be communicated to the FIU-
IND. UCBs/ State Cooperative Banks / Central Cooperative Banks can also designate a person who
holds the position of senior management or equivalent as a 'Designated Director'. However, in no
case, the Principal Officer should be nominated as the 'Designated Director'.
(x) Principal Officer:
Banks/FIs may appoint a senior officer as Principal Officer (PO). The PO should be independent and
report directly to the senior management or to the Board of Directors. The PO shall be responsible for
ensuring compliance, monitoring transactions, and sharing and reporting information as required under the
law/regulations. The name, designation and address of the Principal Officer may be communicated to the
FIU-IND.

Annex- I : Customer Identification Procedure


Documents that may be obtained from customers
Officially Valid Documents for KYC purpose

1.Individual : Passport , Driving License, PAN Card, Voter ID , NREGA Job Card , Letter
issued by UIDIA containing name ,address and Aadhaar number. If the OVD submitted
for proof of identity does not have address proof , then customer is required to submit
another OVD for proof of address

2.Low Risk Customers ( Individual):Simplified measures may be applied for low risk customer .
Under simplified measures, in addition to above OVD following ID Proof may be accepted
Identity card with applicant‘s Photograph issued by Central/State
Government Departments, Statutory/Regulatory authoriries
,PSUs,Scheduled commercial banks and Public financial institutions
Letter issued by Gazetted officer, with a duly attested photograph of the person
Under simplified measures, in addition to above OVD following address proof may be
accepted.
Utility bill( electricity,water,telephone,postpaid mobile phone ,piped gas bill) which is not
more than two months old
Proprty or Municipal Tax receipt
Bank account or post office savings bank account statement
Pension or family pension payment orders (PPOs) issued to retired government
employees /PSU
Letter of allotment of accommodation from employer issued by State or Central
Governments , Statutory or regulatory bodies,PSBs/PSUs/FIs/Listed companies.Similarly
leave and license agreements with such employers allotting official accommodation.
Documents issued by Govt. departments of foreign jurisdictions and letter issued by
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Foreign Embassy or Mission in India.

3.Individuals who are unable to provide OVD : "Canara Small SB Deposit" may be opened by
such customers on the basis of a self attested photograph and putting signature on account
opening form in the presence of a bank official

4.Comapnies: Certificate of incorporation;Memorandum and Articles of Association; A resolution


from the Board of Directors and power of attorney granted to its managers, officers or employees
to transact on its behalf; An officially valid KYC document in respect of managers, officers or
employees holding an attorney to transact on its behalf; and PAN number of the Company.

5.Partnership Firms :Registration certificate; Partnership deed; An officially valid KYC


document in respect of the partners and the person holding an attorney to transact on its
behalf;and PAN number of the Firm.

6.Trusts and Foundations :Registration certificate; Trust deed; An officially valid KYC document in
respect of the trustees,Settlers,beneficiaries and the person holding a power of attorney to
transact on its behalf; and PAN number of the Trust.

7.Unincorporated Association or body of Individuals :Resolution of the managing body of such


association or body of individuals; Power of attorney granted to him to transact on its behalf; An
officially valid KYC document in respect of the person holding an attorney to transact on its
behalf; Such information as may be required by the bank to collectively establish the legal
existence of such an association or body of individuals; and PAN number of the Unincorporated
Association or body of individuals.

8.Proprietorship concerns:Registration certificate (in the case of a registered concern) ;Certificate/licence


issued by the Municipal authorities under Shop & E s t a b l is hm en t Ac t ; S a l es an d i nc om e t a x
r et ur ns ; C S T/ V A T c e rt if i c at e ;Certificate/registration document issued by Sales Tax/Service
Tax/Professional Tax authorities ;Licence/certificate of practice issued in the name of the
proprietary concern by any professional bosy incorpaorate under a statute ;Complete IT return
(not just the acknowledgement) in the name of the sole proprietor where the firm's income is
reflected, duly authenticated/ acknowledged by the Income Tax Authorities.
Any two of the above documents would suffice.These documents should be in the name of proprietory
concern.

Customer is required to furnish proper proof of identity through photo identity card and address
proof. Documents required from various types of customers are given below. The original
documents are to be verified, copies taken and duly authenticated by the officer of the Bank stating
'verified with the original'.
Type of customer Documents
Accounts of individual For proof of identity, only the documents mentioned below would be accepted for opening
accounts of individuals. They are: the passport, the driving license, the Permanent
Account Number (PAN) Card, the Voter's Identity Card issued by Election Commission of
India, job card issued by NREGA duly signed by an officer of the State Government, the
letter issued by the Unique Identification Authority of India containing details of name,
address and Aadhaar number. It is
implied that proof of address also follows from the above documents only. Banks would
not have the discretion to accept any other document for this purpose.
Accounts of a) Certificate of incorporation; b) Memorandum and Articles of Association; c) A
Companies: Name, resolution from the Board of Directors and power of attorney granted to its managers,
Principal place of officers or employees to transact
Business; Mailing on its behalf; and d) An officially validdocument in respect of managers, officers or employees
address; Phone no holding an attorney to transact on its behalf; (e) Copy of PAN Allotment letter; (f) Copy
of the telephone bill.

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Accounts of a) Registration certificate; b) Partnership deed; and c) An officially valid document in
Partnership respect of the person holding an attorney to transact on its behalf; (iv) Any officially
valid document identifying the partners and the persons holding the Power of Attorney
and their addresses; (v) Telephone bill in the name of firm/partners
Trusts a) Registration certificate; b) Trust deed; and c) An officially valid document in
respect of the person holding a pbwer of attorney to transact on its behalf.
Proprietorship at least two of the following documents (i) Proof of the name, address and activity of
concern the concern; (ii) Registration certificate (in the case of a registered concern); (iii)
Certificate/licence issued by the Municipal authorities under Shop & Establishment
Act, (iv) Sales and income tax returns; (v)
CST/VAT certificate; (vi) Certificate/registrationdocument
Tax/Professional Tax authorities; (vii) Licence issued by the Registering authority like
Certificate of Practice issued by Institute of Chartered Accountants of India, Institute of
Cost Accountants of India, Institute of Company Secretaries of India, Indian Medical
Council, Food and Drug Control Authorities, registration/licensing document issued in
the name of the proprietary concern by the Central Government or State Government
Authority/ Department, etc or IEC (Importer Exporter Code) issued to the proprietary
concern by the office of DGFT; (viii) The complete Income Tax return (not just the
acknowledgement) in the name of the sole proprietor where the firm's income is
reflected, duly authenticated/ acknowledged by the Income.Tax Authorities; (ix) Utility
bills such as electricity, water, and landline telephone bills in the name of the proprietary
concern. In March 2015, RBI has allowed acceptance of any one of these
documents. .

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.
Aadhar Card for KYC Purposes
1. The fetter issued by the Unique Identification Authority of India (UIDAI) containing details of name,
address and Aadhaar number may be accepted as an 'Officially Valid Document'. Further, while
opening accounts based on Aadhaar, if the address provided by the account holder is the same as that
on Aadhaar letter, it may be accepted as a proof of both identity and address.
2. Banks may accept e-Aadhaar, downloaded from UIDAI website, as an officially valid document. If the
prospective customer knows only his/her Aadhaar number, the bank may print the prospective customer's
eAadhaar letter in the bank directly from the UIDAI portal; or adopt e-KYC procedure as prescribed by RBI
or confirm identity and address of the resident through simple authentication service of UIDAI.
3. e-KYC service is accepted as a valid process for KYC verification under Prevention of Money Laundering
(Maintenance of Records) Rules, 2005. Information containing demographic details and photographs made
available from UIDAI as a result of e-KYC process ("which is in an electronic form and accessible ") may be
treated as an 'Officially Valid Document' under PML Rules. The individual user has to authorize the =Ai, by
explicit consent, to release her or his identity/address through biometric authentication to the bank
branches/business correspondents (BCs). The UIDAI then transfers the data of the individual comprising
name, age, gender, and photograph of the individual, electronically to the bank/BCs, which may be

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accepted as valid process for KYC verification.
4. RBI has advised the banks to have proper infrastructure in place to enable biometric authentication for e-
KYC.
OPERATIONALISATION OF CENTRAL KYC REGISTRY (CKYCR) AND KYC NORMS FOR FOREIGN
PORTFOLIO INVESTORS (FPIS)
RBI has made (July 8, 2016) the following amendments in KYC directions:
1. Customer Due Diligence Procedure and sharing KYC information with Central KYC Records Registry
(CKYCR): Regulated Entities shall capture the KYC information for sharing with the CKYCR, as required by
the revised KYC templates prepared for ‘individuals’ and ‘Legal Entities’ as the case may be. Government of
India has authorised the Central Registry of Securitisation Asset Reconstruction and Security Interest of India
(CERSAI), to act as, and to perform the functions of the CKYCR vide notification dated November 26, 2015.
The ‘live run’ of the CKYCR would start with effect from July 15, 2016 in phased manner beginning with new
‘individual accounts’. Accordingly, REs shall take the following steps:
1. In the first phase, Scheduled Commercial Banks (SCBs) may upload the KYC data with CERSAI, in
respect of new individual accounts opened on or after July 15, 2016.
2. REs other than SCBs may also participate in the live run of CKYCR from July 15, 2016.
3. Those REs which are not yet ready to join CKYCR
process immediately, shall take steps to prepare their systems for uploading the KYC data in respect of
new individual accounts so that the same is complete as soon as possible in a time bound manner.
4. REs shall prepare a plan for uploading the data in respect of existing individual accounts and include
the same in their KYC Policy.
5. Operational Guidelines (version 1.1) for uploading the KYC data have been released by CERSAI.
Further, ‘Test Environment’ has also been made available by CERSAI for the use of REs.
(b) KYC documents for eligible Foreign Portfolio Investors under Portfolio Investment Scheme PIs under
PIS have been revised
CENTRAL KYC RECORDS REGISTRY (CKYCR) TEMPLATE FOR KYC & REPORTING
REQUIREMENTS UNDER FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA)/ COMMON
REPORTING STANDARDS (CRS) As per notification dated July 7, 2015, Government has amended the
Prevention of Money Laundering (Maintenance of Records) Rules, 2005, (Rules), for setting up of the
Central KYC Records Registry (CKYCR). The proposed CKYCR would receive, store, safeguard and
retrieve the KYC records in digital form of a client. The KYC records received and stored by the CKYCR
could be retrieved online by any reporting entity across the financial sector for the purpose of establishing
an account based relationship. In order to facilitate collating and reporting the KYC data to the proposed
CKYCR, templates have been finalised in consultation with other regulators and CBDT (separate for
individuals and legal entity). RBI has advised banks (November 26, 2015) to be in readiness to share the
KYC data with the CKYCR once the CKYCR is notified by the Government. In case of opening of 'Small
Accounts', only personal details together with the photograph, signature/thumb impression and self-
certification document should be obtained. Salient excerpts from the Govt notification are given below:
1. "Central KYC Records Registry" means a reporting entity, substantially owned and controlled by the
Central Government, and authorised by that Government through a notification in the Official Gazette to
receive, store, safeguard and retrieve the KYC records in digital form of a client.
2. "Know Your Client (KYC) Identifier" means the unique number or code assigned to a client by the
Central KYC Records Registry;
3. "Know Your Client (KYC) records" means the records, including the electronic records, relied upon by a
reporting entity in carrying out client due diligence.
4. "last KYC verification or updation" means the last transaction made by a reporting entity in the Central
KYC Records Registry by which the KYC records of a client were recorded, changed or updated by a
reporting entity;'
5. Officially valid document means and includes the letter issued by the Unique Identification Authority of
India or National Population Register containing details of name, address.
6. Every reporting entity shall within three days after the commencement of an account-based relationship
with a client, file the electronic copy of the client's KYC records with the Central KYC Records Registry.
The Central KYC Records Registry shall process the KYC records received from a reporting entity for de-
duplicating and issue a KYC Identifier for each client to the reporting entity, which shall communicate the
KYC Identifier in writing to their client.
7. Where a client, submits a KYC Identifier to a reporting entity, then such reporting entity shall retrieve
the KYC records online from the Central KYC Records Registry by using the KYC Identifier and shall not
require a client to submit the same KYC records or information or any other additional identification
documents or details, unless — (i) there is a change in the information of the client as existing in the
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records of Central KYC Records Registry; (ii) the current address of the client is required to be verified;
(iii) the reporting entity considers it necessary in order to verify the identity or address of the client, or to
perform
enhanced due diligence or to build an appropriate risk profile of the client. A reporting entity after obtaining
additional or updated information from a client as above shall as soon as possible furnish the updated
information to the Central KYC Records Registry which shall update the existing KYC records of the client
and the Central KYC Records Registry shall thereafter inform electronically all reporting entities who have
dealt with the concerned client regarding updatation of KYC record of the said client. The reporting entity
which performed the last KYC verification or sent updated information in respect of a client shall be
responsible for verifying the authenticity of the identity or address of the client.
8. A reporting entity shall not use the KYC records of a client obtained from the Central KYC Records
Registry for purposes other than verifying the identity or address of the client and shall not transfer KYC
records or any information contained therein to any third party unless authorized to do so by the client or
by the Regulator or by the Director;
9. Every reporting entity shall at the time of commencement of an account-based relationship identify its
clients, verify their identity, obtain information on the purpose and intended nature of the business
relationship. A reporting entity may rely on a third party subject to the conditions that the reporting entity,
within two days, obtains from the third party or from the Central KYC Records Registry records or the
information of the client due diligence carried out by the third party.
10. Functions and obligations of the Central KYC Records Registry:
(a) shall be responsible for storing, safeguarding and retrieving the KYC records and making such records
available online to reporting entities or Director;
(b) shall take all precautions necessary to ensure that the electronic copies of KYC records are not lost,
destroyed or tampered with and that sufficient back up of electronic records are available at all times at an
alternative safe and secure place;
(c) shall provide information only to the reporting entities which are registered with it on payment of fees
as specified by the Regulator;
11. Every reporting entity shall maintain the physical copy of records of the identity of its clients after
filing the electronic copy of such records with the Central KYC Records Registry.
12. Clarification / Guidelines on filling 'Personal Details' section in templates: Name should be stated with
Prefix (Mr/Mrs/Ms/Dr/etc.). The name should match the name as mentioned in the Proof of Identity
submitted failing which the application is liable to be rejected. Either father's name or spouse's name is to
be mandatorily furnished. In case PAN is not available father's name is mandatory.
13. Clarification / Guidelines on filling 'Proof of Identity [Poll' section: If driving license number or
passport is provided as proof of identity then expiry date is to be mandatorily furnished. Mention
identification / reference number if 'Z- Others (any document notified by the central government)' is
ticked.

KNOW YOUR CUSTOMER GUIDELINES : Frequently Asked Questions (Source: RBI)

Q1. What is KYC? Why is it required?: KYC means “Know Your Customer”. It is a process by which banks obtain
information about the identity and address of the customers. This process helps to ensure that banks’ services
are not misused. The KYC procedure is to be completed by the banks while opening accounts. Banks are also
required to periodically update their customers’ KYC details.
Q2. What are the KYC requirements for opening a bank account?: To open a bank account, one needs to
submit a ‘proof of identity and proof of address’ together with a recent photograph.
Q3. What are the documents to be given as ‘proof of identity’ and ‘proof of address’?: The Government of India
has notified six documents as ‘Officially Valid Documents’ (OVDs) for the purpose of producing proof of
identity. These six documents are Passport, Driving Licence, Voters’ Identity Card, PAN Card, Aadhaar Card
issued by UIDAI and NREGA Job Card. One has to submit any one of these documents as proof of identity.
If these documents also contain address details, then it would also be accepted as ‘proof of address’. If the
document submitted for proof of identity does not contain address details, then one will have to submit
another officially valid document which contains address details.
Q4. How to open account if a person does not have proof of address & identity?: If a person does not have any of
the documents listed above to show ‘proof of identity’, he can still open a bank account known as ‘Small
Account’ by submitting his recent photograph and putting his signature or thumb impression in the presence of
the bank official. The ‘Small Accounts’ have certain limitations such as:
• balance in such accounts at any point of time should not exceed Rs.50,000
• total credits in one year should not exceed Rs.1,00,000
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• total withdrawal and transfers in a month should not exceed Rs.10,000
• Foreign remittances cannot be credited to such accounts.
Such accounts 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 to the bank of having applied for any of the
officially valid documents within twelve months of the opening of such account.
Q5. Opening bank account if a person does not have any of the officially valid documents and which is not
subjected to any limitations as in the case of ‘small accounts’?: A normal account can be opened by
submitting:
Proof of identity: a copy of any one of the following documents as Proof of Identity (PoI) - (i) Identity card
with person’s photograph issued by Central/State Government Departments, Statutory/Regulatory
Authorities, Public Sector Undertakings, Scheduled Commercial Banks, and Public Financial Institutions;
or (ii) letter issued by a gazetted officer, with a duly attested photograph of the person.
Proof of Address (PoA): Any one of the following documents: (i) Utility bill, which is not more than two
months old, of any service provider (electricity, telephone, post-paid mobile phone, piped gas, water bill);
or (ii) Property or Municipal Tax receipt;
(iii) Bank account or Post Office savings bank account statement; or (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 Government
departments of foreign jurisdictions or letter issued by Foreign Embassy or Mission in India.
This, however, is not a general rule and it is left to the judgement of the banks to decide whether this
simplified procedure can be adopted in respect of any customer.
Q6. If name is changed due to marriage and person does not have any OVD in the new name, how can
she open an account?:
A copy of the marriage certificate issued by the State Government or Gazette notification indicating
change in name together with a certified copy of the ‘Officially Valid Documents’ in the prior name of the
person is to be furnished for opening of account in cases of persons who change their names on account
of marriage or otherwise.
Q7. Are banks required to categorise their customers based on risk assessment?: Yes, banks are
required to classify their customers into ‘low’, ‘medium’ and ‘high’ risk categories depending on their AML
risk assessment. But banks do not inform customers about this risk categorization.
Q8. Can a person open a bank account with only an Aadhaar card?: Yes, Aadhaar card is accepted as a
proof of both identity and address.
Q9. Is it compulsory to furnish Aadhaar Card for opening an account?: No. A person may furnish Aadhaar
card or any of the other five OVDs for opening an account.
Q10. What is e-KYC? How does e-KYC work?: e-KYC refers to electronic KYC. e-KYC is possible only for
those who have Aadhaar numbers. While using e-KYC service, you have to authorise the Unique
Identification Authority of India (UIDAI), by explicit consent, to release your identity/address through biometric
authentication to the bank branches/business correspondent (BC). The UIDAI then transfers your data
comprising your name, age, gender, and photograph electronically to the bank. Information thus provided
through e-KYC process is permitted to be treated as an ‘Officially Valid Document’ under PML Rules and is a
valid process for KYC verification.
Q11. Is introduction necessary while opening a bank account?: No, introduction is not required.
Q12. If a person is staying in Chennai but if proof of address shows address of New Delhi, can he still
open an account in Chennai?: Yes. Account can be opened in Chennai also even if the address in the
“Officially Valid Document” is that of New Delhi. In such case, the person can submit the officially valid
document having New Delhi address, together with a declaration about Chennai address for
communication purposes.
Q13. Can one transfer his existing bank account from one place to another?: It is possible to transfer an
account from one branch to another branch of the same bank. There is no need to undergo KYC exercise
again for such transfer. However, if there is a change of address, then one will have to submit a declaration
about the current address. If the address appearing in the ‘Officially Valid Documents’ (OVDs) submitted for
proof of address is no longer his valid address (i.e. neither permanent address nor current address), he needs
to get an Officially Valid Document for Proof of
Address containing the current or the permanent address and furnish the same within six months. In
case of opening an account in another bank, however, one will have to undergo KYC exercise afresh.
Q14. Whether separate proof of address & identity required for various accounts in same bank?: No, if one

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has opened a KYC compliant account with a bank, other than a ‘small account’, then for opening another
account with the same bank, furnishing of documents is not necessary.
Q15. For which banking transactions do PAN number is to be quoted?: PAN number needs to be quoted
for transactions such as account opening, transactions above Rs.50,000 (whether in cash or non-cash),
etc.
Q16. Whether KYC is applicable for Credit/Debit cards?: Yes. KYC exercise is necessary for Credit/ Smart
Cards and also in respect of add-on/ supplementary cards. Since debit cards are issued only to account
holders and accounts are opened only after the KYC procedure is completed, there is no need for separate
KYC for issuing debit card.
Q17. If a person does not have a bank account but wants to make a remittance. Is KYC applicable?:
Yes. KYC exercise needs to be done for all those who want to make domestic remittances of Rs. 50,000
and above and all foreign remittances.
Q18. What are rules relating to purchase of a Demand Draft/Payment Order/Travellers Cheque
against cash?: Demand Draft/Payment Order/Travellers Cheques for below Rs.50,000/- can be
purchased against cash and such instruments for Rs. 50000/- and above can be issued only by way of
debiting the customer's account or against cheques.
Q19. Whether KYC documents are to be submitted to the bank while purchasing third party products (like
insurance or mutual fund products) from banks?: Yes, all customers who do not have accounts with the
bank (known as walk-in customers) have to produce proof of identity and address while purchasing third
party products from banks if the transaction is for Rs.50,000 and above. KYC exercise will not be
necessary for bank’s own customers for purchasing third party products. However, instructions to make
payment by debit to customers’ accounts or against cheques for remittance of funds/issue of travellers’
cheques, sale of gold/silver/platinum and the requirement of quoting PAN number for transactions of
Rs.50,000 and above will be applicable to purchase of third party products from bank by its customers as
also to walk-in customers.
Q20. What are the rules regarding periodic updation of KYC?: Banks are required to periodically update
KYC records. Different periodicities have been prescribed for updation of KYC records depending on the
risk perception of the bank. KYC is required to be done at least once in two years for high risk customers,
once in eight years for medium risk customers and once in ten years for low risk customers. This exercise
would involve all formalities for KYC normally taken at the time of opening the account. While periodic
updation of KYC has to be carried out in respect of customer categorised as ‘low risk’ also, if there is no
change in status with respect to the identity (change in name, etc.) and/or address of such customers the
banks may ask such customers to submit only a self-certification about ‘no-change in status’ at the time of
periodic updation. Banks may not ask such customers to submit copies of ‘Officially Valid Documents’ for
periodic updation. In case of change of address of such ‘low risk’ customers, they could merely forward a
certified copy of the document (proof of address) by mail/post, etc. Physical presence of such low risk
customer is not required at the time of periodic updation. Customers who are minors have to submit
fresh photograph on becoming major.
Q21. What will happen if a customer does not provide the KYC documents at the time of periodic
updation?: If one does not provide KYC documents at the time of periodic updation, bank has the option
to close account. Before closing the account, the bank may, however, impose ‘partial freezing’. For
partial freezing, banks have to give due notice of three months initially to the customers and after that a
reminder for further period of three months will be issued. Thereafter, banks shall impose ‘partial
freezing’ by allowing all credits and disallowing all debits with the freedom to close the accounts. If the
accounts are still KYC noncompliant after six months of imposing initial ‘partial freezing’ banks shall
disallow all debits and credits from/to the accounts, classifying them inoperative. Account holders can
revive accounts by submitting the KYC documents.

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
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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
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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.

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.
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

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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'.

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BCSBI has 2 codes : Codes of Bank's Commitment to customers (2014) & Codes of Bank's
commitment to Micro and Small Enterprises(2015)
Apart from Hindi & English these Codes are available in 10 regional languages viz. Assam, Bengali,
Gujarati, Kannada, Malayalam, Marathi, Punjabi, Tamil, Telugu and Urudu.
AIMS AND OBJECTIVES OF BCSBI

1. To plan, evolve, prepare, develop, promote and publish voluntary comprehensive


Codes and standards for Banks, providing for fair treatment to their customers.
2. 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
3. To conduct and undertake research of the Codes and Standards currently in vogue
in and outside India.
4. . To enter into covenants with on observations of the Codes and Standards and for that
purpose to train employees of Banks about the Banking Codes.
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
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.
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MEMORY BASED RECALLED QUESTIONS
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

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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 _____:

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(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)
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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
1. 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
2. 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.
3. 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
4. Account payee crossing defined in:-Not defined any where
5. HUF cannot be partner in a Partnership firm: HUF does not have any legal entity.
6. Implied authority of a partner does not allow ______ singly? Settle a dispute relating to the

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business of the firm thru arbitration.
7. In Limited Liability Partnership account, who are not eligible for becoming partners: a) HUF b)
Minor c) body corporate?: Ans: a & b
8. 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.
9. 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.
10. 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.
11. The consequence of non registration of Partnership - firm cannot sue others for its dues.
12. The liabilities of partners in Partnership is: Joint and several
13. Who can not be full fledged partner: Minor
14. Who cannot become a partner in a firm as per supreme court judgment HUF
Companies
1. 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.
2. 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
3. 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.
4. 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
5. CIN in case of a company indicates: Corporate Identity Number.
6. Company is in liquidation, funds are at the disposal of : Liquidator
7. For formation of a company, Registrar of Companies will issue : certificate of incorporation
8. 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
9. Objectives for which a company has been formed are given in: Memorandum of Association
10. On repayment of_debt of a company, satisfaction of charge shbuld be filed with ROC within: 30
days
11. 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
12. The legal liability to file charges with ROC in case of lending to a Company is that of ______:
Borrowing Company
13. 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.
14.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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 45 | P a g e
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

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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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 47 | P a g e
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

Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 48 | P a g e


(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.

Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 49 | P a g e


TEST YOUR SELF

PRACTICE TEST PAPERS


(BASED ON IIBF TEST PATTERN)

Certificate Examination in Anti-Money


Laundering & Know Your Customer

Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 50 | P a g e


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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 51 | P a g e
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

Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 52 | P a g e


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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 53 | P a g e
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
11) As per the Reserve Bank of India guidelines for ‘On Tap’ Licensing of Universal Banks in the Private
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%
12) As per the Reserve Bank of India guidelines for ‘On Tap’ Licensing of Universal Banks in the Private
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
13) As per the Reserve Bank of India guidelines for ‘On Tap’ Licensing of Universal Banks in the Private
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 54 | P a g e
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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 55 | P a g e
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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 56 | P a g e
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:
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 57 | P a g e
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

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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.
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 59 | P a g e
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 A 2 B 3 A 4 B 5 D 6 B 7 C
8 D 9 A 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 A 24 C 25 B 26 E 27 A 28 E
29 C 30 B 31 A 32 B 33 B 34 E 35 B
36 A 37 C 38 E 39 A 40 B 41 C 42 C
43 A 44 C 45 E 46 B 47 C 48 D 49 A
50 C 51 B 52 A 53 C 54 B 55 C 56 A
57 C 58 C 59 F 60 C 61 B 62 C 63 A
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*

Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 60 | P a g e


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____:
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 61 | P a g e
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
27) If the registration on CERSAI is done from 41 to 50 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. 750 & 1,000 b) Rs. 1250 & 2,500*, c) Rs. 1,250 & 2000 d) Rs. 1000 & 1,500
st th
28) If the registration on CERSAI is done from 51 to 60 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. 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

Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 62 | P a g e


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 :
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 63 | P a g e
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 for of 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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 64 | P a g e
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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 65 | P a g e
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 a) Monitoring of critical areas Information
on Large Credits (CRILC).
(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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 66 | P a g e
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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 67 | P a g e
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;
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 68 | P a g e
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) Intangibles d) 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)
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 69 | P a g e
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.
d) All of the above*
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 158) All penal interest 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 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

Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 70 | P a g e


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?

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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 years d) 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

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_____. 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 and ______ schemes as per the extant rates.
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. 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 .

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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 29th 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
Compiled by Sanjay Kumar Trivedy, Divisional Manager, Govt.Link Cell, Nagpur 74 | P a g e
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

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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 true d) 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.
d) All of the above*
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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