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OBJECTIVE TYPE QUESTIONS ON GENERAL AWARENESS, BANKING & FINANCE

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OBJECTIVE TYPE QUESTIONS

ON

GENERAL AWARENESS, BANKING & FINANCE

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 93 -

GENERAL AWARENESS

(Compiled by Shri K.Anand Kumar)

The present Repo Rate is a) 5% b) 5.5%

1)

c) 6% d) 6.5%

The present reverse report rate is a) 4% b) 4.5%

2)

c) 5% d) 5.5%

The present SLR is a) 30% b) 27%

3)

c) 24% d) 28%

G-77 is group of a) Developed countries b) Under-developed countries

4)

c) Un-developed countries d) Developing countries

Nobel Prize for Peace for 2009 was awarded to a) Muhammad Yunus b) Albert Arnold (Al) Gore Jr.

5)

c) Martti Ahtisaari d) Barack Obama

The estimated growth of GDP for 2011-2012 is a) 8.2% b) 8.6%

6)

c) 8.5% d) 8.7%

The present Bank Rate is a) 5.5% b) 6%

7)

c) 5.75% d) 6.25%

The present CRR is a) 6% b) 6.25%

8)

c) 5% d) 5.25%

RBI has agreed to purchase government securities upto Rs.---- crores a) 60000 b) 62000

9)

c) 67000 d) 70000

What is the base rate of SBI? a) 7.5% b) 8%

10)

c) 8.25% d) 8.5%

SBI plans to raise ---- crores from bonds issue a) 10000 b) 12000

11)

c) 15000 d) 20000

Provisioning on Housing loans classified as standard sanctioned at teaser rates increased to a) 1% b) 2%

12)

c) 3% d) 4%

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 94 -

The national aquatic animal of India is a) Whale b) Tortoise

13)

c) Dolphin d) Seal

The National Bird of our country is a) Parrot b) Parakeet

14)

c) Dove d) Peacock

Water on moon was discovered by a) Aryabhatta-2 b) Chandrayan-2

15)

c) Aryabhatta-1 d) Chandrayan-1

The mission of Oceansat-2 is to study the a) Changes in epicenters b) Sources of water on moon

16)

c) Changes in sea d) Depressions in oceans

The GDP of the country during 2009-10 increased by a) 7% b) 7.5%

17)

c) 8% d) 8.25%

The per capita income of the country a) 54527/- b) 55687

18)

c) 58987 d) 61258

Headquarters of ISRO is located at a) Bangalore b) Hyderabad

19)

c) Chennai d) Mumbai

The term of Rajya Sabha is a) 5 years b) Permanent

20)

c) 6 years d) 4 years

The term of an MP of Rajya Sabha is a) 6 years b) 5 years

21)

c) 4 years d) 2 years 6 months

Head quarters of IBRD (World Bank) is situated at a) New York b) Washington DC

22)

c) London d) California

Chandrayan-2 is expected to be launched by the year a) 2011 b) 2013

23)

c) 2012 d) 2014

Grey Revolution is associated with a) Cement production b) Infrastructure projects

24)

c) Allied Activities d) Fertilizers

Who is the present chairman of SEBI? a) G.N.Bajpai b) M.Damodaran

25)

c) D.R.Mehta d) U.K.Sinha

The number of states in Indian Union is a) 26 b) 27

26)

c) 28 d) 29

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 95 -

The out put of pulses & grains for 2010-11 stood at ---- million tonnes a) 175 b) 200

27)

c) 235.8 d) 244.7

The Nobel Prize in Economic Sciences for the year 2010 was given to a) Christopher Pissasrider,Peter

Diamond, Dale Mortersea b) Paul Krugman

28)

c) Leonid Hurwicz, Eric S.Maskin, Roger B.Myerson

d) Edmond S Phelps

Who is the President of World Bank? a) Robert Zoellick b) Paul Wolfowitz

29)

c) Names D.Wolfenson d) Lewis Preston

Which of the following have been awarded the Navaratna status recently a) ONGC b) RINL

30)

c) SAIL d) NTPC

IDRBT Banking Technology Excellence Award for 2009 - Best Bank Award for best use of technology for financial inclusion was given to a) State bank of India b) Punjab National Bank

31)

c) Union Bank of India d) ICICI Bank

IDRBT Banking Technology Excellence Award for 2009 - Best Bank Award for Mobile Banking and payment applications was given to a) ICICI Bank b) State bank of India

32)

c) Union Bank of India d) Punjab National Bank

The number of companies in BSE Sensex is a) 50 b) 40

33)

c) 30 d) 25

NSE Nifty comprises of a) 25 b) 30

34)

c) 40 d) 50

The following are the Maharatnas a) ONGC,SAIL b) IOC, ONGC, SAIL

35)

c) RINL, SAIL, NTPC, IOC d) NTPC,IOC,ONGC,SAIL

Maha Ratnas have economic freedom up to Rs.----- crores a) 1000 b) 2000

36)

c) 5000 d) 3000

Nava Ratna companies have economic autonomy up to Rs.-----crores a) 500 b) 1000

37)

c) 1500 d) 2000

India Travel Card has been introduced by

a) Axis Bank b) Syndicate Bank

38)

c) ICICI d) Indian Bank

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 96 -

Jalan committee report pertains to a) Banks b) Stock Exchanges

39)

c) Financial Institutions d) Education

Under NREGA in how many days the beneficiaries should get employment after their demand for work a) 20 b) 15

40)

c) 10 d) 7

The period of 11th Five-year plan is a) 2007-2012 b) 2010-2015

41)

c) 2002-2007 d) 2005-2010

The average growth of agriculture during 2004-2009 was a) 5% b) 3%

42)

c) 3.5% d) 5.5%

The present SBAR of the bank is a) 12% b) 12.5%

43)

c) 12.75% d) 13%

Y.H. Malegoan committee was appointed to study the issues & concerns of a) Micro Finance b) SME

44)

c) Agriculture d) Trade

The major portion of revenue for Central Government comes from a) Wealth Tax b) Income Tax

45)

c) Expenditure Tax d) Corporate Tax

What is the MAT of the corporates a) 10% b) 15%

46)

c) 20% d) 25%

Who has been appointed Chairman of the UIDAI (Unique Identification Authority of India)? a) Anil Ambani b) Nandan Nilekani

47)

c) Ratan Tata d) Azim Premji

Which Article of Indian Constitution deals with the creation of new states? a) Article 3 b) Article 52

48)

c) Article 51 d) Article 7

The Chairman of UPSC is appointed by a) The President b) The Prime Minister

49)

c) The Chief Justice of India d) The HR Minister

India's external debt during the year 2008-09 was a) $255 bn b) $230 bn

50)

c) $189 bn d) $217 bn

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 97 -

A derivative instrument that gives the owner the right, but not the obligation, to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date is known as a) Currency Future b) Currency Option

51)

c) Currency Spot d) Currency Call

Who is the present Chairman of Planning Commission? a) Dr. Manmohan Singh b) Smt. Sonia Gandhi

52)

c) Pranab Mukherjee d) P. Chidambaram

Bombay Stock Exchange (BSE) is situated at Mumbai. Where is the National Stock Exchange (NSE)? a) Kolkata b) New Delhi

53)

c) Bangalore d) Mumbai

‘Operation Chaitanya’ is related to a) Rehabilitation program by GoI for

flood victims b) Providing free education at

graduation level

54)

c) Business strategy of SBI for its Internet Banking facility

d) New business strategy by LIC for selling its ULIP schemes

Which of the following is taken for calculation of interest on Savings Bank Accounts? a) Daily closing balance b) Daily average balance

55)

c) Minimum balance between 10th & last day of the month

d) Minimum Balance in a month

The ‘e-invest’ started by the Bank is based on the directives of a) AMFI b) SEBI

56)

c) National Stock Exchange d) Bombay Stock Exchange

The newly formed “Strategic Training Unit” (STU) is situated at a) CBD, Belapur, Navi Mumbai b) Corporate Centre, Mumbai

57)

c) SBSC, Hyderabad d) Registered Office, Kolkata

Project for Development, expansion etc., is referred to as a) Infra Project b) Green House Project

58)

c) Project Expansion d) Brown Project

RBI set up a committee to look into various aspects of services rendered by the banks to retail and small customers. The committee is headed by : a) M.Damodaran b) C.B.Bhave

59)

c) Dr.C.Rangarajan d) Dr.Y.V.Reddy

Gathering confidential banking information by using telephone is known as a) Phishing b) Spying

60)

c) Vishing d) Spamming

Which of the following is not a direct tax? a) Wealth Tax b) Income Tax

61)

c) Profession Tax d) Sales Tax

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 98 -

The regulating body established in India for development and regulation of securities market and investor protection is : a) IRDA b) SEBI

62)

c) AMFI d) RBI

The objective of Command Area Development Programme is a) To ensure that land is given to

the tillers b) Poverty alleviation in selected

areas

63)

c) To ensure better utilisation of irrigation potential

d) To develop the area under the command of Army

The largest share of India’s National Income originates from a) Primary Sector b) Secondary Sector

64)

c) Tertiary Sector d) None of these

A social development scheme which was not launched by the Govt. of India is a) Mid Day Meal scheme b) INdira Awas Yojana

65)

c) Kutir Jyothi d) Look East Policy

Cash withdrawal at POS terminals is now permitted by RBI. What is a POS? a) Potential Online Service b) Point of Online Sale

66)

c) Point of Sale d) Potential of sale

The operational duration of 13th Finance Commission is a) 2005-2010 b) 2010-2015

67)

c) 2007-2012 d) 2011-2016

The 13th Finance Commission was established in a) 2005 b) 2007

68)

c) 2009 d) 2010

The 12th Finance Commission was headed by a) Dr C Rangarajan b) Vijay I Kelkar

69)

c) A M Khusro d) K C Pant

Who is the Chairman of the 13th Finance Commission? a) Dr C Rangarajan b) Vijay I Kelkar

70)

c) A M Khusro d) K C Pant

The Chairman of Unique Identification Authority of India? a) R Narayana Murthy b) Anil Ambani

71)

c) Nandan Nilekani d) Ratan Tata

“The Miracle of Democracy : India’s Amazing Journey” was written by a) V S Naipal b) Jaswanth Singh

72)

c) Dr Manmohan Singh d) T S Krishna Murthy

Currency Futures in India are jointly regulated by a) RBI & SEBI b) SEBI & NSE

73)

c) SEBI & BSE d) RBI & NSE

Which of the following countries stood next after USA and Russia in manufacturing of cars and two wheelers? a) Germany b) UK

74)

c) Singapore d) India

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 99 -

Which is the No.2 Economy a) Japan b) China

75)

c) Germany d) U.S.A

Which of the following committees is associated with the reforms in small industries? a) Abid Hussin Committee b) Narasimham Committee

76.

c) Rekhi Committee d) Chellaiah Committee

India's first SEZ dedicated to the aerospace industry was at a) Hyderabad b) Hallargi

77.

c) Kolkata d) Bangalore

"The Doing Business Report" is prepared every year by a) Asian Development Bank b) International Monetary Fund

78.

c) International Bank for Reconstruction & Development

d) World Trade Organisation

Which of the following has advised Banks to swap customer information so as to prevent frauds and defaults in future? a) Indian Chamber of Commerce &

Industry b) Indian Banks Association

79.

c) Income Tax Department d) Reserve Bank of India

International Monetary Fund (IMF) was established as a result of a) Brettonwood Conference b) Geneva Conference

80.

c) Singapore Conference d) Vienna Conference

Which one of the following statements is true with reference to FEMA in India? a) Enforcement Directorate can

arrest and prosecute the people for the violations

b) Violation of foreign exchange rules has caused to be a criminal offense under FEMA

81.

c) The Foreign Exchange Regulation Act(FERA) was replaced by Foreign Exchange Management Act (FEMA) in the year 2001

d) FERA was given a sunset clause of one year till 31st May 2002 to enable Enforcement Directorate to complete the investigation of pending issues

Which of the following states is the largest producer of cashew nuts in India a) Andhra Pradesh b) Karnataka

82.

c) Kerala d) Tamilnadu

Tirupur is famous as a huge exporter of _____________ to many parts of the world? a) Leather goods b) Processed Food

83.

c) Handicrafts d) Knitted garments

What are Zero Coupon Bonds? a) They are issued at a discount and

redeemed at par b) They are the bonds that yield no

income for the creditors

84.

c) The bonds for which interest income is paid at the time of purchase itself

d) The bonds whose price has wide fluctuations in the market

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 100 -

"Relationships Beyond Banking" is the tag line of a) ICICI Bank b) Bank of India

85.

c) State Bank of India d) Dena Bank

"India's International Bank" is the tag line of a) Bank of India b) Union Bank of India

86.

c) Bank of Baroda d) Dena Bank

Nandan Nilekani, Chairman of the Unique Identification Authority of India (UIDAI) associated with a) Wipro b) Mahindra Satyam

87.

c) TCS d) Infosys

What is 'bottle neck inflation'? a) Rise in prices without increase in

the aggregate demand b) No rise in prices despite increase in

aggregate demand

88.

c) Decline in prices due to increase in aggregate demand

d) Proportionate increase in prices with the growing demand

The Reliance Industries has found gas recently in : a) Mumbai offshore b) Krishna Godavari basin

89.

c) Ganga Yamuna basin d) Kaveri basin

"Speed" is the improved quality petrol introduced by a) Hindustan Petroleum b) Reliance Petroleum

90.

c) Bharat Petroleum d) Indian Oil Corporation

The term 'advantage clause' is associated with a) Badminton b) Cricket

91.

c) Gymnastics d) Football

The Direct Tax Code is expected to become a law effective from a) 2011 b) 2012

92.

c) 2013 d) 2014

Infrastructure bonds have a minimum tenure of --- years a) 10 b) 15

93.

c) 20 d) 25

Who of the following was conferred Rajiv Khel Ratna Award for 2010? a) Sushil Kumar, Wrestling b) Mahendra Singh Dhoni, Cricket

94.

c) Saina Nehwal, Badminton d) Virender Singh, Boxing

Who of the following took over as Chief Election Commissioner recently? a) Harishankar Brahma b) V.S. Sampath

95.

c) Navin Chawla d) Shahabuddin Yaqoob Quraishi

Which of the following states has banned plastic carry bags as a measure of environmental protection recently? a) Andhra Pradesh b) Uttarakhand

96.

c) West Bengal d) Rajasthan

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 101 -

Who of the following is the designer of symbol for Indian Rupee (Rs) ? a) Nondita Correa Mehrotra b) Sharukh J Irani

97.

c) Udaya Kumar Dharmalingam d) Hitesh Padmashali

United Stock Exchange founded on 20/9/2010 with the strategic partnership of BSE is located in a) Singapore b) Mumbai

98.

c) New York d) London

Name of the social networking site which officially announced that it has surpassed 500 million users around the world : a) Facebook b) Flickr

99.

c) My Space d) Orkut

The sprinter who created world record in Men's 100 metres and a triple Olympic champion going to retire on 2016 Olympics. a) Asafa Powell (Jamaic) b) LaShawn Merritt (USA)

100.

c) Tyson Gay (USA) d) Usain Bolt (Jamaica)

A N S W E R S

1. d 2. d 3. c 4. d 5. d 6. c 7. b 8. a 9. c 10. c

11. b 12. b 13. c 14. d 15. d 16. c 17. b 18. a 19. a 20. b

21. a 22. b 23. c 24. d 25. d 26. c 27. d 28. a 29. a 30. b

31. a 32. b 33. c 34. d 35. d 36. c 37. b 38. a 39. b 40. b

41. a 42. b 43. d 44. a 45. d 46. c 47. b 48. a 49. a 50. b

51. b 52. a 53. d 54. c 55. a 56. b 57. c 58. d 59. a 60. c

61. d 62. b 63. c 64. a 65. d 66. c 67. b 68. b 69. a 70. b

71. c 72. d 73. a 74. d 75. b 76. a 77. b 78. c 79. d 80. a

81. b 82. c 83. d 84. a 85. b 86. c 87. d 88. a 89. b 90. c

91. d 92. b 93. a 94. c 95. d 96. d 97. c 98. b 99. a 100. d

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 102 -

OBJECTIVE TYPE QUESTIONS (Banking, Finance & Economy) (Prepared by P.Rajendra Prasad, AGM - Source : SBIRD Weekly Review)

Recently Government of India has infused capital of Rs.1200 cr in three public sector banks. Which of the following is not a recipient of capital a) Central Bank of India b) Indian Bank

1.

c) UCO Bank d) United Bank of India

The biggest Census exercise ever to be attempted in human history to cover India's 1.2 billion population began on 01st April with President Pratibha Patil being the first to be enumerated in the decennial exercise. This is------National Census exercise a) 15th b) 14th

2.

c) 10th d) 12th

The government has given dead line upto---------- to banks and non-banking finance companies to align their accounting practices with the international financial reporting standards (IFRS). a) March 2012 b) March2013

3.

c) April 2012 d) April 2013

Mr T.C.A.Ranganthan of SBBJ (Former MD) is appointed as Chairman of a) Exim Bank of India b) NABARD

4.

c) Bank of India d) None of these

Which of the following financial institutions stood the largest home loan provider in the country a) HDFC b) HDFC Bank

5.

c) SBI d) ICICI

AADHAR is a) A rural development ministry

programme for providing food for work for BPL families

b) The name of the milk collection project taken up by Animal husbandry department of AP Government

6.

c) Name given to the Unique Identification Cards being provided to the citizens of India

d) None of these

As per SEBI notification Listed companies will now have to submit audited quarterly results within -----days from the end of the relevant quarter a) 30 b) 45

7.

c) 60 d) 90

Which of the following country is not a member of BRIC countries a) Brazil b) Iran

8.

c) Russia d) Chaina

Recently our chairman Sri O.P.Bhatt has inaugurated a wind mill at--------- to become the first financial services entity in the country to foray into green power by setting up wind mills for captive use a) PANAPATTI (TAMILNADU) b) MEDAK ( AP )

9.

c) RANCHI (JHARKHAND ) d) AKOLA (MAHARASHTRA)

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 103 -

SBI is partnered with -------- for installing windmills for captive use a) Power grid Corporation b) Reliance energy

10.

c) GMR Power d) Suzlon Energy

How many companies of India find place in the exclusive club of Forbes Global 2000 a) 56 b) 60

11.

c) 50 d) 45

What is the position of SBI group in the Forbes Global 2000 a) 125 b) 130

12.

c) 135 d) 140

SBI has signed MOU with ------- for to provide 20,000 energy efficient plants to rural India through micro finance loans a) Suzlon energy b) Reliance energy

13.

c) Managing Emissions d) None of these

RBI has originally instructed Banks to achieve 70% Provision Coverage ratio by a) March 2011 b) Septemeber2010

14.

c) December 2010 d) June 2011

There is a distinct pattern in flow of remittances by the Indian diaspora. Kochi andMumbai receive more than 50% of remittances from a) Europe b) USA

15.

c) Gulf d) None of these

Enterprise data ware house solutions is provided to SBI by a) IBM b) HCL

16.

c) Wipro d) Mahindra Satyam

RBI has extended time to achieve 70% Provision Coverage ratio to SBI up to a) September 2011 b) March 2011

17.

c) June 2011 d) December 2011

Recipient of “ENTREPRENEUR EXTRAORDINAIRE” life time achievement award in 2009 is a) Sri O.P.Bhat b) Sri Mukhesh Ambani

18.

c) Sri Azim Premji d) Sri Ratan Tata

“Project m Krishi” for helping farmers in some districts of Maharastra was launched by a) Infosys b) Mahindra Satyam

19.

c) TCS d) Wipro

“Rallies India” is the brainchild project of ------------- a) SBI b) Infosys

20.

c) Wipro d) Tata group of companies

India, the world's second fastest growing large economy, also provided the second highest returns from equities, first country being------------- a) China b) Indonesia

21.

c) Japan d) USA

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 104 -

The Tirupati Temple ( TTD ) in Andhra Pradesh has for the first time deposited -------------- of gold with the SBI a) 1075 KG b) 1050KG

22.

c) 1000KG d) None of these

Banks on the National Financial Switch (NFS), the largest ATM network in the country is now managed by--------------- a) National Payments Corporation

of India (NPCI) b) FSS

23.

c) NCR corporation d) None of these

The Bank of Rajasthan is merged with a) HDFC bank b) ICICI Bank

24.

c) Karur Vysya Bank d) Federal Bank

The world celebrates world pensioner’s day on--------- a) 10th December 2010 b) 15th December 2010

25.

c) 18th December 2010 d) 20th December 2010

A new pension account yields an income of Rs.-------- per annum to the Bank a) Rs.840/- b) Rs.800/-

26.

c) Rs.750/- d) Rs.1000/-

SBI has become the largest lender of the country with total business crossing over ----------for the financial year 2009-10. a) Rs.13,50,000 crore b) Rs.14,25,000 crore

27.

c) Rs.14,50,000 crore d) Rs.13,78,000 crore

SBI has become the largest lender of the country with total business crossing over Rs.13,78,000 crore for the financial year 2009-10. Which bank is the second largest for the same period a) PNB b) ICICI

28.

c) BOB d) IOB

Which is the joint venture partner for SBI for setting up of six lac point of sales terminals in the country. a) VISA international b) Elavon

29.

c) Consortium of VISAInternational and Elavon

d) TCS

As per the foreign direct investment (FDI) norms for the banking sector of Government of India, which of the following can not be treated as Indian owned banks a) ICICI bank b) HDFC Bank

30.

c) Federal bank d) Both a & b

The government has embarked on an ambitious plan to cover all villages having a population of more than -------------to have banking facilities by March 31, 2012. a) 5,000 b) 3,000

31.

c) 2,500 d) 2,000

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 105 -

As per the forex rules recently amended by RBI, People going abroad will be entitled to get foreign exchange up to $ a) 2000 b) 3000

32.

c) 1500 d) 3500

As per one study of ASSOCHAM, which of the following Tier II city is the preferred destination for post-retirement living for a majority of CEOs and other officials a) Chandigarh b) Pune

33.

c) Ranchi d) All the three

Banks are mandated not to accept collateral security in the case of loans up to ----------------extended to units in the MSE sector a) Rs.10 lakh b) Rs.15 lakh

34.

c) Rs.5 lakh d) Rs.7 lakh

Which Bank has won the prestigious Asian Banker Achievement Award for being the strongest bank in Asia Pacific region, instituted by the Qatar Financial Centre Authority and the Asian Banker magazine. a) SBI b) ICICI

35.

c) PNB d) HDFC

SBI wants to extend its footprint to -----------unbanked villages, with a population of at least 2,000, this financial year by opening new branches and coverage through Business Correspondents a) 11,569 b) 11,615

36.

c) 11,943 d) 10,800

As per the data of RBI, the number of cards in circulation as of March 2010 was ----- a) 18.5million b) 19 million

37.

c) 18.75million d) 18.3 million

SBI in association with--------- going to assist the farmers of Pudukkottai in Tamilnadu to be a part of a unique pilot project that aims to boost the cultivation of pulses. a) Rallies India b) M krishi

38.

c) E choupal d) None of these

The Total no of Kisan Credit Cards KCC in all banks put together has crossed------since it was introduced in August 1998 a) 10 crore b) 9.06 crore

39.

c) 9.51 crore d) 10.25 crore

Which country’s currency could rapidly become an internationally used currency and serve as an alternative to the US dollar in central bank reserves, as per the report of the Asian Development Bank a) India’s Rupee b) China's yuan

40.

c) Japan’s yen d) None of these

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 106 -

Which bank has recently introduced a move to allow its top-end customers the convenience to withdraw up to Rs.1 lakh a day at ATMs a) ICICI Bank b) SBI

41.

c) Axis Bank d) HDFC Bank

RBI said it has constituted a committee under the chairmanship of ----------to look into banking services rendered to retail and small customers, including pensioners. a) Sri Y.V.Reddy b) Sri M Damodaran

42.

c) Sri Rangarajan d) Sri A.K.Ghosh

India has emerged as ---------largest steel maker in the world, as per government sources a) first b) second

43.

c) third d) fourth

Which country ranked first in respect of a survey by Earnest & Young for the most attractive for foreign direct investment destination for 2010 a) India b) China

44.

c) Japan d) Singapore

SBI plans to mobilise up to through a maiden bond issue in the US a) $2 billion b) $3 billion

45.

c) $4 billion d) $5 billion

The Eleventh Five-Year Plan consists of the years a) 2006-2011 b) 2007-2012

46.

c) 2008-2013 d) 2009-2014

The mid term appraisal of the Eleventh Five-Year Plan has scaled down the average growth target of the economy to ----------per cent from 9 per cent. a) 8.75 b) 8.25

47.

c) 8.10 d) 8.50

The 55th annual general meeting of SBI was held in ---------on 16th June, 2010 a) Mumbai b) Chennai

48.

c) Kolkatta d) Hyderabad

-----------is to promote rural credit bureaus on the lines of the Credit Information Bureau (India) Ltd to help the flow of credit to the rural sector a) RBI b) MINISTRY OF AGRICULTURE

49.

c) NABARD d) Both a & c

As per US administration officials, Indians are the ---------fastest growing foreign investors in the United States a) first b) third

50.

c) second d) fifth

SBI’s Green Channel Counter envisages a) Paperless txns. to customers

using ATM card at branch b) Raising greenery in Bank’s premises

51.

c) Painting the existing Bank counters in green color

d) None of these

The Wings Objective Type Questions

State Bank Learning Centre, Masulipatnam - 107 -

SBI set up a specialised micro-finance branch in-------- a) Yalahanka, Bengaluru b) Avadi,Chennai

52.

c) Musheerabad,Hyderabad d) Dharavi, Mumbai

A government-appointed panel headed by Sri A K Khandelwal called for according the coveted -----------status to SBI a) Navaratna b) Miniratna

53.

c) Bharatratna d) Maharatna

The RBI directive to banks, asking them not to honour cheques with overwriting, will come into effect from a) 1st October2010 b) 1st November 2010

54.

c) December 1st 2010 d) 1st January 2011

Among the PSBs, --------has disbursed the most, at Rs.8,907 crore, as educational loan till March 2010

a) SBI b) PNB

55.

c) BOB d) IOB

A consortium of commercial banks has joined hands to float a new company which will collect from member banks’ historical data on issues related to operational risk faced by banks and analyse it. The name of the company is a) CIBIL b) CIBIL DETECT

56.

c) Loss Data Consortium (Cordex) d) None of these

The Government has set up a committee for comprehensive review of the National Small Savings Fund (NSSF) structure, interest rates, tenor and other administrative matters. This committee would be headed by a) Ms Shyamala Gopinath b) Ms Usha Thorat

57.

c) Sri K.C.Chkraborthy d) Sri M.damodaran

The first 'SME facilitation Centre' of SBI was launched at a) New Delhi LHO b) Chandigarh LHO

58.

c) Chennai LHO d) Hyderabad LHO

RBI imposed a penalty of Rs.5 lakh on ---------for violating Know Your Customer (KYC) and Anti Money Laundering (AML) norms a) SBI b) ICICI Bank

59.

c) Axis Bank d) IDBI Bank

RBI imposed a penalty of Rs.5 lakh on --------- for violating banking regulations by not providing information, within the stipulated time, on a foreign currency loan it had arranged for an offshore special purpose vehicle a) Citi Bank b) HSBC

60.

c) Standard Chartered Bank d) None of these

In a major step towards bringing about financial inclusion of the unbanked sections of the society, the RBI allowed commercial banks to open mobile branches without its approval in areas with less than ------------population a) 50,000 b) 25,000

61.

c) 15,000 d) 10,000

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Which of the following is not a fund manager for the New Pension Scheme(NPS) a) ICICI Prudential b) SBI

62.

c) Kotak Mahindra d) Yes Bank

Under New Pension Scheme, which fund manager mobilized highest collection of Rs.21 Crores for unorganized sector a) Reliance capital b) UTI

63.

c) SBI Pension Fund d) ICICI Prudential

The Lok Sabha passed the State Bank of India (Amendment) Bill 2010, which seeks to, among other things, reduce the statutory minimum shareholding of the Central Government in the bank to --------from the current level of 55 per cent a) 51% b) 54%

64.

c) 49% d) 50%

The Indian economy would grow to USD -------trillion in 2011-12, moving closer towards the USD 2 trillion mark, according to an assessment by the Prime Minister's Economic Advisory Council (PMEAC). a) 1.72 b) 1.70

65.

c) 1.85 d) 1.93

Prime Minister's Economic Advisory Council (PMEAC) predicts that, If the nine per cent growth trend is maintained, India would become USD two trillion economy in ---------------fiscal a) 2011-12 b) 2013-14

66.

c) 2012-13 d) 2014-15

Which of the following income groups occupy second position as per the study of National Council of Applied Economic Research (NCAER) a) High income house holds b) Middle income house holds

67.

c) Low income house holds d) High net worth house holds

The percentage of RBI share holding in State Bank of India is a) 90% b) 75%

68.

c) 0% d) 91.75%

At present, the RBI holds a stake of about -------per cent in the NABARD a) 75 b) 70

69.

c) 72.5 d) 85

The Securities and Insurance Laws (Amendment) and Validation Bill, 2010, provides for setting up a joint body under the chairmanship of the Finance Minister to address the issues of jurisdiction between the financial sector watchdogs. Who will be the vice chairman of the joint body a) SEBI Chairman b) IRDA Chairman

70.

c) Deputy Chairman, Planning Commission

d) RBI Governor

State Bank of Indore merged with SBI with effect from----- as per the gazette notification of GOI a) 26th August 2010 b) 5th September 2010

71.

c) 31st August 2010 d) 1st September 2010

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RBI will come out with polymer (plastic) bank notes of Rs.------- denomination and would follow it up with plastic notes of other denominations a) 1000 b) 500

72.

c) 100 d) 10

SBI has decided to launch a floating rate term deposit product with returns linked to the -------- a) PLR b) Bank rate

73.

c) Base rate d) Repo rate

Which insurance company has topped the league of companies whose agents are members of the Million Dollar Round Table (MDRT) — an international club of agents who have sold policies with a premium of over $1 million equivalent. a) SBI Life b) ICICI Prudential life

74.

c) Bajaj insurance d) Newyork Life

The Telecom Regulatory Authority of India has recommended the use of -------digit numbers for fixed-line phones by December 2011 a) 10 b) 9

75.

c) 8 d) 11

ANSWERS

1. b 2. a 3. d 4. a 5. c 6. c 7. b 8. b 9. a 10. d

11. a 12. b 13. c 14. b 15. c 16. a 17. a 18. d 19. c 20. d

21. b 22. a 23. a 24. b 25. c 26. a 27. d 28. a 29. c 30. d

31. d 32. b 33. d 34. a 35. a 36. c 37. d 38. a 39. b 40. b

41. d 42. b 43. c 44. b 45. a 46. b 47. c 48. a 49. c 50. b

51 a 52 d 53 d 54 c 55 a 56 c 57 a 58 a 59 b 60 C

61 a 62 d 63 c 64 a 65 a 66 b 67 a 68 c 69 c 70 D

71 a 72 d 73 c 74 a 75 a

RATIONALES

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RATIONALES

General Banking (Compiled by Shri L.J.Meclarin)

1) A New Clause has been incorporated in Locker Agreement with particular reference to un-operated lockers.

To enable the bank to go for break open of non operated lockers for one year belonging to the High Risk category customers and 3 years for medium risk category customer after giving a 15 days notice, even though the locker rent has been paid regularly

2) All Locker keys to be embossed with identification code which could

indicate the Bank and Branch which has hired the locker.

To facilitate identification of Safe Deposit Locker on the basis of locker keys by the Income-Tax and other investigating authorities.

3) Locks of surrendered lockers should be interchanged among the surrendered lockers before allotting to a new hirer.

To ensure against any attempt by previous locker hirer to try to open/operate the surrendered locker

4) Safe Deposit Lockers standing in the name of a deceased depositor can be delivered only against production of a probate or a letter of

administration.

If all the legal heirs do not join in executing the indemnity or if there is a dispute between them, the Bank can insist on suitable legal representation. Indian Succession Act covers only debts & securities. It is not applicable to items kept in lockers. However, in the states of UP & MP, succession certificate is applicable to Safe deposit lockers also.

5) Branch should obtain a STDR from new hirers of Safe Deposit Lockers.

Lockers to be allotted on first come first basis without insisting for deposits. However, To ensure prompt payment of rent, Branch should obtain a STDR from new hirers that would cover 3 years rent and the charges for break open in case of an eventuality

6) Duplicate Draft below Rs 50000/- may be issued without sureties if purchaser is considered good for the amount involved & he is maintaining satisfactory account .

To improve customer service by removing major irritant for the applicant in completion of formalities viz. arranging two sureties on the stamped indemnity

7) Drafts for Rs. 50,000/- and above should not be issued against cash and

PAN/G.I.R number have to be obtained.

R.B.I has issued directive to the Banks that Draft, T.T, Bankers cheque, RTC above Rs. 50,000/- are to be issued by debit to the customer’s account. This is done to avoid tax evasion and misuse of banking channels for illegal purposes. This also helps in curbing benami / fictitious transaction which in turn will avoid circulation of black money.

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8) Indemnity is to be obtained for issuing duplicate draft.

It is possible that both original and duplicate drafts might have been negotiated to the holders in due course in which case Bank is obliged to pay both the original and the duplicate. So to protect the Bank’s interest, indemnity is taken before issuing a duplicate draft.

9) Payment of a Bank draft cannot be stopped.

Drafts are issued by one branch on another for value received. Hence, the bank cannot go back on its own promise to pay the money, which was received as consideration. Once a draft is issued, the Bank becomes trustee of the payee for the draft amount. Third parties might have got the title to the draft by negotiation in which case Bank is bound to pay. Hence payment of draft cannot be countermanded.

10) Interest has to be paid to customers on delayed collections of

instruments.

As per the directives of the RBI, based on the recommendations of the Goiporia Committee on Customer Service in Banks. To compensate the customers for delay in collection of instrument as per SBI Compensation Policy. To tone up the efficiency of the banking system.

11) Government bonds, securities etc. that are accepted for safe custody are

recorded in the Safe custody register, Category-wise/ issue-wise.

To ensure that all scrips of the same series are sent for collection of interest, redemption etc. at the appropriate time in appropriate lots without omission. As a bailee the bank has to ensure that dividends etc. are collected promptly.

12) Mobile Banking services were made available over USSD (Unstructured supplementary Services Data)

To facilitate the customers having non-java mobile phones to avail the service. The advantage of using this mode of Mobile Banking Services is that the customers need not download the mobile banking application and can avail the facilities over a SMS session. RBI has restricted the daily transaction limit per customer to Rs.1,000/-.

13) The Service charges for collection of Outstation Cheques have been revised.

As per RBI guidelines issued under Payment & Settlement System Act 2007, which is all inclusive plus the Service Tax. No P&T/Courrier charges should be levied separately.

14) Recently our Bank’s compensation policy (2010) was reviewed.

SBI compensation policy (Banking Services) formulated on the basis of Model Compensation Policy issued by IBA & it is being reviewed periodically to incorporate guidelines/instructions issued by RBI. This will enable the Bank in providing efficient service to the customers in fulfillment of the Bank’s Mission and Vision statements and to compensate them adequately for any deficiency in service.

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15) The maintenance of ‘Draft/IOI lost register’ at Branches is dispensed with.

As the Draft Reconciliation Department is updating the whole Bank level data of Draft/IOI reported lost, the maintenance of ‘Draft/IOI lost register’ at Branches is redundant and hence is dispensed with.

16) It has now been decided by the competent authority to revise security features in other personalized cheque leaves to bring them at par with Multi City Cheques .

To enrich security features in Cheque leaves for better public confidence. To make them more secure in view of growing incidence of fake cheque related frauds in the banking circles.

17) 17.Branches are instructed to maintain proper record of the issuance of Foreign Inward Remittance Certificates.

To streamline the issuance of Foreign Inward Remittance Certificates in respect of transactions undertaken by IRC ( Inward Remittance Cell ). To guard against issuance of Multiple FIRC by branches in respect of inward remittances processed by Inward Remittance Cell.

18) The wards of surrendered lockers are inter-changed before the lockers are rented out again.

This precaution is taken to ensure against any attempt by the previous locker holder to try to open/operate the surrendered locker.

19) When a locker is operated by a Power of Attorney holder, at the time of

closure, the original hirer of the locker must terminate the agreement.

The power to operate an account cannot be construed to include the power to close the account. This will eliminate avoidable contentions and claims and will protect the customer’s interest.

20) A stamped agreement form is obtained from the customer opening a locker.

This is the agreement of hire setting out the terms and conditions of the contract. It specially provides that the Bank has a right of general lien over the contents of the SDL and that in case of default in payment of rent, the Bank has a right to deny access to the SDL.

21) One locker is always kept vacant.

This will enable inter-changing of wards before letting out surrendered locker to another hirer. This contingency will happen in case all the lockers are hired out and one locker is surrendered.

22) Banks do not permit operations in safe deposit lockers before commencement of business hours/after banking hours.

This is to avoid any liability on the part of the bank in the event of seizure of lockers by Income Tax authorities as per section 132 of the IT Act. This will avoid any allegations of collusion by the Bank authorities.

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23) Deposit is accepted now while opening a locker account.

This will ensure that the rent is recovered from the interest earned on the deposit. RBI has advised that it is in order for the banks to demand adequate deposits, interest on which will cover 3 years’ locker rent and charges for forcing open the locker in an eventuality.

24) A separate letter is obtained from the locker hirer at the time of surrender of the locker.

This is to ensure that the locker agreement has come to an end along with his rights thereon and that he may not approach the bank again on the strength of earlier agreement. To avoid contentions/claims in future. In our Bank, the Locker Register has a provision to record the locker termination agreement and the hirer’s signature is obtained thereon at the time of closure of the account.

25) A copy of locker agreement should be given to the locker hirer.

This will serve as evidence that the hirer has understood the terms and conditions of locker operations and also that in the event of non-operation of locker for a specified period, the bank can break open the locker. The bank can also sell the contents in case of arrears of rentals. It adds to the transparency in our dealing with customer. RBI directions based on recommendations of CPPPAPS.

26) The Bank can break open a locker even if rent is paid regularly, under

specified circumstances.

Risk on locker service has increased significantly of late. A few cases of firearms were found in lockers not operated for a long time. Hence, based on the risk categorization of the accounts, different periods are prescribed for breaking open lockers in case of non-operation.

27) Banking facilities including Lockers should be made available to Visually

Challenged persons.

Visually challenged persons cannot be denied of the facility of cheque book, Locker and ATM on the possibility of risk in operating/using the said facility as the risk is involved in the case of other customers as well. Banks as per orders passed by the Hon’ble Court of Chief Commissioner for persons with disabilities and RBI Directives make such facilities available.

28) Locker keys should be embossed with Bank’s name and Branch Code number.

This will facilitate the identification of Safe Deposit Locker on the basis of Locker Keys and seized by Income Tax and other investigating authorities. As per RBI directives.

29) Safe deposit articles are accepted from only those customers who have been ‘introduced’ and for whom KYC due diligence has been carried out.

This is as per RBI directive. With a view to avoid dealings with fictitious persons, benami-holders etc.

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30) Safe Deposit Articles and gold ornaments in a closed gold loan account are not delivered against Succession Certificate.

Succession certificate covers only debts and securities. A Safe deposit Article is neither a debt nor a security.

31) A Demand Draft payable to bearer cannot be issued by the Bank.

Section 31 of the RBI Act prohibits issue of bearer draft. It is punishable under section 58(b) of the Act. A bearer draft, if issued, will become virtually a currency note.

32) The payment of a Bank draft cannot be stopped.

Once a draft issued by the bank is delivered to the payee; it becomes a Trustee for the Payee for the draft amount. Further, the Bank draft carries a promise of the Bank that it would pay ‘Payee’ or ‘ Order’ a sum of money for value received and third parties might have got title to the draft by negotiation. The bank has already received the value for the draft.

33) A draft should not be issued by a branch on itself.

A draft is a Bill of Exchange; In a bill of exchange, three parties are involved- Drawer, Drawee and Payee. (Such drafts, if issued, will only operate as a promissory note). Hence, to simplify matters, it has been prescribed that local payments effected by the branch should be by means of a Banker’s Cheque. Also, draft is a ‘remittance’ instrument and not a ‘payment’ instrument.

34) Demand Drafts should not be signed in red ink by the signing officials.

The red ink pigment is relatively very unstable and hence will fade away in due course; further, it may be washed off quickly by water etc.

35) The signature of the payee should not be attested at the back of the draft by an official.

In the past, the fraudsters have forged the signature of the official who has signed the draft and made forged identification of payees. Such a practice will reduce the level of care at the paying branch, which might result in frauds and forgery. RBI instructions.

36) Validity of a draft is restricted to 6 months.

The draft is a remittance mechanism and hence should be valid for a very short time in modern times with fast communication and wide banking facilities. To ensure that the instrument is not in circulation for an unreasonable long time; the risk of manipulation, alteration etc. minimized. Established banking practice.

37) A discharge on a revenue stamp is obtained from the purchaser of the draft while cancelling a draft.

It is regarded as a receipt for payment and hence it is stamped as receipt under the Stamp Act. RBI has advised that a discharge over the revenue stamp should be obtained, whether the payment is made by credit to account or by cash. The proof of payment will be easy in a court, if need arises.

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38) IOI has been introduced.

It is single design securities form covering the three products- SBI drafts, Banker’s Cheque and Associate Bank drafts. It has improved security and reconciliation processes. It is BPR initiative.

39) Usance bills have to be presented to the drawee for acceptance.

In a usance bill, the drawee is not liable until and unless he accepts the bill. Hnece, the bill has to be presented to him promptly for his acceptance as per NI Act.

40) Dishonoured bills have to be protested and noted, if required by the

lodgers of the bills.

It is a proof that the bill has been dishonored either by non- acceptance or non-payment. Proof of dishonor would be easy in a court.

41) Bills returned unpaid should be marked with “without recourse” endorsement before they are handed over to the lodgers.

Such an endorsement is a notice to the lodger (and other subsequent endorsees, if the lodger endorses the bill to a third party) that the Bank will not be liable on the bill (Sec. 50 of N.I.Act).

42) RR accompanying a Bill should not be in the name of the consignee.

This will obviate the possibility of the consignee/third parties taking delivery of the goods without the Bank’s endorsement, in case the RR falls into the hands of the consignee/ third parties, through oversight. Also, if it is in a negotiable form the Bank can pass on the title to the drawee against payment.

43) Railway Receipts accompanying bills given to the Bank for negotiation

should not be older than 7 days from the date of negotiation.

Otherwise, the goods might have arrived at the destination; the risk of goods being taken delivery by the consignee by executing an indemnity is also there. Further, at a few larger centers, the Railway authorities may sell the goods if they are not cleared by the consignees within 7 days.

44) The Bank’s interest in goods covered by BL. RR etc. should be advised to

the carrier.

To obviate the possibility of the consignee obtaining the goods by executing indemnity. Such notice is given in respect of BBRs/DBRRs, in which cases the Bank has advanced against the bills.

45) The usance bill, if dishonoured, requires noting and protest, but not a

cheque or a draft.

Unlike a draft or a cheque which is payable on demand, a usance bill is a time bill and acceptance of such a bill establishes liability. Dishonor of such a bill after acceptance needs to be noted/protested, which serves as a proof of dishonor if the holder requires the same. Further, the dishonored draft or cheque is returned to the payee which itself is a proof of dishonor.

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46) Usance bill has to be stamped whereas Demand Bill is not stamped.

Usance bill is payable only after a fixed tenor from the date of the bill or from the date of acceptance of the bill. Once it is accepted the liability of the drawee is established. It has to be stamped as per the stamp act. An unstamped usance bill will not be accepted in the court as evidence in the event of litigation: ( A Demand Bill is payable on demand or on presentation and does not require to be stamped as per the Stamp Act).

47) Opinion has to be compiled on borrowers/discounters of bills.

To ensure that the parties are honest, credit-worthy and persons of integrity. To ensure that only genuine trade bills relating to the trade or business of the borrowers are discounted; also to ensure that the quantum of limit corresponds to turnover, means etc. Opinion contains the Total Means and Break up Worth of the borrowers/parties.

48) The Bank has formed a subsidiary company for providing Credit Card Services.

Credit Card is an important complement of Personal segment business which is profitable; Credit card has become a favourate mode of payment for purchases by high income earners. To capture the market and to meet competition, the Bank has entered the business; a separate subsidiary company will enable the bank to market the cards in a cost-effective way, build a good brand image and also take quick and adequate safeguards for preventing frauds/loop-holes in the business.

49) SBI is promoting SBI Card in a big way.

Credit Card business has considerable unexploited potential. Card spending has grown considerably and is expected to grow further substantially in the coming years. With huge network of retail outlets in the State Bank Group we are in an advantageous position vis-à-vis our competitors. The card market will provide an exciting opportunity to our bank to improve its bottom line.

50) Holograms has to be affixed in the drafts for Rs.1.00 lakh and above

against the payee’s name as also on letters of credit and guarantees issued by the bank irrespective of the amount.

It is an additional protective measure. These are instruments, which are sent to third parties, and any attempt to tamper these instruments will put the beneficiary on the alert. To prevent frauds and protect the bank’s interests.

Deposits (Compiled by Shri G.Vasudeva Prasad)

1) Floating Rate Term Deposit (FRTD) with Interest Rate linked to the Bank’s Base Rate introduced

Floating Rate Term Deposit will allow the investor to take advantage of any interest rate changes even in the short term, as rates are reset periodically and based on Economic conditions. By offering floating rate deposits, the Bank is expected to attract long-term deposits in the current interest rate regime

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2) Deposit Accounts not having the sufficient balance for recovery of charges for non maintenance of minimum balance cannot be closed

If the balance in the account is not sufficient to recover the charges, the bank software is unable to debit the account leading to income leakage. Branches are expected to peruse this report and recover charges manually

3) Popularizing of Non – personalized Welcome kits during opening of SB accounts to be encouraged

Result in quicker customer service at the time of opening of the accounts, but also reduce the strain at LCPC and ATM Switch centre. Awareness of non personalized welcome kits is lacking in most of the branches and even in Personalised Banking Branches, the position is the same leading to non utilisation of the non personalized welcome kits

4) Branches to offer 15% discount on applicable rents for the 1st year for

lockers hired.

To reduce the unutilisation of Lockers & to increase other Income

5) Nominations in TDRs/STDRs swiped under MODS do not require separate

nomination

Nomination given by the customer for the deposit account will hold good for the term deposits also and separate nominations are not required for the Multi Deposits so created. As taking of multiple nominations in the principal account, not only increases the workload at a branch, but also causes dissatisfaction in the minds of the customers

6) Savings Bank Account Opening Form for Individuals has been modified

Monolingual form helped us reduce the size and the implied impact on the environment. Applicable to all locations. Provisions for capturing more data. The Form if printed and filled in the space provided, can be optically scanned so as to provide relief to the LCPC for Data entry work etc.

7) Updation of Customer Records has been advised by RBI

Many customers face inconvenience on account of delay in updation of customer records, covering any change of address, e-mail, telephone No. etc. In all such cases, important correspondence in the intervening period between intimation of change and updation of records with the Bank is directed to customer’s old address and resultantly it is returned undelivered causing inconvenience and sometimes resulting in avoidable service charges to the customers

8) SBI Flexi Deposit Scheme introduced

To cater to the needs of the people who have surplus income & seasonal income and desire to earn income, Term Deposits with flexibility of increasing the amount introduced

9) Annuity Deposit Scheme Reintroduced

To marketing the product with focus on regular fixed monthly income to self employed/professionals, retired persons, beneficiaries of compensation from Court

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Order/ insurance companies etc, we can revive the scheme and book substantial business

10) Payment of Interest on Term Deposits at Calendar Quarter

With the application of TDS at source, interest payment can coincide with calendar quarter and interest received by the depositor can be computed and advised to the depositor, for the purpose of filing I. Tax returns.

11) YUVA SB account Introduced

A bundle of value propositions and services are offered. The product will mobilize more CASA deposits, augment use of alternate channel products, demat services, mutual funds and insurance products

12) A range of 8 ‘Made to order’ Business Current accounts introduced

To fine tune our existing current account products to match the competition by widening the range and get us better current volumes

H R Matters (Compiled by Shri G.Narayana Rao)

1) Many Foreign Banks are now seeking entry in to India by setting NBFCs.

Ø NBFC route offer very good access to expand their presence in India. Ø Regulatory requirements are less stringent in case of NBFCs. Ø The NBFC arm of the foreign bank can raise capital from Indian market, but the

foreign bank is not allowed.

2) The Staff Suggestion Scheme has been revised.

Ø Decentralized evaluation and direct acceptance will motivate staff to participate in this scheme.

Ø Creativity of the staff can be enhanced for better organizational growth. Ø To achieve the acceptance of the scheme by the customers.

3) Staff Incentive schemes have been launched.

Ø This will give recognition to the employee coupled with monetary benefit. Ø Staff will be motivated to increase the business volumes

4) Job families concept has been introduced.

Ø To provide an option to the officers up to Scale-III to choose four job families(Clusters of related skills/ knowledge) for working.

Ø Provides an opportunity to work in their choice of work. Ø To develop talent tools with minimum range perspective. Ø Bring about an alignment of training and placement functions with business/ HR

perspectives.

5) A memento is presented to an employee at the time of retirement.

Ø To impart the importance to the land mark incident career of an employee. Ø To strengthen the emotional bondage between the bank and the employees

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6) Staff Alertness Award has been introduced.

Ø Frauds damage the Bank’s image and demoralize the staff. Ø The reward shows the importance attached by the Bank to the prevention and

detection of fraud. Ø This will act as an incentive to the staff in preventing the fraud.

Technology (Compiled by Shri G.Narayana Rao)

7) Pre-printed INB kit is given to customers.

Ø The INB kit will enable the customer to open the bank account immediately. Ø The kit consisting of temporary use-id and password which is provided to the

account holder. Ø The temporary login password is used for logging into internet banking for the

first time and the user-id as well as the password is to be changed on first usage.

8) ATMs are being installed in a big way.

Ø It enables the bank to provide anywhere anytime banking. Ø To meet competition and enhance customer satisfaction. Ø Reduces cost of operations. Ø To reduce the rush at the SWO counters.

9) Passwords of computer users are changed frequently.

Ø Security should be maintained in respect of passwords used by different functionaries at the branch.

Ø To prevent unauthorized access to the account. Ø Software packages do not accept the passwords those have not been changed

for a long time.

10) ATM withdrawal limit has been increased.

Ø ATMs have gained importance as an alternate delivery channel. Ø To increase the usage of ATMs. Ø To meet the increased convenience for customers.

11) Passwords have to be kept strictly confidential by the staff.

Ø To ensure authorization to the transactions put through by them only and to prevent fraud/misuse.

Ø An important preventive vigilance step. Ø To meet the requirement of computer audit.

12) Internet banking has been introduced by many books.

Ø The banking environment has now become highly competitive. Ø Customers are getting used to electronic banking. Ø This is very cost effective and convenient. Ø Ensures Speed and accuracy.

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13) VVR Checking is very much important in CBS Branches.

Ø To ensure against wrong, fictitious entries and double postings. Ø TO ensure against interpolation and manipulation

14) Computer audit is an important aspect of inspection and audit of the branch.

Ø To ensure against the breach of computer security, Ø safeguard assets Ø maintain data integrity and Ø ensure system efficiency.

15) Disaster recovery plan prepared by the branch has to be approved by

the controlling authorities for all branches.

Ø To ensure that in the event of a disaster the branch is capable of dealing with the situation and take emergent action to restore the normalcy and commence transaction within least possible time.

Organization and Business (Compiled by Shri G.Narayana Rao)

16) Relationship Banking is gaining importance now.

Ø To build up close rapport and understanding with the customers, Ø Enable us to anticipate the needs of the customer well in advance and to meet

them, Ø To meet the competition from the other players in the market.

17) Bank has set up Asset Liability Management System.

Ø To manage the mismatch of assets and liabilities, interest rate risk and transaction risks,

Ø To improve profitability of the bank.

18) The bank has entered Credit Card business.

Ø To fully exploit the untapped potential with the help of the existing retail outlets, Ø To improve/ enhance the customer satisfaction, Ø To increase income, Ø To effectively meet the competition.

19) The bank has entered Insurance Sector.

Ø It is a profitable avenue in the long run, Ø Bank is having long customer base as well as Brand equity Ø The expertise and the experience fo the staff will help to market these products

more efficiently. Ø It is profitable and not fully tapped area.

20) Drop Box facility has been introduced at the branches.

Ø Introduced as a part of BPR Initiatives of the bank, Ø Customer will drop the cheques for credit to his account even after the working

hours Ø As per the recommendations of the Tarapore Committee.

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21) The bank has introduced Ambience Policy.

Ø Ambience Policy aims for having a system of excellent maintenance of premises and furniture with an uniform approach and thereby creating an awareness in this area.

Ø Good maintenance of the premises will attract customers, improve staff efficiency and well decored and ventilated surroundings radiate energy and enthusiasm

22) Some Bank branches are now working on Sundays and extended

working hours.

Ø To enhance the customer satisfaction as the transactions will be handled for extended hours.

Ø For better utilization of manpower after computerization for leveraging the effective and efficient customer service

Ø To effectively meet the competition.

23) Non Fund Business has got more importance now.

Ø No immediate out lay of funds, Ø Even crystallized, it will be a small portion of amount over a long period. Ø Income earned by banks from this business is sizeable and servicing costs are

low, Ø NIM is gradually coming down due to disintermediation in fund based business.

24) BPR has been introduced.

Ø To address the fundamental rethinking and radical redesign of banking processes due to changes in the delivery systems of products and services of the bank.

Ø To meet the changes in customers expectations and competition.

25) Branches have been redesigned post BPR.

Ø To relieve the branches from credit appraisal and processing works, Ø Processes have been set up to migrate a large number of customers to ATMs

and other alternate channels, Ø Helps in our endeavour of customer acquisition and retention.

26) Bank has set up CPCs.

Ø Aimed for doing processing work for the branches, Ø To make the branches as front office for various businesses and CPCs will do

back office works like loan processing, cash management, Govt Business, Pension payments and Collection etc.

Ø To enable the branches to focus on sales, marketing and customer service.

27) RACPCs have been set up.

Ø to make it responsible for appraisal of the loan, obtention of search/ valuation report centrally, sanctioning of P segment loans and generation/ obtention of documents,

Ø to make the branches enable for more focusing on constant follow up, recovery and monitoring of advances

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28) SMECCCs have been set up.

Ø Set up as a part of BPR initiatives, Ø To process and sanction SSI, SBF and AGL loan proposals received from

identified branches. Ø To acquire speed and efficiency in disposing of such cases due to specialization.

29) Bank has introduced revised In-branch Cash Handling process.

Ø To avoid delay in starting cash transactions at the beginning of the day. Ø To reduce the time spent by CO/CIC/SWO/Asst(Cash) in handling over and

receiving cash at the beginning/ close of the day.

30) The bank should focus on Net Interest Margin.

Ø The efficiency of the banking business depends on NIM. Ø To helps to know the importance of optimizing the yield on advances and

minimize cost of deposits for getting maximum margin.

31) The bank has introduced many incentive/ award schemes for staff.

Ø To create healthy competition among the staff. Ø To build up a sense of belongingness and involvement of staff in the business

development. Ø To improve the market share of the bank.

32) Many banks publish quarterly results.

Ø It is mandatory for the companies to publish the quarterly results as per the listing arrangements of the stock exchanges.

Ø Stake holders will be informed of the bank's performance so that it will keep the interest of the investor in the bank's share.

33) Online Banking(CBS) has got its prominence now.

Ø Branch customer will become Bank customer, Ø Highly cost effective, Ø Customer can access to his account from anywhere. Ø Enhances customer satisfaction and efficiency in transactions.

34) Mobile Banking is started by the Bank.

Ø To offer simple, convenient, secured banking at any where and anytime, Ø To attract tech savvy young customers with this technological product, Ø MBS now available for low end mobiles also over USSD to cater the needs of low

income clientele also at an affordable rate.

35) Operational Risk has been given importance by banks.

Ø It is in accordance with the Basel II recommendations, Ø Due to rapid increase in the volume of business, risk in the operational area is

increasing, Ø to strengthen the soundness and stability of the banking system

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Legal Aspects of Banking (Compiled by Shri G.Venkateswara Rao)

1) Banks can not sell the assets pledged to them at their will though the repayment is not forthcoming and advance is called up?

Ø In terms of section:176 of Indian contract Act, a reasonable notice should be given to the borrower intimating the bank’s decision to dispose the assets towards recovery of dues from him. Then only banks can dispose off the assets.

2) Nominee’s signature is not obtained on the nomination form?.

Ø To maintain the secrecy as the account holder may not always be inclined to let the nominee be aware of the nomination made by him. It is also convenient for the depositor to change the nomination at his own will as and when he desires to change the same.

3) As far as possible, account opening for un-discharged bankrupt should be avoided?

Ø The un-discharged bankrupt is subject to number of disqualifications. His assets and liabilities vest in the official receiver/assignee. Hence account opening for such persons to be avoided to safeguard the bank’s interest from entering into litigation as his funds carry the risk of attachment until and unless he is discharged.

4) A power of attorney must be definite and unconditional to be accepted

by the bank?

Ø Because fulfilment/completion of the conditions/purposes may automatically withdraw/terminate/ cancel/ revoke the POA without bank’s knowledge thereby carry higher risk of landing the bank in problems.

5) While opening a partnership account, a partnership letter (COS-37) is obtained even though a copy of the partnership deed is submitted?

Ø Bank’s partnership letter empowers the partnership firms to open an account as they may not have the implied authority to open a bank account in their deed.

Ø In the partnership letter partners undertake to notify the bank whenever there is a change in the constitution of the firm. Hence all interim transactions are protected till bank is advised of the change in the constitution.

6) As soon as a minor partner attains majority, he should be made to sign the existing partnership letter in addition to the new partnership

letter?

Ø This is done with a view to get his ratification of the previous transactions transacted during his minority.

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7) Cheques drawn by the customers are not paid after the receipt of the notice of their death?

Ø Agency and mandates are terminated/withdrawn/ evoked/ cancelled on the death of the principal as per Sec.201 of the Indian Contract Act.

8) A cheque drawn by the director of a company can be paid even after

his death if it is otherwise in order?

Ø A company is a legal entity having perpetual succession on whose behalf the cheque was drawn by the director. Hence the death, insolvency or lunacy of the director doesn’t affect the payment of the cheque.

9) We can allow payment of a cheque in cash after business hours only if

it is presented by the drawer himself?

Ø As the drawer can not countermand (stop) the payment of cheque in such cases.

10) Cheques whose crossing has been opened are paid to drawers or his known agents only?

Ø Crossing of a cheque is not a material alteration, whereas, opening of a crossing is a material alteration. Hence payment of such a cheque to persons other than drawers or his known agents may put us in uncalled trouble if it transpires that the material alteration is made by unscrupulous people by forging drawer’s signature.

11) Dishonoured cheques do not require noting and protesting?

Ø Since a return/ objection memo is enclosed to the returned cheque to enable the payee/endorsee/holder to take suitable action against the drawer. Negotiable instruments are noted and protested only when the reason for dishonour is not forthcoming.

12) A cheque crossed “not negotiable” can be transferred by endorsement and delivery?

Ø The transferability of a cheque is not affected by such a crossing and the transferee doesn’t get a better title than the transferor as per section:130 of NI act.

13) In case of a OD/CC account sanctioned to a partnership firm, the old account is closed and a new account is opened on the demise of a partner.

Ø As per Clayton’s rule “the first item on the debit side of the account is discharged or reduced by the first item on the credit side. The credit entries set off the debit entries in chronological order.” Thus in case of death of a partner, the debits in chronological order which are set off by subsequent credits doesn’t constitute debt which can be claimed from the deceased partner’s assets. Bank may suffer a loss if the same can’t be recovered from the remaining partners. Hence to obviate the operation of Clayton’s rule, the bank closes the old account and opens a new account. The same is applicable in case of partners retiring or becoming insolvent.

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14) The documents to title of goods, if it is a documentary bill, should be drawn with the name of banker as consignee?

Ø In case the document to title to goods is drawn in the name of drawee, then there is every possibility that the goods will be removed by the consignee i.e; drawee in this case, without accepting/ paying the bills. Hence the document of title to goods in case of documentary bills is preferably to be drawn in the name of the banker or at least endorsed in favour of the banker.

15) Mandate letters should not be accepted from limited companies and

co-operative societies?

Ø Limited companies and co-operative societies are legal entities which are represented by people acting in fiduciary capacity. Hence people acting in fiduciary capacity can not issue mandatory letters. Mandatory letters are normally issued by individuals and proprietary concerns wherein individuals are acting in their own personal capacity.

16) Banks generally ask for the identification of the payee or the endorsee of an order cheque?

Ø For getting protection as paying banker under section:85 of NI act, the payment must be made in due course. Section:10 of NI act defines payment in due course as a) In accordance with the apparent tenor of the instrument; b) In good faith and without negligence; c) To any person in possession thereof; d) Under circumstances which do not afford a reasonable ground for

believing that he is not entitled to receive payment of the amount. In view of the above, bankers ask for identification of the payee/endorsee of an order cheque so that the payment is made in due course.

17) The banker is called a privileged debtor?

Ø The banker gets certain defined rights in the assets charged until and unless the advance is repaid or liquidated. Such rights are banker’s lien in case of goods and securities and right to set off in case of money.

Ø Based on this, the banker’s charge takes precedence over other’s charge.

18) When an LIC policy is reassigned after the advance has been repaid,

the policy holder is advised to do a fresh assignment or nomination?

Ø As per section:38 of Insurance Act , a nomination made before any assignment is cancelled in favour of nominee by an assignment of the policy. Hence customer is advised to make a fresh nomination.

19) Packet for safe custody is not branded with Bank’s seal/ seal of bank officer?

Ø Packets received from the customer for safe custody are kept under the contracts of bailment and pledge. The banker is expected to take reasonable care of the goods bailed. Hence bank should avoid certifying the contents of the packet with bank’s seal. Otherwise later on customer may charge against bank for any deficiency observed in the contents of the packet.

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20) “Certificate to commence business” is not called for from Private Limited companies for opening a bank account?

Ø Under sec.149 of Indian Companies Act, a private Limited company can commence business immediately on incorporation as they are not mobilizing any public money by way of subscription of shares. Hence certificate to commence business is not called for a pvt. limited co. for opening an a/c.

21) Overdraft facility has been given against LIC policy. The borrower committed a murder and sentenced to jai. What is our position?

Ø The civil rights of the person convicted are not affected. The assignment in favour of the bank is not affected and it is valid. Therefore the bank can make a claim on the LIC for payment of the sum due under the policy after the death of policy holder.

22) Bank guarantee like financial guarantees and performance guarantees

need to be classified properly in respective heads?

Ø Bank has to provide capital adequacy for all types of guarantees. Ø Credit conversion factor for performance guarantees is 50% and for financial

guarantees if 100%. Ø RBI has issued directive to banks to ensure proper classification for having

effective control over the guarantee transactions.

23) Advances against security of partly paid shares should not be sanctioned?

Ø Partly paid shares can’t be sold. Ø Bank may have to pay the call money when called upon by the company in

case the borrower fails to pay the calls. Ø This may result in forfeiture to the company and the security available is null

and void.

24) Obtaining of Revival Letter for standard P segment advances is relaxed?

Ø RL will be obtained once the account becomes sub-standard and bank has adequate time to do this.

Ø There is no dilution of risk management as in case of necessity bank can depend on account statement or credit vouchers to ensure enforceability.

Ø The P segment business has grown manifold posing practical problems in obtaining RLs.

Ø Time will be saved for the operating staff which can be utilized for bringing in new business.

25) Demand bills and usance bills should be properly classified?

Ø Inland bills or usance bills which have to be accepted before payment by the drawees and should be paid on due dates.in the event of non-payment noting and protesting is required to safeguard bank’s interests. Demand bills are payable on demand and appropriate action will be taken if not paid on presentation. Hence to ensure proper follow up, usance and demand bills to be classified correctly.

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26) A & B have opened a “F or S” deposit account. After some time “A” approaches the Bank and wants to substitute the name of “B” with “C”.

His contention is that since he is mentioned as former, he is entitled to change the survivor’s name at will.

Ø The former has exclusive right to the deposit during his life time and the survivor gets the title to the deposit only after the death of former. His request is to be accepted.

27) Failure to obtain revival letter from the guarantor doesn’t affect the

legal enforceability of guarantee?

Ø The liability of the guarantor is co-extensive with that of the principal debtor. The RL signed by the borrower is binding upon the guarantor and extends the limitation against him also. Hence the legal enforceability is not affected.

Advances (Compiled by Shri N.V.R.S.Subba Rao)

1) Revival letter for standard assets in Per segment is not taken.

Ø The volume of Per segment business has gone up substantially and obtention of RLs consuming huge resources

Ø The saved time and resources can be deployed for business development Ø In case of term loans, the limitation starts from the date of default in the

payment of any of the instalments, and therefore, there is no need to obtain RL or debit confirmation, so long there is no default in repayment of the instalment.

2) Goods are insured to the extent of their full market value.

Ø In case of under insurance the insurable interests of the lending bank is affected adversely by the operation of Average Clause. In case a claim arises, the insurance company will pay proportionately and the bank will be put to loss

3) A total reliance on balance sheet analysis alone is not desirable while

arriving at a conclusion regarding the financial health of a unit.

Ø The unit’s Balance sheet indicates the state of affairs as on a specific date and not over a period of time.

Ø It is capable of being window dressed for the sake of impressing the analyst. Ø It does not take into account non monetary factors like labor trouble, market

condition etc which influence a unit’s performance to a great extent.

4) Credit appraisal is necessary even while extending non-fund based facilities to customers.

Ø Non fund based facilities to customers are in the nature of contingent liabilities for the Bank. In such cases, the Bank may be called upon to pay the amount in the event of the customers’ failure to do so.

5) In the case Demand Loans further withdrawals are not permitted.

Ø Additional debits are not covered by the D.P note which is executed for the loan amount.

Ø The value of the D.P note gets reduced to the extent of repayments made into the account.

Ø No continuity clause is embodied in the case of demand loans

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6) We do not insist on registration of a firm who desires to borrow from us.

Ø Non-registration debars a firm from suing the other parties (firm’s debtors/partners) but does not affect the rights of a lender/banker/outsider as per Sec 69 of the Partnership Act.

7) In the case of death/retirement/insolvency/lunacy of a partner, further

operations on the cash credit account of the partnership firm are stopped.

Ø In the absence of such a step, the Rule in clayton’s case (incorporated in Sec. 61 of Indian Contract Act) will operate to the detriment/disadvantage of the lending bank if a claim is preferred against the estate of the deceased

8) The Bank does not accept an equitable mortgage of the land/building

situated in cantonment areas

Ø An equitable mortgage of land/building situated in cantonment areas is not recognized as a valid mortgage as per the Cantonment Board Rules

9) A D.P Note is obtained from the borrower in addition to the ornaments pledged to the Bank

Ø If the sale proceeds (after auction expenses) of the ornaments pledged to the bank are inadequate to cover the entire outstandings in the account, we can sue the borrower for recovery of the shortfall on the strength of the D.P Note.

10) In the normal circumstances, we3 should not grant advances against

TDRs issued by other banks.

Ø Other Banks refuse to mark our lien on the term deposit because T.D is a debt by the issuing bank to its depositor.

Ø The issuing bank has a first and paramount lien on it and can exercise the right of set-off also

11) Undated discharge is taken on the Bank’s TDRs accepted as security for

advances

Ø A TDR is repayable on maturity. A dated discharge given prior to maturity shall be declared ultravires.

12) Advances are generally not granted against shares of private limited companies

Ø Shares of private Ltd companies are generally non-transferrable (Sec.3 of Indian Companies Act 1956)

Ø The lending bank shall not be in a position to have the assignment in its favour. Ø These are not quoted in the share market and we can not ascertain their present

market value.

13) The Bank does not grant advances against its own shares

Ø Restricted under Sec. 20 of Banking Regulation Act. Ø These advances amount to depletion/reduction in the financing bank’s capital

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14) Form COS 245 is obtained in the case of advances against the security of the assets belonging to a company (negative lien)

Ø It is an undertaking (stamped as an agreement) obtained from the borrowing company for not creating further charge, mortgage, lien or encumbrance over its properties ( movable and immovable) and assets (including uncalled capital ) without the Bank’s specific written consent.

15) We preserve the notices sent by post/courier service etc and keep them unopened/intact when these are returned undelivered/un-served

Ø These envelopes can be produced as an evidence of dispatch of notices in the Court of law as the envelopes are branded with the postal date stamps.

Ø A notice sent to the borrower/guarantor which is returned undelivered/ Un-served for the reason ‘refused’ is deemed as duly served in the law. ( Sec 144 of Indian Evidence Act)

16) The BPLR system has been reviewed

Ø The BPLR has tended to be out of sync with market conditions and does not adequately respond to changes in monetary policy

Ø The tendency of banks to lend at sub-BPLR rates on a large scale raises concerns of transparency.

Ø On account of competitive pressures, banks were lending at rates which did not make much commercial sense.

17) The Interest rate on rupee export credit should not exceed the Base

Rate of individual Banks.

Ø Export credit is of short term in nature and exporters are generally wholesale borrowers.

Ø There is need to incentivizes export credit for exporters to be globally competitive.

Ø Enables exporters to still have access rupee export credit at lower rates as the base Rate envisaged is expected to be significantly lower than the BPLRs.

Ø The system will also be more flexible and competitive

18) LTV ratio introduced for Housing Loans

Ø In order to increase the safety margin for the Bank Ø To minimize loss due to defaults and prevent slippages

19) It is preferable for bank to advance SME sector, under CGTMSE coverage

Ø CGTMSSE cover is a more effective risk mitigation tool than collateral security because the enforcement of collateral in case of loan default is a protracted and expensive procedure.

20) No interest is applied on NPA accounts

Ø NPA ceases to generate income for the Bank Ø The principal itself is doubtful of recovery in these cases. Ø In order to avoid tax liabilities on unreceived income.

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21) Credit exposure norms are stipulated by RBI

Ø Concentration of credit risk is avoided thus eliminating the risk of “All eggs in the same basket”.

Ø Failure of a single advance will not affect the capital stability of the Bank.

22) The date of classification of NPA should be advised to CGTMSE

Ø It enables the CGTMSE authorities to make provision for the account

Ø To obviate the possibility of any delays in settlement of claim

23) When a loan account guaranteed by CGTMSE is closed, the Annual

Service Fee should be recovered from the unit on a Prorate basis and credited to charges account

Ø Now CGTMSE approves closure of accounts when branches make online closure requests. After closure of an account, recovery of service fee would be difficult. The amount which is recovered will have to be remitted to the CGTMSE by debit to charges account.

24) Home loan moratorium period has been revised recently

Ø With the advent of integrated townships and mega residential complexes with several towers, longer time is taken for completion of projects

Ø In order to enable alignment of repayment schedule with that of building completion

Ø Higher moratorium period is considered for construction beyond 7 floors.

25) Opinion on borrowers/guarantors has to be revised every year

Ø This will alert the Manager about any erosion of net worth of the borrower/guarantor. The Manager can take additional security or other appropriate action to safeguard the Bank’s interest. The Bank has lost many cases as it was not able to identify/furnish details of assets of borrowers/guarantors to the Court Officials for attachment, execution etc.

26) Bank should take more than ordinary care in the case of pledged goods.

Ø As per law only movable goods can be secured by ‘pledge’. Book debt is an actionable claim which can only be assigned or hypothecated as security.

27) Margin on Raw Materials is less than that on Semi finished goods

Ø Raw materials can easily be disposed of by the Bank, as at this stage they can be utilized for manufacturing a variety of goods. Also, the value of raw materials will not fall as steeply as that of SFGs in a forced sale for the same reason.

28) While granting loans against motor vehicles the vehicles are insured in the sole name of the borrower only.

Ø If the insurance is done in the joint names of the Bank and the borrower, third party claims may be made against the Bank as a co-owner in case of accidents. Also, the Bank Interest clause is sufficient to protect the interest of the Bank.

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29) Bank’s name board are exhibited in the factories/ godowns in which stocks pledged to the Bank are kept

Ø This serves as a notice of the Bank’s charge to the outside world and of the advance made by the Bank. Thus, the Bank’s first charge over the assets is protected.

30) Even after the death of one of its director a cheque issued by a company is paid

Ø A company is a legal entity with perpetual succession. Ø The Director acts in a fiduciary capacity and his death will not affect the

existence of the company

31) RBI changes its instructions regarding selective credit control measures periodically

Ø S.C.C measures relate to sensitive commodities like oil and oilseeds, cotton and kapas, food-grains etc. Depending upon the quantum of buffer stock, production prospects, price level etc. RBI varies its instructions periodically with a view to stabilize prices and prevent hoarding and black marketing.

32) Opening of LC is considered a credit decision

Ø The unit has to meet the bills under L.C in due course. If it fails to do so, the Bank has to meet the commitment and recover the same from the customer. Hence, it is treated as a credit decision.

33) Bank guarantees are not issue for indefinite period

Ø These are contingent liabilities which may crystalise into actual liabilities. The risk of crystalisation is very high when guarantees are issued for long/indefinite period

Ø The bank has to provide for Capital Ø There are also restrictions by RBI in this regard.

34) Banks do not advance against partly paid shares and pvt limited company shares

Ø It is difficult to sell partly paid shares and also the bank may have to pay the call money when called upon by the company in respect of such shares in case the borrower fails to pay the calls. Otherwise it will be forfeited by the company. The shares of private limited companies are not listed in the stock exchange and hence cannot be easily sold in the market. Further, it will be very difficult to assess the value of such shares.

35) No advance is granted against Life Policies that are issued under Married Women’s property Act

Ø Such policies are taken for the benefit of the family and in such policies the policy-holder creates a Trust in favour of his wife and children, and hence he can not encumber them for his benefit

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36) The Bank can not sell the goods pledged to it without serving a notice of sale on the borrower, even though the account has been called up.

Ø A notice of sale giving reasonable time for payment is a statutory requirement (under S.176 of Indian Contract Act. It is also called a statutory notice). If it is not served, the sale would not be valid and will be set aside by the court.

37) Debit and credit summations in the cash credit account are reviewed while renewing the limits sanctioned to borrowers.

Ø This will show the extent of utilization of the limits, whether the sale proceeds/bills have been routed through the account and whether the account has been conducted properly. Adequate facilities commensurate with the current level of operations can be extended.

38) It is preferable to grant advances to companies against hypothecation of stocks rather than pledge.

Ø Sec.125 of the companies Act provides for registration of the hypothecation charge, it serves as an automatic notice to third parties as also to the subsequent creditors, pledge charge can not be registered as there is no provision for the same.

39) While creating equitable mortgage, nothing in writing should be obtained from the person creating the mortgage.

Ø If any instrument is signed by the mortgagor while he creates an equitable mortgage, it maybe contended later that the mortgage is a registered mortgage and that it is inadmissible as evidence, as no stamp duty has been paid on it.

40) While taking an equitable mortgage the mortgagor is required to send a separate confirmatory letter.

Ø In order to secure an independent legal proof that the mortgagor had deposited at the notified centre the title deeds of the immovable property with intention to create an equitable mortgage.

41) In case of a term loan in Per segment, if a few instalments are in

default, the notice should be served on borrower only and no notice recalling the advance should be sent to guarantor.

Ø If a notice of recall of advance is served on the guarantor, it triggers limitation period. If a demand is made on the guarantor and the loan is regularised by the borrower, then the bank will be required to obtain fresh guarantee from the guarantor.

Foreign Exchange (Compiled by Shri T.V.N.B.Raju)

1. Concessionary Rates of Interest are extended to Exporters.

Ø Exporters earn valuable foreign exchange and they have to compete in the international market which is very competitive.

Ø RBI grants refinance to Banks at concessionary rates of interest. Ø To encourage Exporters and to incentivize the exports. Also forex is very much

required to take care of our imports and external debts. Ø RBI guidelines.

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2. Forward Contract are booked by exporters/importers.

Ø To ensure against the risk of fluctuations in exchange/forex rates. Ø To ensure that the profit margins are not eroded/affected

3. Full Set of Bill of Lading should be presented to the Bank for negotiation.

Ø The holder of one negotiable copy of the B/L is entitled for delivery of goods. Ø If the full set is not obtained by the negotiating bank, there is every risk of third

party getting hold of negotiable copy of B/L and obtaining the goods. Ø To ensure against any operational risk in handling the documents/bills.

4. L.C. and other documents are to be scrutinized carefully when an export bill is received for negotiation.

Ø To ensure that the L.C. is in order and valid Ø To ensure that the documents are drawn strictly in conformity with the terms of

L.C. Otherwise the documents may be returned unpaid by the opening Bank/ paying Bank.

Ø To ensure that the Bill is not dishonoured as the Bank usually extends finance to exports finance under post shipment finance.

5. TT Rates are more favourable to customers. (OR) TT Buying Rate is quoted for foreign inward remittances where cover has been provided.

Ø As forex funds have already been credited to us through Nostro account, the Bank is prefunded with the amount.

Ø There is no risk of non payment / non reimbursement of funds by the other Bank

6. Import/Export Bills are crystallized if they are not paid within the

stipulated period.

Ø Import Bills are crystallized as our Nostro A/c would have been debited when the bill under our LC was negotiated by the negotiating Bank.

Ø The foreign liability must be converted into rupee liability within the stipulated period to help avoid Bank's exposure and or customer's exposure to the risk of adverse exchange rate fluctuations.

Ø In line with international practices

7. ECGC cover is not obtained for LC bills.

Ø As L.C. is established, the exporter is assured of getting the payment soon after the shipment or as per the terms.

Ø In view of definite understanding by Opening Bank, ECGC cover is not obtained for LC bills

8. NRI Assistance Cell / NRI facilitation Cell has been set up at LHO. (OR) Lot of importance is given by the Bank for NRI deposits.

Ø NRIs are our Privileged customers. NRIs contribute to more than 10% of our Deposit portfolio and the deposit growth in this segment is substantial.

Ø To render specialized and customized service to them and to ensure quick processing of their requests.

Ø To ensure that their complaints/difficulties are resolved promptly, a Cell has been created at LHO.

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Government Business / Cash (Compiled by Shri T.V.N.B.Raju)

1) System Suspense accounts must be reconciled. Ø Non Zero balances in these entries reflect lack of efforts on the part of Banks

and inefficiency of the System. Ø To prevent frauds and malpractices. Ø Unreconciled entries may lead to customer complaints Ø To avoid provision requirements which will be a drain on our net profit. Ø RBI guidelines.

2) Bank has introduced revised In-branch cash handling process.

Ø To ensure against delay in start of Cash transactions during the opening of day's business.

Ø The process will reduce the time spent by CO/CIC/SWO/Asstt (Cash) in handing over / receiving Cash at the beginning of the day/closing of the day.

Ø To help improve customer delight. Ø BPR initiatives

3) Operation risk is an important component of risk management. (Operational risk has been given importance by the Banks) Ø Due to significant growth in business of the Banks and in Banking transactions,

there is an increased threat of operation risk. Ø To strengthen the Systems and avert operations risks/frauds. Ø Basel-II guidelines.

4) One rupee note/coin is issued by Govt. of India where as notes of other denominations are issued by Reserve Bank of India. Ø Govt. of India is vested with the power to issue one rupee coin under the

Coinage Act, 1906. Ø Issuance of One rupee note is treated as one rupee coin issue hence handled by

GOI. Ø The issue of notes of other denominations is delegated to RBI.

5) No entry is passed while transmitting treasure from one currency chest to

another. Ø Currency chest is the property of RBI. Ø Treasure transfers are effected at the instance of RBI. Ø The Bank's cash position is not affected. Ø RBI instructions.

6) RBI changes the security features of the Bank Notes periodically

Ø Counterfeiting of Currency Notes is a threat not only to the RBI but also to Nation.

Ø To ensure against exploitation of the features of the Notes by the Fraudsters/criminals and to prevent counterfeit notes.

Ø To make them user friendly (like easy identification by Visually challenged etc.)

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Payment Systems (Compiled By Shri T.V.N.B.Raju)

1) The Bank should not recover any excess charges in respect of remittance or collection that is not provided for by RBI.

Ø These charges are prescribed by RBI in accordance with Payment & Settlement Act,2007.

Ø Any deviation/infringement of RBI's instructions will be viewed seriously by RBI. Ø If recovered less, Bank will loose other income.

2) RBI has rationalized dormant/Non operation criteria for deposit accounts

Ø The non withdrawal / non operation criteria for classifying an SB a/c / Current a/c as dormant / in operative have been uniformly fixed as 1 year and 2 years respectively.

Ø To bring uniformity in classification of these accounts in Banking System. Ø To avoid ambiguity in classification of these accounts.

3) While an application for funds transfer under RTGS is obtained, customer's signature must be obtained on the back of the application

which contains the "conditions for transfer".

Ø In respect of these remittances, Bank will be the agent for the customer and should carry out the task with due care and diligence.

Ø The customer acknowledges that the Bank is not liable in the event of delay in transmission/non transmission of the message.

Ø To ensure that the terms and conditions are read by the applicant and are binding on all parties.

4) Govt. Bussiness Software Solution (GBSS) for Central Government

Transactions implemented.

Ø To speed up/rationalize settlement of Central Govt. Transactions with RBI Ø For quick processing, settlement and reconciliation of Central Govt. Transactions

5) OLTAS has been introduced.

Ø On line Tax Accounting System (OLTAS)facilitates generation of computerized receipts to be issued to taxpayers. Branches need not issue counter foils of challans.

Ø This will facilitate easy reconciliation of entries Ø RBI guidelines.

6) IOI has been introduced.

Ø New instrument (IOI) on a single design security form, covering three products viz. SBI drafts, Banker's cheques and Associate Bank Drafts has now been introduced.

Ø It has more security features and the reconciliation would be easier. Ø Single platform payment system product. Ø BPR initiatives.

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7) Unclaimed Bankers cheques of more than 3 years issued by debit to Charges a/c are credited to Bank Charges a/c.

Ø Efforts should be put to trace out the payee of the Banker's cheque and to ensure that the unpaid /outstanding Bankers cheques are kept bearest minimum in the Branches.

Ø To eliminate large number of items outstanding for a long time and their periodical balancing.

Ø Even after crediting to Charges a/c, any claim by the Payee should always be entertained. Therefore payment is never denied

8) Interest payment for delayed collections are paid to customers. (Cheque

collection Policy has been revised by the Bank).

Ø It should be the endeavor of the Bank to ensure that all the instruments are collected within the time frame stipulated and no undue delay occurs.

Ø To ensure that the customers are compensated for the undue delay in collection / realization.

Ø As Best Banking practice/ RBI guidelines

9) DDP (Cheques) revised procedure has been adopted.

Ø To streamline the dual system of accounting for same type of transaction. Ø To reduce pressure of Branch Clearing General a/c. Ø To bring uniform treatment of cheques purchased.

10) DDP are now discouraged, instead Core Power/On line are

encouraged.

Ø To ensure furtherance of excellence in Customer Service. Ø To leverage our Core Power/ Online facilities. Ø DDP is treated as an advance and outstandings have to be reckoned for C/D

ratio and also attract provisions as per IRAC norms.

11) RTGS is introduced by RBI. (RTGS is now encouraged under Payment

Systems).

Ø RTGS is safe, secure, fast, fraud proof and efficient mode of electronic funds transfer.

Ø Administered/Regulated by RBI. Ø Made available by RBI Ø Settlement is on a Gross basis, real time and instant. Ø Customer can trace out his transaction and almost no complaints.

12) RTGS/NEFT timings have been extended.

Ø RTGS is safe, secure, fast, fraud proof and efficient mode of electronic funds transfer.

Ø Administered by RBI at cheaper rates in the interest of common public. Ø To facilitate more and more transactions in a day and to ensure maximum

transactions are put through on the same day. Ø In the interest of common public / users.

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13) New plastic card products have been introduced.

Ø To have tailor made products and to make SBI the preferred choice of customers especially Youth .

Ø To make them more user friendly and to attract more and more customers. Ø To be a on the top of list of Tech Savvy Banks with new Tech Savvy Products. Ø To attract more and more customers to our books.

14) Yuva Card has been introduced.

Ø As a welcoming product to the Youth to join our fold Ø To make the Bank, Preferred choice of generation-Y. Ø To be perceived as an Techno-savvy Bank, especially by youth. Ø A user friendly product with Rewards programme and with many value added

features

15) SBI is promoting SBI Card in a big way.

Ø Unexploited potential exists for Credit Card business. Ø To leverage our vast nest work of branches and to leverage our Customer base. Ø To offer our existing customers, a valued added product. Ø To have other income and to improve our bottom line.

16) Cash is now accepted at our branches for payment of dues of SBI Card.

Ø We are promoting SBI Credit Cards in a big way. Ø To facilitate easy payment of dues by the Card holders at any of our branches. Ø To leverage wide network of our Branches and to improve other Income.

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RATIONALES (Based on e-Circulars) (Compiled by P.Rajendra Prasad, AGM)

The ceiling on the remuneration payable to the Home Loan Counselors

raised from Rs.10,000 to Rs.25,000/-.

1.

Ø With a view to aligning the remuneration payable to the Home Loan Counsellors in tandem with movement of residential real estate prices, and thereby incentivizing them to source high value loan proposals

It has been decided by the appropriate authority to offer all categories

of account holders in Corporate Salary Package (CSP) and Defense Salary Package (DSP) account holders, a discount of 1% on card rate of gold coins of all denominations, 2, 4, 5, 8, 10, 20 and 50gms

2.

Ø In order to continuously enhance the Salary Package product and make it more attractive

Ø A huge potential is available to be exploited

In respect of Home loan accounts being opened in RACPC, if the CIF and home loan account is not properly opened incorporating all the

relevant particulars, it has been decided to recover penalty of Rs.100/- per account-Rs.75/-from the Maker and Rs.25/- from the Checker

3.

Ø To inculcate a sense of discipline in Maker and Checker while entering the data in the system as several adverse consequences can result if the CIF and Home Loan account are not opened correctly in all respects

Ø Apart from rejection of data by CIBIL, maintenance cost and hiking of Capital Adequacy requirements, the incidence of NPAs is closely correlated to the accuracy and completeness in account opening

Ø lack of contact information at CIF and account level severely hampers efforts to address accounts which develop irregularity

Ø it is imperative that up to date information on address fields and telephone numbers of borrowers is available in the system for other maintenance functions like sending statements, obtaining revival letters etc

In cases where the customer chooses to opt for SBI Surakshit Home

Loan plan, a separate letter for that purpose will be obtained from him along with the Home Loan application form.

4.

Ø As per the regulatory guidelines, the insurance policy is required to be sold to the customer only when he volunteers to obtain the cover.

Ø With a view to ensuring demonstrated compliance with these guidelines and avoiding incidence of alleged coercive tactics by the operating units for selling of insurance products

A new variant of Home loan-“SBI Home Loan PAL(Pre Approved Limit) is introduced

5.

Ø To enable the customer to confidently negotiate with the builder/seller Ø Builder/sellers who are apprehensive about our ability to deliver in time will

not find a need to influence the customer to go to other banks/HFCs Ø Database of Pre-approved loans will enable the Bank to negotiate with the

builders to offer better rates for SBI Home Loan borrowers.

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“Car-A Branch” campaign is introduced 6.

Ø Bank is targeting 3,00,000 cars financing during 2010-11 to achieve the budgeted growth and also capture a market share of 18% by March 2011

Ø Thus it is imperative to push all branches to market car loans. Branches should ensure that account opening Forms are dispatched

promptly to LCPCs complete in all respect without any discrepancy as per checklist

7.

Ø About 10% of account opening forms are returned by LCPC to concerned link branches for rectification as they found lacking in one or more aspects.

Ø The discrepancies in the account opening forms result in both, avoidable work and wastage of time at the LCPCs, coupled with additional expenses on postages etc.

Financial Advisory Products/Wealth Planning Products should be

packaged in our publicity material while bundling them with existing retail products of CSP/ DSP.

8.

Ø There is a need to provide FPAS to CSP/ DSP account holders for investing surplus funds available with them for making provisions for future financial needs and enable them to become financially independent.

Ø It should be our endeavor to target executives of the Corporates who are our CAG and MCG clients as well as of those Corporates and Institutions with whom we have a Salary Package tie-up and senior level officers of Defence and Para Military Forces etc.

Bank has decided to empanel Retired officers of the Bank and others

as Auto Loan counselors

9.

Ø While, Bank has Sales Team (MPSTs) for sourcing car loan proposals, it is observed that they are not able to visit all dealerships, especially in Metros and major Car loan centres.

Ø As a result, the dealers find it convenient enough to give the business leads to our competitors, where sales teams are stationed in the dealers’ showroom.

Ø Therefore, it was felt to deploy sufficient number of Sales Team to explain our car loan schemes to the prospective customers and source applications at the dealership outlet.

Bank has opened three Nostro Accounts with Bank of America at

Toronto, Sydney and Tokyo in CAD, AUD & JPY respectively

10.

Ø To facilitate foreign travel card transactions in CAD, AUD and JPY

It has been decided by the Bank to set Hurdle Rate at SB 10 for new connections

11.

Ø Based on feedback received from Circles/Business Units and also aligning the same with the revised CRA Model.

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The maintenance of ‘Draft/IOI lost register’ at Branches is dispensed with.

12.

Ø Blank IOI forms lost during the transit from Printer to Circle Stationary Department and from Circle Stationary Department to Branch, the Central Stationary Department which will make necessary input in CBS and Loss of blank IOI forms at Branch, the branch will make the necessary input in CBS.

Ø As the Draft Reconciliation Department is updating the whole Bank level data, the maintenance of ‘Draft/IOI lost register’ at Branches is redundant and hence is dispensed with.

The provision of stamping the SB account as dormant after one year since withdrawn

13.

Ø As per revised RBI guidelines, ‘Savings’ as well as ‘Current Account’ should be treated as ‘Inoperative’ if there are no debit as well as credit transactions induced at the instance of customers in the account for over a period of two years and these guidelines have not made any differentiation between inoperative and dormant account.

Ø To align with the RBI guidelines and to have uniformity across the banks, our extant instructions have been revised..

Bill selling/buying rate for all FTC transactions will be applied instead of TT selling/buying rate, in respect of Vishwayatra foreign Travel card

14.

Ø To cover the cost of operations of FTC and improve profitability A web site for Builders Tie up is available in the intranet 15.

Ø This facilitates Sourcing Entities to download the Title Investigation Report/Legal and Valuation Reports and place a printout in the loan application file which is taken up for processing

Ø In turn, Processing Officers at RACPC are enabled to process the application within TAT as the time taken for obtaining legal and valuation reports is eliminated

Reserve Bank of India has advised all Banks to formulate a broad based transparent penal interest rate policy

16.

Ø In order to avoid indiscriminate levy of penal Interest to borrowers. Ø The policy should be governed by well accepted principles of transparency,

fairness, incentive to service the debt with due regard to genuine difficulties of customers

cash acceptance facility has been rolled out at SBI branches for SBI card holders

17.

Ø With a view to add value to the ‘SBI Card’ by making available one more payment option to the cardholders.

Ø It also provides an avenue for the branch for improving their other income, as SBI card will pay commission of Rs.2/- per thousand or part thereof for cash receipt

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It is essential that the Bank Guarantees issued are properly categorised. 18.

Ø Incorrect classification would result in incorrect applicability of credit conversion factor, the factor used to convert the non fund based limit to funded limit, on which the bank provides applicable capital charge

Bank has placed the revised Compromise Format which includes a certificate from the Recommending Authority stating that the extant

RBI guidelines (para 14) have been complied with before submitting the Compromise proposal for approval.

19.

Ø To address the concerns of RBI Ø RBI has expressed concern over the manner compromise settlements have

been effected by some banks. Ø One of the DRTs had also commented on cases where the banks have settled

for a far lesser amount as against claimed amount, despite availability of ample securities and in gross violation of Reserve Bank of India (RBI) guidelines

A range of 8 ‘Made to order’ SME Power Current accounts have been

approved by Bank

20.

Ø To counter competition being offered by new generation private sector banks Ø To get us better current account volumes Concessions in interest rate is offered for Commodity backed warehouse receipt financing

21.

Ø In order to encourage credit off take under Warehouse Receipt financing as also to meet the competition in the market, besides capturing good market share in the business during upcoming Kharif season

“Operation Excel” campaign launched for housing loans 22.

Ø Effort put in by all the Circles resulted in making the FY 2009-10 a very very special year for Home Loans business in the Bank.

Ø Challenge in 2010-11 is to retain the No. 1 position in an extremely competitive market. With the objective of capturing mindshare of the market makers through all-round excellence, this campaign is launched.

A campaign for leasing of new safe deposit lockers and breaking open of lockers whose 100% rent is in arrears is launched by the bank

23.

Ø The campaign has been launched as a part of overall strategy to reduce the unutilisation of lockers and recovery of rental arrears.

RBI has cautioned to be more cautious and vigilant in respect of

inward remittance towards participation in lottery, money circulation schemes

24.

Ø Remittance in any form towards participation in lottery schemes is prohibited under the Foreign Exchange Management Act. 1999.

Ø RBI has now advised that there has been a spate of fictitious offers of cheap funds in recent times from the fraudsters through letters, e-mails, mobile phones, SMS, etc. Branches are, therefore, advised to exercise due caution and to be extra vigilant

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RATIONALES (Collected by G.Vasudeva Prasad, Faculty)

1. Cheque Truncation is being introduced

Ø To Capture image of cheque and restricts their physical movement Ø To speed up the collections Ø To prevent the possibility of frauds Ø To minimize complaints of missing of instruments

2. Data Warehousing and Data Mining are the need of the hour Ø It seeks to centralize a variety of data and data mining attempts to dig into the

data. Ø Its goal is to find out patterns of customer behaviour Ø It helps in designing new products and cross- selling products. Ø CRM heavily draws on these

3. Bank Guarantee are not issued for indefinite period.

Ø These are contingent liabilities which may crystallize into actual liability. Ø The risk of crystallization is very high when guarantees are issued for long/

indefinite period. Ø The bank has to provide for capital adequacy ratio. Ø There are also restrictions by RBI in this regard.

4. SBI Vishesh has been introduced Ø A product for mass affluent gives variety of value added services & special

privileges in order to ensure proper recognition of the underlying relationship. Ø By offering attractive concessions and providing specialized services “class”

customers can be attracted. Ø To face the competition with the new generation private and foreign banks. Ø It will help in making banks image in the eye of VIP customers.

5. Corporate Governance assumes greater significance in the wake of

global melt down Ø To enhance shareholders value. Ø To protect interest of shareholders, customers, employees and society at large. Ø To ensure transparency and integrity in communication and to make available

clear information to all concerned. Ø To ensure accountability for performance and to achieve excellence at all

levels. Ø Kumar Mangalam Birla Committee has given various recommendations on it. Ø To provide corporate leadership

6. BCSBI (Banking Code and Standard Board OF India) has been set up

Ø To establish a system whereby the bank compensates its customers for deficiency in service on the part of the bank based on the principle of transparency and fairness in the treatment of the customer

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7. “BUY BACK” arrangements made by the companies Ø It is an arrangement by which shares issued to equity holders are brought back

by the company. Ø It is done to support market price, to acquire controlling interest, to deploy

surplus funds. Funds for by back should come from authorized sources. Ø It may affect company’s liquidity, profits, EPS, Book value and gearing ratio of

the company

8. A scheme for Best Employee of the Month award has been introduced Ø Recognition is an important public acknowledgement of a person’s abilities and

contributions towards corporate growth and success. It also acts as a power motivator for the employee concerned and acts as a catalyst for encouraging others to strive for excellence

9. Branches have been advised to display the salient features of the revised cheques collection policy Ø Revised policy is based on the principles of transparency and fairness in the

treatment to customers. It encompasses our on going efforts to provide efficient service and sets higher performance standards

10. Market Related Transfer Price Mechanism - MRFTP- has been extended to cover all branches Ø It is a scientific internal fund transfer mechanism evolved to supplement and

Assets Liability Management of the Bank. It helps in ascertaining the true profitability of operating units by making the product prices to the market rates MRFTP has been implemented in CAG/MCG and is extended to NBG

11. Higher margins are fixed for receivables/book debts when compared to raw materials

Ø Realization of receivables/book debts may be difficult Ø Raw materials can be realized quickly as it can be disposed easily

12. We cannot sanction loans against SBI Shares Ø Lending against its own shares would amount to virtual reduction of capital of the

Bank.

Ø It is prohibited under Section 34 (b) of SBI Act and Section 20 of Banking Regulation Act, as well

13. Bank has entered Insurance Sector in a big way Ø To leverage our strengths, namely Brand Equity/Network/Experience Workforce Ø To tap the huge potential in the Insurance Sector, Ø To increase our earnings.

14. The Bank has now paying a great deal of attention to the marketing of its

products and services Ø To cater the increasing needs and expectations of our customers Ø To improve our market share in the competition by creating greater awareness

of our products and services in the market place.

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15. Comments on variances are to be furnished by Branch Manager on the performance Report

Ø To explain as a feedback, reasons for the deviations from the budgeted goals. Ø To enable the controllers to monitor the performance of the branch effectively

and to formulate and implement the required strategies

16. Payment of cheque outside business hours is not made to any person other than the drawer

Ø To have protection under Section 65 of N I Act. Ø To obviate risks like, stop payment of cheque by drawer subsequently, Ø To safeguard the interests of bank in case of death/insolvency/insanity of the

depositor etc.

17. Guarantees issued by bank should have a limitation clause.

Ø To ensure against bank's liability on account of BGs issued for an indefinite period.

Ø To have a control over the liability amount on account of BGs issued by the bank for a period

18. Photographs of the borrowers should be obtained in cases of all

agricultural advances even if they are literate Ø To identify the borrowers/guarantors easily, particularly during the visits to the

villages Ø To ensure better follow-up of advances Ø To enable us for building up relationship by recollecting their names.

19. All loan accounts due for renewal should be renewed promptly.

Ø To have a thorough review of past performance and enables us to assess the future credit needs

Ø To comply with Section 33 of SBI Act Ø To inculcate financial discipline among the borrowers. Ø To avoid classification of such loan accounts as NPAs for non renewal as per

IRAC norms

20. Non interest income is become increasingly important for banks. Ø To tap the potential more profitably Ø For better utilization of available funds/ resources and cost management Ø Due to narrowing interest spreads

21. ATMs are installed in a big way Ø To enhance convenience to customers with round the clock facility for basic

banking transactions. Ø To reduce the cost of transactions for the bank Ø To have advantages of Technology in improvement of business. Ø To have operational convenience at branches by better utilization of human

resources. Ø To meet the competition from other banks.

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22. GRR is an important indicator. Ø One of the scientific efficient parameters to gauge the business growth and

profitability. Ø As a Goal and to have a control over the performance of business.

23. RBI introduced Special Mention Accounts [SMAs]

Ø To identify the accounts with early warning signals and take effective measures against slippage to NPAs.

Ø RBIs directive. 24. Self Help Groups to be encouraged.

Ø It inculcates unity, saving habit among the members, Ø The cohesiveness would help in Asset Creation, through loans from banks. Ø The banks can also build up Quality Assets under Priority sector. Ø To be in tune with Economic Policy of Governments.

25. Bank's name plates should be displayed prominently on all goods

pledged or hypothecated to the bank. Ø It serves as a notice to the public at large about the bank's charge over goods Ø To avoid multiple financing Ø It helps as a publicity tool.

26. The bank has to give due notice to the pledgor, before selling the goods

pledged. Ø A statutory requirement as per Section 176 of Indian Contract Act Ø To have recourse against the borrower for the short fall if any in Sale Proceeds

27. Interest rates are linked to credit rating

Ø Risk Rating is considered to be based on assessment of risk involved in the asset,

Ø Both internal and External factors influencing the health of the borrower is taken into account.

Ø More the risk, more the rate of interest, encourages healthy units with better rating.

28. Inspection of agricultural advance should be "farmer oriented" than

"farm oriented" Ø To have a better understanding of total credit needs of the farmer and to meet

them in time Ø To avoid the farmer to approach money lenders at usurious rates. Ø To encourage Agricultural lending.

29. Banks generally grants advances against goods by way of Cash Credit

only. Ø The allowable drawings in Cash Credit Account depends upon the value of the

goods hypothecated/pledged. Ø to obviate the bank to obtain documents frequently for changes in outstanding. Ø for operational convenience to the borrower,.

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30. On death of partner, cash credit of partnership firm would be closed and new account opened.

Ø To crystallize the liability of the deceased partner. Ø New account is opened to prevent the operation of rule in Clayton's case to the

detriment of the bank.

31. On the DP Note two signatures of the borrowers, one over the revenue stamp and the other by the side of it is insisted

Ø Signature on the revenue stamp cancels the stamp. Ø The other signature proves the execution of DPN by the borrower, even in case

the stamp is de-fixed, thereby bank's interest is protected.

32. Charge of hypothecation is preferable in case of advances to companies Ø Bank can register as secured creditor, its charge with Registrar of Companies

under Section 125 of Indian Companies act. Ø To have preference as secured creditor even in case, with official liquidator

also Ø To have reflection about our charge over assets in the search report.

33. Bank obtains confirmation letter in case of equitable mortgage Ø As an evidence to prove that the title deeds were deposited with the bank

voluntarily, with an intention to create Equitable Mortgage as Security.

34. Bank takes general letter of lien and set off Ø It authorizes the bank to adjust/[set off] with the surplus if any, after the sale

of assets in case of need.

35. Bank cannot have a Demand Draft payable to bearer.

Ø Prohibited as per Section 31 of R B I Act, as it may tantamount to issue of currency note.

36. Banks should obtain personal guarantee of the partners also. Ø Though partners are liable jointly and severally as per Act Ø The personal guarantee obtained by bank helps to proceed against his personal

assets in the event of any future litigation.

37. When a bank draft is cancelled, a receipted discharge on revenue stamp

is taken from the applicant. Ø Upon cancellation, the draft ceases its negotiability. the payment made

against it is settled as a receipt. Ø A receipt attracts Stamp duty as per law.

38. Job rotation should be undertaken at regular intervals. Ø It facilitates to review and analyze the work load and proper distribution is ensured-

with a view that,

Ø the employee should not experience monotonous and lacks enthusiasm Ø to provide opportunity to all the staff members for a reasonable exposure and

job enrichment Ø Also as a measure of preventive vigilance to avert frauds.

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39. Comprehensive Insurance in respect of a vehicle financed by the bank is

obtained in the name of the borrower only Ø If bank's name is included, it will become as a co-insurer and stands liable

under litigation of any kind. Ø However suitable noting is made as financier Ø to avoid claims by third parties arising out of any accident

40. Margins are maintained for advances

Ø To ensure borrower's involvement through his stake. Ø It is also provision to absorb cost escalation and to meet unforeseen

contingencies

41. The bank is paying great deal of attention of marketing of its services. Ø To retain its position in the market with severe competition. Ø To make its products and services reach its customers Ø to leverage its strength of Brand Equity.

42. NPA are a drain on profitability.

Ø NPAs effect reduction in profitability, on the one hand they do not earn any income and on the other hand, it attracts provisioning thereby erodes earned profits.

Ø The maintenance cost also more by way of legal expenses, insurance premia etc.

43. Although we obtain partnership deed, we insist for partnership letter.

Ø As per partnership letter i.e. COS 37, partners undertake to advise the bank about any changes in the constitution of the firm and also they abide by the terms of opening of account and mode of operation

44. Registration of Partnership is optional Ø Non registration of firm does not affect the bank's right to sue the firm and its

partners. Ø Registration helps the firm to sue others for its dues, in its own name.

Registration however, Indirectly it helps the banker as lender to the firm

45. A cheque payable to a partnership firm cannot be credited to a partner’s account,. Ø The relationship between partners in a firm is of fiduciary nature. Ø In case of such payment, bank will be liable for conversion.

46. Bank is liable for any damage caused to articles in safe custody.

Ø In case of safe custody, the relationship between the bank and the customer is that of bailee and bailor.

Ø In terms of Section 151 of Indian Contract Act, as bailee for the goods received, bank has to take utmost care in keeping the goods as a prudent person without negligence.

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47. All instruments received for credit to an account either by post or over the counter must be branded with the Bank’s crossing stamp

immediately on receipt. Ø To indicate Bank’s interest as agent for collection of the instrument. Ø To prevent from putting the instrument to improper use by unscrupulous

persons with a view to defraud the bank 48. A letter of disclaimer has to be obtained while accepting cash from the

person who comes to the bank for closure of a gold loan account of the deceased constituents without production of legal representation.

Ø To prevent the remitter from claiming the ornaments with some rights as remitter..

Ø To make him join as a party to the letter of indemnity/surety., along with other legal heir against future litigations.

49. SBI HAS INTRODUCED CENTRALISED COLLECTION & CLEARING system

Ø To reduce the delay and to ensure speedy clearance of instruments received for collection/clearing

Ø to improve Bank’s image in these areas.

50. No advance is granted against other Bank’s TDR Ø The issuing bank has a paramount lien, therefore may refuse to mark lien on

TDR Ø RBI’s directive Ø To prevent unhealthy practices Ø To prevent misuse of facility by unscrupulous persons to defraud banks

51. No advance is granted to partly paid shares

Ø To avoid forfeiture for non payment of unpaid calls by the bank Ø The unpaid call amount is the contingent liability for the lending bank Ø Prohibited by RBI

52. Overdraft is sanctioned against Gold Ornaments

Ø Convenient to the Customer to save interest cost Ø Availability of Technology to accommodate such products. Ø As the Market value of Gold is fluctuating, the borrower can be asked to remit

the amount for security coverage. Ø To meet the competition from other banks and also money lenders.

53. Gestation period is allowed for Term Loan

Ø To consider the normal time to complete the project and commence commercial production to generate income to service the debt

54. FERA has been replaced with FEMA

Ø To amend the rules in tune with Nation's new Economic Policy towards globalisation

Ø From regulating to management.

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55. Capital Adequacy norms are being tightened every year Ø In the present dynamic environment, it is necessary to have adequate capital

to absorb different kinds of business risks. Ø To meet the Global Standards

56. Staff Suggestion Scheme introduced

Ø To strengthen the organization through staff involvement. Ø To encourage staff members in achieving the organizational goals Ø To foster commitment of the staff members.

57. Consent of guarantor is necessary for rephasement of TL

Ø Rephasement of Term Loan is considered as a material alteration and requires consent of all parties including the guarantor

Ø To enforce guarantor’s liability as per section 133 of Indian Contract Act.

58. Requests for extension of due dates of usance bills are not generally

granted by the drawee branch/bank Ø Drawee Bank/Branch is the agent for collection of amount under the bill, and

not conferred with any right to grant such extension. Ø As per section 135 of Indian Contract Act, such grants by an agent, would

release all earlier endorsement from any liability.

59. In case of illiterate borrowers/guarantors, the thumb impressions should not be attested on the documents. Ø Documents are to be signed by the executors only. Ø In case of illiterate borrowers, a separate letter signed by witnesses is obtained

stating that they have explained the borrowers in their known language, the contents of documents.

60. Form "A"/SME-6 has to be sent to us by post by the borrower/guarantor,

a day after the creation of equitable mortgage. Ø Form A/SME-6 is a letter confirming, that depositor has willingly delivered the

documents with an intention to create security against loan. Ø If dated the same day, it amounts to memorandum, and may attract stamp

duty. Ø To avoid legal complications.

61. An account should not be opened in the name of un-discharged

insolvent.

Ø The property of un-discharged insolvent vests with official receiver. Ø Any contract with un-discharged insolvent is not valid as per law.

62. Advances are not granted to minors.

Ø Contracts with minors are void ab-initio as per section 11 of Indian Contract Act Ø Minors can bind all others to the contract except themselves.

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63. Documentary bills are preferred to Clean Bills Ø Documentary bills, hold the documents to title of goods, hence considered

genuine trade transactions. Ø In case of need as an endorsee, the bank can acquire the goods under the

document and put to sale.

64. In granting advances, viability is more important than the security offered.

Ø To ensure booking of need based loans Ø Viability ensures income generation persistently, accordingly the repayment is

fixed Ø to ensure quality assets for the bank.

65. The payee of a cheque cannot stop payment of the cheque.

Ø Payee of cheque has no privity of contract with the bank. Ø Hence bank need not follow the instruction of the person other than the

drawer.

66. Our charges are to be registered with Registrar of Companies within the

stipulated time. Ø To comply with the terms under Indian Companies Act. Ø Any delay would effect in losing the priority charge over the assets and the

loan becomes unsecured.

67. We obtain a Demand Promissory Note from the Borrower in addition to

the ornaments pledged to the Bank while sanctioning a Gold Loan Ø Demand Promissory Note construes the personal liability of the borrower and

can be enforced independently Ø The pledge of ornaments enables the bank to proceed with sale to recover the

dues and in case any short fall, the bank can proceed against DPN

68. Before granting an advance to company, its Memorandum and Articles of Association should be scrutinized. Ø Memorandum of Association declares the objectives of the company and any

finance ultravires to its objectives, would nullify the whole contract. Ø Articles of Association declares the borrowing powers of the board of the

company, and Ø verification ensures the eligibility to borrow by the company.

69. A Bill of Exchange is deemed to be due on the preceding business day

when its actual date of maturity falls on a public holiday Ø In terms with Section 25 of Negotiable Instruments Act. Ø If paid subsequent to due date, it can be construed as invalid.

70. SBAR is changed with every change in the Bank Rate Ø Bank Rate of RBI at which refinance is available to other banks. Ø SBAR required to be changed as per market rates Ø Rate of Interest on loans are linked to SBAR Ø Change in SBAR automatically changes the effective rate of interest on loans.

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71. Bank has been introducing New Schemes. Ø To have tailor made products to the customers Ø To have a competitive edge in the market Ø To improve profitability Ø To have leverage of bank's strengths and technology.

72. Items in the course of collection are not attachable by Garnishee Order

Ø Garnishee order issued by a Court attaching the sums due by a bank to the judgment debtor, therefore does not cover future credits.

73. TDRs maturing on Holidays are paid on the succeeding working day but not on the

preceding working day.

Ø TDRs are not negotiable instruments and does not attract terms as per Sec 125 of NI Act

Ø TDRs are in the form of Receipts for the monies deposited payable on maturity date. Any payment before maturity date will be treated as pre-mature payment.

74. SBI has entered into Credit Card Business

Ø To meet the customer needs Ø to be competitive in the market Ø to tap the potential with higher returns Ø to leverage Bank's strengths like, network of branches Brand equity and larger

customer base.

75. Branches are subjected to inspection & Audit at irregular intervals Ø To ensure that branches are adhering to banks laid down instructions and are

in tune with it growth policies. Ø To strengthen the systems in order to safeguard the interests of customers at

large Ø to maintain the bank's image with robust systems Ø As a feed back mechanism with reports to make strategies to meet its goals.

76. All the documents under LC should be as per the exact terms and

conditions of the Credit. Ø LCs are governed under UCPDC Ø As per UCPDC, all the parties under LCs deal only with documents and not with

goods Ø Hence to confirm that the documents are in order and not leaving any room for

misinterpretation

77. All forex transactions are now delinked from Branch Clearing General

Account and routed through Forex Clearing General Account Ø For easy reconciliation of Forex Transactions with exclusive arrangement Ø To minimize risk with cover operations Ø The operations at branch also becomes easier

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78. Bank does not negotiate/transact foreign exchange transactions for large amounts on Saturdays

Ø International Money Market is closed on Saturday, therefore it is difficult to cover the transactions in minimizing risk of Exchange Fluctuation.

79. RBI has advised all scheduled commercial Banks [ASCB]to move on to

changing of interest of monthly rests w.e.f. 01/4/2002 Ø To enable the borrower to service the interest with smaller amounts Ø To comply with 90 days norm for recognition of assets. Ø the monthly interest application and servicing it, would be mutually convenient. Ø With technology support, it is found no difficulty interest at monthly intervals

80. Cash back Scheme has been launched for use of ATM Cards at Point of

Sales/Merchant Establishments. Ø As a marketing initiative to encourage customers to use ATM Cards for their

purchases at POS also Ø To propagate ATM Cards as Debit Cards in lieu of Credit Cards Ø The use of ATM Cards at POS also earns income for the bank, a part of which

is being shared as an initiative. Ø leveraging technology to reduce Transaction Costs

81. Merger of banks is gaining importance

Ø To have synergy in their business operations to improve market share Ø to meet capital adequacy norms Ø to have presence in the global market.

82. RBI has introduced Rs.1000 denomination currency notes.

Ø To meet the demand in the expanding market with circulation of higher denomination notes at lower transaction cost

83. NOSTRO reconciliation has been given top priority

Ø To avoid provisioning for long period unreconciled entries Ø to improve image of the bank against pending unreconciled entries

84. It has been decided to use STEPS for transmission of realization advices

of DDP instruments eg. e-Realization Ø to ensure speedy reconciliation of outstanding entries Ø to ensure safety and security of message transmission

85. Expired Bank Guarantee and LC are to be reversed periodically

Ø To exercise better monitoring and control Ø to avoid provisions of capital on expired BGs/LCs

86. Affixing of Hologram is compulsory on letter issued by the bank to

Regional Transport Authority for cancellation of Bank's Lien.

Ø To ensure additional Security Ø To recognize the genuineness of the advice.

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87. Commission of Re 1/- per section is levied to Non-Currency Chest branch of other banks by Chest Branches.

Ø RBI directive Ø To rationalize the costs involved, Ø to provide incentive to chest branches.

88. Periodical verification of Staff accounts should be done by the Branch

Manager

Ø To have control over transactions in the accounts of staff members Ø to have a check on unusual credits to the accounts of staff members Ø as a measure of preventive vigilance

89. Banks have been liberalized to pay floating rate on deposits and charge

fixed rate of interest on advances. Ø To have control and better management of Asset Liability Management [ALM]

risks in the dynamic market environment Ø to meet the competition

90. Centralised Credit Processing Cell has been established

Ø To standardise the whole process with increased volumes Ø To reduce Turn Around Time Ø To improve quality of assets with specialized skills in a focused way Ø To enable branches to give more focus on marketing and sales besides

servicing.

91. RBI has stipulated the payment of interest on delayed collection of cheques Ø To strengthen the cheque collection system, among banks and improve

customer service. Ø To adopt technology to expedite the cheque clearing system Ø to discourage delay in service

92. Validity of draft is restricted to 6 months

Ø for better reconciliation Ø to avoid circulation of drafts for unlimited period Ø to discourage holding of drafts for hoarding purposes

93. SBI KISAN Gold Card Scheme has been launched

Ø To encourage timely repayment culture among farmers Ø to facilitate banks in assessment of total needs of the farmer including his

consumption needs Ø to provide more flexibility and convenience to farmers in operating the loan

accounts Ø To reduce transaction cost in Agricultural Banking for the bank Ø To give more thrust in Agricultural Finance

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94. All letters and Dak received at the branch are opened in the presence of the branch manager daily.

Ø To ensure a better control and follow-up over the inward dak Ø To ensure that all the cheques/instruments received for collection or otherwise

are properly accounted for and instructions are followed without delay Ø to ensure that all the letter received are attended by the branch without delay

in correspondence Ø To ensure overall control of external correspondence by the BM and smooth

functioning of branch without complaints

95. Why relationship Banking is considered as a key to customer satisfaction Ø Since banking is in service sector, the approach makes the bank to understand

the customer needs and deliver the services to his utmost satisfaction Ø To win over the customer in the competitive market Ø To make reach to the customer the bank's different products, and to create

opportunities for cross selling of other products.

96. Rectification of irregularities in inspection and audit report should receive top priority

Ø It reflects the over all functioning of the branch's business and administration Ø Enables to identify the weaknesses in carrying out the laid down instructions of

the bank and guides to plug the same and to ensure efficiency Ø To enable the branch, in having a goal setting and work for it with involvement

of staff with enthusiasm Ø An opportunity to dealing staff to understand the risks and for improving their

work culture.

97. Bank has promoted a Code of Fair Banking

Ø To educate customers and make the staff prepared for Ø To have transparency in operations Ø To improve image of Bank with improved governance

98. Double passing of cheques has been introduced

Ø To have extra caution in dealing with high value transactions Ø To prevent frauds in high value transactions

99. Open Term Loan facility for manufacturing sector introduced

Ø To provide more convenience to borrower customers in procuring quality assets at competitive prices

Ø To enable them to have a better plan of capital expenditure

100. Agrl Inspection norms are modified recently

Ø To maintain a closer relationship with farmers in order to understand his financial needs and to market our products.

Ø To ensure effective follow up for early warning signals Ø To improve quality of assets

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101. Credit Audit is being given importance Ø To improve quality of high value assets Ø To have a feed back mechanism on compliance with RBI guidelines as well as

Bank’s Loan Policy guidelines.

102. New CRA Model introduced Ø To have a rational approach Ø To understand the market dynamics in competitive environment Ø to improve the assessment of risk in compliance with changed environment

and CAR

103. BPR is being introduced in the Bank Ø to be in tune with changed economic, market scenario and to meet the

customers’ expectations Ø to leverage bank’s strengths, by adopting technology at reduced cost, with

market orientation focusing on customer convenience and changing market dynamics

Ø to compete with other banks and retain bank’s premier position

104. Loan policy guidelines are issued by bank Ø To communicate down the level of operation about bank’s credit goals with

clarity and equip them to meet the competition effectively Ø In order to review from time in tune with changing market/economic scenario

105. Training Centre has been renamed as Learning Centre

Ø To bring meaningfulness in bank’s HR policy with participative approach in knowledge transfer among the employees

Ø To communicate the need for acquiring the required skill by the employee in the challenging market environment

Ø To create self need among staff members for over all improvement of the organization.

106. Consent clause is incorporated in the loan document

Ø RBI directives Ø To safe guard the interests of banks and financial institutions in India against

willful or other defaulters Ø To bring more cohesiveness among the bankers in dealing with defaulters

107. Banking Codes and Standard Board formed

Ø To ensure fair treatment of customers and create healthy competition among banks by observing minimum standards

Ø To protect the interests of the customers against exploitation from banks

108. RTGS introduced by RBI Ø To facilitate speedy transfer of funds among banks and for their customers

by leveraging the available information technology Ø to have credit based fund transfer instantly without much delay Ø To strengthen the clearing/remittance facility

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109. No frills accounts introduced

Ø to expand banking services to needy customers Ø to have leverage of technology to increase customer base with advantage of

costs Ø to compete with other banks Ø in tune with nation’s policy for financial inclusion

110. CBS implemented

Ø to meet customer needs and provide convenience to have his transactions at any branch of the bank

Ø to have effective control and management of information for bank’s development strategies.

111. Strategic Business Units have been set up

Ø to have more focus in tapping the available market potential for profit maximization

Ø to have care and concern for the customers in a focused way Ø to work out strategies in improving market share

112. GBU (Government Business Unit) has been set up under NBG (National

Banking Group) Ø Government business constitutes sufficient portion of our income and are low

cost income. It also mobilizes low cost deposits. That is why; it is now target of private sectors bank and other commercial banks.

Ø Secondly, there is no monopoly of our bank on this in present time and portion of it has been taken by new players in the market. The new positions (i.e GBU under NBG,) have been created to keep required focus on this and meet the enhanced competition.

Ø This strategic business unit will help bank to develop proper policies in changed business condition and keep our share intact.

113. Negative variance is better than Negative Growth

Ø Negative growth means loss of existing business. Ø Negative variance means budgeted growth has not been achieved. Ø It is difficult to make up the lost business.. Ø This shows the gravity in case of negative growth

114. Alternate Channel in need of the hour

Ø Several alternate delivery channels such as ATM, Phone banking, Internet banking, etc. will provide customer satisfaction and convenience.

Ø It will decrease the crowd at the counter and give free time to branch operative to sell and market products.

Ø It will help to improve market share and quality of business. Ø It will help our bank to retain undisputed leadership in India and compete

effectively with new forces of the market

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115. SBI is introducing USGAAP Ø It will improve the existing accounting system in the line of best international

practices. Ø It will improve transparency in the financial statements, which will enable the

bank to raise resources abroad. Ø It will also help in getting bank listed in foreign stock exchange. It will fetch

better credit rating

116. SBI has introduced Performance linked incentive scheme for its Personnel Ø Salary and perks of PSB (Public sector Bank) officials are less in comparison

to that of New Private sector bank and Foreign Banks. Ø As the salary and incentive of our bank should be in tandem with the

competitors to meet the emerging need of the bank and to keep the good officials in the fold the bank.

Ø This will motivate the officials and ensure superior performance. Ø It will also help to retain best and experienced employees in the bank

117. Password security is observed in Branch Ø Password security protects bank and safe us from future loss and misuse by

fraudsters. Ø The sensitive information can be used by unscrupulous elements for own

vested interest. Fraud committed can cause loss to individual, organization. Ø More than that it can cause reputation loss for the organization.

118. Currency Administration Cells were established Ø Aimed at optimization of currency balances at branches, movement planning,,

insurance clauses and security arrangements. Ø The cell would be located at a main branch with computer, fax, mobile

phones, currency chest boxes, currency vans etc. Ø Kubera software developed by BPR Team for optimization of currency

branches, route planning, automated printing of TR advices etc

119. A Memento is presented to an employee on retirement Ø Retirement is an important landmark in the career of our staff. Ø It will strengthen the emotional bondage between the Bank and dthe

employees. Ø It will also beneficially impact the motivation of staff to the organization

120. Bank has introduced revised In-branch cash handling process Ø There will be no delay in starting cash transactions at the beginning of the

day. Ø The process will reduce the time spent by CO/CIC/SWO//Asst.(cash) in

handing over of cash both at the beginning / close of the day. Ø It is one of the BPRs initiatives

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121. Proceeds of a clearing cheque cannot be credited to Government account unless the stipulated return clearing hours are over

Ø The Govt. Account cannot be debited in the event of cheque being dishonored and it takes a very long time for recovering the same from the Government

122. Proper control should be exercised in the despatch of Bills/Cheques

Purchased/Negotiated

Ø To ensure that unscrupulous persons cannot manage to remove the instruments surreptitiously and take delivery of the goods from transporters by forged endorsements of the Bank

123. Railway Receipts accompanying bills given to the Bank for negotiation

should not be older than 7 days from the date of negotiation Ø Otherwise, the goods might have arrived at the destination; the risk of goods

being taken delivery by the consignee by executing an indemnity is also there. Further, at a few larger centres, the Railway authorities may sell the goods if they are not cleared by the consignees within 7 days

124. The Bank’s interest in goods covered by BL, RR etc., should be advised

to the carrier Ø To obviate the possibility of the consignee obtaining the goods by executing

indemnity. Such notice is given in respect of BBRs/ DBRRs, in which cases the Bank has advanced against the bills

125. Usance bill has to be stamped whereas Demand bill is not stamped

Ø Usance bill is payable only after a fixed tenor from the date of the bill or from the date of acceptance of the bill. Once it is accepted the liability of the drawee is established. It has to be stamped as per the Stamp Act. An unstamped usance bill will not be accepted in the court as evidence in the even of litigation. A demand bill is payable on demand or on presentation and does not require to be stamped as per Stamp Act

126. No employee at the branch should handle the Clearing

Desk/Department for unduly long periods Ø So that no vested interests are developed and committing of frauds averted.

To remove monotony in the routine job over a period of time

127. Banks declare quarterly results Ø As investors require more frequent dissemination of information on the Bank’s

performance and our Bank’s equity share is one of the index makers in the stock exchanges, a need is felt to prepare quarterly results

128. We deduct from the gross worth of a firm the minor’s share in the

assets Ø Minor’s share in the assets cannot be charged against the debt of the

partnership as he is admitted only for the benefits of partnership

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129. Certificates of Deposits are introduced in the Banking System Ø To widen the range of money market instruments and to provide wider choice

to corporate investors for profitable investment

130. A banking holiday should be declared a public holiday under the N.I.Act,

1881 Ø As it is required under Sec.25 of N.I.Act, 1881. As the banks deal in

negotiable instruments, they can not stop business unless holiday is declared under the Act

131. Concurrent Audit is conducted at bigger branches

Ø To trace out errors for their rectification on an ongoing basis. To avoid accumulation of large irregularities difficult if they are not pointed out immediately, to check whether the Systems and Procedures are followed meticulously, to plug income leakage. To verify documentation of loans sanctioned with a view to protect our interest in case of legal disputes and to facilitate easy conduct of Central Office Inspection and Audit

132. Books of the Bank are closed once in a financial year Ø As per SBI Act and RBI Act, Bank’s Books and Registers have to be balanced

and closed as on March 31 every year, to present them to Statutory Auditors and submission to Central Government after certification, to arrive at net result of our operations during the year and to determine Bank’s Tax liability

133. All Banks have to maintain CRR Ø To check inflation, to regulate money supply, it is a credit control mechanism.

It is a credit policy measure

134. Items in the course of collection are not attachable by Garnishee Orders

Ø Because in the case of collections the Banker-Customer relationship is that of Agent and Principal but not that of Debtor and Creditor. Garnishee Orders are issued for funds due but not becoming due

135. Minors cannot be adjudged insolvent Ø Because Minors have no capacity to contract in terms of Sec.11 of Indian

Contract Act

136. The Bank has recognized Training as an important intervention

Ø To meet effectively the growing needs of the changing scenario and environmental compulsions and not to lag behind in the competition, towards increasing knowledge and skills in employees, towards facilitating attitudinal changes

137. The Bank has been placing continuous emphasis on the simplification of

Systems & Procedures Ø With the objective of improving work efficiency, accounting practices,

Customer Service, productivity and reduction in costs and time, rationalize systems and procedures by removing outdated and obsolete practices. To remove wrong notions in the minds of customers, staff and other bank that delay in service at SBI is due to lengthy systems and procedures

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138. The weighing scales and the weights must be certified by the Controller of Weights and Measures annually

Ø The use of unverified weights, measure, weighing & measuring instruments is an offence as per sec 264 of IPC and Sec 153 of Cr.P.C

139. Certain large advances Branches are subjected to RBI Inspection

Ø Under Sec.35 of RBI Act such inspections are carried out to ensure proper compliance of various policies and norms of credit framed by RBI from time to time

140. Greater importance is attached to Asset-Liability management (ALM)

Ø Because there is an inherent risk for the banks in the asset-liability mismatches. A mature asset-liability management exercise enables banks to properly deploy funds and avoid risk of running short of liquidity

141. Passing and Signing Powers of Junior Management Grade Scale I

officers have been enhanced Ø Upward revision called for in the context of inflationary impact on the value of

the rupee; to reduce delays and improve customer service at branches

142. Cash officer to carry out intra-day cash verification at the cash counter(s) at irregular intervals

Ø To reduce incidence of frauds committed at cash counters by employees with fraudulent set of mind. To curb tendency of some of the employees working at the cash counters to pocket money without accounting the same in the Bank’s Books

143. Interest is paid on delayed collections of cheques

Ø Goiporia Committee’s one of the recommendations on customer service is to compensate the customer for interest loss & not to put the customer to inconvenience due to the bank’s inefficiency, to increase the efficiency of staff in collection area by prompt despatch of instruments, to project better image of the Bank

144. Resolution is insisted for opening an account in the name of a Limited

Company

Ø The Company being an artificial person having separate legal entity can act only through the resolution passed by the Board of Directors/Authorised Officials. The Bank will get the specific instructions as to how to open and operate the account of the Company. Non-compliance may lead to litigation

145. Nominee’s Signature is not obtained on the nomination form(except in

case of Senior citizen Deposit accounts) Ø Not required as per the B.R. Act, to maintain secrecy from safety angle.

Nomination is subjected to change any time at the instance of the original parties to the contract.

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146. Payment of a Bank draft cannot be stopped Ø Bank receives value well in advance and cannot go back on its own promise

to pay the Money. The Bank becomes trustee of the funds for the payee. The payee might have got the title to the draft by providing some consideration

147. Account’s not opened in the name of undischarged solvent

Ø Undischarged solvent cannot enter into a valid contract as all the rights are vested with the official receiver or assignee. To avoid any legal complication

148. Operations are not allowed in the account of partnership firm on death

of a partner Ø On death of a partner, partnership firm stands dissolved. To avoid application

of Rule based on Clayton's case, to crystallize the exact liability of the deceased partner as on the date of his death, No liability to be casted on the legal heirs after the death of the partner

149. A search is to be made with Registrar of Company before and after

granting an advance to Limited Company

Ø To ensure that no prior charge exist over the securities offered before granting advance, to ensure that our charge is registered., To protect the Bank’s interest at ROC

150. Trust Deed should be verified once in a year

Ø In order to ensure that the instructions of annual compliance nature in the Trust Deed are not overlooked. Non-compliance may lead to litigation

151. Confirmation of debit balances on COS 48 are to be stamped

Ø Obtention of balance confirmation amounts to an acknowledgement of debts and extending the period of limitation under the Limitation Act. Any acknowledgement of debt requires to be stamped under the Indian Stamp Act

152. Hypothecation is preferred to pledge for advances sanctioned to limited

companies Ø Hypothecation charge is registered with the Registrar of Companies, which is

a notice to the public and hence the interest of the bank is protected but no registration is warranted in case of pledge as per Indian Contract Act.

153. e-Rail facility a new technological initiative

Ø This is one of the technology based business innovation which facilitates Online Rail Ticket Booking., Provides Customer convenience and value addition to customer service. An opportunity to increase fee based income of the Bank’s besides competitiveness of the bank

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154. Pledged goods can not be sold without notice to borrower Ø As per Indian Contract Act. Sec172 pledge is bailment of goods i.e. ownership

with pledger & possession with bank. The pledger can procure a better bidder in the interest of himself as well as the Bank, to avoid legal complications arising out of any possible objections by the pledger. For Ex. the stocks are being sold cheaply

155. Maturity proceeds of time deposits of RS. 20,000/- and above should

not be paid in cash Ø Required in terms of Income tax act, this is to curb benami transactions

leading to tax evasion

156. A cheque drawn by a Director of a company on its account can be paid

even after the death of the director Ø A company is a legal entity with perpetual succession. As the director is

operating in his representative capacity and not in individual capacity, such cheques can be paid even after the death of the director

157. Chequebooks are not issued on current accounts opened for public

limited companies while accepting their share application monies etc., into the account Ø In the event of the company failing to obtain the minimum share money as

prescribed and thereby the certificate of commencement of business, the entire balance should be refunded by the bank to the applicants. If a cheque book is issued, Cheques drawn have to be paid by the bank, if they are in order. It may not be impossible to refund the money to applicants

158. A person who has signed the letter of relinquishment need not join the

execution of indemnity letter Ø Signing relinquishment letter implies surrendering of his right or claim not

only in his share in the property but also absolving himself of future legal liability towards the bank and other legal heirs

159. On the death of one of the joint depositors, the survivor does not get

absolute right over the property Ø Section 45 of Indian Contract Act, 1872 provides for repayment of monies

received from joint depositors, on the death of one of them, jointly to the survivor and the legal heirs of the deceased. Survivor holds the property in trust for the legal heirs of the deceased

160. Branches have to maintain a separate record for receipt and disposal of

IOA memos in the specified format

Ø To have an effective control over record of the IOA Memoranda received, dealt with and pending to facilitate scrutiny by higher authorities and to ensure due attention to high value items. This is also to obviate the possibility of keeping away of IOA Memos unattended to

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161. Term Deposit Receipts cannot be presented through clearing Ø TDRs are Non-transferable receipts. They are not negotiable instruments.

Clearing is meant for settling transactions between banks on account of negotiable instruments

162. Partnership Letter (COS.37) is obtained from partnership concern when

an account is opened Ø It restricts the implied authority of the partners and imposes an obligation

that any change in the partnership is to be informed to the Bank. This also makes all the partners liable jointly and severally

163. On the death of a partner or whenever there is change in constitution of

the firm the account should be closed and reopened

Ø It enables the Bank to quantify the liabilities of the partners in the dissolved firm and to guard against operation of the Clayton’s rule

164. An endorsement transferring the amount of a TDR to a third party is not

admissible Ø The TDR is only a receipt, which is not transferable. It cannot be transferred

by endorsement and delivery. It is payable to the depositor or nominee or the survivor on due date as per established and recognized rules in force

165. Safe Custody Receipt must be produced at the time of taking delivery of

the securities, while memorandum of securities is not insisted upon Ø Memorandum of securities is a mere acknowledgement while Safe Custody

Receipt is a receipt against deposit of articles

166. The Bank is responsible for not taking reasonable care of an article kept

in Safe Deposit, which was damaged due to improper/negligent handling by the Bank’s Staff and absentmindedness

Ø As per Section 151 of Indian Contract Act, a bailee must take as much care of bailed articles as a reasonable man of ordinary prudence would take care of his own articles

167. A nominee is authorised to demand premature payment of a TDR

standing in the name of a depositor who had nominated him the

nominee and later died i.e. before the maturity of TDR Ø The nominee has the same rights as that of a depositor after the death of the

depositor

168. A bearer draft is not issued Ø Issuance of bearer drafts by banks is prohibited by Sec.31 of RBI Act. This

will tantamount to issuance of currency, which right is vested with RBI only. Infringement is an offence punishable under section 55 of RBI Act

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169. A standard register is maintained for recording details of settlement of deceased constituents

Ø To ensure proper follow up and to expedite formalities for disposal of claims of legal heirs. To record claims received in chronological order and to avoid complaints for delay in settlement

170. When Cheques are returned to the Constituents, the Bank’s crossing

stamp and register number, if any, must be cancelled

Ø To avoid any liability as an agent for the collection of an instrument

171. Whenever a minor partner attains majority, he should be asked to sign existing partnership letter in addition to the fresh partnership letter Ø To ratify the previous transactions and to bind himself for future transactions

and to make him accept joint and several liability along with the other partners

172. A Power of Attorney must be definite and not conditional

Ø Because the failure to fulfill the conditions may automatically cancel the Power of Attorney and jeopardize the interest of the Bank

173. Production of legal representation is not required for disposal of money

left with the Bank in the case of deceased Army and Air Force personnel

Ø Such property is governed by the provisions of the Army and Air Force (Disposal of Private Property) Act, 1950. (Letter from the Commanding Officer of the unit is sufficient to pay the money to the dependants of the deceased)

174. While canceling a duplicate draft, when the original is lost in transit,

consent of the payee is necessary

Ø It is to be ascertained whether the payees claim in respect of the draft has been satisfied and payees express consent is to be obtained in writing. The bank becomes a payee once a draft is sent to the payee trustee

175. While issuing duplicate Demand draft, the original draft voucher is to be

kept with the letter of indemnity Ø To facilitate easy verification by inspecting officials and to produce the same

as evidence in legal disputes

176. Bank can not stop payment of its own draft Ø On issue of a draft, Bank takes the role of trustee to the payee as such; Bank

cannot go back on its own promise to pay the money which was received for consideration

177. The Bank does not accept Security of the LIC Policy taken out for the

benefit of wife/child/children Ø As per Section 6 of the Married Women’s Property Act, any insurance policy

issued for the benefit of wife and children is protected as they may not have independent source of income to pay the remaining premia in case of any unto ward happening to the earning member

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178. The depositors of SBI are called Unsecured Creditors

Ø As they have no charge on the assets of the SBI they do not hold any security

179. Dishonored cheques do not require noting and protest Ø Cheque, though a bill of exchange for all interpretations, is payable on

demand. Reason for dishonor is given by the paying bank. Noting and protesting is available for Bills only

180. While advancing against the security of TDR, we do insist on its blank

(undated) discharge Ø As the dated discharge amounts to premature withdrawal, which attracts

penal provisions as per RBI Directives and to enable us to proceed against legal heirs, in case of customer’s death, to recover our dues if the proceeds of the TDR are not sufficient to liquidate the loan amount

181. Current account cheques are treated as security forms but the saving bank withdrawal forms are made available freely Ø S.B. Withdrawals are not negotiable instruments. They are meant for

personal withdrawal on the counter.

182. Cheques presented after business hours are not paid

Ø As such payments are not considered as payments in due course under Sec.10 of the N.I.Act and to obviate any liability if the payment proves to be defective. Sec.65 of N.I.Act provides for payment of negotiable instruments during banking hours

183. Cheques payable to joint stock companies should ordinarily be credited

to their accounts Ø To make the payment in due course and to get protection under Sec.10 of

the N.I.Act, 1881. They represent the property of the company. Hence, if credited to others account, it amounts to wrongful conversion and bank gets no protection

184. We insist on a crossed cheque being credited to the Holder’s Account in a bank rather than to pay the Holder over the counter even when the Holder is identified to the satisfaction of the Bank

Ø As per Sec.126 of N.I.Act, 1881 the Paying Banker gets protection only when he pays the amount of Cheque to the Account Holder. Further, it is a direction to the paying banker to pay the amount only through the payee’s account

185. The Customer is under no obligation to acknowledge entries in Pass

Book/Statement of Account. Ø The entries in the Pass Book are not conclusive, binding and/or

unquestionable on both the parties (in India & UK). Express agreement by balance confirmation letter alone is conclusive of transactions.(However, in USA silence of the customer on receipt of the Pass Book/Statement confirms the correctness of entries)

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186. Reasonable Notice must be given by the Bank before closing an unsatisfactory account

Ø Account is a bilateral contract. Bank cannot unilaterally close the account and terminate the contract. This is to obviate chances of litigations and thereby not being made liable for wrongful dishonor of Cheques issued on the account

187. Branch Manager should examine all Trust Accounts & Deeds periodically

Ø Trust Accounts are fiduciary in nature and it must be ensured that their provisions are not overlooked because any violation is there it lands the Bank in trouble for refund of monies to the beneficiaries

188. Private Limited Companies can start business on getting Certificate of

Incorporation itself Ø Such Companies do not invite Public subscription to their Capital and

statutory requirements in this regard are not necessary for them to follow. They need not wait for the certificate to commence business issued by the Registrar of joint stock companies

189. SB Accounts are not to be opened for Firms/Companies

Ø SB accounts are purely meant for individuals with a view to encourage and inculcate savings habit in them but not for business purposes. SB Accounts cannot be opened for profit oriented commercial organizations as per Income Tax Act

190. SB Withdrawals not accompanied by Pass Books should not be paid

Ø Withdrawal Form is not a cheque and is only designed to suit the convenience of Depositors of non-cheque operated accounts and to obviate chances of frauds by forgery by unscrupulous persons

191. TDRs maturing on Holidays are paid on the succeeding working day but

not on the preceding working day Ø Bank holidays are declared as per Sec.25 of NI Act with specific reference to

payment of Negotiable Instruments which are paid on the previous working day. TDRs are not NIs but are receipts of monies deposited. Their payments can not be made before maturity date as per Contract lest they should become premature payments

192. Delayed payments of RD installments are penalized

Ø To ensure against investment of the RD installments in some other accounts on which interest earned is more than the penalties payable by him on delayed installments

193. Branch Manager should scrutinize Staff accounts at Quarterly intervals

Ø To ensure that the inflows of monies, spending and life style of Staff Members is of usual nature commensurate with the known sources of income and they are properly conducted

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194. The prospective Current Account Depositors have to sign an undertaking while opening a Bank Account

Ø This is to obviate possibility of lodging of Cheques in the Current Account of another Bank other than the Bank granting credit limits as the outstanding in the lending Bank become unsecured

195. Current Account Formality Register should be maintained

Ø To ensure that no single formality while opening the account is overlooked and to serve as a reminder to complete the formalities remaining to be attended to

196. Gold Deposit Scheme has been introduced

Ø To mobilize domestic gold and recycle it for economic purposes. To reduce Country‘s reliance on import of gold and to help the depositors in earning income on gold by way of interest

197. Succession Certificate not to be insisted upon irrespective of the

amount involved for settlement of claims of deceased constituents Ø RBI directive on payment of balance in accounts of the deceased customers

to legal heirs without insisting on succession certificate

198. Accounts can be closed if bouncing of cheques is continuous

Ø Irregularly conducted accounts are a source of danger to the Bank and must not be allowed to continue as such forced closure of such accounts is permitted

199. Gold ornaments or articles in Safe Deposit should not be delivered

against Succession Certificate

Ø Succession Certificate is applicable in the case of only debts and securities. Gold loans do not fall under the category.(However it is applicable in states of UP & MP)

200. Constituents should be asked to transfer securities in the name of the

Bank even if those are lodged for safe custody Ø To enable us to collect the interest on securities at periodical intervals when

due and on due date the principal has to be got recovered or renewed 201. Anti-termite treatment in locker rooms should be carried out regularly

Ø In order to keep the locker room clean and treated against insecticides, dampness, white ants, moth etc and to avoid claims for damages, losses etc. This is also to get protection under Section 151 of Contract Act and to protect the image of the bank

202. Packets/boxes tendered for Safe Deposit are not sealed with the Bank’s

seal

Ø To avoid possibility of contesting by the depositor that the bank has tampered with the contents of the packet/box and resealed it. This is done also as a precautionary measure from future litigations

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203. A Safe Deposit Locker cannot be hired either singly or jointly in the name of a Minor

Ø Safe Deposit Lockers are hired on Stamped Agreement causing contractual relationship between Bank and Hirer and Minors have no contractual capacity in Law i.e. minor can not enter into any contract, as per Section 11 of Indian Contract Act

204. Power of Attorney Holder should not be allowed to surrender the Locker

Key to the Bank Ø PoA Holder is only authorised to operate on the Locker for convenience of

hirer and the original agreement is between the Bank and the Locker Hirer. Termination of the contract is in the hands of the original hirer only

205. We must insist for a full set of Bill of Lading

Ø To avoid the risk of delivery of the consignment on production of any one copy of the set as all the copies are negotiable

206. We normally do not collect Bills for non-constituents Ø To avoid liability to the true owner if it proves to be a conversion. We loose

protection under section 131 of N. I. Act, 1881 if they are not our constituents.

207. Scale of finance in case of crop loans varies from place to place

Ø It varies with the cost of cultivation from place to place depending upon the agro climatic characteristics of the region and varied cost of different input components

208. Crop Loans are to be sanctioned only during the season Ø Crop loans are sanctioned to meet the cultivation expenses to grow the crops

and therefore help to obviate diversion of funds for unproductive purposes

209. Two-months cushion period is added for repayment after harvest of the

crops Ø The peak harvest prices will be low. To enable the farmer get a better price

after announcement of support price by the Government. Further, there will not be any buyers for the produce in view of wetness it contains soon after harvest. This is to enable the farmer to sell his produce i.e. marketing time

210. Minimum two milch animals are to be financed under dairy farming scheme Ø In order to ensure continuous and uninterrupted income through dairy, even

when one animal goes dry as the animal has two phases of life cycle i.e. lactation period (milk period) and dry period

211. In case of illiterate borrowers/guarantors the thumb impressions should not be attested on the documents Ø It should not be attested as it attracts ad valorem stamp duty. Instead, a

separate letter on form AGR-9 is to be obtained from two witnesses to prove that the contents of the document were explained in a language known to the borrower/guarantor

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212. Interest on Agricultural Term Loans is calculated in May and November Ø It coincides with harvesting of kharif & rabi crops and it is easier &

convenient to repay the installments and interest from the sale proceeds and will not result in compounding of interest

213. A farmer who is being financed for purchase of tractor should be

persuaded to avail of crop loan facility also Ø To avoid borrowers approaching the money lenders to get finance for

cultivation expenses, there by reducing the cost of funds to cultivators and to discourage multiple financing. -Sufficient surplus is generated from cultivating the land for regular repayment of instalments of Agricultural Term loans

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RATIONALES (Compiled by N.V.RS.Subba Rao, Faculty)

We stop operations in the accounts of partnership firms on the death of a partner

1.

Ø On death of a partner, partnership stands dissolves Ø To avoid applicability of rule in Clayton’s case Ø To crystallize the exact liability of the deceased partner. His survivors can not

be made liable for debts to the account after his death.

Bank is keen to increase the share in non fund based business 2.

Ø In order to have diversification and increase profitability Ø Comparatively lesser operational cost Ø Lower risks involved Ø Good source of deposits by means of margins

Take over of accounts from State Bank groups prohibited 3.

Ø As a system of coordination for avoiding and also do present unhealthy competition among SBI group Banks.

The right of general lien/set off can be exercised in the case of time-

barred debit also

4.

Ø The effect of limitation is to bar the personal remedy to recover a debt by filling a civil suit and not to discharge/extinguish the debt. The relationship of debtor-creditor continues till the lending bank’s dues are paid in full.

Why is the insurance policy of a vehicle financed by the bank taken in

the single name of the borrower & the bank’s hypothecation charge endorsed on the policy.

5.

Ø In order to absolve the bank from any dispute and complications in case the vehicle meets with an accident or is fined. The hypothecation charge is endorsed on the policy because it empowers the bank to settle the claim with insurance company. In case of any claim arising, the claim is payable to the bank whose receipt for the claim amount constitutes sufficient discharge to the insurance company.

The consent of guarantor is necessary while rephasing the term loan

instalments.

6.

Ø Rephasement of term loan installments is a major change in the material contract. Hence guarantors consent is required

Currency notes are not treated as security. 7.

Ø Securities Act or the Sale of Goods Act does not recognise currency notes as securities or goods respectively.

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Advances granted to minor cannot be recovered from his guarantor also.

8.

Ø The principal contract between the banker and the minor borrower is itself invalid. Therefore, the secondary contract (i.e. the contract of guarantee) is also void ab-Initio and unenforceable

Advances against ‘pledge of goods’ need not be registered with the registrar of companies

9.

Ø In terms of sec. 125 it is a specific and not a floating charge. Only floating charges need be registered with Registrar of companies.

In addition to the partnership deed, the Bank obtains partnership letter (COS 37) duly signed by all partners

10.

Ø Partnership letter empowers the partners to open and operate partnership accounts as they might not have an implied authority to do so.

Ø Through this letter they also undertake to inform the Bank of any change in the constituent of the firm.

In the case of Gold loans ornaments can be auctioned without resorting to court of law.

11.

Ø This is a pledge advance. Under Sec 172 of Indian contract act, 1872, there is no necessity to go to court of law for realizing our dues.