these functions of banks

A. Primary Functions of Banks

The primary functions of a bank are also known as banking functions. They are the
main functions of a bank.
These primary functions of banks are explained below.
1. Accepting Deposits
The bank collects deposits from the public. These deposits can be of different types,
such as :a.
Saving Deposits
b.
Fixed Deposits
c.
Current Deposits
d.
Recurring Deposits
a. Saving Deposits
This type of deposits encourages saving habit among the public. The rate of interest is
low. At present it is about 4% p.a. Withdrawals of deposits are allowed subject to certain
restrictions. This account is suitable to salary and wage earners. This account can be
opened in single name or in joint names.
b. Fixed Deposits
Lump sum amount is deposited at one time for a specific period. Higher rate of interest
is paid, which varies with the period of deposit. Withdrawals are not allowed before the
expiry of the period. Those who have surplus funds go for fixed deposit.
c. Current Deposits
This type of account is operated by businessmen. Withdrawals are freely allowed. No
interest is paid. In fact, there are service charges. The account holders can get the
benefit of overdraft facility.

d. Recurring Deposits
This type of account is operated by salaried persons and petty traders. A certain sum of
money is periodically deposited into the bank. Withdrawals are permitted only after the
expiry of certain period. A higher rate of interest is paid.
2. Granting of Loans and Advances
The bank advances loans to the business community and other members of the public.
The rate charged is higher than what it pays on deposits. The difference in the interest
rates (lending rate and the deposit rate) is its profit.
The types of bank loans and advances are :a.
Overdraft
b.
Cash Credits
c.
Loans
d.
Discounting of Bill of Exchange
a. Overdraft
This type of advances are given to current account holders. No separate account is
maintained. All entries are made in the current account. A certain amount is sanctioned
as overdraft which can be withdrawn within a certain period of time say three months or
so. Interest is charged on actual amount withdrawn. An overdraft facility is granted
against a collateral security. It is sanctioned to businessman and firms.
b. Cash Credits
The client is allowed cash credit upto a specific limit fixed in advance. It can be given to
current account holders as well as to others who do not have an account with bank.
Separate cash credit account is maintained. Interest is charged on the amount
withdrawn in excess of limit. The cash credit is given against the security of tangible
assets and / or guarantees. The advance is given for a longer period and a larger
amount of loan is sanctioned than that of overdraft.
c. Loans
It is normally for short term say a period of one year or medium term say a period of five
years. Now-a-days, banks do lend money for long term. Repayment of money can be in

the form of installments spread over a period of time or in a lumpsum amount. Interest is
charged on the actual amount sanctioned, whether withdrawn or not. The rate of
interest may be slightly lower than what is charged on overdrafts and cash credits.
Loans are normally secured against tangible assets of the company.
d. Discounting of Bill of Exchange
The bank can advance money by discounting or by purchasing bills of exchange both
domestic and foreign bills. The bank pays the bill amount to the drawer or the
beneficiary of the bill by deducting usual discount charges. On maturity, the bill is
presented to the drawee or acceptor of the bill and the amount is collected.
B. Secondary Functions of Banks
The bank performs a number of secondary functions, also called as non-banking
functions.
These important secondary functions of banks are explained below.
The bank acts as an agent of its customers. The bank performs a number of agency
functions which includes :a.
Transfer of Funds
b.
Collection of Cheques
c.
Periodic Payments
d.
Portfolio Management
e.
Periodic Collections
f.
Other Agency Functions
The bank also performs general utility functions, such as :a.
Issue of Drafts, Letter of Credits, etc.
b.
Locker Facility
c.
Underwriting of Shares
d.
Dealing in Foreign Exchange
e.
Project Reports
f.
Social Welfare Programmes
g.
Other Utility Functions

Question: Banking Terminologies

You need to have a basic idea on the most common set of banking terms
and terminologies. Just have a look at these.

EFT (Electronic Fund Transfer): In this we use Automatic teller

machine, wire transfer and computers to move funds between
different accounts in different or same bank.

Mortgage: It is a kind of security which one offers for taking an

advance or loan from someone.

Wholesale Banking: It is similar to retail banking with a slight

difference that it mainly focuses on the financial needs of the
institutional clients and the industry.

Zero Coupon Bond: It is a bond that is sold at good discount as it

has no coupon.

Why are you not working anywhere from past 10 months ?

Sir I had soft tissue bone cancer last year so for the treatment I m on leave since may
2015.
Radiation den surgery and then chemotherapy. Treatment has completed, now my body
recovering. Only physiotherapy is going on. Now I can lift my hand.
Can you shift to another city ?
Yes, this job means a lot to me. I can move anywhere
What is Call option and Put option ?
Call option - An option which gives right to the Option Holder to buy a certain stock at
specified time and specified date
Put option - An option which gives right to the Option Holder to sell a certain stock at

specified time and specified date

What is Fiscal policy
Government revenue generation and spending policies that impact the macro economy.
What is Fiscal deficit
Excess of government expenditure over revenue
What is DeMat account
It is the process of converting the physical share certificates into equivalent number of
electronic holdings
5. What is KYC?
Ans. KYC stands for Know Your Customer. As per KYC guidelines prescribed by RBI,
some personal information of the customer is required while opening an account (or
renewal of old accounts!). The objective is to enable positive identification of customers
by their respective Banks; and to prevent money laundering.
The documents as mandated under KYC guidelines are:
1. Photograph
2. Proof of identity. This includes Aadhar, Pan Card, Driving license, Govt ID, or
any other document acceptable to Branch Manager
3. Proof of address. This includes Ration Card, Electricity Bill, or any other
document acceptable to Branch Manager
6. What is Money Laundering ?
Ans. Money laundering means presenting an illegally obtained money as
legitimate manner.
17. What is PLR?
Ans. The Prime Interest Rate is the interest rate that a bank charges to its most
financially sound (or high credit worthy) customers. This rate remains basically the
same for most banks.
PS: From July 1, 2010, Base Rate has replaced the Benchmark Prime

Lending Rate. However, this applies to loans taken after July 1, 2010. All
existing loans at July 1, 2010 continues to be at BPLR. But if such old loans
are renewed, theyll be linked to Base Rate. Cross Question: Whats the
difference between PLR and Base Rate?
18. What is Base Rate?
Ans. It is the minimum rate of interest that a bank is allowed to charge from its
customers. No bank can offer loans at a rate lower than Base rate to any of its
customers unless mandated by the govt.
20. What are Basis Points?
Ans. BPS is an acronym for basic points and is used to indicate changes in rate of
interest and other financial instruments.
PS: 1 basis point change corresponds to 0.01% change. So when we say that
repo rate has been increased by 25 bps, it means that the rate has been
increased by 0.25%
21. What are Treasury Bills?
Ans. Treasury bills ( a.k.a T-Bills) are the short term money market instrument (bonds)
issued by central government through auctions. These T-Bills can be issued for 91 days,
182days, or 364 days.
22. What are Commercial Papers?
Ans. Commercial papers are short term money market instrument issued by corporate,
primary dealers, or financial institutions. The maturity period of commercial papers can
range from 7 days to 1 year from the date of issuance.
25. What is Inflation?
Ans. Inflation is as an increase in the price of goods & services that projects the
Indian economy. This rise in prices means the demand for these goods and services
exceeds their supply.
26. What is Deflation?
Ans. Deflation is the decrease in prices of goods and services. During Deflation,
Inflation rate becomes negative .
27. What is FII?
Ans. FII (Foreign Institutional Investor) used to denote an investor that proposes to
make an investment in Indian securities. Institutional Investors includes pension funds,
mutual funds, Insurance Companies, Banks, etc.
PS: FII doesnt exist now. A new investor category Foreign Portfolio

Investor(FPI) has been formed by merging FIIs, Sub Accounts and

Qualified Foreign Investors(QFI).
28. What is FDI?
Ans. FDI (Foreign Direct Investment) means injection of foreign funds in Indian
Markets.
PS: Foreign investment of 10 per cent or more in a listed company will now
be treated as FDI. Whereas lesser investment will be treated as FPI.
29. What is IPO?
Ans. IPO stands for Initial Public Offering. This is the first offering of shares to the
general public by a company who wishes to enlist itself on the stock exchange.
30. What is GDP?
Ans. The Gross Domestic Product or GDP is a measure of all of the services and goods
produced in a country over a specific period (usually one year).
31. What is GNP?
Ans. Gross National Product is measured as GDP plus income of residents from
investments made abroad minus income earned by foreigners in domestic market.
32. What is Revenue deficit?
Ans. Where the net amount received by the govt. (from taxes & other forms) is lesser
than the predicted amount, the shortfall amount is called Revenue Deficit.
34. What is Disinvestment?
Ans. When a government decides to dilute its stake in public sector
undertakings, its called disinvestment.
35. What is National Income?
Ans. National Income is the money value of all goods and services produced in a
country during the year.
36. What is Recession?
Ans. When GDP (Gross Domestic Product) growth is negative for a period of two
or more consecutive quarters.
37. What causes Sub-prime crisis?
Ans. The Sub-prime crisis occurs when the too many loans are given to customers with
low credit rating.

40. What is RuPay Card?

Ans. RuPay is a india`s own card payment network set up by National Payments
Corporation of India (NPCI). The initial focus of NPCI is to approach banks that do
not issue cards. Example Regional Rural Banks and urban co-operative banks.
41. What is Private Banking?
Ans. Banking services offered to high net-worth individuals is called Private Banking. By
Private, we mean that the services are provided and tailored on a more personal basis.
42. What is BSBDA?
Ans. On August 10, 2012, RBI mandated that any individual, including poor or those
from weaker section of the society, can open zero balance account in any bank. These
account are called Basic Savings Bank Deposit Accounts. Less kyc norms.
45. What is SIDBI?
Ans. SIDBI (Small Industries Development Bank of India) is a state-run bank aimed to
aid the growth and development of micro, small and medium scale industries in India.
Set up in 1990 through an act of parliament, it was incorporated initially as a wholly
owned subsidiary of Industrial Development Bank of India(idbi).
Ceo- Dr. Kshatrapati Shivaji
46. What is SWIFT?
Ans. SWIFT stands for Society for worldwide Interbank financial telecommunication.
This code is used particularly in International transfer of money between banks.
49. What is SEZ?
Ans. SEZ means Special Economic Zone is the one of the part of governments policies in
India. A special Economic zone is a geographical region that has more liberal economic
laws as compared to the rest of the country. This is to increase foreign investment,
development of infrastructure, job opportunities and increase the income level of the
people.
50. What are Mutual funds?
Ans. Mutual funds are investment companies that pool money from investors and
use this capital to invest in securities of different companies. For this, they charge some
commission or fees from their clients.
51. What is SENSEX and NIFTY?
SENSEX stands for Sensitive Index and is associated with the Bombay Stock Exchange.
Established in 1986, this index shows the 30 most traded stocks of BSE. NIFTY, on the
other hand, is the index of National Stock Exchange. NIFTY shows the 50 most traded

stocks of NSE
52. What is NOSTRO and VOSTRO account?
Ans. A NOSTRO account is maintained by an Indian bank in foreign countries. A
VOSTRO account is maintained by a foreign bank in India.
53. What is foreign exchange reserve?
Ans. Foreign exchange reserve (aka Forex reserves) is the foreign currency deposits
and bonds (only), that a countrys central bank or monetary authorities hold.
56. What is a Non-Banking Financial Company (NBFC)?
Ans. Non-banking financial companies aka NBFCs are financial institutions that provide
banking services, but do not hold a banking license. These institutions cant take
deposits from the public. They also cant issue cheques drawn on themselves;
as they do not come under Payment and Settlement System.
PS: NBFCs are not insured by DICGC (Deposit Insurance and Credit
Guarantee Corporation)
57. What is PM Jan Dhan Yojna?
Ans. PMJDY is a scheme for financial inclusion launched by the PM Narendra Modi on
28 August 2014. The scheme was first announced on his first Independence Day speech
on 15 August 2014.

10 February 2016, over 20 crore (200 million) bank accounts were

opened and 32378 crore (US$4.8 billion) were deposited under the
scheme.[4]
Highlights of the scheme:
1. Accounts will be zero-balance bank accounts with issuance of RuPay debit card.
2.In addition, an accidental insurance cover of Rs 1 lakh will be provided
by HDFC Egro.
3. Those opening accounts by January 26, 2015 will be given additional life
insurance cover of Rs 30,000 by LIC.
4. After Six months of satisfactory operation of the account, holders can
avail 5,000 overdraft from the bank.
5. Beneficiaries of Government Schemes will get Direct Benefit Transfer in
these accounts.

A current account deficit means the value of imports of goods / services / investment incomes
is greater than the value of exports.

A negotiable instrument is a document guaranteeing the payment of a specific amount

of money, either on demand, or at a set time, with the payer named on the document.
An ATM card is any payment card issued by a financial institution that enables a
customer to access an automated teller machine (ATM) in order to perform transactions
such as deposits, cash withdrawals, obtaining account information, etc. ATM cards are
known by a variety of names such as bank card, MAC (money access card), client
card, key card or cash card, among others. Most payment cards, such
as debit and credit cards can also function as ATM cards,

A cheque (or check in American English) is a document[nb 1] that orders a bank to pay a
specific amount of money from a person's account to the person in whose name the
cheque has been issued. The person writing the cheque, the drawer, has a transaction
banking account ) where their money is held. The drawer writes the various details
including the monetary amount, date, and a payee on the cheque, and signs it. ordering
their bank, known as the drawee, to pay that person or company the amount of money
stated.
A cash machine, (automated teller machine) is an electronic telecommunications
device that enables the customers of a financial institution to perform financial
transactions, particularly cash withdrawal, without the need for a human cashier.
Authentication is provided by the customer entering a personal identification
number (PIN).

A demand draft is a negotiable instrument similar to a bill of exchange. A bank issues a

demand draft to a client (drawer), directing another bank (drawee) or one of its own
branches to pay a certain sum to the specified party (payee). [1][2]
Here are few basic difference between cheque and DD
1.) Cheque is issued by customer, whereas Demand draft issued by bank
2.) In cheque payment is made after presenting cheque to bank, while in DD is given
after making payment to bank.
3.) Cheque can bounce due to insufficient balance . DD cannot be dishonored as
amount is paid before hand.
4.) Payment of cheque can be stopped by drawee, whereas payment cannot be stopped
in DD.
6.) In cheque drawer and payee are different person. In DD, both parties are banks.
7.) A cheque needs signature to transfer amount, While DD does not require signature to
transfer funds
Credit Information Bureau (India) Limited is founded in August 2000. CIBIL collects
and maintains records of an individuals payments pertaining to loans and credit cards.
These records are submitted to CIBIL by member banks and credit institutions, on a
monthly basis. Which help to evaluate and approve loan applications. To avoid the bad
loans.
Green Channel Counter is an innovative step towards paperless 'Green Banking' for
deposit, withdrawal and funds transfers within theBank. The customer need not fill up
any pay-in slip or draw cheques for depositing or withdrawing money from their
accounts.
payments and settlement systems:Real Time Gross Settlement is a funds transfer mechanism where transfer of money
takes place from one bank to another on a 'real time' and on 'gross' basis. This is the
fastest possible money transfer system through the banking channel. Settlement in 'real
time' means payment transaction is not subjected to any waiting period. The
transactions are settled as soon as they are processed.
National Electronic Funds Transfer (NEFT)
it is not on real time basis like RTGS (Real Time Gross Settlement), hourly batches are
run in order to speed up the transactions..for this use ifsc and micr.
Immediate Payment Service (IMPS) is an initiative of National Payments Corporation
of India (NPCI). It is a service through which money can be transferred immediately
from one account to the other account, within the same bank or accounts across other
banks. Upon registration, both the individuals are issued an MMID(Mobile Money
Identifier) Code from their respective banks. This is a 7 digit numeric code. To initiate
the transaction, the sender in his mobile banking application need to enter the
registered mobile number of the receiver, MMID of the receiver and amount to be

transferred. Upon successful transaction, the money gets credited in the account of the
receiver instantly..
Gift cards are given out by banks to be used as an alternative to cash for purchases
within a particular store or related businesses . and can not be cashed out, and in some
situations may be subject to an expiry date or fees.
TDR and STDR terms are used in banking industry. Both are type of fixed deposit. TDR
means Term Deposit and STDR means special term deposit.
TDR
If you want to get interest on your fixed deposit after short period like week, month or
quarterly, you have to deposit under TDR scheme. At that time, bank will pay you
normal interest rate on your fixed deposit. your saving account will connect with your
Fixed deposit and at the completing of your time period, you will get the interest on your
FD in your saving account.
Mini tenure 7 days maxi 10 yrs
STDR
If you are not interested to get interest in short period, you will get interest on the date of
maturity of your fixed deposit. Your FD will made under special term deposit scheme. In
this scheme, you will get one extra benefit. After every quarter, you will get interest on
your collected interest in three months.
interest.mini 180 days maxi 10 yrs.
Call money is a method by which banks lend to each other to be able to maintain
the cash reserve ratio. The interest rate paid on call money is known as the call rate. It
is a highly volatile rate that varies from day to day and sometimes even from hour to
hour.
The Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (also known as the Sarfaesi Act) is an indian law .It allows
banks and other financial institution to auction residential or commercial properties to
recover loans.[1]
National Bank for Agriculture and Rural Development (NABARD) is an apex
development bank in India, having headquarters in Mumbai (Maharashtra)[3]
Chairman

Dr. Harsh Kumar Bhanwala

It was established on 12 July 1982 by a special Act of parliament and its main focus
was on development of rural India by increasing the credit flow for agriculture & rural
non farm sector
Roles:-

1. Serves as an apex financing agency for the institutions providing investment and
production credit for promoting the various developmental activities in rural areas
2. Co-ordinates the rural financing activities of all institutions engaged in
developmental work at the field level and maintains liaison with Government of
India, state governments, Reserve Bank of India (RBI) and other national level
institutions concerned with policy formulation
3. NABARD refinances the financial institutions which finances the rural sector.
4. NABARD partakes in development of institutions which help the rural economy.
5. It regulates the institutions which provide financial help to the rural economy.
6. It provides training facilities to the institutions working in the field of rural
upliftment.
7. It regulates the cooperative banks and the RRBs, and manages talent
acquisition through IBPS CWE.
ASBA (Applications Supported by Blocked Amount) is a process developed by the
India's Stock Market Regulator SEBI for applying to IPO. In ASBA, an IPO applicant's
account doesn't get debited until shares are allotted to them
A universal bank participates in many kinds of banking activities and is both
a commercial bank and an investment bank as well as providing other financial
services such as insurance.[1] These are also called full-service financial firms,
Export-Import Bank of India is the premier export finance institution in India,
established in 1982 under the Export-Import Bank of India Act 1981. Since its inception,
Exim Bank of India has been a key player in the promotion of cross border trade and
investment.
BASEL NORMS
The committee formulates guidelines and makes recommendations on best
practices in the banking industry.
b) Basel III or Basel 3 released in December, 2010 is the third in the series of
Basel Accords. These accords deal with risk management aspects for the
banking sector.
What is LIBOR?

London Interbank Offered Rate. An interest rate at which banks can borrow
funds, in marketable size, from other banks in the London interbank market.
What do you mean by term CASA related to bank?
CASA stands for Current Account Savings Account. The CASA ratio shows
how much deposit a bank has in the form of current and saving account
deposits in the total deposit. A higher CASA ratio means better operating
efficiency of the bank because on current account there is no interest
payable whereas on savings account a tiny 3.5% interest is payable by the
bank. CASA ratio shows how much of the deposit of the bank comes from the
current and savings deposit.
IFSC (Indian Financial System Code):
Indian Financial System Code is an alpha-numeric code that uniquely
identifies a bank-branch participating in the NEFT system. This is an 11 digit
code with the first 4 alpha
characters representing the bank, The 5th character is 0 (zero).and the last 6
characters representing the bank branch.
For ex: PNBN0014976 :
[2] MICR Magnetic ink character Recognition :MICR is 9 digit numeric code that uniquely identifies a bank branch
participating in electronic clearing scheme.
Used to identify the location of a bank branch. City (3) Bank (3) Branch (3)
Para banking- When Bank provides banking services except the general
banking facility.
Narrow Banking- When banks invest its money in government securities
instead investing in market to avoid risk.
Offshore Banking- Bank which accept currency of all countries.
ECGC
Export Credit Guarantee Corporation of India. This organisation provides
risk as well as insurance cover to the Indian exporters.
Chairman- Geetha Muralidhar
Head Quarters : Mumbai
SCHEDULED BANKS VS NON-SCHEDULED BANKS
As per Reserve Bank of India Act, 1934, Banks were classified as Scheduled Banks and
Non-Scheduled
Banks. The Scheduled banks are those having been entered in the Second schedule of
Reserve Bank of India Act, 1934, whereas those excluded from it are called NonScheduled banks. All commercial banks Indian as well as Foreign Banks, State Cooperative Banks, Regional Rural Banks are Scheduled banks.
DICGC (Deposit Insurance and Credit Guarantee Corporation of India)

Commercial Banks: All commercial banks including branches of foreign banks

functioning in India, local
area banks and regional rural banks are insured by the DICGC.
In the event of a bank failure, DICGC protects bank deposits that are payable in
India. The DICGC insures all deposits such as savings, fixed, current, recurring, etc.
except the following types of deposits.
Accounts for Foreign (Currency/Person) in India
a) NRO A/c (Foreign Tourist)
1) Foreign tourists during their short visit to India can open a Non-Resident (Ordinary)
Rupee (NRO) account (Current / Savings) with any Authorised Dealer bank dealing in
foreign exchange.
Non-Resident (External) Rupee Account (NRE Account)
NRE account may be in the form of savings, current, recurring or fixed deposit
accounts.
Account will be maintained in Indian Rupees
Financial inclusion involves
1) Give formal banking services to poor people in urban & rural areas.
2) Promote habit of money-savings, insurance, pension investment among poor-people.
3) Help them get loans at reasonable rates from normal banks. So they dont become
victims in the hands of local moneylender.
REGIONAL RURAL BANK (RRB):
Regional Rural Bank Were Set Up By An Ordinance In 1975, Later Replaced By Rrbs
Act, 1976 As Pre Banking Commission Recommendation In 1975.
Father Of Rrb Is M.Swaminathan.
The Govt. Of India Had Appointed A Working Group On Rural Banks Under The
Chairmanship Of Mr. M. Narasimham In 1975. First Rrbs Were Set Up On 2 nd Oct.
Share Holder Contribution In %: Government Of India 50% Sponsor Bank 35% State
Government 15% Total 100%.
Brief on NDB
1) The Bank launched by BRICS nations: New Development Bank (NDB).
2) The Chairperson of the Bank is K.V. Kamath
3) The HQ of the bank is located at: Shanghai (China)
4) The objective is to primarily fund infrastructure and development projects in five BRICS
countries Brazil,
Russia, India, China and South Africa.
Sukanya Samriddhi Accounts
i. Rate of interest 9.1% Per Annum(2014- 15),calculated on yearly basis ,Yearly
compounded.
ii. Minimum INR. 1000/-and Maximum INR. 1,50,000/- in a financial year.
iii. Account can be opened up to age of 10 years only from the date of birth.
iv. If minimum Rs 1000/- is not deposited in a financial year, account will become
discontinued and can be revived with a penalty of Rs 50/- per year with minimum
amount required for deposit for that year.
v. Partial withdrawal, maximum up to 50% of balance standing at the end of the
preceding financial year can be taken after Account holders attaining age of 18 years.
vi. Account can be closed after completion of 21 years

Pradhan Mantri Jeevan Jyoti Bima Yojana

Highlights of the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY Scheme 2 for Life
Insurance) are:
Eligibility: Savings Bank (SB) Account holders between 18 years (completed) and 50
years.
Premium: Rs. 330 (per annum).
Payment Mode: The premium will be directly autodebited by the bank from the
subscribers savings bank account. This is the only mode available currently.
Risk Coverage: Sum Assured of Rs. 2 Lakh on death of the Insured member for any
reason is payable to the Nominee.
Termination of assurance:
Account holder attains age of 55 years
Closure of account with the Bank or insufficiency of balance for debiting premium.
BRIEF OF ATAL PENSION YOJANA
The GoI has announced a new scheme called Atal Pension Yojana (APY)1 in 2015-16
budget. The APY is focussed on all citizens in the unorganized sector.
The scheme is administered by the Pension Fund Regulatory and Development
Authority (PFRDA) through NPS architecture.
HIGHLIGHTS OF ATAL PENSION YOJANA
Under the APY, there is guaranteed minimum monthly pension for the subscribers
ranging between Rs. 1000 and Rs. 5000 per month.
The minimum age of joining APY is 18 years and maximum age is 40 years. The age of
exit and start of pension would be 60 years.
Pradhan Mantri Suraksha Bima Yojana
Highlights of the Pradhan Mantri Suraksha Bima Yojana (PMSBY Scheme 1 for
Accidental Death Insurance) are:
Eligibility: The savings bank account holders of the participating Bank between 18
years (completed) and 70 years
Premium: Rs. 12/- + service tax (per annum).
Payment Mode: The premium will be directly autodebited by the bank from the
subscribers account.
Risk Coverage: Total coverage (sum-insured) under the scheme is Rs. 2 Lakh.

Payment Banks
Key features of Payments Banks
1. Acceptance of demand deposits. Payments bank will initially be
restricted to holding a maximum balance of Rs. 100,000 per individual
customer.
2. Issuance of ATM/debit cards. Payments banks, however, cannot issue
credit cards.
5. Distribution of non-risk sharing simple financial products like mutual fund
units and insurance products, etc.
6. The minimum paid-up equity capital for payments banks shall be Rs. 100
crore.
7th Pay Commission Report Submitted

The 7th Pay Commission was, headed by Justice AK Mathur submitted its
report to Finance Minister Arun Jaitley .
Some of the key points recommended by the commission are:
a) 23.55 per cent increase in pay and allowances recommended
b) Recommendations to be implemented from January 1, 2016
c) Minimum pay fixed at Rs. 18,000 per month; maximum pay at Rs. 2.25 lakh
d) The rate of annual increment retained at 3 percent
e) 24 per cent hike in pensions
f) One Rank One Pension proposed for civilian government employees on line
of OROP for armed forces
g) Cabinet Secretary to get Rs 2.5 lakh as against Rs 90,000 per month pay
band currently
h) Short service commissioned officers will be allowed to exit the armed
forces at any point in time between 7 to 10 years of service
Facts related to Gold Coin/Bullion Scheme
a) It is the first ever national gold coin minted in India.
b) It is having National Emblem of Ashok Chakra engraved on one side and
Mahatma Gandhi on the other side.
c) The Coin weighs 5 and 10 grams.
e) The gold coin and bullion will be of 24 carat purity and 999 fineness.
f) Aim: The government's move comes on the hope that Indians who is said to
have an obsession for gold will prefer the national coin over imported ones.

Gold Monetisation Scheme, 2015

The Reserve Bank of India issued a Direction to all Scheduled Commercial
Banks (excluding Regional Rural Banks) on implementation of the Gold
Monetisation Scheme, 2015 notified by the Central Government.
The objective of the Scheme is to mobilise gold held by households and
institutions of the country and facilitate its use for productive purposes,
and in the long run, to reduce countrys reliance on the import of gold. The
Reserve Bank has issued the Direction to banks in exercise of powers conferred
on it under Section 35 A of the Banking Regulation Act, 1949.
The scheme is aimed at converting an estimated 20,000 tonnes of idle gold
worth Rs 540,000 crore in family lockers and temples into the banking
system.
c) The minimum deposit at any one time shall be raw gold (bars, coins,
jewellery) equivalent to 30 grams of gold of 995 fineness. There is no
maximum limit for deposit under the scheme.
d) The principal and interest of the deposit is 2.5%
PM Modi Launches Skill India Initiative That Aims to Train 40 Crore People

Prime Minister Narendra Modi launched ambitious projects that aims to train over
40 crore people in India in different skills by 2022.
The initiatives include National Skill Development Mission, National Policy for Skill
Development and Entrepreneurship 2015, Pradhan Mantri Kaushal Vikas Yojana
(PMKVY) scheme and the Skill Loan scheme.
Modi also unveiled the Skill India logo with the tagline -- 'Kaushal Bharat, Kushal
Bharat' (Skilled India, Successful India).
Fresh PMKVY training was initiated in 1,000 centres across all States and Union
Territories in India, covering 50,000 youth in 100 job roles across 25 sectors.
Under the Skill Loan scheme, loans ranging from Rs. 5,000-1.5 lakh will be made
available to 34 lakh youth seeking to attend skill development programmes over
the next five years.
PM Modi's 'Make in India'
Make in India initiative launched by Prime Minister Narendra Modi was an initiative
aimed at making India a global manufacturing hub. It was also rolled out with the
aim of creating millions of jobs in the country.
What is 'Make in India' program?
The 'Make in India' program is an initiative launched to encourage companies to
increase manufacturing in India. This not only includes attracting overseas
companies to set up shop in India, but also encouraging domestic companies to
increase production within the country.
Policies under 'Make in India' initiative:
1. New Initiatives: This initiative is to improve the ease of doing business in India,
which includes increasing the speed with which protocols are met with, and
increasing transparency.
Here's what the government has already rolled out
a) Environment clearances can be sought online.
b) All income tax returns can be filed online.
c) Validity of industrial licence is extended to three years.
2. Foreign Direct Investment (FDI):
The government has allowed 100% FDI in all the sectors except Space(74%),
Defence (49%) and News Media (26%).
FDI restrictions in tea plantation has been removed, while the FDI limit in
defence sector has been raised from the earlier 26% to 49% currently.
3. National manufacturing: to increase the share of manufacturing in the
countrys Gross Domestic Product from 16% to 25% by 2022.

NPA: A big problem for the Banking Sector

1.14 lakh crore of total npa as feb 2016.
Net NPA = Gross NPA (Balance in Interest Suspense account + DICGC/ECGC claims received and
held pending adjustment + Part payment received and kept in suspense account + Total provisions held).

What is NPA?
It means once the borrower has failed to make interest or principal payments for 90
days, the loan is considered to be a non-performing asset.
NPA directly have the impact on:
1) Profitability of the bank decreases.
2) It lead to Asset (Credit) contraction.
3) Creates a problem in Liability Management.
4) Problem in Capital Adequacy.
5) Shareholders confidence declines.
6) Public confidence declines.
What are the possible steps which can reduce the NPA?
3 c character capability capacity
1) Proper evaluation of credit proposals should be collected.
2) Banks should be equipped with latest credit risk management techniques to
protect the bank funds and minimize insolvency risks.
3) Timely follow up is the key to keep the quality of assets intact and enables the
banks to recover the interest/instalments in time.
4) Selection of right borrowers, viable economic activity, adequate finance and
timely disbursement, end use of funds and timely recovery of loans should be the
focus areas for preventing or minimizing the incidence of fresh NPAs.
Major steps taken to solve the problems of Non-Performing Assets in India :1. Debt Recovery Tribunals (DRTs)
Narasimham Committee Report I (1991) recommended the setting up of Special
Tribunals to reduce the time required for settling cases. Accepting the
recommendations, Debt Recovery Tribunals (DRTs) were established.
2. Securitisation Act 2002
Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act 2002 is popularly known as Securitisation Act. This act enables the
banks to issue notices to defaulters who have to pay the debts within 60 days.
Once the notice is issued the borrower cannot sell or dispose the assets without
the consent of the lender.
3. Lok Adalats

4. Compromise Settlement
5. Credit Information Bureau
NITI Aayog - Objectives and Composition
The National Institution for Transforming India Aayog or NITI Aayog is a
Government of India policy think-tank established by Prime Minister Narendra
Modi to replace the Planning Commission.The stated aim for NITI Aayog's creation
is to foster involvement and participation in the economic policy-making process by
the State Governments of India.
The NITI Aayog will comprise the following:
1) Prime Minister of India as the Chairperson
2) Governing Council comprising the Chief Ministers of all the States and Lt.
Governors of Union Territories
Current Composition:
Prime Minister Narendra Modi, Chairperson
Amitabh Kant, CEO
Shri Arvind Panagariya, Vice Chairperson
Highlights of Economic Survey 2015-16
This year the report is authored by chief economic adviser Arvind Subramanian.
Major Highlights of Economic Survey 2015-16:
GDP growth rate for 2015-16 to be in the range of 7 % to 7.75 %
Low inflation has taken hold and confidence in price stability has improved
Govt. will meet its fiscal deficit target of 3.9 per cent of GDP.
India can become the leading investment destination owing to its robust
macroeconomic fundamentals.
Reserve Bank of India will meet 5 per cent inflation target by the end of March
2017
It projects 7.6 per cent economic growth rate in 2015-16
Bank accounts for over 20 cr people under Pradhan Mantri Jan Dhan Yojan have
been created.
All About Railway Budget 2016-2017
Railway Minister Suresh Prabhu presented his second rail budget this year. He kept
the fares unchanged.
He outlined the 3 pillars of strategy - raise new revenues, raise productivity and
efficiency and revamp the processes. He also said that the Core objective is to
highlights of the Rail Budget 2016:

 The Capital plan of Rs 1.21 lakh crore.

Railways will get Rs 40,000 crore budgetary support from the government.
400 stations to be re-developed through PPP.
Overnight double-Decker train Uday Express to be introduced on busiest
routes which will increased carrying capacity with 40% more.
Three direct services, fully air-conditioned Humsafer, to travel at 130km per
hour will be starting this year.
Lower berth quota for senior citizens to be increased by 50%
33% of sub-quota for women in each of the reserved categories will be
introduced.
Railways announces measures for women security: All India 24X7 helpline, CCTV
surveillance, reserved middle bay in coaches.
WiFi in 100 stations this year and 400 other stations next year.
To have CCTV surveillance at all stations, 300 major stations will be covered
this year.
Enhanced capacity of e-ticketing system - from 2000 tickets a minute to 7200 a
minute (to support 120,000 concurrent users).
Now the Coolies will be called 'Sahayaks'.
Children's menu, baby foods, baby boards to be made available for travelling
mothers.
We've introduced Sarthi Seva in Konkan Railways for help to senior citizens, will
expand this service.
With helpline number 139, the passenger will soon able to do cancellation of
ticket.
Long distance superfast train Antyodaya Express for unreserved passengers.
Introduction of Tejas, the future of train travel with operating speeds of 130
kph.
To introduce Humsafar Express, full air-conditioned third AC service with
operational services for meals.
Proposal
for Antyodaya
Express
and
Deenadayalu
coaches
for
unreserved travelers.

Agriculture

will bring
under irrigation Implementation of
irrigation projects under
AIBP, which are languishing for a long time, will be fast tracked A
dedicated Long Term Irrigation Fund will be created in NABARD with
an initial corpus of about Programme for sustainable management of
ground water resources with an estimated cost of
will be implemented through 3 multilateral funding
model
retail outlets of Fertilizer companies will be provided with soil and
seed testing facilities during the next three years
to provide a common e-market platform

for wholesale markets Allocation under Pradhan Mantri Gram Sadak

Yojana increased to
. Will connect remaining 65,000
eligible habitations by 2019. To reduce the burden of loan
repayment on farmers, a provision of
has been
made in the BE 2016-17 towards interest subvention

Rs 35,984 crore
Rural Sector

will be given as Grant in Aid to Gram

Panchayats and Municipalities as per the recommendations of the
14th Finance Commission A sum of
allocated for
MGNREGS.
Rurban Clusters will be developed under the
by 1st May, 2018. New scheme
proposed with allocation of

Rs 87,765 crore
Total allocation:
Rs 2.87 lakh crore
Rashtriya Gram Swaraj Abhiyan
Shyama Prasad Mukherjee Rurban Mission
Rs 38,500 crore
100% village electrification
300
Rs 655 crore

Infrastructure

of National Highways to be awarded in 2016-17

Allocation of ` 55,000 crore in the Budget for Roads. Additional
to be raised by NHAI through bonds. Amendments to be
made in Motor Vehicles Act to open up the road transport sector in
the passenger segment

Rs 2,21,246 crore
Financial sector

Increasing members and benches of the Securities Appellate

Tribunal. Allocation of ` 25,000 crore towards recapitalisation of
Public Sector Banks. Target of amount sanctioned under Pradhan
Mantri Mudra Yojana increased to ` 1,80,000 crore. General
Insurance Companies owned by the Government to be listed in the
stock exchanges.