Important Acts
- RBI Act – Reserve Bank of India Act, 1934
- BI Act – Banking Regulation Act, 1949
- NI Act – Negotiable Instruments Act, 1881
- PSS Act – Payment & Settlement System Act, 2007
- FEMA Act – Foreign Exchange Management Act, 1999
- PMLA Act – Prevention of Money Laundering Act 2002
- SBI Act – State Bank of India Act, 1955
- IRDA Act – Insurance Regulatory & Development Authority of India Act, 1999
- PFRDA Act – Pension Fund Regulatory & Development Authority of India Act, 2013
- SEBI Act – Securities & Exchange Board of India Act, 1992
Bank
- A bank is a financial Institution whose
- Primary Function is-
- Accepts Deposits
- Providing Loans(for long term lendings) & Advance(for short term lendings)
- Secondary/Additional Function is-
- Investment
- Fund Transfer
- Card facility
- Locker facility
- Insurance facility
- Discounting of Bill
- Primary Function is-
- Bank defined under Section 5 of BR Act 1949
- Banking customer defined under NI Act 1881
- Major source of Bank’s income – Interest on Loan
- Bank accounts can not be opened for a person with an unsound mind
- Minimum age to open single operating Bank A/c – 10 years
- Demand Deposit – Any time withdrawl)
- CASA(Current A/c & Saving A/c)
- Time/term Deposit – Withdrawl after a specific time
- RAFA (Recuring Deposit A/C & Fixed Deposit A/C)
- Overdraft – Withdrawl excess/more than balance available in Bank A/C
- In India, the Interest rate is decided every quarter
Types of Deposits
- Dormant A/C
- Inactive/Inoperative
- If no transaction up to 2 year
- Unclaimed A/C
- If no transaction upto 10 year
- Unclaimed A/C Balance transfer to RBI “Depositor Education”
- Demat A/C
- For trading in Share Market/Financial Market
- AMC (Annual Maintenance Charge) on Demat A/C
- A/C open in Bank & Share Trader Company
- Sukanya Samridhi Yojana A/C
- A/c open for Girls
- Age upto 10 years
- Max 2 girls a/c for a family
- Minimum deposit – 250/- per annum
- Maximum deposit – 1.5 lakh/- per annum
- Deposit upto 14 years age of Girls
- Rate of interest – 7.6% per annum
- Deposit in a/c is tax free for parents/guardian
- 18 year age of girl – 50% withdrawal for higher study
- 21 year or marriage – 100% withdrawal
- Amount received on maturity is also tax free
- Started on 22 January 2015, under “Beti Padhao Beti Bachao Yojana”.
- PPF A/c
- Public Provident Fund
- Tax benifit
- Minimum Deposit – 500/- per annum
- maximum Deposit – 1.5 lakh per annum (maximum 12 time deposit)
- Duration – 15 year
- extended by 5 years for each block
- Rate of Interest – 7.1% per annum
- Deposit in A/C is tax free
- After 3 years A/c – 25% loan against PPF
- After 6 year A/c – 50% withdrawal
- The amount received on maturity is also tax-free
- It started under PPF Scheme, in 1968
- Current A/C
- For business/companies
- Unlimited transactions
- No interest
- Overdraft Facility
- Overdraft limit or charges are vary.
- Service charge applicable
- Saving A/C
- For household/individual
- Limited Transaction
- Interest provided by Bank
- Interest rate decided by Individual Bank
- Interest calculated on daily balance basis
- Interest payable & compounded quarterly
- Interest is tax free upto 10000 per annum
- Minimum balance in A/C should be maintained
- BSBDA A/C
- Basic Saving Bank Deposit A/C
- Also known as No Frill A/C
- No KYC
- Zero Balance A/C
- No need to maintain a minimum balance
- Maximum Balance – 50000
- maximum aggregate Credit/Deposit – 10000 /- per month
- Interest as per Saving A/C
- PM Jan Dhan Yojana A/C
- Started – 28 August, 2014
- Theme: “Mera Khata – Bhagya Vidhata”
- Objective: Financial Inclusion
- Zero balance A/C
- Single KYC/Document
- Accidental Insurance – 2 Lakh Rupee
- Overdraft facility
- Maximum: 10000 Rupee
- RuPay ATM/Debit Card
- Cheque not available
- MIS A/C
- Monthly Income Scheme A/C.
- A special type of fixed deposit on which you can withdraw interest on a monthly basis.
- Maximum Limit(Single Person): 9 Lakh
- maximum Limit(Joint A/C): 15 Lakh
- RD A/C
- Recurring Deposit Account
- Monthly installment
- Minimum time: 6 months
- Maximum time: 10 years
- Minimum Amount: 500/-
- maximum Amount: No Limit
- Interest provided by Bank
- Discounting of RD A/c – Premature Withdrawal
- Loan against RD is upto 90%
- FD A/C
- Fixed Acc
- Onetime/Lumpsum deposit
- Minimum Time: 7 days
- Maximum Days: 10 years
- Minimum amount and maximum amount – no limit
- Interest procvided by Bank
- Discounting of FD – Premature withdrawal
- Loan against FD – 90% maximum
- NRE A/c
- Non Resident External A/c
- For NRI only
- Transfer foreign earnings in India
- Deposit in Foreign currency & Withdrawal in Indian Currency
- NRO A/c
- Non Resident Ordinary A/c
- For NRI only
- Managed earned in India
- Deposit in Indian currency & Withdrawal in Foreign Currency
- FCNR A/c
- Foreign Currency Non Resident A/c
- For NRI only
- Min term: 1 year
- Max Term: 5 year
- Deposit in foreign currency & withdrawl in Indian Currency
- EEFC A/c
- Exchange Earner Foreign Currency Acc
- It is an accounts for Indian resident
- Deals in Foreign Currency Exchange.
- No Interest
- ESCROW A/c
- It is a third party bank account
- Funds are held in bank account till transction are completed.
- It is a legal arrangement by 2 or more parties.
- NOSTRO A/c
- A Nostro account is a bank account held in a foreign bank in a different currency. The word “Nostro” is Latin for “ours”.
- VOSTRO A/c
- A vostro account is a bank account held by a domestic bank on behalf of a foreign bank. The word “vostro” is Latin for “your”.
Priority Sector Lending
- Education
- Housing
- MSME
- Agriculture
- Startup
- Renewable Energy
- Social Infrastructure
- Export Credit
- Weaker Section/SC/ST/Minority/Disabled Person/Marginal farmers/SHG(Self Help Group)/ PM Jandhan Overdraft
PSL Limit
- Domestic Bank (Public & Private): 40% of total loan/ANBC(Adjusted Net Bank Credit)
- Foreign Bank: 40% of total loan/ANBC
- Regional Rural Bank: 75% of total loan/ANBC
- Small Finance Bank: 75% of total loan/ANBC
- Payment Bank: Not applicable to provide loan
Targets within the Priority Sector
| Categories | Targets |
| Agriculture | 18 per cent of total outstanding |
| Small and Marginal Farmers | 8 percent of total outstanding |
| Micro Enterprises | 7.5 per cent of total outstanding |
| Weaker Sections | 15 per cent of total outstanding |
- If PSL not fulfilled, remaining amount of PSL category transfer in RIDF for 1 year with 6.5% interest rate per annum.
- RIDF: Rural Inbfrastructure Developement Fund
- Maintain/managed by NABARD
- RIDF: Rural Inbfrastructure Developement Fund
- PSLC: Priority Sector Lending Certificate
- Validity: 1 year (April to March)
- Type of PSLC
- PSLC Agriculture
- PSLC Marginal farmer
- PSLC Micro Interprises
- PSLC General
- Education Loan
- Rate of Interest on Market basis
- Repayment of Education Loan is fully tax free
- To study in India: max loan is 10 lakh
- To study in Abroad: max loan is 20 lakh
- Housing Loan
- Rate of Interest on Market basis
- Repayment: Only interest amount is tax free
- For metro city(Population 10 lakh & above): max 45 lakh
- For other city (Population below 10 lakh): max 30 lakh
- Agriculture Loan
- Rate of Interest fixed by government @7% per annum
- Repayment: 7% interest paid by farmer & 3% interest subsidy
- For short term credit, Bank provide “Kishan Credit Card”
- MSME
- Micro, Small & Medium Enterprises
- Approx 90% Business in India under MSME
- MSME generate employee
- MSME contribute in GDP & Export
- MSME regional development
- Micro
- Investment upto: 1Cr
- Turnover upto: 5Cr
- Small
- Investment: 1Cr – 10Cr
- Turnover: 5Cr-50Cr
- Medium
- Investment: 10Cr-50Cr
- Turnover: 50Cr-250Cr
- Renewable Energy
- Solar Energy
- Wind Energy
- Bio Energy
- Hydro Energy
- Social Infractructure
- Park
- School/Library
- Hospital/Dispensary
- Startup
- Minicorn: Company value $1 million & above
- Unicorn: Company Value $1 billion & above
- Decacorn: Company Value $10 Billion & above
- Hectocorn : Company Value $100 Billion & above
Financial Market
- A market where investors, invest their money to earn profit/interest.
Money Market
- Short Term Market
- Maturity upto 1 year
- Regulated by RBI
- Components/Imstrument
- Treasury Bills
- Cash Management Bill
- Commercial paper
- Certificate of Deposit
- Ways & Mean Advance
- Repurchase Agreement
Capital Market
- Long term market
- Maturity above 1 year
- Regulated by SEBI
- Components/Imstrument
- Share/Equity
- Debenture
- Bond
- Mutual Fund
- Participatory Note
SEBI
- Security & Exchange Bond of India
- Established: 12 April, 1988
- Head Office: Mumbai
- SEBI Act: 30 january, 1992 passed
- Body: Statutotury Body
- Board of Director: 9(Including Chairman)
- Chairperson: Madhabi Puri Buch
- Tenure: 5 year
- Function:
- To protect interest of Investors
- To regulate capital market/sharemarket
- To promote fair trade practice
- To prevent insider marketing
- To promote financial market awareness
- To regulate Gold Exchange
- To regulate credit rating agencies
- To promote better broker services
Stock Exchange
- It is a secondary market
- BSE: Bombay Stock Exchange
- Established: 1875
- HQ: Dalal Street, Mumbai
- Index value: Sexsex (Sensitivity Index)
- 30 Company/Blue Chip
- BSE is oldest stock exchange in India & Asia
- NSE: National Stock Exchange
- Established: 1992
- HQ: Mumbai
- Index Value: Nifty
- 50 Companies
- NYSE: New York Stock Exchange
- Established: 1792
- HQ: Wall Street, New York, USA
- Value : DowJones
- NASDAQ: New York
- Nikkei: Tokyo, Japan
- Kospi: South Korea
- HangSeng: Hongkong
- FTSE(Footsie): Britain
- Euronext: Amsterdam, Netherland
FINANCIAL TERM
- Coupon rate: rate of Interest
- Divident: Profit distributed among shareholders
- Retained Earning: undistributed profit of company
- Bull & Bear: Bull is Up, Bear is down
- IPO: Initial Public Offering
- First Time Share offering
- It is called Primary Market
- FPO: Follow Public Offering
- After First time share offer
- It is called secondary market
- Dated Securities: Long term securities
- Insider Trading: illegal trade practrice/leak company information
- Intraday Trading: Share purchase or sale within 1 day
- Right issue: Share offer to existing shareholders only
- Bonos Issue: Share offer to existing shareholders free of cost
- Sweat Equity: Share offer to employee of company at lower price.
- Buy back of Share: When company repurchase its own share
- Call Money: Interbank lending for 1 day or overnight
- Notice Money: Interbank lending for 14 days
- Term Money: Interbank lending for more than 14 days
- LIBOR: London Interbank Offered rate
- MIBOR: Mumbai Interbank Offered rate
- SAT: Securities Appellate Tribunal
- An authority to solve share market related issue
- Located in Mumbai
- Gilt-edged Securities
- Investment in Government securities.
- Face/Par Value: Original price (suppose 100)
- Premium Value: value more than original price(suppose 120)
- Discount Value: Value less than original value(suppose 80)
- T-Bill(Treasury Bill)
- Issues by Govt of India
- Time Period: 91 days, 182 days & 364 days
- Price: 25000 & multiple of 25000
- It issues at discount value
- It matured at Par/Face value
- CMP(Cash Management Bill)
- It issued by Govt of nIndia
- Time Period is less than 91 days
- It issued ar discount valuye
- It matured at Par/Face value
- Its price is not fixed.
- CP(Commercial Paper)
- it is issued by Corporate
- Time Period: 15 days to 1 years
- Price: 5 lakh 7 & multiple
- It is short-term unsecured promissory note
- It isssued at discount value
- It matured at Par/Face value
- CD(Certificate of Deposit)
- It issued by Bank & financial institution
- Time Period: 7 days to 1 year
- Price: 1 lakh 7 & multiple
- It issued at discount value
- It matured at Par/Face value.
- WMA(Ways & Mean Advance)
- RBI provide loan to Central & State Govt to Repo Rate Interest.
- Bond:
- Minimum Duration: 1 year
- Bondholder get interest or discount
- Zero Coupon Bond
- A bond issued at discount value & mature at Par/face Value.
- Convertible Bond
- A bond that can be converted in equity or share
- STT(Securities Transaction Tax)
- tax imposed by Central Govt on Purchase & Sell securities, Share, Debenture and Bond.
- Mutual Fund
- An institution/Company which pools/collect money from investors and invest in market.
- Mutual Fund Company Licence approved by SEBI
- MF are managed by AMFI
- Established 1995
- Association of Mutual Fund in India
- Minimum investment 500 rupee
- SIP: Systematic Investment Plan
- NAV: net Asset Value
- Mutual funds is a tax free investment(upto 1.5 lakh rupee per annum
- Types of MF
- ELSS: Equity Linked Saving Scheme
- lock in period: 3 year
- Only Share
- ULIP: Unit Linked Insurance Plan
- Lock in period: 5 year
- Type of ULIP
- Income Fund/Debt Fund: Investment in Debenture
- Equity Fund: Investment in Debenture
- Balanced/Hybrid Fund: Investment in Share and Debenture
- ELSS: Equity Linked Saving Scheme
- Hedging
- A strategy to manage risk incolve in Investment
- Arbitrage
- the strategy of taking advantage of price differences in different markets for the same asset
- P-Note(Participatory Notes)
- A participatory note, commonly known as a P-note or PN, is an instrument issued by a registered foreign institutional investor (FII) to an overseas investor who wishes to invest in Indian stock markets without registering themselves with the market regulator, the Securities and Exchange Board of India (SEBI).
- CAR(Capital Adequacy Ratio)
- A financial metric that measures a bank’s capital in relation to its risk-weighted assets.
- CAR is a key indicator of a bank’s financial stability and ability to absorb losses. It’s calculated by dividing a bank’s capital by its risk-weighted assets.
- CAR decided by RBI
- IRDAI
- Insurance Regulatory & Devel;opment Authgority of India
- Established: 1999 under IRDAI Act 1999
- HQ: Hyderabad
- Board of Director: 10 member including Chairman
- Present Chairman: Debasish Panda
- It is a statutory Body
- IRDAI recommended by RN Malhotra Committee.
- Function:
- To protect interest of Policytholder
- To regulate the insurabnce sector in India
- To promote & Develope Insurance Business
- To promote insurance awareness
- To promote fair insurance deals
- To prevent fraud & malpractice
- To provide licence to new Company & may be cancelled the licence of old company.
- Insurance: An agreement between insurer and Insured.
- Insurer: Insurance Company
- Insured: person who buy insurance policy
- Life Insurance: Death
- Non Life/General Insurance
- Accident
- Health
- Fasal
- Vehicle….
- Life Unsurance Public Sector Company
- LIC
- Non Life Insurance Public Sector Company
- New India Insurance Company, HQ-New Delhi
- National Insurance Company, HQ-Mumbai
- Oriental Insurance Company, HQ-Kolkata
- United India Insurance Company, HQ-Chennai
- Only reinsurance company: GIC-Re (general Insurance Corporation, HQ-Mumbai)
- Insurance Premium: Insured to insurer
- Insurance claim: Insurer to insured
Bancassurance
- When an insurance policy sell by insurance company througfh Bank Branch.
- A relation between Bank & insurance Company.
- For Bancassurance approval given by IRDAI
- Comdition for Bank
- Minimum Capital: 500 Cr
- Minimum CAR(Capital Adequacy Ratio): 10%
- NPA(Non Performing Assets): Satisfactory
- Bank in profit from last 5 years.
| Share/Equity | Debenture |
|---|---|
| Shareholder received Divident/Profit | Debentureholder get fixed interest |
| Share are more risky | Debenture are low risky |
| Shareholder have gvoting rights | Debentureholder hacve no voting rights |
| Shareholder consider as owner of company | Debentureholder consider as creditor of company |
BFS
- Board for Financial Supervision
- It is formed by RBI in 1994
- Chairman: RBI Governor
- BFS Meeting: Every Month
- It provide credit rating to Banking & Financial System
- A, B, C, D, D, E
- 6 factor used for rating: CAMELS
- C: Capital Adequacy
- A: Assets Quality
- M: Management
- E: Earning
- L: Liquidity
- S: System & Control
CRA
- Credit rating Agencies
- Regulated by SEBI
- CRISIL
- Credit rating Information Service of India Ltd.
- HQ: Mumbai
- CRISIL is the oldest/first Credit rating agency.
- ICRM
- Investment information credit rating agencies.
- HQ: Gurugram/New Delhi
- CARE
- Credit Analysis & researdch Ltd.
- HQ: Mumbai
- CIBIL
- Credit Information Bureau of India Ltd.
- HQ: Mumbai
- CIBIL provide rating/CIBIL score to individual
- SMERA
- Small & Medium Enterprises Credit Rating Agency
- HQ: Mumbai
- SMERA provide Credit rating to MSMEs
- ONICRA: HQ Gurugram
- Brickwork: HQ bengaluru
- Fitch: USA
- S & P: USA
- Moody’s: USA
Banking Ombudsman
- Banking Ombudsman Scheme 2006
- It is an authority to resolve Bank related issues.
- It formed under section 35A of banking Regulation Act, 1949
- It is a statutory body.
- Banking Ombudsman appointed by RBI for 3 year tenure
- 22 Banking ombudsman in India
- It applicable with effect from 1 april 1995
- Complaint to ombudsman within 1 year from date of conflict
- Max compensation: 20 lakh
- max compensation in Mental Harrasement: 1 lakh
- Process
- Bank manager( 30 day to resolve) > Banking ombudsman > Appellate Authority (RBI deputy governor) > Court
- For banking issues: Banking Ombudsman Scheme 2006
- For non-banking Finance Companies Issues: Ombudsman Scheme fore Non banking Finance Companies 2018
- For Digital Payment Issues: Ombudsman Scheme for Digital Transction 2019
- The Reserve Bank: Integrated Ombudsman Scheme 2021( Merger of All 3 Scheme)
NSC
- National Saving certificate
- Available in Post Office
- Duration: 5 year
- Min Invesytment: 10000
- Max investment: No limit
- Investment in NSC is taxable
- Denomination: 100, 500, 1000, 5000, 10000
- Rate of Interest: 7.7%
- NSC can used as a collateral against loan
KVP
- Kisan Vikas Patra
- Available in bank & Post office
- Denomination: 1000, 5000, 10000, 50000
- Min Investment: 1000
- Max investment: No limit
- Lock in Period: 30 months
- Double amount: after 120 months
- Rate of Interest: 7.5%
- Investment in KVP is not tax free
- KVP can used as a collateral against loan
IBC
- Insolvency & Bankruptcy Code
- IBC code passed by parliament in 2016
- IBC revive the company & to liquidation of company
- IBBI: Insolvency & Bankruptcy Board of India
- Formed: 1 OCt, 2016
- HQ: New Delhi
- Chairman: Shri Ravi Mital
- Ministry of Corporate Affairs
- IBBI is a statutory body
- IBC speed up insolvency cases
- IBC consist
- Individual Case
- DRT: Debt Recovery Tribunals
- DRAT: Debt Recovery Appellate Tribunals
- Company Case
- NCLT: National Company Law Tribunal
- NCLAT: National Company Law Appellate Tribunal
- Individual Case
Basel
- Basel is a name of city in Switzerland
- Basel city: Headoffice of BIS(Bank of International Settlement)
- BIS formed a BCBS committee for Global Banking Stability or improve Bank/Financial sector ability.
- BCBS: Basel committee on Banking Supervision
- BCBS/Basel norms mainly focus on Risk management
- Basel 1: 1998-Introduced in India, 1888: introduced in World
- Basel 2: 2006-Introduced in India, 2004: introduced in World
- Basel 3: 2013-Introduced in India, 2010: introduced in World
- BCBS committee have 45 members(Governor of central banks)
- Pillar of Basel Norms
- Minimum Capital Standard
- Supervisory review
- Market Duiscipline
- CAR/CRAR by Basel norms: 8%
- CAR/CRAR by RBI: 9%
- CRAR: Capital Risk Weighted Assets Ratio
- CAR: Capital Adequacy Ratio
- CAR: to kept a reserve from own fund by Bank to sffset any loss incurred in future
- CAR percentage determined by RBI