BANKING AWARENESS TERMS

Nationalisation of Banks in India in Two stages: 

On 19th July 1969, 14 Private Sector Banks Nationalised In first Phase by Late Indira Gandhi, the then Prime Minister of India.
1) Allahabad Bank
2) Bank of Baroda
3) Bank of India
4) Bank of Maharashtra
5) Canara Bank
6) Dena Bank
7) Central Bank of India
8) Indian Bank
9) Indian Overseas Bank
10) Punjab National Bank
11) Syndicate Bank
12) Union Bank of India
13) United Bank of India
14) United Commercial Bank

On 15th April 1980, 6 Private Sector Banks Nation-alised in second phase.
1) Andhra Bank
2) Corporation Bank
3) New Bank of India - Merged With PNB in 1993
4) Oreintal Bank of Commerce - Global Trust Bank Merged with OBC.
5) Punjab and Sind Bank
6) Vijaya Bank

Important Bits:
1. Present RBI Governor is 
D. Subba Rao, I.A.S.
2. RBI Central Office Located at Mumbai.
3. Authority to Issue of Currency Notes into Circulation by 
Reserve Bank
4.Signature on Currency Notes by Governor of RBI.

5. Prouducts of Electronic Banking Innovation are -
A) Internet Banking
B) Electronic Funds Transfer
C) Offshore Banking
D) Mobile Banking
E) Smart Cards

6. Country's Largest Commercial Bank - State Bank of India.
7. NPA - Non-Performing Asset-
A loss to Bank or a bad debt.

8. Stale Cheque - A Cheque becomes Invalid from the date of Issue of 3 Months.

9. Negotiable Instruments are:- As per Negotiable Instrument Act, 1881, Promissory Note, Bill of Exchange and a Cheque.

10. State Bank of India Nationalised on - July 1st, 1955

11.State Bank Previously Know as - Imperial Bank of India.

12. RBI Functioning From: 
01-04-1935

13. Repo Rate - The Interest Rate Charged by RBI to Banks on Loans.

14. Reverse Repo Rate: The Interest Rate at which RBI borrows from other Banks.

15. BPLR - Bench Mark Prime Lending Rate Charged by a Bank to borrowers of Funds. 

Urban Cooperative Banks

The number of Urban Cooperative Banks (UCBs) whose license was cancelled in the last three yearsare, 31 in 2009-10, 12 in 2010-11 and 14 in 2011-12.

                 Reserve Bank of India (RBI), the licensing authority for UCBs announced in the Annual Policy Statement (2004-05) that no fresh proposals for new UCBs would be considered till a comprehensive policy including an appropriate legal and regulatory framework for the sector is put in place. There has been no change in the policy of RBI since then. An Expert Committee on the subject was constituted in April, 2010 which submitted its report to RBI in September, 2011.

                 RBI has, from time to time, taken a number of steps to strengthen the financial position of UCBs, which, inter alia, include ;-

·        Allowing merger of UCBs to encourage merger/amalgamation and to provide an avenue for non-disruptive exit route for weak UCBs;

·        Allowing UCBs to raise share capital;

·        Allowing financial restructuring of weak UCBs by conversion of deposits into equity;

·        Entering into MOU with State Governments/UTs and Central Government (for multi-State UCBs) to address the problem of dual control of UCBs by RBI and Registrar of Cooperative Societies; and

·        Setting up a Task Force on Urban Cooperative Banks in each State/UT with an objective to have a consultative arrangement for identifying weak and potentially viable entities and turning them around and also to provide a non disruptive exit path to unviable entities so as to ensure continuous process of monitoring of such UCBs

RBI directs Co-op banks to not grant loans for gold purchase

The RBI has directed State and Central co-operative banks not to give loans for purchase of gold in any form to curb the considerable increase in its import in recent years.

Currently, these banks are allowed to grant loans against pledge of gold ornaments, but not permitted to grant any advance for purchase of gold in any form. They offer loans for various purposes against the security of gold/gold ornaments as part of their lending policy.

Corporation Bank launches new variants of savings bank accounts

Corporation Bank has rolled out two new types of savings accounts namely SB Super and SB Signature.
A customer should maintain a minimum Quarterly Average Balance (QAB) of Rs 15,000 for SB Super and Rs 1 lakh for SB Signature.
Customers having any of the two accounts will be offered preferential loan processing. Both accounts offer bundled demat and trading account including a waiver of annual maintenance charges for the first year. They also bring concessions and offers like free NEFT, SMS banking, and 25 % concession in bank charges for gold coins.

Thirty Software companies detach from NASSCOM to form “iSpirt”

30 Indian software product companies have decided to form a new association called the Indian Software Product Industry Round Table, or “iSpirt”.
Why this separation:
Software companies involved in forming the new group have felt the need to create a new body which would be a group of Software Products companies rather than IT services companies like TCS, Infosys, and Wipro etc. which dominate NASSCOM. The objective is to bring all the software product companies (large and small) to share expertise and experiences, and create a larger awareness in society and government about the critical role the industry can play and something they believe they cannot effectively do under the larger NASSCOM umbrella. They have named the new body as Indian Software Product Industry Round Table, or iSpirt. Founding companies include Tally Solutions, QuickHeal, InMobi, Nucleus software, and industry stalwarts. The idea is to create and promote mass-solution software that can be bought off the shelf, like MS Windows or Office. The new association’s members want to offer education software for all schools rather than just IITs/IIMs.
The thirty founding members are led by Bharat Goenka, co-founder of Tally Solutions, Sharad Sharma, former head of Yahoo India R&D, startup mentor and founder of Brand Sigma, Naveen Tewari, founder of In-Mobi , and Vishnu Dusad, founder of Nucleus Software.
Why they are emphasizing on software products over software services?
Software services which are offered by IT service providers like TCS, Infosys cater to the needs of small number of people whereas the scalability of Software Product like Microsoft office, Tally is very high and many of its operations can be performed by the user itself.

Aircel offers ‘Mobile Money’

The Telecom operator Aircel has launched a new service called ‘Mobile Money’ in collaboration with ICICI Bank and Visa to enable its customers transfer money, pay bills and withdraw cash by using only their mobile phones—without having to make a trip to the bank or an ATM.  It is similar to Vodafone’s M-Pesa service which first pioneered to great success in Africa.
The service will be initially rolled out in Tamil Nadu, specifically for the Chennai – Tirunelveli corridor – to help migrant labourers send back money to their villages.
How does it work:
A person who wishes to transfer money from A location to B destination will have to deposit the money with a correspondent in the A area, after which an SMS is sent to the recipient confirming the transaction details. The recipient has to merely go to a banking correspondent in their respective area (B) to retrieve the cash.
This plan will work even if both parties have no ICICI bank account, with the minimum amount needed to start an account being Rs. 100. The company will make money by charging commission ranging from 1.5 to 3% on each transaction.

Amendments to the National Bank for Agriculture and Rural Development (NABARD) Act, 1981

The Union Cabinet  gave its approval to the amendments to the National Bank for Agriculture and Rural Development (NABARD) Act 1981.

The following amendments to the NABARD Act 1981 are proposed:

1.      Raising the authorized capital of NABARD to Rs. 20,000 crore from Rs. 5,000 crore.

2.      The meaning of cooperative society is proposed to be enlarged to include multistate cooperative societies registered under any Central law or any other Central or State law relating to cooperative societies.

3.      Change of ownership to facilitate the transfer of the remaining share capital of NABARD from the Reserve Bank to the Central Government.

4.      Increasing the scope of operations of NABARD under short term funding purposes and other changes.

The following benefits are projected by this amendment:-

1.  By increasing the authorized capital of NABARD to Rs 20,000 crore from Rs 5,000 crore, the ability of NABARD to mobilize resources from the market will be enhanced thereby new credit products, new credit linkages and new clients will be developed.

2.  The amendments allow NABARD to lend to new institutions, mainly Societies covered under multistate cooperative societies act and other central laws, producer organizations or such class of financial institutions which are approved by the Central Government. This is likely to benefit a larger segment of the financially excluded farmers in the country.

3.  The amendments allow combination of credit, creation of short term operations fund and swapping of debt of farmers.

4.  The decision of the Government to transfer the balance one percent shares to the Govt. of India from Reserve Bank of India (RBI) in NABARD shall be carried out, which will provide for increased public accountability, as the Government will acquire the equity held by RBI.

5.  NABARD will combine the post of Chairman and the post of Managing Director, into one, therefore Chairman and Managing Director, under the provisions of the NABARD Act relating to these two posts. This shall ensure a distinct line of command.

Background

        NABARD was established on 12 July 1982 to provide sharp focus to agriculture credit and rural development. NABARD adopted, as its mission, the promotion of sustainable and equitable development of agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives.

RBI cuts policy rates by 0.25 percent

After a long gap of nine months, the Reserve Bank (RBI) has reduced the short-term lending rate by 0.25 per cent to 7.75 per cent and Cash Reserve Ratio (CRR) by similar margin to 4 per cent thus released Rs 18,000 crores primary liquidity into the system. While repo rate cut will reduce the cost of borrowing for individuals and corporates, the reduction in CRR, which is the portion of deposits that banks have to park with RBI, would improve the availability of funds.

Following the repo rate revision, the other policy rates like reverse repo, bank rate, and Marginal Standing Facility Rate too will come down by 0.25 per cent.

These initiatives are aimed at encouraging investments, supporting growth and anchoring inflationary expectations.

Inflation has been the prime inhibiting factor that has prevented the RBI from cutting repo rate in the last nine months. The RBI, however, has reduced the growth projections for the current financial year to 5.5 per cent from its earlier estimate of 5.8 per cent.  On inflation, it moderated the rate to 6.8 per cent for March-end from earlier projection of 7.5 per cent.

What is CRR? Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to increase the per cent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks. What is SLR? Statutory Liquidity Ratio is the amount of liquid assets, such as cash, precious metals or other approved securities, that a financial institution must maintain as reserves other than the Cash with the Central Bank What is Repo and Reverse Repo rate? A repurchase agreement is the sale of securities together with an agreement for the seller to buy back the securities at a later date. The repurchase price should be greater than the original sale price, the difference effectively representing interest, called the repo rate. The party that originally buys the securities effectively acts as a lender. The original seller is effectively acting as a borrower, using their security as collateral for a secured cash loan at a fixed rate of interest. A reverse repo is simply the same repurchase agreement from the buyer's viewpoint, not the seller's. Hence, the seller executing the transaction would describe it as a "repo", while the buyer in the same transaction would describe it a "reverse repo". So "repo" and "reverse repo" are exactly the same kind of transaction, just described from opposite viewpoints. The term "reverse repo and sale" is commonly used to describe the creation of a short position in a debt instrument where the buyer in the repo transaction immediately sells the security provided by the seller on the open market.

Central Bank unveils limited period deposit scheme

Central Bank of India has launched a new limited period deposit scheme – Cent 101, to mobilise up to Rs 3,000 crore, for a short-term requirement of the bank.

Announcing the launch here, B. Akbaraly, Zonal Manager (South Zone), Central Bank of India, said in the last couple of days of soft launch, the bank managed to mobilise Rs 58 crore. “Our target is to collect at least Rs 560 crore before the end of March 31, from the Tamil Nadu and Kerala markets alone,” he said.

Elaborating on the scheme, R. Thiagarajan, Deputy General Manager of the bank, said the bank will pay 8.55 per cent interest, which is the highest in the industry. For senior citizens, it offers 9.05 per cent.

Minimum amount that can be deposited is Rs 1,000, thereafter in multiples of Rs 1,000 and the maximum limit is Rs 10 crore.

Earlier, the bank came out with a similar plan for 555 days – Cent 555, which was a great success, said Akbaraly.

HYBRID CARD:

The bank is also proposing to come out with a hybrid card, which will work as an usual debit card as long as the individual has balance in his bank account. Once the credit balance is exhausted by the individual, the card will automatically turn to be a credit card, he explained.

As on December 31, 2012, the bank has crossed 3.5 million debit card base. It has plans to launch co-branded debit, credit and pre-paid cards with several corporates.

The bank, being a late entrant to the ATM system segment, had only around 1,000 ATMs across the country by the end of 2011-12. In the current financial year, so far, it crossed the 2,000-mark. “In the next two months, we are planning to install another 500 ATMs across cities, to take the total to 2,500 by the end of the current financial year.

Vijaya Bank’s new credit cards target high net-worth individuals

Vijaya Bank has launched two credit cards ‘V-Platinum’ and ‘V-Privilege’ targeted at high net worth individuals (HNIs) and term deposit holders.

Launching the credit cards, H.S. Upendra Kamath, Chairman and Managing Director, said “We have set a target to issue 10,000 ‘V-Platinum’ cards and 5000 ‘V-Privilege’ by the end of this calendar year”

“The bank has issued around one lakh ordinary credit cards and has exposure of Rs 29 crore. But due to debit card, credit cards were not popular, hence today we have launched a variant of credit card targeted at HNIs and term deposit holders,” he added.

Vijaya Bank has drawn up a plan to issue both the credit cards by utilising the services of its 12,000 employee based and through its 1333 branches.