BANKING ACTS : RBI ACT 1934

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BANKING MATERIALS: BCSBI

Here sharing a pdf book on BCSBI :

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BANKING MATERIALS : KYC

Know Your Customer Guidelines

(This is a summarised and simplified version of the Reserve Bank of India's Know Your Customer guidelines.)

Q 1. What is KYC? Why is it required?
Response: KYC means "Know Your Customer". It is a process by which banks obtain information about the identity and address of the customers. This process helps to ensure that banks' services are not misused. The KYC procedure is to be completed by the banks while opening accounts and also periodically update the same.

Q 2. What are the KYC requirements for opening a bank account?
Response: To open a bank account, one needs to submit a 'proof of identity and proof of address' together with a recent photograph.

Q3. What are the documents to be given as 'proof of identity' and 'proof of address'?
Response: The Government of India has notified six documents as 'Officially Valid

Documents (OVDs) for the purpose of producing proof of identity. These six documents are Passport, Driving Licence, Voters' Identity Card, PAN Card, Aadhaar

Card issued by UIDAI and NREGA Card. You need to submit any one of these documents as proof of identity. If these documents also contain your address details, then it would be accepted as as 'proof of address'. If the document submitted by you for proof of identity does not contain address details, then you will have to submit another officially valid document which contains address details.

Q 4. If I do not have any of the documents listed above to show my 'proof of identity', can I still open a bank account?
Response: Yes. You can still open a bank account known as 'Small Account' by submitting your recent photograph and putting your signature or thumb impression in the presence of the bank official.

Q 5. Is there any difference between such 'small accounts' and other accounts?
Response: Yes. The 'Small Accounts' have certain limitations such as:
balance in such accounts at any point of time should not exceed ₹50,000
total credits in one year should not exceed ₹1,00,000
total withdrawal and transfers should not exceed ₹10,000 in a month.
Foreign remittances cannot be credited to such accounts.

Such accounts remain operational initially for a period of twelve months and thereafter, for a further period of twelve months, if the holder of such an account

provides evidence to the bank of having applied for any of the officially valid documents within twelve months of the opening of such account. The bank will review such account after twenty four months to see if it requires such relaxation.

Q 6. Would it be possible, if I do not have any of the officially valid documents, to have a bank account, which is not subjected to any limitations as in the case of 'small accounts'?
Response: A normal account can be opened by submitting a copy of any one of the following documents:

(i) Identity card with person's photograph issued by Central/State Government

Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, and Public Financial Institutions;

or

(ii) letter issued by a gazetted officer, with a duly attested photograph of the person.

This, however, is not a general rule and it is left to the judgement of the banks to decide whether this simplified procedure can be adopted in respect of any customer.

Q 7. If I refuse to provide requested documents for KYC to my bank for opening an account, what may be the result?
Response: If you do not provide the required documents for KYC, the bank may not be able to open your account.

Q 8. Can I open a bank account with only an Aadhaar card?
Response: Yes, Aadhaar card is now accepted as a proof of both, identity and address.

Q 9. What is e-KYC? How does e-KYC work?
Response: e-KYC refers to electronic KYC.

e-KYC is possible only for those who have Aadhaar numbers. While using e-KYC service, you have to authorise the Unique Identification Authority of India (UIDAI), by explicit consent, to release your identity/address through biometric authentication to the bank branches/business correspondent (BC). The UIDAI then transfers your data comprising name, age, gender, and photograph of the individual, electronically to the bank/BC. Information thus provided through e-KYC process is permitted to be treated as an 'Officially Valid Document' under PML Rules and is a valid process for KYC verification.

Q 10. Is introduction necessary while opening a bank account?
Response: No, introduction is not required.

Q 11. If I am staying in Chennai but if my address proof shows my address of New Delhi, can I still open an account in Chennai?
Response: Yes. You can open a bank account in Chennai even if your permanent address is in New Delhi and you do not have a proof of address for your Chennai. In that case, you can submit an officially valid document (proof of address document) of your New Delhi address together with a declaration about your Chennai address, for communication purposes.

Q 12. Can I transfer my existing bank account from one place to another? Do I need to undergo full KYC again?
Response: Yes, it is possible to transfer an account from one branch to another branch of the same bank. There is no need for KYC exercise again to transfer a bank account from one branch to another branch of the same bank. However, if there is a change of address, then you would have to submit a declaration about the current address. If the address in the 'officially valid documents'/ 'proof of address' is neither permanent nor current address, a new proof of address would be required within six months. In case of opening an account in another bank, however, you would have to undergo KYC exercise afresh.

Q 13. Do I have to furnish KYC documents for each account I open in a bank even though I have furnished the documents of proof of identity and address?
Response: No, if you have opened an account with a bank, which is KYC compliant, then for opening another account with the same bank, furnishing of documents is not necessary.

Q 14. For which banking transactions do I need to quote my PAN number?
Response:PAN number needs to be quoted for transactions, such as, account opening, transactions above ₹50,000 (whether in cash or non-cash), etc. A full list of transaction where PAN number needs to be quoted can be accessed from website of Income Tax Department at the following URL:

http://law.incometaxindia.gov.in/DIT/File_opener.aspx?page=ITRU&schT=rul&csId=2 1533008-bbb4-4f86-b609-9296e8b5223e&rNo=114B&sch=&title=Taxmann%20-%20Direct%20Tax%20Laws

Q 15. Whether KYC is applicable for Credit/Debit/Smart/Gift cards?
Response:Yes. Full KYC exercise is necessary for Credit/Debit/Smart/for purchaser of Gift Cards and also in respect of add-on/ supplementary cards.

Q 16. I do not have a bank account. But I need to make a remittance. Is KYC applicable to me?
Response:Yes. KYC exercise needs to be done for all those who want to make domestic remittances of ₹ 50,000 and above and all foreign remittances.

Q 17. Can I purchase a Demand Draft/Payment Order/Travellers Cheque against cash without KYC?
Response:Demand Draft/Payment Order/Travellers Cheques for ₹50,000/- and above can be issued only by way of debiting the customer's account or against cheques.

Q 18. Do I need to submit KYC documents to the bank while purchasing third party products (like insurance or mutual fund products) from banks?
Response:Yes, all customers who do not have accounts with the banks (known as walk-in customers) have to produce proof of identity and address while purchasing third party products from banks if the transaction is for ₹50,000 and above. KYC exercise may not be necessary for bank's own customers for purchasing third party products. However, instructions to make payment by debit to customers' accounts or against cheques for remittance of funds/issue of travellers' cheques, sale of gold/silver/platinum and the requirement of quoting PAN number for transactions of ₹50,000 and above would be applicable to purchase of third party products from banks by bank's customers as also to walk-in customers.

Q 19. My KYC was completed when I opened the account. Why does my bank insist on doing KYC again?
Response:Banks are required to periodically update KYC records. This is a part of their ongoing due diligence on bank accounts. The periodicity of such updation would vary from account to account or categories of accounts depending on the bank's perception of risk. Periodical updation of records also helps prevent frauds in customer accounts.

Q 20. What are the rules regarding periodical updation of KYC?
Response:Different periodicities have been prescribed for updation of KYC records depending on the risk perception of the bank. KYC is required to be done at least every two years for high risk customers, at least every eight years for medium risk customers and ten years for low risk customers. This exercise would involve all formalities normally taken at the time of opening the account.

If there is no change in status with respect to the identity (change in name, etc.) and/or address, such customers who are categorised as 'low risk' by the banks may

now submit a self-certification to that effect at the time of periodic updation.

In case of change of address of such 'low risk' customers, they could merely forward a certified copy of the document (proof of address) by mail/post, etc. Physical presence of such low risk customer is not required at the time of periodic updation.

Customers who are minors have to submit fresh photograph on becoming major.

Q 21. What if I do not provide the KYC documents at the time of periodic updation?
Response:If you do not provide your KYC documents at the time of periodic updation bank has the option to close your account. Before closing the account, the bank may, however, impose 'partial freezing' (i.e. initially allowing all credits and disallowing all debits while giving an option to you to close the account and take your money back).

Later even all credits also would not be allowed. The 'partial freezing' however, would be exercised by the bank after giving you due notice.

Q 22. How is partial freezing imposed?
Response:Partial freezing is imposed in the following ways:
While imposing 'partial freezing', banks have to give due notice of three months initially to the customers before exercising the option of 'partial freezing'.
After that a reminder for further period of three months would be issued.
Thereafter, banks may impose 'partial freezing' by allowing all credits and disallowing all debits with the freedom to close the accounts.
If the accounts are still KYC non-compliant after six months of imposing initial 'partial freezing' banks may disallow all debits and credits from/to the accounts, rendering them inoperative.
Thus, one year after the account is due for updation, if you do not provide the necessary documents/information, your account would become fully inoperative i.e, neither credits nor debits would be allowed in the account.

Meanwhile, the account holders can revive accounts by submitting the KYC documents.

BANKING MATERIALS : ALL ABOUT BHIM

About BHIM

What Exactly Is BHIM?

BHIM is a UPI based payment interface which allows real time fund transfer using a single identity like your mobile number or name.

IIBF CAIIB BFM DISCUSSION TOPIC UNIT :2

Here sharing unitwise collection of BFM unit -2. This post will get updated with more qus time to time.Hope you like it. happy Reading:)

1. .......... can be defined as an unplanned event with financial consequences resulting in loss or reduced earnings.
a) Risk
b) Derivates
Ans-Risk

2. Herstatt Risk is also known as ......?
a) exchange risk
b) Country Risk
c) Intrest Rate Risk
d) Settlement Risk
Ans- Settlement risk

IIBF CAIIB BFM EXAM STRATEGY

Today I will tell you the strategy for the study of Bank Financial Management which many people finds difficult to clear. If you study properly, it is easy to clear the BFM. This subject also contains 4 modules, they are;

1. -International Banking
2. -Risk Management
3. -Treasury Management
4. -Balance Sheet Management

Many people do not correlate the syllabus of the subject with day to day banking activity. So they find it difficult to score and understand this subject. But this is not true, this subject is very much important which will increase your knowledge regarding top management & middle management functioning of your bank as well as banking as a whole industry.

All the modules are equally important, but you may clear the paper with three modules study also. Module A & B are relatively easy and scoring as well. Let us discuss strategy for each module.

Module A-International Banking

Important topics are Exchange Rates and Forex Business, Basics for Forex Derivatives, Documentary LC, and Facilities for Exporters & Importers
Rapid reading or bullet point reading is quite useful for this module. Practice numerical again and again.
Many numerical/case studies are asked from this module which are quite easy as compared to Module B & Module D case studies. Refer the case studies from McMillan given at the end of the topic. Also N.S.Toor book has many numerical and case studies. Questions are asked on Exchange rates, Shipment Finance etc.

Module B-Risk Management

All chapters are equally important as they are interlinked to each other. Again focus more on case studies/numericals given in Apendix at the end of chapter. Maximum case studies are asked from this module. Though short notes are useful for this module I would suggest McMillan reading for this module because some questions are twisted type for which you require details of the concept which is hard to get from short notes. RBI website contains FAQs which are quite useful for this modules, you should read them at least once.

Module C- Treasury Management

Important topics are Introduction, Types of treasury products, Treasury Risk Management, Treasury and Asset-Liability Management.

Mostly questions asked on this module are theoretical type, so through reading of McMillan is important. If you don’t get time then you can skip this module or read short notes since the weighted of this module for exam point of view is low according to me as compared to Module A&B. But those who wish to make carrier or work in treasury department, this is the best module to learn.

Module-D Balance Sheet Management

Important chapters are Components of ALM in Bank’s Balance Sheet, Capital and banking Regulation,, Capital Adequacy, Asset Classification and Provisioning Norms, Interest rate Risk management.

Though McMillan book contain sufficient material but I would suggest you to refer RBI website for this module. In this module focus more on Case Studies as compared to theoretical questions. Do not skip this module as it is much important for exam as well as knowledge point of view. No need to read McMillan line by line.

Overall you have to keep balance between theoretical reading as well as case studies/numerical since the paper would contain 40-45% case studies. N.S.Toor book contains good case studies and MCQs. Also there are many resources available on the blog and internet from where you will get case studies for this module.

After giving this paper you will realized that BFM is easier as compared to ABM and no need to worry for BFM.

Source: Internet

BANKING MATERIALS: Banking Quiz

Q1. BCSBI was set up to ensure that the common person as a consumer of financial services from the banking Industry is in no way at a disadvantageous position and really gets what he/she has been promised. BCSBI stands for-?

(a) Branch Codes and Standards Board of India

(b) Banking Codes and Stability Board of India

(c) Banking Codes and Standards Bank of Industry

(d) Banking Codes and Society Board of Investment

(e) Banking Codes and Standards Board of India

Q2. When was the currency system in India converted into the decimal system?

(a) April 01st 1959

(b) April 01st 1957

(c) April 01st 1955

(d) April 01st 1953

(e) April 01st 1951

IIBF JAIIB PPB : MUTUAL FUND

It is mechanism of pooling resources from public and investing in securities. Following are the features of Mutual Fund:

·         Units are sold to public

·         Investors are called unit holders

·         Money is kept in trust

·         Registration is required with SEBI  

·         Mutual Fund is set up in the form of trust with sponsored trustees, Asset Management Companies (AMCs) and custodians.

·         Sponsor is like a promoter of a company. AMC manages funds by making investment in various types of securities. Custodian holds securities in its custody

·         SEBI requires that at least 2/3^rd of directors of Trustee Company must be independent and at-least 50% of directors of AMC must be independent.

NAV (Net Asset Value)	It measures performance of any Mutual Fund. It is calculated as under: Market Value of Securities of scheme  - Expenses incurred on the scheme Total number of units of a scheme as on date NAV has to be disclosed by the Mutual Fund on regular basis – daily or weekly.
Types of Mutual Funds	There are two types of Mutual Funds: Open Ended Plan  It is available for subscription and repurchase on continuous basis. There is no fixed maturity period. Sale and Purchase is made at NAV on daily basis. NAV is declared on daily basis. Close Ended Plan Under this plan, there is fixed maturity period. Investors invest during Public Offer which is valid for some specified period. Sale and Purchase of units is made in Stock Exchanges.NAV is generally declared on weekly basis.
Growth Scheme or Equity Oriented Scheme	Growth Scheme of Mutual fund has following features: ·         Major part of Corpus is invested in Equities ·         The risk is higher ·         Capital appreciation is more if the market rises. ·         Chances of losses can also be not rules out ·
Income Scheme or Debt Oriented Scheme	Income Scheme of Mutual fund has following features: ·         Major part of Corpus is invested in Bonds, Debentures and G-Secs ·         Risk is lesser as compared to Growth Scheme ·         Regular and Steady Income to investors ·         NAV is affected due to change in interest rates ·         Fall in Interest rates leads to Higher NAV.
Balanced Plan	Mixed Scheme of Mutual fund has following features: ·         It is a mixed plan. Investment is made in both equities and bonds. ·         The general proportion is 40 in equity and 60 in bonds. ·         Fund is affected by fluctuation in share market but not too much. ·         NAV is less volatile as compared to Equity Fund.
Other Plans	Gilt Fund: It consists of Investment in Govt. Securities Index Fund: The portfolio consists of particular Index securities such as BSE sensitive index or Nifty Index. Tax Saving Schemes Under this plan, money is invested in Tax Saving Securities under specific provisions of IT Act. For Example, ELSS (Equity Linked Saving Scheme) and Pension Plans launched by Mutual Funds are types of Tax Saving Schemes Fund of Funds  A scheme that invests primarily in other schemes of same mutual funds or other mutual funds is known as FOFs (Fund of Funds)
AMFI -	AMFI is Association of Mutual Funds of India Certificate Test. It is an examination which has to be passed for new entrants in marketing and selling of units of Mutual Funds Firms and Corporate have to obtain certificate of registration from AMFI whereas all employees engaged in marketing of these funds have to pass AMFI examination.