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Banking and Insurance: Key important Questions and Answers

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1. What are "RE-CALLED ASSETS?"
When bank has a doubt on the intension of the customer it ask for the whole money to be pa...
4. Basic criteria for a new Bank licensing.
• New bank license norms
• The new guidelines state that the groups applying f...
The setting up of a Debts Recovery Tribunal is dependent upon the volume of cases. Higher the number of cases
within a ter...
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Banking and Insurance: Key important Questions and Answers

  1. 1. 1. What are "RE-CALLED ASSETS?" When bank has a doubt on the intension of the customer it ask for the whole money to be paid back even, if he has not paid two or three installments. Notice are sent to the customer. On recalled assets bank can take legal action also. 2. Mention the tools used to assess credit risk in banks.  Operations in the account  Stock statements  Godown Inspection/ Stock/ Unit Audit  Review of financial statements  Credit Rating (CRISIL)  Concurrent audit, Annual Audit, Credit Audit, Statutory Audit etc.  Change in lifestyle of the borrower, to find out diversification of funds 2. Mention the six types of risks in Banking.
  2. 2. 4. Basic criteria for a new Bank licensing. • New bank license norms • The new guidelines state that the groups applying for a license should have a successful track record of at least 10 years • The new regulations also stipulate that 25% of the branches should be opened in previously unbanked rural areas. 5. Short notes on DRT (DEBT RECOVERY TRIBUNAL) Keeping in line with the international trends on helping financial institutions recover their bad debts quickly and efficiently, the Government of India has constituted thirty three Debts Recovery Tribunals and five Debts Recovery Appellate Tribunals across the country. The Debts Recovery Tribunal (DRT) enforces provisions of the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993 and also Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002. Under the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993 banks approach the Debts Recovery Tribunal (DRT) whereas, under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002 borrowers, guarantors, and other any other person aggrieved by any action of the bank can approach the Debts Recovery Tribunal (DRT).
  3. 3. The setting up of a Debts Recovery Tribunal is dependent upon the volume of cases. Higher the number of cases within a territorial area, more Debts Recovery Tribunal would be set up. Each Debts Recovery Tribunal (DRT) is presided over by a Presiding Officer. The Presiding Officer is generally equavalent to the rank of Dist. & Sessions Judge. A Presiding Officer of a Debts Recovery Tribunal is assisted by a number of officers of other ranks, but none of them need necessarily have a judicial background. Therefore, the Presiding Officer of a Debts Recovery Tribunal is the sole judicial authority to hear and pass any judicial order. Each Debts Recovery Tribunal has two Recovery Officers. The work amongst the Recovery Officers of a Debts Recovery Tribunal (DRT) is allocated by the Presiding Officer of the Tribunal. Though the Recovery Officer of the Tribunal need not be a judicial Officer, but the orders passed by a Recovery Officer are judicial in nature, and are appealable before the Presiding Officer of the Debts Recovery Tribunal (DRT). The Debts Recovery Tribunal (DRT) are fully empowered to pass comprehensive orders and can travel beyond the Civil procedure Code to render complete justice. A Debts Recovery Tribunal (DRT) can hear cross suits, counter claims and allow set offs. However, a Debts Recovery Tribunal (DRT) cannot hear claims of damages or deficiency of services or breach of contract or criminal negligence on the part of the lenders. In addition, a Debts Recovery Tribunal (DRT) cannot express an opinion beyond its domain, or the list pending before it. The recording of evidence by Debts Recovery Tribunal is somewhat unique. All evidences are taken by way of an affidavit. Cross examinations is allowed only on request by the defense, and that too if the Debts Recovery Tribunal (DRT) feels that such a cross examinations is in the interest of justice. Frivolous cross examination are denied is the same can be brought on record by way of affidavit. There are a number of other unique features in the proceedings before the Debts Recovery Tribunal all aimed at expediting the proceedings. 6. What are MSMEs? (a) The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under: (a) Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below: (i) A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh; (ii) A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore; and (iii) A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore. (b) Enterprises engaged in providing or rendering of services and whose investment in equipment (original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006 are specified below.
  4. 4. (i) A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh; (ii) A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore; and (iii) A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore. 7. Short notes on PRIORITY SECTOR LENDING Priority sector refers to those sectors of the economy which may not get timely and adequate credit in the absence of this special dispensation. Typically, these are small value loans to farmers for agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections. Priority Sector includes the following categories: (i) Agriculture (ii) Micro and Small Enterprises (iii) Education (iv) Housing (v) Export Credit (vi) Others The rate of interest on various priority sector loans will be as per RBI’s directives issued from time to time, which is linked to Base Rate of banks at present. Priority sector guidelines do not lay down any preferential rate of interest for priority sector loans. Priority sector loans to the following borrowers are considered under Weaker Sections category:- (a) Small and marginal farmers; (b) Artisans, village and cottage industries where individual credit limits do not exceed `50,000; (c) Beneficiaries of Swarnjayanti Gram Swarozgar Yojana (SGSY), now National Rural Livelihood Mission (NRLM); (d) Scheduled Castes and Scheduled Tribes; (e) Beneficiaries of Differential Rate of Interest (DRI) scheme; (f) Beneficiaries under Swarna Jayanti Shahari Rozgar Yojana (SJSRY); (g) Beneficiaries under the Scheme for Rehabilitation of Manual Scavengers (SRMS); (h) Loans to Self Help Groups; (i) Loans to distressed farmers indebted to non-institutional lenders; (j) Loans to distressed persons other than farmers not exceeding `50,000 per borrower to prepay their debt to non- institutional lenders; (k) Loans to individual women beneficiaries upto `50,000 per borrower; Educational Loan: Loans to individuals for educational purposes including vocational courses upto `10 lakh for studies in India and `20 lakh for studies abroad are included under priority sector Housing Loan:
  5. 5. Loans to individuals up to `25 lakh in metropolitan centres with population above ten lakh and `15 lakh in other centres for purchase/construction of a dwelling unit per family excluding loans sanctioned to bank’s own employees. Manufacturing sector Enterprises Investment in plant and machinery Micro Enterprises Do not exceed twenty five lakh rupees Small Enterprises More than twenty fivelakh rupees but does not exceed five crore rupees Enterprises Investment in equipment Micro Enterprises Does not exceed ten lakh rupees Small Enterprises More than ten lakh rupees but does not exceed two crore rupees 8. What is ALLONGE? A sheet of paper attached to a bill of exchange for the purpose of documenting endorsements. The need for an allonge arises as a result of a lack of space on the bill itself.  Because a bill of exchange or cheque is transferable through endorsement, it may be exchanged among so many parties that these parties don't all fit on the bill.  In this case, a separate piece of paper - the allonge - is attached to the bill or the cheque, acting as a legal extension of the document.  This is called the Allonge 9. Meaning of Endorsement and types
  6. 6. 10. SEC 138 OF NI ACT Dishonour of cheque for insufficiency, etc., of funds in the account. —Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provisions of this Act, be punished with imprisonment
  7. 7. for 19 [a term which may be extended to two years], or with fine which may extend to twice the amount of the cheque, or with both: Provided that nothing contained in this section shall apply unless— (a) the cheque has been presented to the bank within a period of six months from the date on which it is drawn or within the period of its validity, whichever is earlier; (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque, 20 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice. 11. What is the purpose of crossing a cheque and what are the types of crossing?
  8. 8. 12. What is core banking and what are its advantages? Core banking is a banking service provided by a group of networked bank branches where customers may access their bank account and perform basic transactions from any of the branches. Advantages: • Limited Professional Manpower to be utilized more effectively • Customer can have anywhere, more convenient and easier banking • ATM, Internet Banking, Mobile Banking, Payment Gateways, Referral Business • More Strong and economical way for MIS • Reduction in Branch Manpower by 15-20% • Additional Manpower available for Marketing, Recovery and Personalized banking • Instant Information availability for decision support • Quick and Accurate Implementation of Policies • Improved Recovery Process causing reduction on recovery costs, NPA Provisions • Innovative, redefined or improved processes (e.g. Inter Branch Reconciliation) causing reduction in Manpower at Head Office Reduction in Software maintenance at Branch and Head Office • Centralized Printing and Backup resulting in reduction in capital and revenue expenditure on printing and backup devices and media at branches • Electronic Transactions with Other Financial Institutions • Increased Speed in working resulting in more business opportunities and reduction in penalties, legal expenses etc 13. Short notes on CTS. Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point by the presenting bank en-route to the paying bank branch. In its place an electronic image of the cheque is transmitted to the paying branch through the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc. Cheque truncation thus obviates the need to move the physical instruments across bank branches, other than in exceptional circumstances for
  9. 9. clearing purposes. This effectively eliminates the associated cost of movement of the physical cheques, reduces the time required for their collection and brings elegance to the entire activity of cheque processing. Implementation: CTS has been implemented in New Delhi, Chennai and Mumbai with effect from February 1, 2008, September 24, 2011 and April 27, 2013 respectively. After migration of the entire cheque volume from MICR system to CTS, the traditional MICR-based cheque processing has been discontinued across the country. The new approach envisioned as part of the national roll-out is the grid-based approach. Under this approach the entire cheque volume in the country which was earlier cleared through 66 MICR Cheque Processing locations is consolidated into the three grids in New Delhi, Chennai and Mumbai. Each grid provides processing and clearing services to all the banks under its respective jurisdiction. Banks, branches and customers based at small / remote locations falling under the jurisdiction of a grid would be benefitted, irrespective of whether there exists at present a formal arrangement for cheque clearing or otherwise. Benefits of CTS to customers of banks:  Shorter clearing cycle  Superior verification and reconciliation process  No geographical restrictions as to jurisdiction  Operational efficiency for banks and customers alike  Reduction in operational risk and risks associated with paper clearing  No collection charges for collection of cheque drawn on a bank located within the grid. 14. How does a credit/debit card transaction work behind scene? Card is swiped at merchant. Merchant sends data to their processor, which is usually an acquiring bank. Acquiring bank routes transaction through appropriate card network, e.g., Visa , Master networks Transaction reaches card holder's issuing bank. Issuing bank approves or declines transaction. Approve/decline sent back through network to merchant to complete purchase. Acquiring bank settles with issuing bank. Acquiring bank settles with merchant.
  10. 10. 15. Write about ECS / NEFT/ RTGS Electronic Clearing Service (ECS) ECS is an electronic mode of payment / receipt for transactions that are repetitive and periodic in nature. ECS is used by institutions for making bulk payment of amounts towards distribution of dividend, interest, salary, pension, etc., or for bulk collection of amounts towards telephone / electricity / water dues, cess / tax collections, loan instalment repayments, periodic investments in mutual funds, insurance premium etc. Essentially, ECS facilitates bulk transfer of monies from one bank account to many bank accounts or vice versa. ECS includes transactions processed under National Automated Clearing House (NACH) operated by National Payments Corporation of India (NPCI). National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer. Under this Scheme, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country participating in the Scheme. Transfer Limit: No. There is no limit – either minimum or maximum – on the amount of funds that could be transferred using NEFT. However, maximum amount per transaction is limited to Rs.50,000/- for cash- based remittances within India and also for remittances to Nepal under the Indo-Nepal Remittance Facility Scheme. Operating Hours: Presently, NEFT operates in hourly batches - there are twelve settlements from 8 am to 7 pm on week days (Monday through Friday) and six settlements from 8 am to 1 pm on Saturdays. RTGS: The acronym 'RTGS' stands for Real Time Gross Settlement, which can be defined as the continuous (real-time) settlement of funds transfers individually on an order by order basis (without netting). 'Real Time' means the processing of instructions at the time they are received rather than at some later time; 'Gross Settlement' means the settlement of funds transfer instructions occurs individually (on an instruction by instruction basis). Considering that the funds settlement takes place in the books of the Reserve Bank of India, the payments are final and irrevocable. The RTGS system is primarily meant for large value transactions. The minimum amount to be remitted through RTGS is` 2 lakh. There is no upper ceiling for RTGS transactions. Under normal circumstances the beneficiary branches are expected to receive the funds in real time as soon as funds are transferred by the remitting bank. The beneficiary bank has to credit the beneficiary's account within 30 minutes of receiving the funds transfer message. 16. Benefits of cloud banking • Cut costs on hardware/software and related manpower - pay-on-demand model means they pay only for the hardware and software they need • Improves flexibility and sociability • Increases efficiency • Serves clients faster • Forge stronger client relationships • Brings clients closer to their clients
  11. 11. 17. Define Insurance in any one aspect what are the basic insurance products in India A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured. When shopping around for an insurance policy, look for the best priced package that is right for you - prices can vary from one insurance company to the next. And make sure you know what you want. Some individuals, for example, prefer 24-hour claims service or face-to-face contact with an insurance representative. Also consider the claims settlement process, the amount of the deductible and the extent of the replacement coverage. Insurance companies and the policies they offer are not all the same, so think about more than just the price. Basics Product of Insurance: Life Insurance, Health Insurance, Marine Insurance, General Insurance. 18. Importance of Insurance The following point shows the role and importance of insurance: Insurance has evolved as a process of safeguarding the interest of people from loss and uncertainty. It may be described as a social device to reduce or eliminate risk of loss to life and property. Insurance contributes a lot to the general economic growth of the society by provides stability to the functioning of process. The insurance industries develop financial institutions and reduce uncertainties by improving financial resources. 1. Provide safety and security: Insurance provide financial support and reduce uncertainties in business and human life. It provides safety and security against particular event. There is always a fear of sudden loss. Insurance provides a cover against any sudden loss. For example, in case of life insurance financial assistance is provided to the family of the insured on his death. In case of other insurance security is provided against the loss due to fire, marine, accidents etc. 2. Generates financial resources: Insurance generate funds by collecting premium. These funds are invested in government securities and stock. These funds are gainfully employed in industrial development of a country for generating more funds and utilised for the economic development of the country. Employment opportunities are increased by big investments leading to capital formation.
  12. 12. 3. Life insurance encourages savings: Insurance does not only protect against risks and uncertainties, but also provides an investment channel too. Life insurance enables systematic savings due to payment of regular premium. Life insurance provides a mode of investment. It develops a habit of saving money by paying premium. The insured get the lump sum amount at the maturity of the contract. Thus life insurance encourages savings. 4. Promotes economic growth: Insurance generates significant impact on the economy by mobilizing domestic savings. Insurance turn accumulated capital into productive investments. Insurance enables to mitigate loss, financial stability and promotes trade and commerce activities those results into economic growth and development. Thus, insurance plays a crucial role in sustainable growth of an economy. 5. Medical support: A medical insurance considered essential in managing risk in health. Anyone can be a victim of critical illness unexpectedly. And rising medical expense is of great concern. Medical Insurance is one of the insurance policies that cater for different type of health risks. The insured gets a medical support in case of medical insurance policy. 6. Spreading of risk: Insurance facilitates spreading of risk from the insured to the insurer. The basic principle of insurance is to spread risk among a large number of people. A large number of persons get insurance policies and pay premium to the insurer. Whenever a loss occurs, it is compensated out of funds of the insurer. 7. Source of collecting funds: Large funds are collected by the way of premium. These funds are utilised in the industrial development of a country, which accelerates the economic growth. Employment opportunities are increased by such big investments. Thus, insurance has become an important source of capital formation. 19. Mention the various ACTs governing Insurance Various legislations and acts influencing transaction of general insurance business in India and also loss minimization and risk management : The Aircraft Act, 1934 : To make better provision for the control of the manufacture, possession, use, operation, sale, import and export of aircraft. Aircraft Rules, 1937 : The Rules extend to the whole of India and apply to (i) aircrafts (including persons on board) regisÂ-tered in India, wherever they may be, and to (ii) all aircrafts (including person on board) for the time being in or over India. However, the regulations relating to registration, licensing of
  13. 13. personnel, airworthiness and log-books provided in the Rules do not apply to foreign aircrafts which are governed by the relevÂ-ant regulations of the respective countries in which the airÂ-craft are registered. The Bill of Lading Act, 1855 : This Act defines the characÂ-ter of the bill of lading as an evidence of the contract of carriage of goods between the shipowner and the shipper, as an acknowledgement of the receipt of the goods on board the vessel and, as a document of title. The bill of lading is one of the various documents required in connection with settlement of marine cargo claims. Carriage by Air Act, 1972 : The Act gives effect to the provisions of the Warsaw Convention, 1929 and the Hague Protocol, 1955 relating to international carriage of passengers and goods by air. The Act defines the liability of the air carrier for death of or injury to passengers and for loss of or damage to registered luggage and cargo. The provisions of the Act also apply, with some changes, to domestic carriage, i.e, carriage within India. Carriage of Goods by Sea Act, 1925 : This act defines the minimum rights, liabilities and immunities of a shipping Co. in respect of loss or damage to cargo carried. The Carriers Act, 1865 : This Act defines the rights and liabilities of truck-owners or operators who carry goods on public hire, in respect of loss or damage to goods carried by them. The Act also prescribes the time limit within which notice of loss or damage must be filed with the road carriers. Employees’ State Insurance Act, 1948 (ESI) : This is an Act to provide for certain benefits to employees in cases of sickÂ-ness, maternity and employment injury and to make provision for certain other matters in relation thereof. Under the Act, the Employees’ State Insurance Corporation has been set up to adminÂ-ister the insurance Scheme. The scheme is applicable to indusÂ-trial employees as defined. Foreign Exchange Regulation Act, 1973 (FERA) : Exchange control regulations governing general insurance business written in India are set out in a Memorandum which is issued by the Reserve Bank of India under Sec. 73(3) of the Foreign Exchange Regulation Act. General Insurance Business (Nationalization) Act, 1972 : This Act came into force on 1st January, 1973 with the following objectives : To provide for the acquisition and transfer of shares of Indian Insurance companies and undertakings of other existing insurers. To serve better the needs of the economy by securing the development of general insurance business in the best interest of the community. To ensure that the and activities of the economic system does not result in concentration of wealth to the detriment of common interest. For the regulation and control of such business and for matters connected therewith or incidental thereto.
  14. 14. Note: The transactions of general insurance business in India is governed by and is subject to this Act.  Indian Arbitration Act, 1940 : Disputes regarding insurance claims relating to the amounts payable under the policy are settled through the process of arbitration provided in this Arbitration Act. Indian Boiler Act, 1923: The manufacturing, supply, operaÂ-tion, registration of Boilers in India are governed by this Act. Indian Contract Act, 1872: To codify laws of contract. Indian Factories Act, 1948: This Act defines Factory and provides for regulations for governing factories. This Act also provides for various provisions of safety for various types of machinery, plant etc. in factories. Indian Mines Act, 1952 : Similar to Factories Act, defines mines and provides for regulations to ensure safety and security in mines. Indian Ports (Major Ports) Act, 1963 : This Act defines the liability of Port Trust authorities for loss of or damage to goods whilst in their custody and prescribes time limits for filing monetary claim on, or suit against the Port Trust auÂ-thorities. Indian Post Office Act, 1898 : This Act defines the liability of the Government for loss, misdelivery, delay of or damage       to any postal article in course of transit by post. Indian Railways Act, 1890 : The Act deals with various aspects of Railways administration also relevant to Marine Insurance practice as it deals with the responsibility of RailÂ-ways administration as carriers. Indian Stamp Act, 1899 : The Act provides that a policy of Insurance be stamped in accordance with the schedule of rates prescribed. Inland Steam-Vessels Act, 1917 : The Inland Steam-Vessels Act, 1917 as amended in 1977, provides for the application of the provisions of Chapter VIII of the Motor Vehicles Act, 1939 in relation to insurance of mechanically propelled vessels against third party risks. The Act makes it compulsory for owners or operators of inland vessels to insure against legal liability for death or bodily injury of third parties or of passengers carried for hire or reward and for damage to property of third parties. The limits of liability are also prescribed. Insurance Act, 1938: The Act applies to the General InÂ-surance Corporation of India and the four Subsidiary companies subject to exceptions, restrictions and limitations as specified by the Central Government under powers conferred by Section 35 of the General Insurance Business (Nationalization) Act. The important provisions of the Act relate, among other things, to registrations, accounts and returns, investments, limitations in expenses of Management, prohibition of rebates, powers of invesÂ-tigation, licensing of agents, licensing of surveyors, advance payment of premium and Tariff Advisory Committee etc.
  15. 15. Marine Insurance Act, 1963: This Act codifies the law relating to Marine Insurance. With a few exceptions this Act closely follows the UK Marine Insurance Act, 1906. Motor Vehicles Act, 1939: Chapter VIII provides for compulsory insurance of motor vehicles. According to this Act, no motor vehicle can be used in public places unless there is, in force, in relation to that vehicle, a policy of insurance issued by an authorized insurer. Motor Vehicles Act, 1988: The Motor Vehicles (Amendment) Act, 1988 has introduced changes which have far-reaching conseÂ-quences. The changes also affect Third Party Liability arising out of the use of the Motor Vehicles in a public place. Workmen’s Compensation Act, 1923: The Act provides for the payment of compensation by employers to their workmen for injury by accident arising out of and in the course of employment. 20. What is a cover note ? A temporary document issued by an insurance company that provides insurance coverage until a final insurance policy can be issued. A cover note is different than a certificate of insurance or an insurance policy document. The note features the name of the insured, the insurer, the coverage, and what is being covered by the insurance. BREAKING DOWN 'Cover Note' Insurance companies issue a cover note in order to provide an individual with proof of insurance before all the insurance paperwork has been processed. During this time the insurer may continue to evaluate the risks associated with insuring the holder of the cover note, and the cover note will continue to serve as the insurer’s proof that he or she has purchased coverage until the insurer issues the policy document and certificate of insurance. In general, the cover note provides the same level of coverage as the full insurance policy, though insurers may place some restrictions while they make any final determinations on the risks associated with the insurance policy. How long the cover note lasts depends on how quickly the insurance company can process the creation of a new policy, and whether the insurer has any problems with the policy coverage in between selling the policy and issuing the policy document. If the cover note expires before the permanent policy documentation has been received, the individual will either be issued an extension of the cover note automatically or can request that one be sent. Insurance companies may allow someone who has recently purchased an insurance policy but who does not have a formal policy to cancel the purchase. This allows someone who only holds a cover note to receive a refund, provided that a claim on the policy has not been made during the cancelation period.
  16. 16. Some insurance companies do not issue cover notes, and instead issue a certificate of insurance when the policy is purchased and accepted. 21. What is a certificate of insurance or a policy document? A document issued by an insurance company/broker that is used to verify the existence of insurance coverage under specific conditions granted to listed individuals. More specifically, the document lists the effective date of the policy, the type of insurance coverage purchased, and the types and dollar amount of applicable liability. A certificate of insurance is often demanded in situations where liability and large losses are a concern. For example, a company wishes to hire a driver from a temp agency. The company will most likely ask the agency to show them a certificate of insurance that proves that certain liabilities will be covered by insurance in the event the driver causes problems, such as incurring damages from driving the company's vehicles. 22. Write about RUPAY card The Indian market offers huge potential for cards penetration despite the challenges. RuPay Cards will address the needs of Indian consumers, merchants and banks. The benefits of RuPay debit card are the flexibility of the product platform, high levels of acceptance and the strength of the RuPay brand-all of which will contribute to an increased product experience. RuPay is a combination of two words – Rupee and Payment. RuPay Card is an Indian version of credit/debit card. It is very similar to international cards such as Visa/Master. National Payments Corporation of India (NPCI) initiated the launch of RuPay card in India. It was done with the intention of integration of payment systems in the country. It has also tied up with Discover Financial Services firm for promoting this. RuPay debit cards are similar any other debit cards that you might hold now. You can access them in the 1.45 lakh ATMs and 8.75 lakh POS terminals across the country. It will also be accepted on 10,000 e-commerce websites. All major public sector banks, including SBI, have started issuing these cards to all their customers. The card also comes with a high end technology chip named EMV (Europay, Master Card and Visa) especially for high end transactions. It also has an embedded micro processor circuit with information about the card holder. Benefits: 1. Lower cost and affordability : Since the transaction processing will happen domestically, it would lead to lower cost of clearing and settlement for each transaction. This will make the transaction cost affordable and will drive usage of cards in the industry.
  17. 17. 2. Customized product offering : RuPay, being a domestic scheme is committed towards development of customized product and service offerings for Indian consumers. 3. Protection of information related to Indian consumers : Transaction and customer data related to RuPay card transactions will reside in India. 4. Provide electronic product options to untapped/unexplored consumer segment : There are under-penetrated/untapped consumers segments in rural areas that do not have access to banking and financial services. Right pricing of RuPay products would make the RuPay cards more economically feasible for banks to offer to their customers. In addition, relevant product variants would ensure that banks can target the hitherto untapped consumer segments. 5. Inter-operability between payment channels and products : RuPay card is uniquely positioned to offer complete inter-operability between various payments channels and products. NPCI currently offers varied solutions across platforms including ATMs, mobile technology, cheques etc and is extremely well placed in nurturing RuPay cards across these platforms. 23. Short notes on Bhartatiya Mahila Bank Slogan Empowering Women, Empowering India. In India, only 26% of women have an account with a formal financial institution, compared with 46% of men Bharatiya Mahila Bank (BMB) is an Indian financial services banking company based in New Delhi, India. Former Indian Prime Minister Manmohan Singh inaugurated the system on 19 November 2013 on the occasion of the 96th birth anniversary of former Indian Prime Minister Indira Gandhi.[1] Although initially reported as a bank exclusively for women, the bank allows deposits to flow from everyone, but lending will be predominantly for women. India is the third country in the world to have a bank especially for women, after Pakistan and Tanzania.[2] . The bank will also place emphasis on funding for skills developments to help in economic activity. Moreover, the products will be designed in a manner to give a slight concession on loan rates to women.[6] The bank shall also aim to inspire people with entrepreneurial skills and, in conjunction with NGOs, plans to locally mobilize women to train them in vocations like toy-making or driving tractors or mobile repairs, according to Usha Ananthasubramanian (CMD).[7] One of the other objectives of the bank is to promote asset ownership amongst women customers.[8] Studies have shown that asset ownership amongst women reduces their risk of suffering from domestic violence.[9]
  18. 18. The Bank's initial capital consists of Rs 1,000 crores. The government plans to have 25 branches of the said bank by the end of March 2014 and 500 branches by 4th year of operation (2017). Bank is currently having 80 branches and is planning to open more than 700 branches within 2 years. 24. Write about Payment Banks recently given license.  Can accept deposits of up to Rs 1 lakh a customer and issue debit cards…  The operations of the bank should be fully networked and technology-driven from the beginning and it should also have a high powered customer grievances cell to handle complaints  Mumbai Aditya Birla Nuvo  Fino PayTech  National Securities Depository  Reliance Industries  Dilip Shantilal Shanghvi  Tech Mahindra  Vodafone M-pesa  New Delhi Airtel M Commerce  Department of Posts  Vijay Shekhar Sharma  Chennai Cholamandalam Distribution 25. A rough sketch of Banking Structure in India:
  19. 19. 26. Functions of IRDA ?
  20. 20. 27. Goiporea committee reommendations • RBI constituted a committee under the chairmanship of Sri M.N. Goiporia, the then President of SBI, in September 1990 on making recommendations for consumer service improvements in banks. Recommendations :
  21. 21. • 1. Extension of banking hours for all works excluding cash payment. 2. Re-adjustment of bank opening time for staff so as to ensure start of work at bank counters well in time. 3. Spot deposit of outstation cheques of Rs. 5000/- (instead of existing 2500/-) in bank accounts. 4. Increase in bank interest rates on saving accounts. 5. Providing tax benefit on bank deposit amounts. 6. To ensure optimum use of powers available with bank staff. 28. BASEL II Recommendations • Basel II in 2004, laid down guidelines for capital adequacy (with more refined definitions), risk management (Market Risk and Operational Risk) and disclosure requirements. • use of external ratings agencies to set the risk weights for corporates, banks. • Operational risk has been defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. • disclosure requirements allow market participants assess the capital adequacy of the institution based on information on the scope of application, capital, risk exposures, risk assessment processes, etc. 29. Tandon method of MPBF .( Formula) • MPBF stands for Maximum Permissible Banking Finance in Indian Banking Sector. As per the recommendations of Tandon Committee, the corporate are discouraged from accumulating too much of stocks of current assets and are recommended to move towards very lean inventories and receivable levels. • Depending on the size of credit required, two methods are in practice to fund the working capital needs of the corporate.
  22. 22. 30. Write short notes on SEBI • SEBI -Securities and Exchange Board of India : SEBI Act, 1992 : Securities and Exchange Board of India (SEBI) was first established in the year 1988 as a non-statutory body for regulating the securities market. It became an autonomous body in 1992 and more powers were given through an ordinance. Since then it regulates the market through its independent powers. The SEBI is managed by its members, which consists of following: The chairman who is nominated by Union Government of India. Two members, i.e., Officers from Union Finance Ministry. One member from the Reserve Bank of India. The remaining five members are nominated by Union Government of India, out of them at least three shall be whole-time members. Upendra Kumar Sinha was appointed chairman on 18 February 2014 Functions And Responsibilities: The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as "...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto". SEBI has to be responsive to the needs of three groups, which constitute the market: the issuers of securities the investors the market intermediaries.
  23. 23. SEBI has three functions rolled into one body: quasi-legislative, quasi-judicial and quasi-executive. It drafts regulations in its legislative capacity, it conducts investigation and enforcement action in its executive function and it passes rulings and orders in its judicial capacity. Though this makes it very powerful, there is an appeal process to create accountability. There is a Securities Appellate Tribunal which is a three-member tribunal and is headed by Mr. Justice J P Devadhar, a former judge of the Bombay High Court.[6] A second appeal lies directly to the Supreme Court. SEBI has taken a very proactive role in streamlining disclosure requirements to international standards Powers Of SEBI: to approve by−laws of stock exchanges.sebi to require the stock exchange to amend their by−laws. inspect the books of accounts and call for periodical returns from recognized stock exchanges. inspect the books of accounts of a financial intermediaries. compel certain companies to list their shares in one or more stock exchanges. registration brokers.

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