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Wednesday, 22 March 2017

Big Bank Theory

 Regulatory Bodies of the Financial Sector

Banking Awareness is a crucial part of many bank exams. To help you all prepare for this topic better, we have started our series, 'Big Bank Theory'. 
Keeping in mind the banking sector related questions asked in the exams, today we are going to discuss about the Financial Regulatory bodies in our country.
First lets understand what exactly is a Regulatory body. As per definition, a regulatory body is an organisation that supervises a particular industry or business activity. Now another major question that arises is Why financial regulators are required? The objectives of these financial regulators are multifold.
  • They help maintain the confidence of the customers in the financial system.
  • They help in maintaining the stability of the financial system of the country.
  • They help safeguard the interests of the customers.
  • They help regulate the foreign participation in the financial markets.
The major financial regulatory bodies of India are -

1. Reserve bank of India (RBI) -

Headquarters - Mumbai
Governor - Mr. Urjit Patel

RBI, or if we may say, ‘the bank of all banks’ is the central banking organisation of the country.It was moulded as an organisation on 1 April 1935 during the British Rule in accordance with the provisions of Reserve Bank of India Act, 134. RBI was nationalised on 1 January 1949. RBI performs following functions -
  • It regulates the functioning of scheduled commercial banks of the country.
  • The bank issues and exchanges currency notes and coins and destroys the same when they are not fit for circulation.
  • It also acts as the banker to the Government of India.
  • It also manages the foreign market in the country.
  • Following are the fully owned subsidiaries of RBI -
    (a) Deposit Insurance and Credit Guarantee Corporation of India(DICGC)
    (b) Bharatiya Reserve Bank Note Mudran Private Limited(BRBNMPL)
    (c) National Housing Bank(NHB)

2. National Bank for Agriculture and Rural Development (NABARD) -

Headquarters - Mumbai
Chairman - Dr. Harsh Kumar Bhanwala

NABARD is the apex development bank in India. It was established in 1982 on the recommendation of Dr. Shiv Raman Committee. It’s  functions include -
  • It works on matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India.
  • NABARD is the most important institution in the country which looks after the development of the cottage industry, small industry and village industry, and other rural industries.
  • NABARD also reaches out to allied economies and supports and promotes integrated development.
  • It regulates the institutions which provide financial help to the rural economy.

3. Securities and Exchange Board of India -

Headquarters - Mumbai
Chairman - Mr. Ajay Tyagi

It was established in the year 1988 and given statutory powers on 12 April 1992 through the SEBI Act, 1992. It’s functions include -
  • Protection of  the interests of investors in securities.
  • Promoting the development and regulation of the securities market
  • Regulating the activities of the Stock Exchange.
  • SEBI helps regulate the intermediaries such as merchant bankers, brokers, underwriters, etc. by forming a code of conduct to regulate them.

4. Insurance Regulatory and Development Authority of India (IRDA) -

Headquarters - Hyderabad
Chairman - Mr. T. S. Vijayan

IRDA is the apex statutory body responsible for the regulation and promotion of the insurance and Re- insurance industries in India. It was constituted by the Insurance Regulatory and Development Authority Act, 1999, duly passed by the government of India. The FDI limit in insurance sector was raised to 100% in June 2016. It’s functions include -
  • It is responsible for issuing, renewal, modification, withdrawal, suspension or cancellation of registrations of the insurance institutions.
  • It aims at protecting the interest and rights of the policy holders.
  • It is also responsible for ensuring speedy settlement of genuine claims and to prevent frauds and malpractices.

5. Pension Fund Regulatory and Development Authority(PFRDA) -

Headquarters - New Delhi
Chairman - Hemant Contractor

On 23rd August, 2003, Interim Pension Fund Regulatory & Development Authority (PFRDA) was established through a resolution by the Government of India to promote, develop and regulate pension sector in India. The Authority shall consist of a Chairperson and should not have more than five members, of whom at least three should be whole-time members, to be appointed by the Central Government. Its key functions are -
  • PFRDA is authorized by Ministry of Finance, Department of Financial Services
  • To be a model Regulator for promotion and development of an organized pension system to serve the old age income needs of people on a sustainable basis. 
  • PFRDA is responsible for appointment of various intermediate agencies such as Central Record Keeping Agency (CRA), Pension Fund Managers, Custodian, NPS Trustee Bank, etc. 

 Banking Ombudsman 

Banking Ombudsman Scheme came into picture in order to resolve the complaints of bank customers related to certain services rendered by the banks.  It was introduced in India for the first time in 1995  under Section 35 A of the Banking Regulation Act, 1949 by RBI and underwent a revision in 2002. Banking Ombudsman Scheme became operational in the country on 1st January 2006, and also replaced the previously operational Scheme of 2002.  Banking Ombudsman resolved around 36000 complaints in the period of 2002 to 2006.At present, Banking Ombudsman have 17 regional offices in the country. The latest regional office was inaugurated in Dehradun in December 2016.
An important question that arises is, Who exactly is a Banking Ombudsman?
Banking Ombudsman is basically an official appointed by the RBI, who is responsible for redressal of the complaints of the customers in case of issues with certain banking services.
Now, let us have a look at the times when a customer can lodge complaint under the Banking Ombudsman Scheme.
In case of deficiencies in the banking services, the customer may lodge complaint under the following circumstances -
Non Acceptance of small denomination notes or coins and/or charging of commission for the same, without sufficient cause.
Non payment or delay in the payment of the cheques, bills, drafts, inward remittances etc.
Failure or Delay in issue of drafts, pay orders, banker’s cheque etc.
Non Adherence of the prescribed work hours
Failure or delay in providing any banking service (other than loans and advances), promised in writing by a bank or its direct selling agents.
Delay or non - credit of proceeds to the party accounts, non - payment of deposits and non - observance of the RBI directives
Complaints related to remittances from abroad, deposits and other bank related matters from the Non - Resident Indians having accounts in India
Refusal to open bank accounts, without sufficient cause/ reason
Levying extra/ unnecessary charges without prior information
Non - adherence to the ATM/ Debit/ Credit Card operations as instructed by RBI
Non - disbursement or delay in disbursement of pension by the bank
Refusal or delay in acceptance of payment towards taxes as required by RBI or the Government
Refusal or Delay in issuing, or failure or delay in servicing or redemption of Government securities.
Forced closure of Deposit Accounts without prior notice or sufficient reason
Refusal or Delay in Closure of accounts
Non adherence to fair practice codes or provisions of the code of bank’s commitment to customers as issued by Banking Codes and Standards Board of India (BCSBI)
Non observance of RBI Guidelines on engagement of recovery agents by Banks.
Any matter related to violation  of the directives issued by RBI for banking and other services.
In cases pertaining to Loans and Advances, a customer can also lodge complaint on the following grounds of deficiency in service -
Non Observance of interest rates as per RBI directives
Delay in sanction, disbursement or non observance of prescribed time schedule for disposal of loan applications
Non acceptance of loan applications without producing valid reasons.
Non adherence to provisions of fair practice codes for lenders as per Code of Bank’s commitment to Customers
Non observance of any direction/ instruction of RBI for this segment

Highlights of Banking Ombudsman Scheme -

The Appellate authority of Banking Ombudsman is vested with the Deputy Governor of the Reserve Bank of India.  
The complaint of the customer may be filed by his/ her authorized representative as well.
There is a limit on the compensation that is offered by the bank. The amount to be paid by the bank as compensation for any loss suffered by the complainant is restricted to the amount arising directly out of the act or Rs 10 lakhs, whichever is lower.
The customer may also be awarded a compensation of amount not exceeding Rs. 1 lakh to the complainant, only in case of complaints related to credit card operations for mental agony or harassment.
In case the customer is not satisfied with the decision passed by the Banking Ombudsman, he/she can approach the appellate authority against the Banking Ombudsman's decision. Such an appeal has to be made within 30 days of the date of receipt of the award.
Banking Ombudsman is appointed for a  period of 3 years.
The Banking Ombudsman Scheme covers all Scheduled Commercial Banks, Regional Rural Banks as well as Scheduled Primary Co-operative Banks.

Micro, Small and Medium Enterprises

Micro, Small and Medium Enterprises have been defined under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, in terms of the investment, which varies for the Manufacturing and the Service Sector.
Let us now have a look at the classification of the Micro, Small and Medium Enterprises, in terms of investment.

(a) For the enterprises that are engaged in the Manufacture or Production, Processing or Preservation of goods, classification based on investment in Plant and Machinery may be made as-

Manufacturing Enterprise
Investment in Plant and Machinery
Micro enterprise
Investment does not exceed Rs. 25 lakh
Small enterprise
investment is more than Rs. 25 lakh but does not exceed Rs. 5 crore
Medium enterprise
Investment is more than Rs.5 crore but does not exceed Rs.10 crore.
In these enterprises, the investment in plant and machinery is the original cost excluding land and building and the items, as specified by the Ministry of Small Scale Industries.

(b)  For the enterprises, that are engaged in providing or rendering of Services, classification of the enterprises based on investment in Equipment is done as -

Service Sector Enterprise
Investment in Equipment
Micro enterprise
Investment does not exceed Rs. 10 lakh
Small enterprise
investment is more than Rs.10 lakh but does not exceed Rs. 2 crore
Medium enterprise
Investment is more than Rs. 2 crore but does not exceed Rs. 5 crore

Highlights of MSMED Act -

  • Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 was enacted on June 16, 2006.
  • Micro, Small and Medium enterprises Development Act, 2006 aimed to support economic recovery and sustained growth by encouraging a more diversified and efficient industrial structure. To achieve this objective, it is focused on these main areas, these are -
    (i) strengthening competition by establishing an appropriate legal and regulatory framework and removing barriers to competition and trade.
    (ii) facilitating investment and trade by strengthening the framework governing the policy, credit facilities, grants, administration and utilisation of funds, development of skill in the employees, management and entrepreneurs, provisioning for marketing assistance or infrastructure facilities and cluster development of such enterprises with a view to strengthening backward and forward linkages
    (iii) developing a SME policy, regulatory and financing framework.
  • The Micro, Small and Medium Enterprises Development Act, 2006 has empowered the Central Government to establish a National Board for MSMEs with its head office at Delhi.
  • Accordingly, the National Board for Micro, Small & Medium Enterprises (NBMSME) was established for the first time on 15th May 2007. It consisted of 47 members, including Chairman, Vice- Chairman and Member Secretary.
  • The Minister in charge of Ministry of MSME is ex-officio Chairman of the National Board of MSME.
  • Bank’s lending to the Micro and Small enterprises engaged in the manufacture or production of goods specified in the first schedule to the Industries (Development and regulation) Act, 1951 and notified by the Government from time to time is reckoned for priority sector advances.
  • Bank loans up to Rs.5 crore per borrower / unit to Micro and Small Enterprises engaged in providing or rendering of services and defined in terms of investment in equipment under MSMED Act, 2006 are eligible to be considered for priority sector advances. Lending to Medium enterprises is not eligible to be included for the purpose of computation of priority sector lending.
  • Banks have a target of 7.5 percent of ANBC (Adjusted Net Bank Credit) or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher to be invested in micro enterprises for priority sector lending. This is to be achieved in a phased manner i.e. 7 per cent by March 2016 and 7.5 per cent by March 2017.
  • The sub-target for Micro Enterprises for foreign banks with 20 branches and above would be made applicable post 2018 after a review in 2017.


Important Acts of Banking Sector

Here is a list of some of the acts that are relevant for the Banking Sector -
Societies Registration Act. 1860
Negotiable Instrument act, 1881
Co-operative Societies Act, 1912
Provident Funds Act. 1925
Reserve Bank of India Act, 1934
The Industrial Finance Corporation of India Act–1948
The Banking Companies (Legal Practitioner Clients’ Accounts) Act–1949
The Industrial Disputes (Banking and Insurance Companies) Act–1949
The Banking Regulation(Companies) Rules–1949
The Banking Regulation Act–1949
The State Financial Corporations Act–1951
The State Bank of India Act–1955
The State Bank of India (Subsidiary Banks) Act-1959
The Subsidiary Banks General Regulation–1959
The Deposit Insurance and Credit Guarantee Corporation Act–1961
Limitation Act, 1963
Banking Companies (Acquisition and Transfer of Undertaking) Act, 1969
Foreign Contribution (Regulation) Act, 1976
The Regional Rural Banks Act–1976
The Banking Companies (Acquisition and Transfer of Undertakings) Act–1980
The Export-Import Bank of India Act–1981
The National Bank for Agriculture and Rural Development Act–1981
Chit Fund Act–1982
NABARD General Regulations 1982
Banking Companies (Period of Preservation of Records) Rules, 1985
Banking Companies (Regulation)Rules,1985
Shipping Development Fund Committee (Abolition)Act–1985
Sick Industrial Companies (Special Provisions)Act–1985
The National Housing Bank Act–1987
SIDBI General Regulations, 1990
Securities and Exchange Board of India Act, 1992
The Industrial Finance Corporation (Transfer of Undertakings and Repeal) Act–1993
Recovery of Debts due to Banks and Financial Institutions Act,1993
Industrial Reconstruction Bank (Transfer of Undertaking & Appeal) Act–1997
Insurance Regulatory and Development Authority Act, 1999
Foreign Exchange Management Act, 1999
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI-2002)
Prevention of Money Laundering Act, 2002
Fiscal Responsibility and Budget Management Act, 2003
Industrial Development Bank (Transfer of Undertaking & Repeal) Act–2003
Credit Information Companies (Rules & Regulation) Act–2005
Government Securities Act, 2006
SARFAESI (Central registry) Rules,2011
Before you start to panic, no you do not need to mug up all of them. This was just to give you an overview of the Acts that have been issued in the Banking Sector. We will now have a look at some of the major acts.

Negotiable Instrument act, 1881

Negotiable Instruments Act was introduced by Imperial Legislative Council of India and enacted on 9th December 1881 to define laws related to negotiable instruments. This act has been amended various times, with the last amendment in 2002. As per Section 13 of this Act, "A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer. Negotiable Instruments may include Inland Instruments, Foreign Instruments and Bank Drafts.
You can go through the details of this act from the link below -

Negotiable Instrument act, 1881

Reserve Bank of India act, 1934

RBI Act, 1934 is the legislative act under which Reserve bank of India was formed. Along with Companies Act, it was amended in 1936 to provide a framework for the supervision of banking firms in India. The act also defines Scheduled banks. Here are some of the highlights of this act -
  • Section 17 of the Act defines manner in which the RBI can conduct business.
  • Section 18 deals defines emergency loans to banks.
  • Section 21 states the RBI must conduct the banking affairs for the central government and manage public debt.
  • Section 22 says that only RBI has the exclusive rights to issue currency notes in India.
  • Section 24 states that the maximum denomination a note can be ₹10,000.
  • Section 26 describes the legal tender character of Indian bank notes.
  • Section 28 allows the RBI to form rules regarding the exchange of damaged and imperfect notes.
  • Section 31 says that in India only the RBI or the central government can issue and accept promissory notes that are payable on demand.
  • Section 42(1) says that every scheduled bank must have an average daily balance with the RBI.

Banking Regulation Act, 1949

This act regulates all banking firms in India i.e. it provides a framework using which commercial banking in India is supervised and regulated.Important features of this act are -
  • Primary Agricultural Credit Society and Cooperative land mortgage banks are not included under this act.
  • The act gives RBI, power to license banks, have regulation over shareholding and voting rights of shareholders.
  • It also grants RBI to supervise appointment of the boards and management and regulate the operations of banks.
  • It also lays down instructions for audits to be conducted by RBI, control moratorium, mergers and liquidation, issue directives in the interests of public good and on banking policy, and impose penalties.
  • Cooperative Banks were included in this act under the 1965 amendment.

State Bank of India Act, 1955

Under the State Bank of India Act of 1955, the Reserve Bank of India acquired a controlling interest in the Imperial Bank of India. On 1 July 1955, Imperial Bank of India became State Bank of India. In 2008, the Government of India acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of interest because the RBI is the country's banking regulatory authority.

Deposit Insurance and Credit Guarantee Corporation Act–1961

Under this Act, Deposit Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of RBI was set up on 15th July 1978 to provide insurance of deposits and guaranteeing of credit facilities. DICGC insures all bank deposits, such as saving, fixed, current, recurring deposits for up to the limit of Rs. 100,000 of each deposits in a bank.As per this act, all new commercial banks are required to be registered as soon as may be after they are granted licence by the Reserve Bank of India.

Regional Rural Banks Act–1976

Under this act, Regional Rural Banks were established  to create an alternative channel to the cooperative credit structure and to ensure sufficient institutional credit for the rural and agriculture sector, on the recommendations of The M. Narasimham Working Group. They are jointly owned by Government of India, the concerned State Government and Sponsor Banks with the issued capital shared in the proportion of 50 percent, 15 percent and 35 percent respectively.

Securities and Exchange Board of India Act, 1992

Under this act, Securities and Exchange Board of India (SEBI) was given Statutory powers on 30th January 1992. The Act was enacted for regulation and development of securities market in India. It was amended in the years 1995, 1999 and 2002 to meet the requirements of changing needs of the securities market.

Foreign Exchange Management Act, 1999

This act was enacted to consolidate and amend the law relating to foreign exchange in order to facilitate external trade and payments and to promote orderly development and maintenance of foreign exchange market in India. It replaced the Foreign Exchange Regulation Act (FERA), which had become incompatible with the pro-liberalization policies of the Government of India. The act paved way for a new foreign exchange management regime that was consistent with emerging framework of the World Trade Organisation (WTO).

Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI-2002)

SARFAESI Act, 2002 enables banks and other financial institutions to auction residential or commercial properties to recover loans. ARCIL, the first asset reconstruction company (ARC) of India was set up under this act. The law does not apply to unsecured loans, loans below 100,000 or where remaining debt is below 20% of the original principal.

Prevention of Money Laundering Act, 2002

The act was enacted in order to prevent Money Laundering as well as to provide provisions for confiscation of the property obtained from money laundering. This act was amended in 2005, 2009 and 2012. It involves following - Punishment for Money laundering, powers of attachment of tainted property, adjudicating authority, presumption in inter connected transactions, burden of proof, Appellate tribunal, Special court and FIU - Ind (Financial Intelligence Unit – India)

Fiscal Responsibility and Budget Management Act, 2003

FRBMA Act was introduced to mainly to eliminate the revenue deficit of the country. It also aimed at institutionalizing financial discipline, reducing India's fiscal deficit, improving macroeconomic management and the overall management of the public funds by moving towards a balanced budget. N. K. Singh is currently the chairman for the review committee of FRBMA Act.


Payment Banks

Payment Bank is basically a new model of banks that has been conceptualized by RBI. Now, many of you may further ask,

How is it different from a regular bank ?

Yes, A Payment Bank is very similar to a regular bank but it varies from a regular bank on following grounds -
  • Payment Banks operate on a smaller scale as compared to the commercial banks of the country.
  • Payment Banks do not have any credit risk involved with them as they cannot issue loans and credit cards.
  • Payment Banks can accept demand deposits up to Rs 1 lakh only.
Now one may further ask,

Why were the Payment Banks required?

The primary aim of Payment Banks is to expand the availability of financial services to many unbanked entities, for instance small businesses, households with low income, migrant labour force etc i.e. achieve Financial Inclusion as well as increase the access of financial services to all, especially the rural areas of the country.

History of Payment banks

Reserve Bank of India (RBI), on 23rd September 2013 constituted a Committee on Comprehensive Financial Services for Small Businesses and Low Income Households that was headed by Nachiket Mor. The committee submitted it’s report on 7th January 2014 and also recommended the formation of a new category of bank (Payment Banks) among its other recommendations.
Draft guidelines for payment banks, seeking the opinion of interested entities as well as general public was released by RBI on 17th July 2014. Final guidelines for Payment banks were released by RBI on 27th november 2014.
41 applicants applied for the licence of Payment Bank and their list was released by RBI in February 2015. The licence applications were evaluated by External advisory Committee (EAC), headed by Nachiket Mor, which submitted it’s report on 6th July 2015 after examining the financial track record as well as governance issues of the applicant entities.
On 19th august 2015, RBI gave in-principle licence to 11 entities to launch Payment Bank. The In-Principle licence is valid for a period of 18 months and the concerned entities are required to fulfill the requirements within this period. They cannot engage in the Banking activities in this period. Upon satisfactory fulfillment of the conditions required to setup a Payment Bank, RBI will grant full licences under Section 22 of the Banking Regulation act, 1949.
Following 11 entities were initially granted the In-Principle licence by RBI -
  • Airtel M-Commerce Services
  • Department of Posts
  • Aditya Birla Nuvo
  • FINO PayTech
  • Cholamandalam Distribution Services
  • National Securities Depository
  • Paytm
  • Tech Mahindra
  • Vodafone M-Pesa
  • Reliance Industries
  • Sun Pharmaceuticals (Dilip Shanghvi)
However, 3 out of these 11 organisations surrendered their licences, namely -
(a) Cholamandalam Distribution Services
(b) Sun Pharmaceuticals (Dilip Shanghvi)
(c) Tech Mahindra
Now, let us have a look at the conditions that need to be fulfilled to set up a Payment Bank
An entity in order to setup a Payment Bank is subject to following regulations -
  • The minimum capital requirement to set up a Payment Bank is Rs. 100 crore.
  • The stake of the promoter for the initial 5 year period should be minimum 40%.
  • Foreign share holdings will be permitted subject to the rules of foreign direct investment for private banks in India.
  • The voting rights in the bank will be regulated by Banking Regulation Act, 1949 and the upper cap of voting right for any shareholder will be 10%. This may be raised to 26% by Reserve bank of India.
  • Any acquisition of more than 5% needs to be approved by RBI.
  • Majority of Bank’s board of Directors should consist of independent directors, who should be appointed as per RBI Guidelines.
  • Payment Bank can accept Utility Bills and they cannot form separate subsidiary to undertake non-banking activities.
  • 25% of the branches of these banks should be in the unbanked rural areas.
  • Payment Banks cannot approve/ disburse loans or issue credit cards.
  • Payment banks can offer remittance services, mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking and third party fund transfers.
  • Payment Bank will be provided licence under Section 22 of the Banking Regulation act, 1949 and they will be registered as a Public Limited Company under Companies act, 2013.
As of now, 3 entities have already started their operations as Payment Bank. In order of their inception, these are -
  1. Airtel Payment bank Ltd.
  2. Paytm Payment bank
  3. India Post Payment Bank
Let us have a look at the features of these Payment Banks in brief now.

Airtel Payment bank Ltd

  • Airtel Payment Bank Ltd is a joint venture between Bharti Airtel (80.1%) and Kotak Mahindra Bank (19.9%).
  • Airtel Payment bank Ltd launched its pilot project of its banking services 10,000 Airtel retail outlets in Rajasthan on 23rd November 2016.
  • Mr. Shashi Arora is the MD & CEO of Airtel Payments Bank.
  • Airtel Payments Bank is a fully digital and paperless bank.
  • It offers quick and paperless account opening using Aadhaar based e-KYC i.e no documents are required, only the customer’s Aadhaar number is sufficient.
  • Customer’s Airtel mobile number will be his/her bank account number.
  • Airtel Payment Bank offers interest rate of 7.25 % p.a. on deposits in savings accounts.
  • It also offers personal accidental insurance of Rs. 1 Lac with every Savings Account.

Paytm Payment Bank

  • Paytm received approval from RBI to start its Payment Bank in January 2017 and is expected to start its operation this month with first branch coming up in Noida, Uttar Pradesh.
  • Vijay Shekhar Sharma, founder of One97 Communications (parent company of Paytm) is expected to take up the executive job in the bank and will hold majority share in Paytm Payments Bank, with the rest being held by One97 Communications.
  • Its first branch in Northeast would be opened in Guwahati.

India Post Payment bank

  • India Post Payment Bank (IPPB) was incorporated as a Public Sector Bank under the Department of Posts with 100% Government of India equity.
  • First branch of IPPB inaugurated at Raipur and Ranchi on 30th January, 2017 .
  • IPPB will play a major role in financial inclusion as India Post has about 1,54,000 post offices, of them 90% are in rural areas.
  • IPPB will set up 650 branches across the country by September 2017.
  • IPPB will offer an interest rate of 4.5 per cent on deposits up to Rs 25,000; 5 per cent on deposits of Rs 25,000-50,000 and 5.5 per cent on Rs 50,000-1,00,000.
Payments Banks will thus help expand the potential of financial inclusion in the economy.

National Payment Corporation of India

National Payments Corporation of India (NPCI) is the core organization for all retail payments system in India. It was set up with the guidance and support of the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA). This organisation was set up with the following objectives-
  • The main objective of this organisation as to  consolidate and integrate the multiple systems with varying service levels into nation-wide uniform and standard business process for all retail payment systems.
  • It also aims to facilitate an affordable payment mechanism to benefit the common man across the country and help financial inclusion.

Highlights of National Payment Corporation of India

  • National Payment Corporation of India (NPCI) was founded in December, 2008 and has been registered under Section 8 of the Companies Act 2013.
  • It was issued the Certificate for Commencement of Business in April 2009.
  • NPCI commenced business with an authorised capital of Rs. 3 billion and paid up capital of Rs. 600 million.
  • NPCI started with 2 million transactions per day and has now grown multi fold to almost 20 million transactions.
  • NPCI initially offered a single service of switching interbank ATM transactions. It now covers following -
    Cheque Clearing
    Immediate Payments Service (24x7x365)
    Automated Clearing House
    Electronic Benefit Transfer
    RuPay (Domestic Card Payment Network
  • NPCI has its headquarters in Mumbai.
  • Currently, NPCI has 10 promoters. These are -
    1. State Bank of India
    2. Punjab National Bank
    3. Canara Bank
    4. Bank of Baroda
    5. Union Bank of India
    6. Bank of India
    7. ICICI Bank
    8. HDFC Bank
    9. Citibank
    10. HSBC
  • NPCI Board consists of following -
    1. .Managing Director and Chief Executive Officer of NPCI - Shri A. P. Hota
    2. Chairman - Shri Balachandran M
    2. Nominee from RBI
    3. Nominees from ten core promoter banks
    4. Two Independent Directors

NPCI Brand Philosophy

The brand logo of NPCI signifies the pace at which the organisation has been achieving new benchmarks.
  • M. Balachandran, Chairman of NPCI unveiled the logo of the company at the Board Meeting on 15th December 2015.
  • Blue, Green and Saffron colours that are present in the logo represent the Indian flag’s colours and pay tribute to the organisation’s deep roots. These colours signify the following -
    1. Blue - This colour (primary corporate colour) represents depth and stability.
    2. Green - This represents balance, growth and harmony.
    3. Saffron - This represents warmth and happiness.
  • In NPCI’s logo, the open P and liberal spaces around N and C represent company’s belief in transparency and clear work ethics.

National Payment Corporation of India - Products

Let us now have a look at various products of National Payment Corporation of India -

1. National Financial Switch (NFS) -

  • NPCI runs NFS, which is the largest shared network of ATMs (Automated Teller Machines) in India.
  • It was initially designed and developed in 2004 by IDRBT (Institute for development and Research in Banking Technology), in order to interconnect various ATMs across the country and hence make banking convenient.  

2. Unified Payment Interface (UPI) -

  • This Payment system was launched on 11th April 2016 by NPCI and is regulated by RBI.
  • This single mobile application helps users in accessing different bank accounts.

3. BHIM App -

  • BHIM App was launched on 30th December 2016 and has been developed by NPCI.
  • This app allows users to make simple, easy and quick payments/ transactions.
  • It uses UPI interface.

4. Immediate Payment Service (IMPS) -

  • This service was launched by NPCI on 22nd November 2010.
  • It offers an instant, 24X7, interbank electronic fund transfer service through mobile phones.
  • It was built upon NFS network.

5. *99#

  • This service works on Unstructured Supplementary Service Data (USSD) channel.
  • It is a common number across all Telecom Service Providers (TSPs)
  • *99# channel offers the following services -  interbank account to account fund transfer, balance enquiry, mini statement besides host of other services.

6. National Automated Clearing House (NACH) -

  • National Automated Clearing House is a centralised clearing system that has been implemented by NPCI in order facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature.
  • This service aims to consolidate multiple ECS (Electronic Clearing Service) systems running across the country.

7. Cheque Truncation System (CTS) -

  • This project was launched in 2010.
  • Under this system, online image-based cheque clearing system is used where cheque images and Magnetic Ink Character Recognition (MICR) data are captured at the collecting bank branch and transmitted electronically.

8. Aadhaar Payments Bridge System (APBS) -

  • Under this system, which is a bank led model, online interoperable financial inclusion transaction can be performed at PoS (Point of Sale - Micro ATM) through the Business correspondent of any bank using the Aadhaar authentication.

9. RuPay Card Scheme -

  • This is a new card payment scheme that has been launched by the National Payments Corporation of India on 26th March 2012.
  • It offers a domestic, open-loop, multilateral system which will allow all Indian banks and financial institutions in India to participate in electronic payments.

10. Bharat Bill Payment System (BBPS) -

  • This system will function as a tiered structure for operating the bill payment system in the country under a single brand image.
  • NPCI will function as the authorized Bharat Bill Payment Central Unit (BBPCU) and will be responsible for setting business standards, rules and procedures for technical and business requirements for all the participants.

Monday, 20 March 2017

 MS Word Shortcuts


A. Microsoft Word – common shortcuts

1. Ctrl + N = will open a new word document
2. Ctrl + O = will open the ‘Open’ box to open previously saved documents
3. Ctrl + W = will close the current word document
4. Ctrl + S = to save the currently open word document
5. Ctrl + P = will give the print option for current document
6. Ctrl + Z = will undo the last action
7. Ctrl + Y = will restore the action undone
8. Ctrl + X = will cut selected item
9. Ctrl + C = will copy selected text/item

10. Ctrl + V = will paste the previously cut/copy selected text/item
11. Ctrl + A = Selects all the text
12. Ctrl + F = will open Find and Replace option/dialogue box

B. Microsoft Word’s Formatting Shortcuts

1. Ctrl + B = will bold-en the selected text
2. Ctrl + I = will italicize the selected text
3. Ctrl + U = will underline the selected text

4. Ctrl + Shift + D = Double underline

5. Ctrl +Shift + > = will increase the font size of selected text
6. Ctrl +Shift + < = will decrease the font size of selected text

7. Ctrl + 2 = double line spacing
8. End = will take you to the end of a line
9. Home = will take you to the beginning of a line
10. Ctrl + End = will take you to the very end of a document (last page/last line/last
11. Ctrl + Home = will take you to the very beginning of a document

12. Shift + F3 = will change the case of letters of selected text (keep pressing the F3 and
                           see how it keeps changing from All CAPS, to all lower, to Sentence 
13. Ctrl + Shift + F = will activate the ‘Font’ option and you can chose the font you want
14. Ctrl + Shift + N = will apply the ‘Normal’ style to the selected text

15. Ctrl + ‘equal sign’ = for superscript.
                                       i.e., select a text first, then do - ‘ctrl + =’.
                                       example: Birds(of all kinds).

16. Ctrl + Shift + ‘the plus sign’ = for superscript.
                              example: November the 30th of 2014.

C. Microsoft Word – insert option shortcuts

1. Ctrl + Enter = will give/insert a page break, i.e., it’ll go to the next page
2. Ctrl + K = to insert a hyperlink
3. Alt + Shift + D = will insert the current Date

4. Alt + Shift + T = will insert the current Time

5. Alt + I + P + C = will open the Clip Art box on the right side of the document
6. Alt + I + P + W = will open the Word Art options box
7. Alt + I + P + H = will insert/open graph/chart input/options box in the form of an excel
                                 sheet! (Try it out!)

8. Alt + I + P + O = will insert an organization flow chart, which you can edit as per your

Thursday, 9 March 2017

Bird Sanctuaries in India


Andhra Pradesh

Atapaka Bird Sanctuary
Nelapattu Bird Sanctuary
Pulicat Lake Bird Sanctuary
Sri Peninsula Narasimha Wildlife Sanctuary
Uppalapadu Bird Sanctuary


Bordoibam Beelmukh Birds’ Sanctuary
Deepor beel bird sanctuary
Panidihing bird sanctuary


Nagi Dam Bird Sanctuary
Nakti Dam Bird SanctuaryBhimband Wildlife Sanctuary


Najafgarh drain bird sanctuary


Salim Ali Bird Sanctuary


Gaga Wildlife Sanctuary
Khijadiya Bird Sanctuary
Kutch Bustard Sanctuary
Nal Sarovar Bird Sanctuary
Porbandar Bird Sanctuary
Thol Lake


 Bhindawas Wildlife Sanctuary
Khaparwas Wildlife Sanctuary

Himachal Pradesh



Attiveri Bird Sanctuary
Bankapura Peacock Sanctuary
Bonal Bird Sanctuary
Gudavi Bird Sanctuary
Kaggaladu Bird Sanctuary
Magadi Bird Sanctuary
Mandagadde Bird Sanctuary
Puttenahalli Lake (Yelahanka)
Ranganathittu Bird Sanctuary


Kadalundi Bird Sanctuary
Kumarakom Bird Sanctuary
Mangalavanam Bird Sanctuary
Pathiramanal Kerala
Pakshipathalam Bird Sanctuary
Thattekad Bird Sanctuary


Mayani Bird Sanctuary
Great Indian Bustard Sanctuary


Lengteng Wildlife Sanctuary


Chilika Lake 


Harike bird sanctuary


Keoladeo National Park
Khichan Bird Sanctuary
Tal Chhapar Sanctuary

Tamil Nadu

Chitrangudi Bird Sanctuary
Kanjirankulam Bird Sanctuary
Koonthankulam Bird Sanctuary
Suchindram Theroor Birds Sanctuary
Udayamarthandapuram Bird Sanctuary
Vedanthangal Bird Sanctuary
Vellode Birds Sanctuary
Vettangudi Bird Sanctuary

Uttar Pradesh

Bakhira Sanctuary
Lakh Bahosi Sanctuary
Nawabganj Bird Sanctuary
Okhla Sanctuary
Patna Bird Sanctuary
Saman Sanctuary
Samaspur Sanctuary
Sandi Bird SanctuaryThasrana Bird Sanctuary

West Bengal

Chintamoni Kar Bird Sanctuary
Raiganj Wildlife Sanctuary     

Tips to solve Reading Comprehension

Hello Aspirants, In all of your exams, 10-12 questions come from the topic Reading comprehension in English  Section.so here we are providing you some tips & tricks to easily approach reading comprehension.

Reading comprehension (RC) is among the highest section of Banking/Competitive examinations. So what makes it the most favored section in English:
  • Its asked in every paper
  • You don’t need prior knowledge to solve RC questions.
  • It takes time to solve but there is a 80-90% accuracy.
  • Due to its high accuracy and repetition, it acts as a game changer in clearing sectional cut off in english section of IBPS PO/Clerk Exam.
We have prepared a list of few tips and strategies which can be applied to solve reading comprehension questions quickly with high accuracy in your upcoming IBPS PO/Clerk exam.
1. If you have to clear english sectional cutoff without breaking a sweat, attempt all RC questions.
2. However if you less time left and there are more than one Reading Comprehension questions, pick the one based on the following preferences :
a) Which one is smaller : less number of words.
b) Which one is based on a topic of your understanding: If you are a economics graduate,  it makes sense to go for topics related to economy, finance etc and to avoid topics related   to engineering or quantum mechanics. Same applies for graduates from any field. Choose  the topic related to your field of interest.)
c) What is the tone of the author: formal or informal. Identify what the author wants to   convey and can you relate yourself to it.
3. Once you are done selecting the passage, have a quick glance on its content. Don’t read just observe it like a image.
4. Now read the question. Since you had a glance, you will realize that you can quickly discover the answer to the question in the passage.
5. Remember questions and information in the passage is linked. This means first question will have relevance in the first paragraph and so on.
6. For finding the gist (main idea) of passage, read the first and last paragraph of the passage.
7. For answering vocabulary questions of RC, just read the sentence the word is present in and without looking over at the options, think about the context that word is used in. Then check the options and the nearest assumption is your answer.
8. Never use past knowledge about the topic to answer any questions.
9. Improve your reading speed. Read articles in newspaper Novels etc.
10. Avoid extreme answers.

Monday, 6 March 2017

Mutual Funds and its Types

A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. They are professionally managed in a way that when people invest in the mutual funds, they get the services of a team of professionals.
  • By investing in mutual fund, one can gain the services of professional fund managers, who would otherwise be costly for an individual investor.
  • Professional fund managers can assess the risk profile of the investments.
  • Without investing a large amount of money, one can enjoy the services.
  • Since many investors are investing small amounts in a single mutual fund, risk (if any) gets divided among all of them, so mutual funds are better options for investments.
  • Investments in a stock market go up or down with the change in prices of the stocks, so the biggest risk in investing in Mutual Funds is the market risk because of the economic alterations.
An investment in mutual fund follows the following cycle:

Types of Mutual Funds

Open Ended:

Under this scheme, the investors are free to buy or sell units at any point in time. This means that they do not have a maturity date. So your money is available to you any time you want.
As new investors can purchase fresh units any day, the unit capital is case of an open-ended funds can fluctuate on daily basis.

Closed Ended:

Under this scheme, there is a stipulated maturity period. The investors can invest only during the launch period known as the NFO (New Fund Offer) period. Unlike open-ended funds, unit capital in case of closed-ended funds does not fluctuate on daily basis.

Interval Fund:

This is a scheme which operates as a combination of open and closed ended schemes. It allows investors to trade units at pre-defined intervals.

Sunday, 5 March 2017

Banking Ombudsman

Banking Ombudsman is a person who hears complaints relating to certain services rendered by banks. The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995.
The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints. All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.
A Person can make a complaint to the Banking Ombudsman for things such as,
  • Inordinate delay in the payment or collection of cheques, drafts, bills etc.
  • Non-payment or delay in payment of inward remittances.
  • Non-adherence to prescribed working hours
  • Complaints from NRIs having accounts in India in relation to their remittances from abroad, deposits and other bank-related matters
  • Refusal to open deposit accounts without any valid reason for refusal
  • Levying of charges without adequate prior notice to the customer
  • Failure to provide or delay in providing a banking facility promised in writing by a bank or its direct selling agents.
  • Forced closure of deposit accounts without due notice or without sufficient reason;
  • Refusal to close or delay in closing the accounts.
  • Refusal to accept or delay in accepting payment towards taxes, as required by Reserve Bank/Government.
  • Delays in receipts of export proceeds, handling of export bills, collection of bills etc. for exporters provided the said complaints pertain to the Banks operations in India.
  • Non-acceptance of application for loans without furnishing valid reasons to the applicant
It is possible to file a complaint with the Banking Ombudsman simply by writing on a plain paper. One can also file it online by sending an email to the Banking Ombudsman. Banking Ombudsman can order the Bank to compensate the actual money loss OR Rs.10 lakh (whichever is lower). In case of Credit card related cases, the Ombudsman can order the bank to pay additional fines (upto Rs.1 lakh) for the mental harassment caused to the customer.
The Banking Ombudsman does not charge any fee for filing and resolving customers’ complaints.
If a person is not satisfied with the decision passed by the Banking Ombudsman, he/she can approach the appellate authority against the Banking Ombudsmen’s decision. Appellate Authority is vested with a Deputy Governor of the RBI.

Assets and Liabilities of a Bank

The two main components of a bank’s balance sheet are its assets and liabilities.
Bank’s assets and liabilities definition is same as we talk about their simple definitions. But the examples that come under the category vary. These are explained below:

ASSETS are the ones which are useful or valuable things a person/organization has like goods, property, vehicles, equipment, machinery, etc.
If we talk about bank’s assets: They are those which the bank has and can be readily converted to cash whenever bank requires money.
The bank’s assets are

  • physical assets – this includes land, furniture, building, etc owned by bank. They are the minor assets.
  • cash present with bank – cash which is used for day to day transactions such as for cash withdrawals and cheque processing.
  • the interest amount on loans – it is a major asset of a bank because they earn more money by interest amounts of loans than they have to give on saving accounts.
  • investments – this include investments in government securities and other securities, treasury bills, etc.
LIABILITIES are the ones for which an amount of money is owed like in a company the salaries of employees are to be given, etc.
If we talk about bank’s liabilities: They are those which the bank has from the customer deposits and borrowed money for bank’s purpose.
The bank’s liabilities are
  • deposits – customers deposits in the savings account and current account. They can withdraw this amount whenever they want, so bank have to keep this money aside and cant use it because a customer can come any time to bank to withdraw his money. Other type of deposits such of certificates of deposits.
  • borrowings – they include borrowings from other banks including RBI.

Assets and liabilities of bank can be calculated to find the bank’s capital. Bank Capital = Total Assets – Total Liabilities; as the total amount of money the bank has and the money which is to be kept aside to be given to customers and lenders.

Friday, 3 March 2017

Inflation Types and its Imapact

Inflation is nothing but the more price we pay for goods. It is the persistent rise of all goods and services over a period of time. There are several factors that influences inflation in India. The major factors to be taken into account is the population, unbalanced economic growth, demand for more money and increased taxes. On the flip side it has adverse effects on consumers.
The day to day goods are sold considerably at a higher rate which makes difficult for the consumers to afford their basic needs. Hence the need for money increases which is one of the major cause.
There is huge money gap which could be the potential factor for increased price and inflation in India. Increase in enormous expenditure can cause inflammatory gap at current prices.
The rate of inflation is measured on the basis of price indices which are of two kinds—Wholesale
Price Index (WPI) and Consumer Price Index (CPI).

Types of Inflation

Demand – Pull Inflation

When there is a mis-match between demand and supply, it will eventually pull up the prices. Here we have two cases. In first case, the demand increases over the same level of supply. In second case, the supply decreases with the same level of demand. In both cases the situation of
demand-pull inflation arise.

Cost – Push Inflation

An increase in factor input costs pushes up prices. In general the factors that could contribute to Cost-Push inflation are increases in corporate taxes, rising wages, and rising raw materials cost.

Low Inflation

Low inflation takes place in a longer period and the range of increase is usually in ‘single digit’. Such inflation has also been called as ‘creeping inflation’.


Deflation is the exact opposite of inflation. The persistent fall in the prices of all goods and services over a period of time is called deflation. When deflation occurs it is possible to buy more amount of goods with the same amount of money. Deflation has often had the side effect of increasing unemployment in an economy, since the process often leads to a lower level of demand in the economy.


Stagflation is a situation in an economy where inflation and unemployment both are at higher levels. Stagflation occurs when the economy isn’t growing but prices are going up. Stagflation is basically a combination of high inflation and low growth.

Galloping Inflation

This is a “very high inflation” running in the range of double-digit or triple digit (i.e. 20%, 100% or 200% a year). The Russian economy showed such inflation after the disintegration of the ex-USSR in the late 1980s.


This form of inflation is ‘large and accelerating’ which might have the annual rates in million or even trillion. In such inflation not only range of increase is very large but the increase takes place in a very short span of time, prices shoot up overnight. This hasn’t happened in the U.S. since the Civil War, occurred in Germany before World War II, and in Zimbabwe in the 2000s. Such an inflation quickly leads to a complete loss of confidence in the domestic currency and people start opting for other forms of money.


It is an un-usual inflation, where there is an inflation in one particular sector for a particular period of time, while the other sector is experiencing no changes at all or facing deflation.

Impacts of Inflation

  • It slow down the economic growth rate.
  • Inflation redistributes wealth from creditors to debtors i.e. lenders suffer and borrowers benefit out of inflation.
  • Prices goes up, that mean you pay more money for the same product which you got it lesser earlier. 
  • With the rise in inflation, lending institutions feel the pressure of higher lending.
  • Investment in the economy is boosted by the inflation (in the short-run).
    The standard of living declines. 
  • The export segment of the economy benefits due to inflation.
  • Inflation gives an economy the advantage of lower imports and import-substitution as foreign goods become costlier.

Types of Expenditures

Expenditure is when a individual or company or government spend the money they have for goods and services.

There are three types of Expenditures as:

Capital Expenditure

  • Capital Expenditure is when someone spends money for generating profits for years or to expand the business.
  • Example: Someone wants to start a business of cosmetic products. He will open a shop for it which is a one-time investment which means capital expenditure. Another example include purchasing of machinery for a factory which too will be one time spending.
  • Since it is a one-time investment, it is non-recursive in nature.
  • So the expenditure for the asset (in above example, shop or machinery) which is bought for generating profits for years will come under capital expenditure.
  • Capital expenditures will be written on asset side of balance sheet of a company.
  • The benefits of spending will be counted for years.

 Revenue Expenditure

  • Revenue Expenditure is when anyone spends money to run his day-to-day business.
  • Example: Let a person opens a cosmetic shop, for running his business, he will have to buy the cosmetic products from a dealer or manufacturer, there will be some electricity charges, he might employ another person to look for the shop and products, etc. So the money spent on these things which are required for running the business will be the revenue expenditure.
  • So it is a short term as compared to capital expenditure.
  • This expenditure will be recursive in nature, i.e. revenue expenditure will have to be done frequently unlike capital expenditure.
  • Revenue expenditures will be written as liabilities in balance sheet of a company.
  • The benefits of spending will be counted only in the current financial year.

Deferred Revenue Expenditure

  • Deferred Revenue Expenditure is the Revenue Expenditure whose benefits can be extended to a number of years.
  • Example: Spending on advertisement of company will help in the day-to-day business of company but if it is extended for another year, it will be Deferred Revenue Expenditure.