Pragathi Krishna Gramin Bank 469 Officer & Office Asst Vacancies

PRAGATHI KRISHNA GRAMIN BANK invites applications for the post of Officers Scale-II, Officer Scale-I and Office Assistants (Multipurpose) from Indian Citizens who have appeared at the  Common Written Examination (CWE-II) for RRBs conducted by IBPS in September / October 2013 and have been declared qualified.

Click here for more details 

SBI Special Recruitment Drive for SC/ST/OBC Category

SBI Special Recruitment Drive for SC/ST/OBC Category

SBI Special Recruitment Drive for SC/ST/OBC Category : State Bank of India (SBI) is inviting online applications from eligible Indian Citizens belonging to SC / ST / OBC category for filling up the posts of Management Executives (Middle Management Grade Scale-II (Mmgs II) )  in State Bank of Hyderabad. Posting will be anywhere in India. You can apply online from 16th December 2013 to 3rd January 2014. Check remaining details below.

Name of the post : Management Executives 

Detailed list of vacancies :

 

SC	ST	OBC	Total	PWD (OH)
14	7	25	46	1

Important Dates :

• Online Registration : 16th December 2013
• Payment of Fee-Online : 16th December to 3rd January 2013
• Payment of Fee-Offline : 18th December to 7th January 2013
• Date of Recruitment Exam : 23rd January 2014

Eligibility Criteria :

• Education : 
• Post Graduate Degree/ Diploma in Business Administration, Business Management, Finance, Marketing, International Business, Operations Management, Systems, HR (Thecourse studied should be of minimum two years full time course. Part time course/distance learning courses are not eligible). OR
• M.Com OR
• M.A. / M.Sc. (in Economics or Statistics) OR
• CA /CWA/CFA/CS (Company Secretary)
• Percentage of Marks : 
• Candidates with professional qualification (CA/CWA/CFA/CS) should have secured 55% minimum aggregate marks in XIIth Standard.
• Candidates without any professional qualification (i to iii mentioned under 'A' above) should have secured :
• 55% minimum aggregate marks in XIIth Standard AND
• 50% minimum aggregate marks in Graduation irrespective of pass course or honours course AND
• 50% aggregate marks in Post Graduation
• Age (as on 1st December 2013) : 
• Minimum : 21 Years
• Maximum :
• 35 years for SC / ST
• 33 years for OBC (Non Creamy Layer)
• PWD -
• SC / ST - 45 years
• OBC - 43 years
• Ex Servicemen - 35 years

Application Fee :

• for SC / ST / PWD -  Rs. 100/-

• for OBC -  Rs. 500/-
  Note : The online application link will be activated from 16th December 2013

Caution Against Fictitious Offers

• Phishing

What is Phishing ?

Phishing refers to 'fishing' out sensitive information such as banking details by pretending as a trustworthy entity. Usually the attacks will be in the form of an e-mail that appears to be from the bank. These randomly generated e-mails contain click able links that guides you to a scamsters log on page which will be a page designed to capture your details. Different techniques will be employed by the scamsters to make you click on the links and enter the user id and passwords. Scamsters then use this information to siphon off funds or, undertake transactions that are billed to the original customer.

How Phishers operate ?

Usually Phishing attempts will be in the form of a spam mail which contains click able links that will direct you to the 'spoofed website’, which scamsters have created. The fraudsters will procure a database of valid email addresses over a period of time in advance through publicly available sources. The website to which the email directs will have the same look and feel as the bank's website. The URL or the website address of such fake pages will be created by the scamsters on freely available web hosting servers. Our Bank website's URL is www.saraswatbank.com,. The fraudsters create fake websites with URL almost similar to the real one .For example www.saraswatbank.org or www.saraswatbank.net .Those who are unaware of this fact enter their login details which will be captured in the background by the fraudsters.The mis-users then log-in remotely into such victims’ accounts and transfer funds into thier account. The bank has employed the best possible security software and firewalls to protect our customers sensitive information. On the other hand we expect our customers to be alert of the above facts.

• Spoofing :

 Website Spoofing is the term for falsified e-mail addresses that appear to come from a sender when in fact, the message is really being sent by a spammer. They can be difficult to spot and cause many problems, both for recipients and spoofed e-mail address owners. Scamsters can not only fake the URL but also the Pad lock icon at the bottom right corner.

• Vishing :

"Vishing" or "Voice Phishing" is the act of leveraging a new technology called Voice over Internet Protocol(VoIP) in using the telephone system to falsely claim to be a legitimate enterprise in an attempt to scam users into disclose personal information. The victim is contacted by a phishing e-mail directed to a VoIP based telephone number. The user may receive a telephone call from another individual with a spoofed caller ID or a recorded incoming call with a spoofed caller ID directing them to a phishing site.

Fraudsters uses a spoofed (fraudulent) caller ID matching the identity of a misrepresented organization and they invite you to punch your telephone information through your telephone keypad. The content of the incoming message is designed to trigger an impulsive reaction from you. It can use upsetting or exciting information, demand an urgent response or use a false pretense . Any of the personal information such as bank account number, credit card number, PIN etc should not be typed in your telephone keypad in response to above mentioned calls. As a customer you also have a role in stopping vishing scams. You are encouraged to recognize it, report it and stop it. Do not react immediately without thinking. 

• Skimming : 

Skimming is a scam where scamsters use a skimming card reader or skimmer with which they make a counterfeit copy of the ATM card or Credit card. While the victim withdraws money from his/her account the card details will be read into the skimmer or an attached PC. Once the skimmer gets the card data they can duplicate the card and also use it for online shopping.

Usually Skimming card readers or Skimmers will be placed in ATMs or POS machines . Skimmer is a small electronic device which is capable of capturing the data present in magnetic strips of the cards. Skimming may take place during a legitimate transaction at a business. Such fraudulent activities can happen mostly in shopping outlets and restaurants. For example, in a restaurant your card may be taken away when the bill is being settled and may use your card for regular transaction, also for capturing the card details. This captured card details will be misused by the scamsters. 

•  TIPS TO PROTECT YOURSELF FROM SKIMMING 

Do not leave your card unattended.

Keep changing your ATM Card PIN number regularly

Use your hand or body to shield your PIN from onlookers when you are conducting transactions at a bank machine or at the point-of-sale.

Beware of a skimming card reader.

Regularly check your statements or passbook to verify all transactions have been properly documented.

Never let your card out of your sight, for example at a restaurant. 

Courtesy:

http://www.saraswatbank.com/view_section.jsp?lang=0&id=0,229,231#

    

What is Share Capital

“Share Capital” means capital of the company divided into shares of fixed amount.
Meaning: It is the money raised by a company by issuing of shares. A public company and its subsidiary can issue only two types of shares viz., equity shares and preference shares.

EBIT (Earnings Before Interest & Tax)

An indicator of a company's profitability, calculated as revenue minus expenses, excluding tax and interest. EBIT is also referred to as "operating earnings", "operating profit" and "operating income", as you can re-arrange the formula to be calculated as follows:

EBIT =

Revenue - COGS- Operating  Expenses - Depreciation & Amortization

Also known as Profit Before Interest & Taxes (PBIT), and equals Net Income with interest and taxes added back to it.



http://www.investopedia.com

Blue-Chip Index

A stock index that tracks the shares of the top-performing publicly traded companies. Blue-chip stocks represent companies that are financially stable, well established and provide good returns for investors, making them desirable investments. Because blue-chip companies tend to perform similarly to the economy as a whole, the performance of a blue-chip index may be considered a gauge of an industry's or region's economic strength. It is for this reason that news reports typically mention how a major blue-chip stock index, such as the Dow Jones Industrial Average (DIJA), performed that day.

Read more: http://www.investopedia.com

Universal Banking

A banking system in which banks provide a wide variety of financial services, including both commercial and investment services. Universal banking is common in some European countries, including Switzerland. In the United States, however, banks are required to separate their commercial and investment banking services. Proponents of universal banking argue that it helps banks better diversify risk. Detractors think dividing up banks' operations is a less risky strategy.


Source:
http://www.investopedia.com

BSC (Balance ScoreCard )

The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance.  While the phrase balanced scorecard was coined in the early 1990s, the roots of the this type of approach are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950’s and the work of French process engineers (who created the Tableau de Bord – literally, a "dashboard" of performance measures) in the early part of the 20th century.
The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. The “new” balanced scorecard transforms an organization’s strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies.
This new approach to strategic management was first detailed in a series of articles and books by Drs. Kaplan and Norton. Recognizing some of the weaknesses and vagueness of previous management approaches, the balanced scorecard approach provides a clear prescription as to what companies should measure in order to 'balance' the financial perspective. The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise.
Kaplan and Norton describe the innovation of the balanced scorecard as follows:

"The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

Adapted from Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review (January-February 1996): 76.

Perspectives

The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives:
The Learning & Growth Perspective
This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Metrics can be put into place to guide managers in focusing training funds where they can help the most. In any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization.
Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. It also includes technological tools; what the Baldrige criteria call "high performance work systems."
The Business Process Perspective
This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately; with our unique missions these are not something that can be developed by outside consultants.
The Customer Perspective
Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good.
In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups.
The Financial Perspective
Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives.  There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data, in this category.

Strategy Mapping

Strategy maps are communication tools used to tell a story of how value is created for the organization.  They show a logical, step-by-step connection between strategic objectives (shown as ovals on the map) in the form of a cause-and-effect chain.  Generally speaking, improving performance in the objectives found in the Learning & Growth perspective (the bottom row) enables the organization to improve its Internal Process perspective Objectives (the next row up), which in turn enables the organization to create desirable results in the Customer and Financial perspectives (the top two rows).

Balanced Scorecard Software

The balanced scorecard is not a piece of software.  Unfortunately, many people believe that implementing software amounts to implementing a balanced scorecard. Once a scorecard has been developed and implemented, however, performance management software can be used to get the right performance information to the right people at the right time. Automation adds structure and discipline to implementing the Balanced Scorecard system, helps transform disparate corporate data into information and knowledge, and helps communicate performance information. The Balanced Scorecard Institute formally recommends the QuickScore Performance Information System^TM developed by Spider Strategies and co-marketed by the Institute.



Source :
www.balancedscorecard.org

EPS ( Earning per share )

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.

Calculated as:



When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period.

Diluted EPS expands on basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number .

Source:
http://www.investopedia.com

EVA(Economic Value Added)

Economic Value Added or EVA, is an estimate of a firm's economic profit – being the value created in excess of the required return of the company's investors (being shareholders and debt holders). Quite simply, EVA is the profit earned by the firm less the cost of financing the firm's capital. The idea is that value is created when the return on the firm's economic capital employed is greater than the cost of that capital. This amount can be determined by making adjustments to GAAP accounting. There are potentially over 160 adjustments that could be made but in practice only five or seven key ones are made, depending on the company and the industry it competes in.


^{Source :
http://en.wikipedia.org}
 

IPO(initial public offer)

An initial public offering (IPO) or stock market launch is a type of public offering where shares of stock in a company are sold to the general public, on a securities exchange, for the first time. Through this process, a private company transforms into a public company. Initial public offerings are used by companies to raise expansion capital, to possibly monetize the investments of early private investors, and to become publicly traded enterprises. A company selling shares is never required to repay the capital to its public investors. After the IPO, when shares trade freely in the open market, money passes between public investors. Although an IPO offers many advantages, there are also significant disadvantages. Chief among these are the costs associated with the process, and the requirement to disclose certain information that could prove helpful to competitors, or create difficulties with vendors. Details of the proposed offering are disclosed to potential purchasers in the form of a lengthy document known as a prospectus. Most companies undertaking an IPO do so with the assistance of an investment banking firm acting in the capacity of an underwriter. Underwriters provide a valuable service, which includes help with correctly assessing the value of shares (share price), and establishing a public market for shares (initial sale). Alternative methods such as the dutch auction have also been explored. In terms of size and public participation, the most notable example of this method is the Google IPO. China has recently emerged as a major IPO market, with several of the largest IPOs taking place in that country.

Underwriting

Underwriting refers to the process that a large financial service provider (bank, insurer, investment house) uses to assess the eligibility of a customer to receive their products (equity capital, insurance, mortgage, or credit)

Securities underwriting

Securities underwriting refers to the process by which investment banks raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt capital). The services of an underwriter are typically used during a public offering.
This is a way of selling a newly issued security, such as stocks or bonds, to investors. A syndicate of banks (the lead managers) underwrites the transaction, which means they have taken on the risk of distributing the securities. Should they not be able to find enough investors, they will have to hold some securities themselves. Underwriters make their income from the price difference (the "underwriting spread") between the price they pay the issuer and what they collect from investors or from broker-dealers who buy portions of the offering.

Bank Underwriting

In banking, underwriting is the detailed credit analysis preceding the granting of a loan, based on credit information furnished by the borrower; such underwriting falls into several areas: (a) Consumer loan underwriting includes the verification of such items as employment history, salary and financial statements; publicly available information, such as the borrower's credit history, which is detailed in a credit report; and the lender's evaluation of the borrower's credit needs and ability to pay. Examples include mortgage underwriting. (b) Commercial (or business) underwriting consists of the evaluation of financial information provided by small businesses including analysis of the business balance sheet including tangible net worth, the ratio of debt to worth (leverage) and available liquidity (current ratio). Analysis of the income statement typically includes revenue trends, gross margin, profitability, and debt service coverage (see Debt Service Coverage Ratio).
Underwriting can also refer to the purchase of corporate bonds, commercial paper, government securities, municipal general-obligation bonds by a commercial bank or dealer bank for its own account or for resale to investors. Bank underwriting of corporate securities is carried out through separate holding-company affiliates, called securities affiliates or Section 20 affiliates.

Insurance underwriting

Insurance underwriters evaluate the risk and exposures of potential clients. They decide how much coverage the client should receive, how much they should pay for it, or whether even to accept the risk and insure them. Underwriting involves measuring risk exposure and determining the premium that needs to be charged to insure that risk. The function of the underwriter is to protect the company's book of business from risks that they feel will make a loss and issue insurance policies at a premium that is commensurate with the exposure presented by a risk.
Each insurance company has its own set of underwriting guidelines to help the underwriter determine whether or not the company should accept the risk. The information used to evaluate the risk of an applicant for insurance will depend on the type of coverage involved. For example, in underwriting automobile coverage, an individual's driving record is critical. As part of the underwriting process for life or health insurance, medical underwriting may be used to examine the applicant's health status (other factors may be considered as well, such as age & occupation). The factors that insurers use to classify risks should be objective, clearly related to the likely cost of providing coverage, practical to administer, consistent with applicable law, and designed to protect the long-term viability of the insurance program.
The underwriters may either decline the risk or may provide a quotation in which the premiums have been loaded or in which various exclusions have been stipulated, which restrict the circumstances under which a claim would be paid. Depending on the type of insurance product (line of business), insurance companies use automated underwriting systems to encode these rules, and reduce the amount of manual work in processing quotations and policy issuance. This is especially the case for certain simpler life or personal lines (auto, homeowners) insurance. Some insurance companies, however, rely on agents to underwrite for them. This arrangement allows an insurer to operate in a market closer to its clients without having to establish a physical presence.

Other forms of underwriting

Real estate underwriting

In evaluation of a real estate loan, in addition to assessing the borrower, the property itself is scrutinized. Underwriters use the debt service coverage ratio to figure out whether the property is capable of redeeming its own value or not.

Forensic underwriting

Forensic underwriting is the "after-the-fact" process used by lenders to determine what went wrong with a mortgage. Forensic underwriting refers to a borrower's ability to work out a modification scenario with their current lien holder, not to qualify them for a new loan or a refinance. This is typically done by an underwriter staffed with a team of people who are experienced in every aspect of the real estate field.

Sponsorship underwriting

Main article: Underwriting spot

Underwriting may also refer to financial sponsorship of a venture, and is also used as a term within public broadcasting (both public television and radio) to describe funding given by a company or organization for the operations of the service, in exchange for a mention of their product or service within the station's programming.


^{Source :}

http://en.wikipedia.org/wiki/Underwriting

ASBA (Applications Supported by Blocked Amount)

ASBA (Applications Supported by Blocked Amount) is a process developed by the India's Stock Market Regulator SEBI for applying to IPO. In ASBA, an IPO applicant's account doesn't get debited until shares are allotted to them.

ASBA process facilitates retail individual investors bidding at a cut-off, with a single option, to apply through Self Certified Syndicate Banks (SCSBs), in which the investors have bank accounts. SCSBs are those banks which satisfy the conditions laid by SEBI. SCSBs would accept the applications, verify the application, block the fund to the extent of bid payment amount, upload the details in the web based bidding system of NSE, unblock once basis of allotment is finalized and transfer the amount for allotted shares to the issuer.

ASBA means “Applications Supported by Blocked Amount”. ASBA is an application containing an authorization to block the application money in the bank account, for subscribing to an issue. If an investor is applying through ASBA, his application money shall be debited from the bank account only if his/her application is selected for allotment after the basis of allotment is finalized, or the issue is withdrawn/failed.
It is a supplementary process of applying in Initial Public Offers (IPO) and Follow-On Public Offers (FPO) made through Book Building route and co-exists with the current process of using cheque as a mode of payment and submitting applications.
ASBA is stipulated by SEBI, and available from most of the banks operating in India. This allows the investors money to remain with the bank till the shares are allotted after the IPO. Only then does the money transfer out of the investors account to the company. This eliminates the need for refunds on shares not being allotted.
As on 3 December 2012, 52 Banks are acting as SCSBs. Investors may submit their ASBA Applications to these SCSBs in order to apply for Public Issues. The list of SCSBs include the likes of Axis Bank, HDFC Bank, ICICI Bank, State Bank of India, Punjab National Bank, UCO Bank, IDBI Bank among others


Source :
http://en.wikipedia.org

Investment banking

An investment bank is a financial institution that assists individuals, corporations, and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities.

 Source :
http://en.wikipedia.org

Utmost good faith (Uberrimae Fidei)

Utmost good faith (Uberrimae Fidei)

In all legal contracts, it is essential that the parties to the contract exercise good faith. However, in insurance the emphasis is on utmost good faith which should be exercised by the insured. As the insured alone has complete information about the subject of insurance, he should reveal all the facts to the insurer. In case of breach of this condition the contract becomes void abinitio

Third Party Administrators (TPA) - Health Insurance

Third Party Administrators (TPA) - Health Insurance

TPAs are licensed by IRDA and are engaged for a fee or remuneration for the provision of health services. Health services means all the services rendered by a TPA as per the terms of agreement entered into with an insurance company in connection with health insurance business, however the services rendered will not include either insurance business or soliciting of insurance business either directly or through an intermediary. They are normally contracted by a health insurer to administer services, including claims administration, premium collection, enrollment and other administrative activities.
The license to act as TPA is granted by IRDA only to companies which have a share capital and are registered under Companies Act, 1956. As per the memorandum of the company, the primary objective should be to carry on business in India as TPA in the health services and they are not permitted to transact any other business. The minimum capital prescribed is Rs. 1,00,00,000 .
As per the act at least one of the directors should be a qualified medical doctor registered with Medical Council of India. The Chief Executive Officer (CEO) of the company has to under go training as prescribed by the IRDA.
The TPA can enter into agreement with more than one insurance company and the insurance companies can also deal with more than one TPA.

Insurance Regulatory and Development Authority (IRDA)

Insurance Regulatory and Development Authority (IRDA)

IRDA is the regulator of the insurance industry in India and was constituted by an Act of Parliament in 1997. It has the following mission:
To protect the interests of the policy holders. To regulate, promote and ensure orderly growth of the insurance industry.

It is constituted by a 10 member team consisting of :
Chairman
Five whole time members
Four part time members

Duties, Powers and Functions of IRDA

Section 14 of the IRDA Act, 1999 lays down the duties, powers and functions of IRDA which are :
1. issuance of certificate of registration, renewal, modification, withdraw, suspend or
cancel such registration;
2. Protection of the policyholders interest;
3. Laying down qualifications, training and code of conduct for intermediaries;
4. Laying down code of conduct for Surveyors;
5. Promote efficiency in the conduct of insurance business;
6. Promoting and regulating professional organisations connected with the insurance
and re-insurance business;
7. Levying fees and other charges for carrying out the purposes of this Act;
8. Calling for information, conduct of inspection, audit of all organizations associated
with the insurance business;
9. Control of the rates, terms etc. offered by general insurers in respect of business not
controlled by Tariff Advisory Committee (TAC);
10. Specifying the manner in which accounts should be maintained by insurers and
intermediaries;
11. Regulation of investment of funds by insurers ;
12. Regulation of maintenance of solvency margins;
13. Act as a dispute settlement authority between insurers and intermediaries;
14. Supervise TAC;
15. Specify the percentage of premium income to be utilised for promoting organizations mentioned in clause 6 ;
16. Specify the rural sector obligation of insurers;
17. Exercise any other powers as prescribed.

Insurance Act, 1938

Insurance Act, 1938

This Act came into force on 1st July 1939 and is applicable to the whole of India, except Jammu and Kashmir. This law is applicable to all the insurance companies and other entities participating in the insurance industry in India .
The purpose of enactment of this law is:
1. To supervise all the organisations operating in insurance business in India. This is
ensured by making registration compulsory.
2. To increase deposit of insurance companies to ensure that they are adequately
financed and conform to minimum capital requirements.
3. Full disclosure of information is enforced to ensure soundness and transparency in
management.
4. Submission of accounts and inspection of insurance companies by authorities.
5. Guidelines are laid for investment of funds by insurance companies.
6. Regulations to govern the assignment and transfer of life insurance policies besides
including the possibility of making nominations.
The Insurance Act, 1938 was amended in 1950, again in 1956 when life insurance business
was nationalized and again in 1972 when general insurance was nationalised.

Time value of Money

Time value of Money

The concept of time value of money arises from the relative importance of an asset now vs.in future. Assets provide returns and ownership of assets provides access to these returns.
For example, Rs. 100 of today’s money invested for one year and earning 5% interest willbe worth Rs. 105 after one year. Hence, Rs. 100 now ought to be worth more than Rs. 100 a year from now. Therefore, any wise person would chose to own Rs. 100 now than Rs. 100 in future. In the first option he can earn interest on on Rs. 100 while in the second option he loses interest. This explains the ‘time value’ of money. Also, Rs. 100 paid now or Rs. 105 paid exactly one year from now both have the same value to the recipient who assumes 5% as the rate of interest. Using time value of money terminology, Rs. 100 invested for one year at 5% interest has a future value of Rs. 105. The method also allows the valuation of a likely stream of income in the future, in such a way that the annual incomes are discounted and then added together, thus providing a lump-sum “present value” of the entire income stream.
For eg. If you earn Rs. 5 each for the next two years (at 5% p.a. simple interest) on Rs. 100, you would receive Rs. 110 after two years. The Rs. 110 you earn, can be discounted at 5% for two years to arrive at the present value of Rs. 110, i.e. Rs. 100.
Valuing future cash flows, that may arise from an asset such as stocks, is one of the cornerstones of fundamental analysis. Cash flows from assets make them more valuable now than in the future and to understand the relative difference we use the concepts of interest and discount rates. Interest rates provide the rate of return of an asset over a period of time, i.e., in future and discount rates help us determine what a future value of asset, value that would come to us in future, is currently worth.
The present value of an asset could be shown to be:
Where
PV = Present Value
FV = Future Value
r = Discount Rate
t = Time

Point of Sale (PoS) Terminals

Point of Sale (PoS) Terminals

To use smart cards/debit cards/credit cards for the purchase of an item or for payment of a service at a merchant's store, the card has to be swiped in a terminal (known as Point of Sale or POS terminal) kept at the merchant's store. As soon as the card is put on the terminal, the details of the card are transmitted through dial-up or leased lines to a host computer. On verification of the genuineness of the card, the transaction is authorised and concluded. It is thus a means to 'check out' whether the cardholder is authorized to make a transaction using the card. POS terminal is a relatively new concept.
A Point of Sale (PoS) terminal is an integrated PC-based device, with a monitor (CRT), PoS keyboard, PoS printer, Customer Display, Magnetic Swipe Reader and an electronic cash drawer all rolled into one. More generally, the POS terminal refers to the hardware and software used for checkouts.
In recent years, banks are making efforts to acquire Point of Sale (PoS) terminals at the premises of merchants across the country as a relatively new source of income. 'Acquiring' a POS terminal means installing a POS terminal at the merchant premises. The installer of thePoS terminals is the acquirer of the terminal and the merchants are required to hold an account (merchant account) with the acquirer bank. The acquirer bank levies each transaction with a charge, say 1% of the transaction value. This amount is payable by the merchant. Most merchants do not mind absorbing this cost, because such facilities expand their sales. Some
merchants, however, pass on the cost to the customer. This business is known as merchant acquisition business.
Banks are vying with one another for PoS machine acquisition, since it offers a huge opportunity to generate additional income by increasing the card base and encouraging card holders to use them for their merchant transactions. Leading banks--both in the public and private sectors are planning to install hundreds of thousands of these terminals across the country. Some banks are planning joint ventures with global companies who have experience and expertise in
this area.
PoS terminals are predominantly used for sale and purchase transactions. The PoS terminals have proved to be very effective in combating fraudulent transaction by on-line verification of cards. Also, the RBI is expected to permit cash withdrawal transactions to cardholders from PoS terminals installed with shopkeepers, mall stores, etc.
PoS terminals, having gained significant acceptance in metros, need to become more popular in tier-2 and tier-3 cities. Public sector banks appear to be more interested in targeting the smaller towns and cities where they have strong branch presence. The challenges of setting up a widespread PoS network will be primarily (a) operational costs and (b) viability in smaller towns and cities. Experts feel that once the technology stabilises and costs per unit comes down, PoS terminals will become popular all over India.

Mobile Banking Transactions

Mobile Banking Transactions

 Some banks have started offering mobile banking and telebanking to customers. The expansion in the use and geographical reach of mobile phones has created new opportunities for banks to use this mode for banking transactions and also provide an opportunity to extend banking facilities to the hitherto excluded sections of the society.
The RBI has adopted Bank Led Model in which mobile phone banking is promoted through business correspondents of banks.45 The operative guidelines for banks on Mobile Banking Transactions in India were issued on October 8, 2008. Only banks who have received one-time approval from the RBI are permitted to provide this facility to customers.

Mobile Banking in India

Till June 30, 2009, 32 banks had been granted permission to operate Mobile Banking in India, of which 7 belonged to the State Bank Group, 12 to nationalised banks and 13 to private/ foreign banks.

Source: Report on Trends and Progress of Banking in India 2008-09, RBI.

Internet Banking

Internet Banking

Through its website, a bank may offer its customers online access to account information and payment and fund transfer facilities. The range of services offered differs from bank to bank depending mainly on the type and size of the bank. Internet banking is changing the banking industry and affecting banking relationships in a major way

Examples of Online Payment Services offered by some banks

Shopping Online: One can shop securely online with the existing debit/credit card. This can also be done without revealing the customer's card number.
 
Prepaid Mobile Refill: A bank's account holder can recharge his prepaid mobile phone with this service.

Bill Pay: A customer can pay his telephone, electricity and mobile phone bills through the Internet, ATMs, mobile phone and telephone.

Register & Pay: One can view and pay various mobile, telephone, electricity bills and insurance premiums on-line. After registering, customers can get sms and e-mail alerts every time a bill is received.

RTGS Fund Transfer: RTGS is an inter-bank funds transfer system, where funds are transferred as and when the transactions are triggered (i.e. real time).

Online Payment of Taxes: A customer can pay various taxes online including Excise and Service Tax, Direct Tax etc.

Prevention of Money Laundering Act (PMLA), 2002

Prevention of Money Laundering Act (PMLA), 2002

The PMLA, 2002 casts certain obligations on the banking companies in regard to maintenance
and reporting of the following types of transactions:

a) all cash transactions of the value of more than Rs 10 lakh or its equivalent in foreign
currency;

b) all series of cash transactions integrally connected to each other which have been
valued below Rs 10 Lakh or its equivalent in foreign currency where such series of
transactions have taken place within a month and the aggregate value of such
transactions exceeds Rs 10 Lakh;

c) all cash transactions where forged or counterfeit currency notes or bank notes have
been used as genuine and where any forgery of a valuable security or a document has
taken place facilitating the transaction; and

d) all suspicious transactions whether or not made in cash

Know Your Customer (KYC) norms

Know Your Customer (KYC) norms

Banks are required to follow Know Your Customer (KYC) guidelines. These guidelines are meant to weed out and to protect the good ones and the banks. With the growth in organized crime, KYC has assumed great significance for banks. The RBI guidelines on KYC aim at preventing banks from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities. They also enable banks to have better knowledge and understanding of their customers and their financial dealings. This in turn helps banks to manage their risks better. The RBI expects all banks to have comprehensive KYC policies, which need to be approved by their respective boards.

Banks should frame their KYC policies incorporating the following four key elements:

a) Customer Acceptance Policy;
b) Customer Identification Procedures;
c) Monitoring of Transactions; and
d) Risk Management.

 Customer Acceptance Policy

Every bank should develop a clear Customer Acceptance Policy laying down explicit criteria for acceptance of customers. The usual elements of this policy should include the following. Banks, for example, should not open an account in anonymous or fictitious/ benami name(s). Nor should any account be opened where the bank's due diligence exercises relating to identity has not been carried out. Banks have to ensure that the identity of the new or existing customers does not match with any person with known criminal background. If a customer wants to act on behalf of another, the reasons for the same must be looked into.
However, the adoption of customer acceptance policy and its implementation should not become too restrictive and should not result in denial of banking services to general public, especially to those who are financially or socially disadvantaged.

Customer Identification Procedures

Customer identification means identifying the customer and verifying his/her identity by using reliable, independent source documents, data or information. For individual customers, banks should obtain sufficient identification data to verify the identity of the customer, his address and a recent photograph. The usual documents required for opening deposit accounts are given in Box 7.3. For customers who are legal persons, banks should scrutinize their legal status through relevant documents, examine the ownership structures and determine the natural persons who control the entity.

Documents for opening deposit accounts under KYC guidelines

The Customer identification will be done on the basis of documents provided by the prospective customer as under:
a) Passport or Voter ID card or Pension Payment Orders (Govt./PSUs) alone, whereon the address is the same as mentioned in account opening form.

b) Any one document for proof of identity and proof of address, from each of the under noted items:
Proof of Identity
i) Passport, if the address differs from the one mentioned in the account opening form
ii) Voter ID card, if the address differs from the one mentioned in the account opening form
iii) PAN Card
iv) Govt./ Defence ID card
v) ID cards of reputed employers
vi) Driving License
vii) Pension Payment Orders (Govt./PSUs), if the address differs from the one mentioned in the account opening form
viii) Photo ID card issued by Post Offices
viii) Photo ID card issued to bonafide students of Universities/ Institutes approved by UGC/AICTE
Proof of address
i) Credit card statement
ii) Salary slip
iii) Income tax/ wealth tax assessment

iv) Electricity bill
v) Telephone bill
vi) Bank account statement
vii) Letter from a reputed employer
viii) Letter from any recognized public authority
ix) Ration card
x) Copies of registered leave & license agreement/ Sale Deed/ Lease Agreement may be accepted as proof of address
xi) Certificate issued by hostel and also, proof of residence incorporating local address, as well as permanent address issued by respective hostel warden of aforesaid University/institute where the student resides, duly countersigned by the Registrar/ Principal/Dean of Student Welfare. Such accounts should be closed on completion of education/leaving the University/ Institute.
xii) For students residing with relatives, address proof of relatives along with their identity proof, can also be accepted provided declaration is given by the relative that the student is related to him and is staying with him.
Source: State Bank of India website

Monitoring of Transactions

Ongoing monitoring is an essential element of effective KYC procedures. Banks can effectively control and reduce their risk only if they have an understanding of the normal and reasonable activity of the customer so that they have the means of identifying the transactions that fall outside the regular pattern of activity. Banks should pay special attention to all complex, unusually large transactions and all unusual patterns which have no apparent economic or visible lawful purpose. Banks may prescribe threshold limits for a particular category of accounts and pay particular attention to the transactions which exceed these limits.
Banks should ensure that any remittance of funds by way of demand draft/ mail/ telegraphictransfer or any other mode and issue of travellers' cheques for value of Rs 50,000 and above is effected by debit to the customer's account or against cheques and not against cash payment.
Banks should further ensure that the provisions of Foreign Contribution (Regulation) Act, 1976 as amended from time to time, wherever applicable, are strictly adhered to.

Risk Management

Banks should, in consultation with their boards, devise procedures for creating risk profiles of their existing and new customers and apply various anti-money laundering measures keeping in view the risks involved in a transaction, account or banking/ business relationship.Banks should prepare a profile for each new customer based on risk categorisation. The customer profile may contain information relating to customer's identity, social/ financial status, nature of business activity, information about his clients' business and their location etc. Customers may be categorised into low, medium and high risk. For example, individuals (other than high net worth individuals) and entities whose identities and sources of wealth can be easily identified and transactions in whose accounts by and large conform to the known transaction profile of that kind of customers may be categorised as low risk. Salaried employees, government owned companies, regulators etc fall in this category. For this category of customers, it is sufficient to meet just the basic requirements of verifying identity.
There are other customers who belong to medium to high risk category. Banks need to apply intensive due diligence for higher risk customers, especially those for whom the sources of funds are not clear. 
Examples of customers requiring higher due diligence include 
(a) nonresident customers; 
(b) high net worth individuals; 
(c) trusts, charities, NGOs and organizations receiving donations; 
(d) companies having close family shareholding or beneficial ownership;
(e) firms with 'sleeping partners'; 
(f) politically exposed persons (PEPs) of foreign origin; 
(g) non-face-to-face customers and 
(h) those with dubious reputation as per public information available etc.
Banks' internal audit and compliance functions have an important role in evaluating and ensuringadherence to the KYC policies and procedures. Concurrent/ Internal Auditors should specifically check and verify the application of KYC procedures at the branches and comment on the lapses observed in this regard.

Directed Lending

Directed Lending 

The RBI requires banks to deploy a certain minimum amount of their credit in certain identified sectors of the economy. This is called directed lending. Such directed lending comprises priority sector lending and export credit Priority sector lending

Priority sector lending

The objective of priority sector lending program is to ensure that adequate credit flows into some of the vulnerable sectors of the economy, which may not be attractive for the banks from the point of view of profitability. These sectors include agriculture, small scale enterprises, retail trade, etc. Small housing loans, loans to individuals for pursuing education, loans to weaker sections of the society etc also qualify as priority sector loans. To ensure banks channelize a part of their credit to these sectors, the RBI has set guidelines defining targets for lending to priority sector as whole and in certain cases, sub-targets for lending to individual priority sectorsThe RBI guidelines require banks to lend at least 40% of Adjusted Net Bank Credit (ANBC) or credit equivalent amount of Off-Balance Sheet Exposure (CEOBSE), whichever is higher. In case of foreign banks, the target for priority sector advances is 32% of ANBC or CEOBSE,whichever is higher.
In addition to these limits for overall priority sector lending, the RBI sets sub-limits for certain sub-sectors within the priority sector such as agriculture. Banks are required to comply with the priority sector lending requirements at the end of each financial year. A bank having shortfall in lending to priority sector lending target or sub-target shall be required to make contribution to the Rural Infrastructure Development Fund (RIDF) established with NABARD or funds with other financial institutions as specified by the RBI.

Export Credit

As part of directed lending, RBI requires banks to make loans to exporters at concessional rates of interest. Export credit is provided for pre-shipment and post-shipment requirements of exporter borrowers in rupees and foreign currencies. At the end of any fiscal year, 12.0% of a bank's credit is required to be in the form of export credit. This requirement is in addition to the priority sector lending requirement but credits extended to exporters that are small scale industries or small businesses may also meet part of the priority sector lending requirement

Rural and Agricultural Loans

Rural and Agricultural Loans

The rural and agricultural loan portfolio of banks comprises loans to farmers, small and medium enterprises in rural areas, dealers and vendors linked to these entities and even corporates.For farmers, banks extend term loans for equipments used in farming, including tractors,pump sets, etc. Banks also extend crop loan facility to farmers. In agricultural financing, banks prefer an 'area based' approach; for example, by financing farmers in an adopted village. The regional rural banks (RRBs) have a special place in ensuring adequate credit flow to agriculture
and the rural sector. The concept of 'Lead Bank Scheme (LBS)' was first mooted by the Gadgil Study Group, which submitted its report in October 1969. Pursuant to the recommendations of the Gadgil Study Group and those of the Nariman Committee, which suggested the adoption of 'area approach' in evolving credit plans and programmes for development of banking and the credit structure,
the LBS was introduced by the RBI in December, 1969. The scheme envisages allotment of districts to individual banks to enable them to assume leadership in bringing about banking developments in their respective districts. More recently, a High Level Committee was constituted by the RBI in November 2007, to review the LBS and improve its effectiveness, with a focus on financial inclusion and recent developments in the banking sector. The Committee has recommended several steps to further improve the working of LBS. The importance of the role of State Governments for supporting banks in increasing banking business in rural areas has
been emphasized by the Committee.