Short Notes – CC TO GBO

1. KYC / AML / CFT, COPRA, RTI, Banking Ombudsman

KYC (Know Your Customer)

• Meaning & Purpose:
KYC is a mandatory process used by banks and financial institutions to verify the identity and
background of customers before and during the banking relationship. It helps prevent financial
fraud, identity theft, money laundering, and terrorist financing.
• Key Elements of KYC:
• CIP (Customer Identification Program): Collect & verify customer’s details like
Name, Date of Birth, Address, PAN/Aadhaar, supported by OVDs (Officially Valid
Documents such as Passport, Voter ID, Driving License, Aadhaar, MNREGA card, NPR
letter).
• CDD (Customer Due Diligence): Classify customers into Low/Medium/High risk
based on business activity, location, and transaction behaviour.
• EDD (Enhanced Due Diligence): Applied for high-risk customers like Politically
Exposed Persons (PEPs), NGOs receiving foreign contributions, diamond traders etc. It
involves deep verification of identity, source of funds, and purpose of transactions.
• AML (Anti-Money Laundering):
Focuses on preventing criminals from making illegal funds look legitimate. Stages of money
laundering:
• Placement – Introducing illegal funds into the banking system.
• Layering – Creating complex layers of transactions to hide origin.
• Integration – Reintroducing the funds as apparently legal money.
• CFT (Combating Financing of Terrorism):
Aimed at detecting and preventing use of banking channels for terror financing. Banks must
freeze accounts/assets of listed terrorist entities and report them to RBI/MHA/FIU-IND.
• Types of KYC:
• Normal KYC: Physical verification of documents.
• e-KYC: Aadhaar-based verification via OTP/biometric.

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 • CKYC: Centralized KYC valid across all financial institutions, customers get a 14-digit
KYC ID.
• Latest RBI Guidelines (Highlights):
• Lowered beneficial ownership thresholds (now 10%).
• Mandatory GST verification for businesses.
• AI/analytics encouraged for monitoring suspicious transactions.
• Re-KYC periodicity: Low risk – 10 years, Medium – 8 years, High – 2 years.

COPRA (Consumer Protection Act, 2019)

• Scope & Importance:
Originally enacted in 1986, the Consumer Protection Act (COPRA) 2019 modernizes
consumer rights by covering both offline and online transactions, including e-commerce, direct
selling, and multi-level marketing.
• Who is a Consumer?
• A person who buys goods or hires services for personal use or livelihood.
• Not a consumer: Those who buy goods for resale or commercial purposes, or avail
services under an employment contract.
• Consumer Rights in Banking:
• Right to Information: Transparent disclosure of interest rates, charges, terms and
conditions.
• Right to Redressal: Complaints can be filed for incorrect charges, poor service, failed
ATM transactions, unauthorized debits etc.
• CCPA (Central Consumer Protection Authority):
Established in 2020 to protect rights of consumers as a class, prevent unfair trade practices, and
regulate misleading advertisements.
• Powers: Can order product recalls, refunds, impose penalties, and ban misleading ads.
• Penalty Structure:
• Misleading Ads: Up to ₹10 lakh (first offence), ₹50 lakh (repeat).
• Unsafe Goods: ₹1–5 lakh + possible imprisonment.
• Consumer Redressal Mechanism:
• District Commission: Up to ₹50 lakh disputes.

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 • State Commission: ₹50 lakh – ₹2 crore.
• National Commission: Above ₹2 crore.
• Appeals allowed within 30 days to higher forum.

RTI (Right to Information Act, 2005)

• Objective: Empower citizens to seek information from public authorities, ensuring
transparency, accountability, and reducing corruption.
• Applicability: Central/State governments, PSUs, government-funded institutions, banks, etc.
Only Indian citizens can file RTI.
• Process:
• Application to Public Information Officer (PIO) with a fee of ₹10/- (BPL applicants
exempt).
• Timeline: 30 days for normal cases, 48 hrs for matters concerning life or liberty.
• Exemptions: Information affecting national security, personal privacy, or ongoing
investigations.
• Appeals:
• First Appeal: Appellate Authority.
• Second Appeal: State/Central Information Commission.
• Penalty: PIO can be fined ₹250/day (max ₹25,000) for delay or refusal.

Banking Ombudsman (RBI Integrated Ombudsman Scheme)

• Purpose: Free and speedy resolution of customer grievances in banking services.
• Coverage: All scheduled commercial banks, NBFCs, and payment system operators.
• Process:
• Customer must first approach the bank and wait 30 days.
• If unsatisfied, complaint can be filed within 1 year (via [Link], email, or
physical submission).
• Resolution is normally within 30 days.
• Appeal: If not satisfied, appeal can be made to RBI’s Deputy Governor (Appellate Authority).
• Common Complaints Covered:
• Delay in account opening/closure.

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 • Wrongful charges or non-disclosure of terms.
• ATM/UPI failures, unauthorized transactions.
• Harassment by recovery agents.
• Complaints Not Covered:
• Premature complaints (before 30 days with bank).
• Delayed complaints (beyond 1 year).
• Duplicate complaints.
• Issues involving commercial decision-making (loan sanction, interest rate).
• Disputes between banks themselves.
• Cost: Filing is free of charge for customers.

2. Retail Credit – Home Loan & Its Variants

Star Home Loan (Main Scheme)
• Purpose of Loan:
• Purchase/construct house/flat.
• Renovation/repair/extension.
• Purchase of plot for construction (composite loan possible).
• Household articles, furnishing, solar PV installation.
• Takeover of housing loans from other banks/NBFCs.
• Eligible Borrowers:
• Salaried, self-employed, professionals, NRIs/PIOs, HUF, corporates (for staff).
• Groups of individuals allowed (for their own housing needs).
• Loan Quantum:
• Up to ₹750 lakh (House/Flat).
• Up to ₹300 lakh (Plot).
• Linked to income/NTHP.
• Repayment:

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 • Up to 30 years (House/Flat).
• Renovation/Repair: 20 years.
• Moratorium: 36–60 months depending on floors.
• Annual EMI Holiday option (11 EMIs instead of 12).
• Margin (as per RBI LTV guidelines):
• Up to ₹30L → 90%
• ₹30–75L → 80%
• Above ₹75L → 75%
• Other Features:
• CIBIL score required (700+).
• Bridge loan facility available.
• Free personal accident insurance cover up to ₹5 Cr (individuals only).

Star Diamond Home Loan

• For High Net Worth Individua ls (HNIs).
• Loan quantum: Above ₹7.50 Cr.
• Margin: 25% (only property value, no stamp duty/other charges included).
• Repayment: Take-home pay at least 25% of gross income.
• Due Diligence:
• Independent inspection by 2 officials.
• Valuation by 2 approved valuers.
• 30-year title search.
• Vetting of documents.
• Insurance: Not covered under free accident insurance.
• Processing Fees (PPC): ₹60,000 (waived for high CIBIL score cases temporarily).

Star Pravasi Home Loan

• Targeted at NRIs / PIOs / OCIs.
• Eligibility:

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 • NRIs with valid Indian passport.
• PIOs/OCI with foreign passport.
• Minimum 2 years’ job/contract abroad (except for Govt. officials on foreign posting).
• Income Consideration:
• Foreign income supported by returns filed abroad.
• 70% of rental income can be included (must be credited directly to loan account).
• Co-borrowers: Co-owners must be co-borrowers. Resident Indian relatives allowed as co-
borrowers.
• Margin: Same as Star Home Loan. Contribution must come from NRE/NRO/FCNR account
or remittance via banking channel.
• Credit Report: To be taken from CIBIL + foreign credit bureau (where available).

Star Smart Home Loan

• A Home Loan Overdraft (HL-OD) scheme.
• Eligibility: Existing/new SB/CD account holder with ₹5,000+ average balance.
• Loan Type: Overdraft account linked with SB/CD account.
• Mechanism:
• Surplus funds from SB/CD automatically swept into OD in multiples of ₹5,000.
• EMI repayment still compulsory (OD balance reduces monthly).
• Benefits: Flexibility in withdrawals/deposits, better liquidity.
• Operations: Cheque book, debit card, internet/mobile banking available.

Financing Bare House / Flat

• Applicable in projects where builder registers sale deed for land but construction is under a
separate agreement.
• Loan given for purchase + additional construction.
• Additional loan capped at 50% of agreement value.
• Only for Zones permitted by ZLCC.

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🪖 Star Jai Jawan Home Loan (Army Housing Scheme)
• Target Group: Army, ex-servicemen, widows, parents of fatal battle casualties, paramilitary
forces (CISF, BSF, ITBP, Coast Guard).
• Special Conditions:
• Tripartite agreement between Borrower + AWHO + Bank.
• Only one branch per zone handles these loans.
• Benefit: In case of death due to war/terrorism, loan write-off up to ₹50 lakh.

Scheme for Earnest Money Deposit (EMD)

• For individuals applying for plots/flats from Urban Development Authorities (UDA).
• Purpose: To finance Earnest Money Deposit (EMD).
• Loan Amount:
• Salaried: 12× monthly income.
• Others: Based on annual ITR.
• Max: ₹10 lakh.
• Margin: 10% (funds treated as upfront interest).
• Repayment:
• If allotment successful → loan adjusted in regular Home Loan.
• If unsuccessful → refund adjusted against EMD loan.

PMAY – Urban 2.0 (Interest Subsidy Scheme)

• Objective: Affordable housing under “Housing for All”.
• Eligibility: EWS, LIG, MIG families without pucca house. Annual income ≤ ₹9 lakh.
• Property Size: Up to 120 sq.m. carpet area.
• Loan Limit: Up to ₹25 lakh (Max project cost ₹35 lakh).
• Interest Subsidy: Up to ₹1.8 lakh (released in 5 yearly installments via DBT).
• Conditions:
• Woman co-ownership mandatory (unless no adult female).
• Geo-tagging of houses required before subsidy disbursement.

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 • Loan tenure: 12–30 years.

Affordable Home Loan (For EWS/LIG/MIG in Urban Areas)

• Target Group: Small traders, artisans, workers, SHG members, PM-SVANidhi, PM-
Vishwakarma beneficiaries.
• Eligibility:
• Income up to ₹9 lakh.
• No home/only one home.
• CIBIL ≥ 675 or “New to Credit”.
• At least 12 months digital banking/UPI transaction history.
• Loan Quantum:
• Metro: Up to ₹35L (Project cost ≤ ₹45L).
• Others: Up to ₹25L (Project cost ≤ ₹30L).
• Repair/renovation: Up to ₹10L (Metro), ₹6L (Others).
• Co-borrowers: Max 4 (spouse + earning children).
• Credit Guarantee: Optional (coverage up to 70% for loans ≤ ₹20L).

Samriddhi Home Loan Scheme

• Target Group: Confirmed employees of Central/State Govt., PSUs, MNCs, Large Corporates.
• Eligibility: Salary ≥ ₹50,000/month, salary account with bank.
• Loan Amount: ₹25 lakh – ₹7.5 crore.
• NTHP Norms:
• Up to ₹1L income → 35%
• ₹1–5L income → 25%
• Above ₹5L → 20%
• Incentives:
• Waiver of last 2 EMIs (max ₹2L) if tenure ≥ 15 years and account never irregular.
• Free lifetime BOI Credit Card.
• Free personal accident insurance cover.

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Home Loan for Purchase of Plot
• Purpose: To buy residential plots for construction (urban/metropolitan areas).
• Loan Quantum: ₹5L – ₹15 Cr.
• Condition: Construction must be completed within 5 years.
• Margin:
• Up to ₹30L → 75% LTV.
• ₹30–75L → 70%.
• Above ₹75L → 60%.
• Security: Equitable mortgage of the plot.
• Default: If construction not completed → loan treated as commercial advance, interest at
higher rate.

Star Top-Up Loan

• Available to existing home loan borrowers with satisfactory repayment.
• Purpose: For personal needs (education, renovation, medical, etc.).
• Loan Amount:
• Max 75% of realizable property value (including existing HL).
• Min: ₹2L.
• Conditions:
• Up to ₹5L → no mortgage extension required.
• Above ₹5L → mortgage extension + fresh valuation required.
• ROI: Home Loan ROI + 0.50%.
• Repayment: Max 20 years or residual HL tenure.
• Limit: Max 2 top-up loans at a time.

Staff Top-Up Loan Scheme

• For staff members with existing Staff Housing Loan (SHL).
• Eligibility: After 12 months of availing SHL & possession of property.
• Purpose: Any genuine purpose except speculation.
• Loan Limit: Up to 75% of realizable property value.

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 • Repayment: Lower of residual SHL tenure or 20 years.
• Security: Extension of mortgage not mandatory; undertaking required.
• Special Condition: No fresh revaluation allowed before 2 years of last sanction.

3. Retail Credit – Other than Home Loan

Star Vehicle Loan – Individuals
• Eligible Customers:
• Salaried (confirmed or with ≥6 months service), Professionals, Self-employed,
Businessmen, HNIs, Pensioners, Senior Citizens, Farmers, Retired BOI employees,
Staff.
• NRIs: Allowed jointly with resident close relative.
• CIBIL Score: ≥ 700 or -1/0 (new to credit).
• Purpose:
• Purchase of new two- wheelers /four- wheelers, jeeps, vans.
• Purchase of water vehicles (motor/sports boats for personal use).
• Second-hand vehicles: Allowed if ≤3 years old, no accident history, comprehensive
insurance.
• Electric / Hybrid vehicles: Supported, with RTO registration mandatory for higher
speed/power vehicles.
• Quantum of Loan:
• Linked to repayment capacity (NTHP/DSCR ≥ 1.25).
• Depreciation can be added back for proprietors/businessmen.
• Margin:
• New vehicles: 10% (on on-road price incl. tax, insurance, regn).
• Second-hand: 30% (on depreciated value/valuer’s report/actual sale consideration).
• Repayment:
• 2-Wheelers: Max 5 years.
• 4-Wheelers / Water vehicles: Max 7 years.

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 • Pre-owned vehicles: repayment capped based on age (5–7 years from registration date).
• Security:
• Hypothecation of vehicle.
• Comprehensive insurance with bank clause.
• For loans > ₹2 Cr, collateral security required.
• For water vehicles: collateral security mandatory.
• Guarantee:
• Not required if vehicle registered with RTO and bank charge noted.
• Required for non-RTO registered vehicles (like some EVs).
• Special Provisions:
• Staff eligible without processing charges.
• Takeover of vehicle loans allowed if vehicle ≤2 years old and account standard.

Star Vehicle Loan – Non-Individuals

• Eligible Borrowers: Companies, Partnerships, LLPs, Proprietorships, Trusts, Societies.
• Quantum: Based on DSCR ≥ 1.25.
• Margin: Same as individuals (10% new, 30% used).
• ROI: Linked to RBLR (concessions up to 0.10% for CMR-3 rating & EVs).
• Repayment:
• 2-Wheelers: 5 years.
• 4-Wheelers / Water vehicles: 7 years.
• Security: Hypothecation + collateral (depending on limit).

Star Education Loan

• Purpose: Higher education in India or abroad (graduate, postgraduate, professional courses).
• Eligible Students: Indian nationals with confirmed admission.
• Co-borrowers: Parent/guardian mandatory. Spouse can be co-borrower if married.
• Loan Quantum:
• India: Up to ₹10 lakh.

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 • Abroad: Up to ₹20 lakh (higher in special schemes).
• Expenses Covered: Tuition, hostel, books, equipment, travel (for abroad), exam/lab/library
fees.
• Margin:
• Up to ₹4 lakh → Nil.
• Above ₹4 lakh → 5% (India), 15% (abroad).
• Security:
• Up to ₹7.5 lakh → No collateral (parent co-obligation sufficient).
• Above ₹7.5 lakh → Tangible collateral + guarantee.
• Repayment:
• Moratorium = Course period + 1 year.
• Repayment up to 15 years.
• Interest Subsidy:
• Govt. scheme for EWS students during moratorium.

Star Personal Loan (Unsecured)

• Eligible Customers: Salaried, Pensioners, Professionals, Businessmen with regular income.
• Purpose: Personal needs – medical, marriage, travel, consumer durables. (No speculative use).
• Quantum:
• Salaried: Up to ₹20 lakh (linked to income).
• Pensioners: Lower limits depending on age & pension.
• Repayment:
• Up to 5 years (Salaried).
• Pensioners: Max 3 years (must close by 75 yrs of age).
• Security: Unsecured, but guarantee may be required for pensioners.
• Special Facility: Salary tie-up arrangements allow higher limits.

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Key Differences – Home Loan vs. Other Retail Loans
Feature Home Loan Vehicle Loan Education Loan Personal Loan
Tenure Up to 30 yrs 5–7 yrs Up to 15 yrs 3–5 yrs
Hypothecation
Security Mortgage (property) Collateral (above ₹7.5L) Mostly unsecured
(vehicle)
Moratorium Up to 60 months None Course period + 1 yr None
Up to ₹2 Cr
Amount Up to ₹7.5 Cr ₹10–20L ₹20L
(individuals)
Margin 10–25% 10–30% Nil–15% Nil

4. MSME (Micro, Small & Medium Enterprises)

Definition of MSME (as per MSMED Act, 2006 – Revised 2020)

• Classification is based on Investment + Annual Turnover (both conditions must be
satisfied):

Category Investment Limit Turnover Limit

Micro
≤ ₹1 crore ≤ ₹5 crore
Small
≤ ₹10 crore ≤ ₹50 crore
Medium
≤ ₹50 crore ≤ ₹250 crore
• Registration: Udyam Registration (online, self-declared, Aadhaar linked).
• Benefits: Easy credit, subsidy, PSL status, govt. schemes eligibility.

Importance of MSMEs
• Backbone of Indian economy → contribute ~30% to GDP, 45% exports, 110 million jobs.
• Promote regional balance, entrepreneurship, employment.
• Major focus under “Make in India” & “Atmanirbhar Bharat”.

Priority Sector Lending (PSL) – MSME

• Banks’ obligation: 40% (SCBs) of ANBC must go to PSL, MSME forms a key part.
• Targets:

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 • 7.5% of ANBC to Micro Enterprises.
• Loans up to ₹50 crore to MSME are eligible under PSL.
• Export credit also eligible for PSL.

MSME Loan Schemes (BOI / RBI / Govt.)

Star MSME Loan (General Guidelines)

• Eligible Borrowers: Proprietorship, Partnership, LLPs, Companies, SHGs, Societies, Trusts.
• Purpose: Working Capital (WC) + Term Loan (TL).
• Loan Limit: Linked to turnover / project need.
• Collateral: Waiver up to ₹2 crore under CGTMSE.

CGTMSE (Credit Guarantee Fund Trust for Micro & Small Enterprises)
• Coverage: Collateral-free loans up to ₹2 crore.
• Guarantee Coverage:
• Micro enterprises (loans up to ₹5 lakh): 85%.
• Women / NER borrowers (up to ₹50 lakh): 80%.
• Others: 75%.
• Annual Guarantee Fee (AGF): 0.37–1.35% depending on category.

PMMY – Pradhan Mantri Mudra Yojana (2015)

• Purpose: Micro enterprises funding (non-farm, non-corporate).
• Products:
• Shishu: Up to ₹50,000.
• Kishor: ₹50,001 – ₹5 lakh.
• Tarun: ₹5 – ₹10 lakh.
• Collateral: Not required.
• Refinance: MUDRA Ltd refinances banks/NBFCs.

Stand-Up India (2016)

• Target: SC/ST & Women entrepreneurs.
• Loan Size: ₹10 lakh – ₹1 crore.

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 • Purpose: Greenfield enterprises in manufacturing, services, trading.
• Eligibility: Borrower should not be defaulter, age 18+.

PMEGP (Prime Minister’s Employment Generation Programme)

• Implementing Agency: KVIC (Khadi & Village Industries Commission).
• Purpose: Encourage entrepreneurship & self-employment.
• Loan Limit: Up to ₹25 lakh (manufacturing), ₹10 lakh (services).
• Margin: 5–10%.
• Subsidy (Back-end):
• 15–25% (General).
• 25–35% (SC/ST, Women, NE, Hilly areas).

PSB Loans in 59 Minutes

• Objective: Fast-track digital loan approvals.
• Eligibility: Existing GST, ITR, bank statements needed.
• Loan Size: Up to ₹5 crore.
• Approval: In-principle sanction in < 1 hr; final disbursement depends on bank appraisal.

MSME Cluster & TReDS

• Cluster Financing: MSME units in same area/sector financed under single cluster scheme
(reduces cost of credit).
• TReDS (Trade Receivables Discounting System):
• Digital platform to finance MSME receivables against corporates/PSUs.
• RBI-regulated; 3 licensed platforms (RXIL, M1xchange, Invoicemart).
• Helps reduce delayed payments.

Special Schemes
• PM Vishwakarma Yojana (2023): For artisans/traditional craftspeople.
• Collateral-free loans up to ₹3 lakh.
• Subsidized ROI: 5%.
• ECLGS (Emergency Credit Line Guarantee Scheme – Covid support):

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 • Guarantee cover for additional WC to MSMEs hit by pandemic.
• Valid till March 2023 (₹5 lakh crore scheme).

RBI Guidelines for MSME Lending

• Restructuring: MSME loans up to ₹25 crore allowed one-time restructuring (till March 2021
extended due to Covid).
• Collateral Waiver: Collateral-free credit mandatory up to ₹10 lakh (Priority sector).
• Rehabilitation: For sick but viable MSMEs – separate package by RBI/GOI.
• Interest Subvention Scheme: 2% subsidy on fresh/incremental loans up to ₹1 crore (for GST-
registered MSMEs).

NPA & Stress Management in MSME

• MSMEs often face delayed payments → stress.
• RBI allows classification of MSME NPAs with additional forbearance in special cases.
• Samadhan Portal: Online grievance for delayed payments.
• Receivables under MSME Act, 2006: Must be paid within 45 days; otherwise, buyer liable to
pay compound interest @ 3× RBI Bank Rate.

OTHER MSME Credit Products (BOI)

Star MSME E-Rickshaw Loan

• Purpose:
• To finance purchase of battery-operated electric rickshaws (for passenger/goods
transport).
• Funding also available for chargers / charging infrastructure.
• Eligible Borrowers:
• Individuals (driver-owners), SHGs, small entrepreneurs, street vendors.
• Must hold valid driving license / permit for e-rickshaw.
• Loan Quantum:
• Typically up to ₹1.5–2 lakh per rickshaw (depends on cost, state subsidy).
• Margin: 10–15%.
• Security:

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 • Hypothecation of vehicle financed.
• Collateral-free up to ₹2 Cr under CGTMSE coverage.
• Repayment:
• 3–5 years (monthly instalments).
• Moratorium: 1–3 months, if required.
• Special Features:
• Encourages green mobility and financial inclusion.
• Subsidy support may be available under state EV policies.
• Concession in ROI (usually 0.25–0.50%).

Star MSME Term Loan / Working Capital (WC) Scheme

• Purpose: Composite financing solution for MSMEs:
• Term Loan (TL): For purchase of plant, machinery, equipment, technology upgrades.
• Working Capital (WC): For day-to-day expenses, raw materials, receivables.
• Eligible Borrowers:
• Micro, Small & Medium Enterprises (Manufacturing / Services / Trading).
• Proprietorship, Partnership, LLP, Companies, Co-operatives.
• Loan Quantum:
• Linked to project cost & turnover.
• Working Capital Assessment: Cash Budget Method or Turnover Method.
• Margin: 15–25% depending on activity.
• Security:
• Primary: Assets created (machinery, stock, receivables).
• Collateral: Waiver up to ₹2 Cr under CGTMSE.
• Repayment:
• Term Loan: 5–7 years, including moratorium up to 6–12 months.
• WC: Renewed annually.
• Special Features:

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 • One-stop composite loan (both TL & WC together).
• Faster sanction for cluster-based MSMEs.

Star Laghu Udyami Credit Card (LUCC)

• Purpose: Simplified, revolving working capital credit facility – like a credit card for small
businesses.
• Target Group: Small shopkeepers, retail traders, artisans, small service providers, self-
employed.
• Loan Quantum:
• ₹25,000 – ₹10 lakh.
• Revolving credit facility with card limit.
• Security:
• Hypothecation of stock, receivables, assets created.
• Collateral-free up to ₹2 Cr under CGTMSE.
• Repayment:
• WC limit → Annual renewal.
• TL portion (if any) → 3–5 years.
• Special Features:
• Similar to Kisan Credit Card (KCC) but for MSME units.
• Simple documentation & flexible withdrawal.
• Promotes small entrepreneurs’ access to formal credit.

Star Artisan Credit Card (ACC)

• Purpose: Special scheme to meet working capital & term loan needs of artisans, craftsmen,
hand loom weavers.
• Eligible Borrowers:
• Registered artisans / weavers, members of Co-operative Societies / SHGs, certified by
Development Commissioner (Handicrafts/Handlooms).
• Loan Quantum:
• Up to ₹2 lakh (higher in some cases based on turnover).

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 • Both WC & TL components allowed.
• Margin: Low margin (5–10%) as per need.
• Security:
• Hypothecation of raw materials, finished goods, tools/equipment.
• Collateral-free up to ₹2 Cr under CGTMSE.
• Repayment:
• WC: Annual renewal.
• TL: 3–5 years.
• Special Features:
• Easy access to institutional finance for artisans.
• NABARD refinance support available in some states.
• Promotes traditional industries & rural economy.
Comparison-

Product Target Group Loan Limit Purpose Security

E-Rickshaw Drivers, SHGs, small ~₹2 EV purchase + Hypothecation
Loan entrepreneurs lakh/vehicle chargers (CGTMSE cover)
Term Loan / WC MSME units Assets hypothecated;
Project-linked Machinery + WC
Scheme (mfg./services) CGTMSE cover
Traders, small Working capital Stocks/receivables;
LUCC ₹25k–₹10L
artisans (card-based) CGTMSE cover
Raw material, Assets hypothecated;
ACC Artisans, weavers Up to ₹2L
tools, WC CGTMSE cover

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 5. EASE 7.0 & ESG
EASE – Enhanced Access & Service Excellence
• Launched by: DFS (Department of Financial Services), Govt. of India in 2018.
• Objective: Reform and improve performance of Public Sector Banks (PSBs).
• Approach: Annual reform agenda with measurable outcomes.

🔹 EASE 1.0 (2018)

• Focus: Customer responsiveness, digital banking, financial inclusion, credit off-take.

🔹 EASE 2.0 (2019)

• “Responsible banking” theme.
• Customer-centric processes, digitization, governance, HR practices.

🔹 EASE 3.0 (2020)

• Smart, tech-enabled banking.
• 24x7 digital banking, data analytics for lending, ease of working capital.

🔹 EASE 4.0 (2021)

• Smart Lending for Aspiring India.
• Focus on doorstep banking, analytics-based credit, strengthening NPA management.

🔹 EASE 5.0 (2022)

• Tech-enabled, simplified, collaborative banking.
• Digital platforms for retail, MSME, corporate lending.

🔹 EASE 6.0 (2023)

• Emphasis on customer-first and outcome-centric banking.
• Focus on analytics-driven risk management, digital journey for all segments.

🔹 EASE 7.0 (2024–25)

• Theme: “Digital, Inclusive, Sustainable & Green Growth.”
• Key Features:
1. Digital Banking Units (DBUs): Promote paperless, branch-lite banking.

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 2. MSME & Agri-credit digitization: End-to-end paperless loan journeys.
3. ESG integration: Lending focus on green finance, renewable projects.
4. Financial Inclusion 2.0: Deepen coverage in rural/underserved areas.
5. NPA management using AI/ML: Early warning systems.
6. Cyber security: Advanced resilience for digital banking.

ESG – Environmental, Social, Governance

• Definition: Framework for banks & companies to operate sustainably and responsibly.
• Why Important: Investors, regulators, and customers demand sustainable practices.

🔹 Environmental Factors (E)

• Green financing (renewables, EVs, energy efficiency).
• Reducing carbon footprint of bank operations.
• Avoiding financing of polluting industries.

🔹 Social Factors (S)

• Inclusive lending (women, MSMEs, weaker sections).
• Financial literacy & inclusion programs.
• Employee welfare, customer service quality.

🔹 Governance Factors (G)

• Ethical business practices.
• Transparency in reporting.
• Strong board oversight & risk management.

ESG in Banking
• RBI Guidelines: Banks to integrate ESG risk assessment in lending.
• Green Bonds: PSBs/NBFCs issuing bonds to fund renewable projects.
• Sustainable Finance: Priority for clean energy, EVs, waste management, climate-smart
agriculture.
• Disclosure: SEBI requires top 1000 listed companies to file Business Responsibility and
Sustainability Report (BRSR).

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Why EASE 7.0 + ESG are Linked
• EASE 7.0 focuses on “sustainable growth”.
• ESG is the framework through which banks show responsibility.
• Together, they ensure:
• Stronger PSBs.
• Cleaner credit portfolios.
• Trust from investors & international agencies.
• Alignment with India’s Net Zero 2070 commitment.

6. General Operations & Deposits

Types of Deposits
• Demand Deposits (withdrawable on demand):
• Savings Bank Account (SB): For individuals; moderate interest, limited withdrawals;
encourages savings.
• Relation: Customer = Creditor; Bank = Debtor (bank owes money).
• Current Account (CA): For business entities; no interest; overdraft facility available;
unlimited transactions.
• Relation: Customer = Creditor; Bank = Debtor (bank owes money).
• Time Deposits (fixed maturity):
• Fixed Deposit (FD): Lump sum for fixed term, higher interest.
• Recurring Deposit (RD): Regular monthly instalments, suitable for salaried/regular
income earners.
• Term Deposit with reinvestment plan (Cumulative FD): Interest compounded and
paid at maturity.

Special Deposit Schemes

• Tax Saver Fixed Deposit: 5-year lock-in; tax deduction under Sec 80C (up to ₹1.5 lakh).
• Capital Gains Account Scheme (CGAS): For depositing capital gains till investment in
property/bonds.

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 • Senior Citizens Savings Scheme (SCSS): 5-year deposit, higher interest rate, available to 60+
years.
• Sukanya Samriddhi Account (SSA): For girl child (<10 years); high interest, tax-free,
maturity at 21 years.
• PMJDY (Jan Dhan): Basic Savings Bank Deposit Account (BSBDA); zero balance; RuPay
card; overdraft facility after 6 months.
• Foreign Currency Non-Resident (FCNR) Deposit: Term deposit in foreign currency, protects
against forex risk.
• Non-Resident External (NRE) & Non-Resident Ordinary (NRO) Deposits: For NRIs –
NRE (repatriable, tax-free interest); NRO (local earnings, taxable).

KYC / Account Opening Norms

• Documents Required: Aadhaar, PAN/Form 60, OVDs (Passport, Voter ID, Driving License,
MNREGA card).
• Customer Categorization: Low/Medium/High risk.
• Small Accounts: Balance ≤ ₹50,000; Annual credits ≤ ₹1 lakh; Validity up to 24 months
(simplified KYC).
• Re-KYC: Every 2/8/10 years depending on risk category.
• Relation: During verification, Bank acts as Trustee, holding documents safely & ensuring
compliance; Customer = Beneficiary.

Nomination Rules
• Allowed in all deposit accounts (single or joint).
• Nominee has right to claim after depositor’s death → Bank discharges liability by paying
nominee, but legal heirs can contest later.
• Minors can be nominees (payment made to guardian).
• Relation: After customer’s death, Bank becomes a Trustee of the funds until payment is made
to nominee/legal heir.

Deposit Insurance
• Agency: DICGC (subsidiary of RBI).
• Coverage: Up to ₹5 lakh per depositor per bank (principal + interest).
• Scope: All commercial banks, RRBs, cooperative banks (except primary credit societies).

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 • Exclusions: NBFCs, development financial institutions.

Cheque & Payment Instruments

• Cheque: Bill of exchange drawn on a banker; must be dated, signed, payable on demand.
• Types:
• Bearer / Order cheque.
• Crossed cheque (A/c Payee).
• Post-dated / Antedated / Stale cheque (>3 months old).
• Other Instruments: Demand Draft (DD), Banker’s Cheque, Pay Order.
• Electronic Payments: NEFT, RTGS, IMPS, UPI.
Relation:
• Customer (Drawer) instructs bank to pay.
• Bank (Drawee) acts as Debtor when paying.
• If bank refuses without valid reason → Bank liable (Customer = Principal, Bank = Agent).
• Demand Draft / Pay Order: Bank’s own order to pay → here, Bank acts as Principal Debtor
to beneficiary.

Dormant / Inoperative Accounts

• Inoperative Account: No transactions for 2 years (other than interest/charges).
• Procedure: Bank must contact customer before classifying as dormant; KYC re-verification
needed before reactivation.

Locker Facility
• Eligibility: Existing account holders.
• Agreement: Bank + Hirer (Locker Agreement).
• Nomination: Permitted.
• Access after Death: Nominee/legal heirs.
• RBI Guidelines: Banks liable for loss of contents due to negligence.
Relation:
• Customer = Bailor (gives property for safe custody).

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 • Bank = Bailee (duty of care as per Indian Contract Act).

General Banking Operations

• NEFT (National Electronic Funds Transfer): Batch settlement, available 24×7.
• RTGS (Real Time Gross Settlement): For large-value (₹2 lakh+); instant settlement.
• IMPS (Immediate Payment Service): 24×7 instant transfer via mobile/net banking.
• UPI (Unified Payments Interface): Mobile-based, real-time, 24×7.
• BBPS (Bharat Bill Payment System): Integrated platform for bill payments.
• Relation: Bank = Agent of customer, executing instructions.

7. Foreign Exchange (Forex)

Regulatory Framework
• FEMA, 1999 (Foreign Exchange Management Act):
• Governs all forex transactions in India.
• Objective: Facilitate external trade, promote orderly forex market, prevent misuse.
• Regulator: Reserve Bank of India (RBI).
• Authorised Dealers (AD): Only ADs permitted to deal in forex.
• Category I: Full-fledged forex operations (all current & capital account).
• Category II: Non-trade current account transactions (travel, education).
• Category III: Limited activities like money changers.
• Other Regulators: SEBI (for capital market), DGFT (for exports/imports).

Types of Forex Transactions

(A) Current Account Transactions

• Governed by Current Account Rules, 2000.
• Permissible: Trade, travel, education, medical expenses, remittances.
• Restricted/Prohibited:
• Lottery, sweepstakes, banned magazines.

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 • Remittances from Nepal/Bhutan.
• Liberalised Remittance Scheme (LRS):
• Resident Indians can remit up to USD 250,000 per financial year.
• For education, medical, travel, gifts, investments abroad.

(B) Capital Account Transactions

• More regulated.
• Examples: Investments abroad, ECBs (External Commercial Borrowings), FDI in India,
property abroad.
• Require approvals from RBI/Govt.

Foreign Currency Accounts (for NRIs/PIOs)

(A) NRE Account (Non-Resident External)

• Rupee account, funded from foreign remittances.
• Fully repatriable (principal + interest).
• Interest tax-free in India.

(B) NRO Account (Non-Resident Ordinary)

• For local income (rent, dividend, pension in India).
• Repatriation restricted – up to USD 1 million per year (with tax compliance).
• Interest taxable in India.

(C) FCNR (Foreign Currency Non-Resident)

• Fixed deposit in permitted foreign currency (USD, GBP, EUR, etc.).
• Tenure: 1–5 years.
• No currency risk for depositor.
• Interest tax-free in India.

Export Transactions
• Exporter must realise & repatriate proceeds within prescribed time (usually 9 months).
• Export Documents:

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 • Shipping Bill
• Bill of Exchange
• Invoice & Packing List
• Bank’s Role (AD):
• Certifies documents, handles remittance, ensures forex inflow.
• EDPMS (Export Data Processing & Monitoring System): RBI system to track export
payments.

Import Transactions
• Importer must submit Bill of Entry, Form A1, etc.
• Payment Methods:
• Advance Payment (before shipment).
• Letter of Credit (LC): Bank’s undertaking to pay exporter.
• Collection Basis: Documents against Payment (D/P) or Acceptance (D/A).
• IDPMS (Import Data Processing & Monitoring System): RBI system to monitor import
payments.

Remittances
• Inward Remittances:
• For family maintenance, export proceeds, investments.
• Modes: SWIFT transfer, demand draft, UPI International.
• Outward Remittances:
• Education, travel, medical, investment, donations.
• Regulated under LRS.

Trade Finance Instruments

• Letter of Credit (LC):
• Issued by bank on behalf of importer; assures exporter of payment if conditions met.
• Types: Sight LC, Usance LC, Confirmed LC.
• Bank Guarantee (BG):

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 • Bank undertakes to pay beneficiary if applicant defaults.
• Bills of Exchange (DA/DP):
• D/A → Documents released against acceptance (payment at future date).
• D/P → Documents released against payment (immediate).

Forex Risks
• Currency Risk: Loss due to exchange rate fluctuation.
• Settlement Risk: Counterparty fails to deliver on time.
• Political Risk: Govt. restrictions in other countries.
Hedging Instruments (RBI Permitted):
• Forward Contracts
• Currency Options
• Currency Swaps
• Futures

RBI Guidelines & Compliance

• All forex transactions only through Authorised Dealers.
• AML/CFT checks mandatory.
• Proper reporting in:
• EDPMS: Export proceeds monitoring.
• IDPMS: Import payments monitoring.
• Banks must follow KYC norms strictly in forex dealings.

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8. Inspection & Audit

Objective of Inspection & Audit

• Ensure compliance with:
• RBI guidelines
• Banking Regulation Act provisions
• Internal bank policies & systems
• Detect and prevent frauds, errors, irregularities.
• Assess quality of assets, risk management, internal control.
• Improve efficiency, transparency & accountability.

Types of Audit in Banks

(A) Internal Audit

• Conducted by bank’s own audit/inspection department.
• Periodic review of branches/units.
• Focus: Compliance with laid down systems, procedures, risk mitigation.
• Identifies weaknesses before they become serious.

(B) Concurrent Audit

• Real-time, transaction-level audit carried out simultaneously with branch operations.
• Deployed at large/critical branches (high advances, forex, treasury).
• Scope:
• High-value cash transactions
• Advances & credit monitoring
• Forex transactions
• NPA identification
• KYC/AML checks
• Objective: Preventive (stops frauds/irregularities before they occur).
• RBI Guideline: Mandatory for branches with advances ≥ ₹50 crore.

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(C) Statutory Audit
• Mandatory under Banking Regulation Act, 1949.
• Conducted annually by external Chartered Accountants (appointed by RBI/Govt).
• Examines whether financial statements give “true and fair view”.
• Includes Long Form Audit Report (LFAR) → detailed report covering advances, deposits,
forex, frauds, income recognition, etc.

(D) Stock Audit

• Conducted in large borrowal accounts (esp. MSME & Working Capital).
• Verifies actual stock, book debts, and their valuation.
• Detects over-financing and diversion of funds.

(E) Revenue Audit

• Checks whether income is correctly recognized (interest, fees, charges).
• Helps in detecting income leakage.

(F) Management Audit

• Evaluates overall efficiency & effectiveness of management.
• Focuses on HR practices, decision-making, governance.

(G) Credit Audit

• Independent review of large advances.
• Ensures proper sanction, documentation, end-use of funds.
• Detects diversion or misuse of loans.

(H) Information Systems (IS) Audit

• Covers Core Banking Systems, IT infrastructure, Digital Banking.
• Verifies cybersecurity, access control, data integrity.

RBI Inspections
• Conducted under Section 35 of Banking Regulation Act, 1949.
• Covers financial, operational, and compliance aspects.
• Uses CAMELS Rating System:

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 • C – Capital Adequacy
• A – Asset Quality
• M – Management
• E – Earnings
• L – Liquidity
• S – Systems & Controls
• Outcome → RBI gives supervisory rating (not disclosed to public).

Audit Committees & Reporting

• Audit Committee of the Board (ACB):
• Headed by a non-executive director.
• Reviews inspection/audit reports, fraud cases, compliance status.
• Inspection Reports:
• Must be placed before ACB & Board.
• Corrective actions to be monitored.

Fraud Monitoring & Red Flag Accounts (RFA)

• Early Warning Signals (EWS):
• Frequent devolvement of LCs/BGs
• Unusual forex transactions
• Overvaluation of stocks/collateral
• Delay in project implementation
• Red Flag Account (RFA): Account flagged when risk of fraud suspected.
• Forensic Audit: Ordered for loan accounts > ₹50 crore if fraud suspected.
Forensic Audit
• Specialized audit → tracks diversion of funds, fraud, money laundering.
• Conducted by independent forensic experts.
• Findings reported to: RBI, FIU-IND, investigative agencies.

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Income Recognition & Asset Classification (IRAC) Audit
• Ensures proper identification of NPAs as per RBI norms.
• Ensures correct provisioning for NPAs.
• Prevents “evergreening of loans.”

Long Form Audit Report (LFAR)

• Submitted by statutory auditors to RBI & Bank.
• Covers:
• Quality of advances (top borrowers, NPAs)
• Deposits, profitability
• Housekeeping, reconciliation of accounts
• Inter-branch transactions
• Fraud detection & compliance with AML norms

9. Risk, Capital & Fund Management

Types of Risks in Banking

(A) Credit Risk

• Risk of borrower not meeting repayment obligations (principal + interest).
• Arises in loans, investments, guarantees, derivatives.
• Examples: NPA formation, default on corporate bonds.
• Management Tools:
• Proper credit appraisal & risk rating.
• Credit risk models (IRB, Standardised approach under Basel).
• Diversification of portfolio.
• Collateral, guarantees, covenants.

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(B) Market Risk
• Risk of loss due to changes in market variables like interest rates, foreign exchange rates,
commodity & equity prices.
• Types:
• Interest Rate Risk – fluctuation in lending/borrowing rates.
• Foreign Exchange Risk – fluctuation in currency value.
• Equity Price Risk – fall in share prices held in investment book.
• Commodity Risk – change in commodity prices where banks finance traders.
• Management Tools:
• Value at Risk (VaR) method.
• Stress testing.
• Hedging through derivatives.

(C) Operational Risk

• Risk of loss from failed internal processes, people, systems, or external events.
• Examples: Cyber frauds, errors in transaction processing, technology breakdown, staff
negligence.
• Management Tools:
• Robust internal control & audit systems.
• Segregation of duties.
• Business Continuity Planning (BCP).
• Insurance against frauds.

(D) Liquidity Risk

• Risk of bank not being able to meet payment obligations when due.
• Examples: Sudden withdrawal of deposits, funding crunch in interbank markets.
• Management Tools:
• Maintaining High Quality Liquid Assets (HQLA).
• Liquidity Coverage Ratio (LCR).
• Asset-Liability Management (ALM).

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(E) Other Risks
• Reputational Risk: Loss of trust, customer dissatisfaction.
• Legal/Compliance Risk: Penalties due to violation of RBI/SEBI/Other regulations.
• Strategic Risk: Poor business decisions affecting long-term profitability.

Capital Adequacy – Basel Norms

Basel I (1988)
• First international framework for capital adequacy.
• Focused mainly on Credit Risk.
• Prescribed Capital to Risk-Weighted Assets Ratio (CRAR) = 8% (India: 9%).

Basel II (2004)
• More risk-sensitive framework.
• Three Pillars:
1. Minimum Capital Requirement: Covers credit, market, operational risk.
2. Supervisory Review: Regulators to evaluate banks’ risk processes.
3. Market Discipline: Disclosure of risk exposures to improve transparency.

Basel III (2010 – post 2008 crisis)

• Introduced to strengthen resilience of banks.
• Key Features:
• Higher and better-quality capital.
• Global Minimum CRAR = 8% (India = 9%).
• Tier I Capital: Core equity, retained earnings (at least 7% in India).
• Tier II Capital: Subordinated debt, hybrid capital instruments.
• Capital Conservation Buffer (CCB): Extra 2.5% over minimum.
• Leverage Ratio: Min 3% (to avoid excessive leverage).
• Liquidity Ratios:
• Liquidity Coverage Ratio (LCR): Banks must hold liquid assets ≥ net cash
outflow for 30 days (100% by 2019, implemented in India).

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 • Net Stable Funding Ratio (NSFR): Stable funding over 1-year horizon ≥
required stable funding.

Fund Management – Key Regulatory Ratios

(A) CRR (Cash Reserve Ratio)

• A % of NDTL to be maintained with RBI in cash.
• Currently ~4.5% (changes as per RBI policy).
• No interest paid by RBI.
• Tool of monetary control → RBI increases CRR to absorb liquidity, decreases to release
liquidity.

(B) SLR (Statutory Liquidity Ratio)

• A % of NDTL to be maintained in form of approved securities (mainly Govt. securities).
• Currently ~18% (subject to RBI changes).
• Ensures financial stability & supports Govt. borrowing programme.

(C) NDTL (Net Demand & Time Liabilities)

• Basis for calculating CRR & SLR.
• Demand Liabilities = payable on demand (current deposits, demand drafts).
• Time Liabilities = deposits repayable after some time (FDs, RDs).

Asset-Liability Management (ALM)

• System to manage liquidity and interest rate risks by matching maturity profile of assets &
liabilities.
• Key Components:
• ALCO (Asset-Liability Committee): Senior management body overseeing ALM.
• Gap Analysis: Identifying mismatches in maturities.
• Duration Analysis: Sensitivity of assets/liabilities to rate changes.
• Objective: Ensure liquidity for commitments + stable margins.

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Risk Management Tools
• Credit Risk Mitigation: Collateral, guarantees, Credit Default Swaps (CDS).
• Market Risk Control: Forward contracts, options, swaps, futures.
• Operational Risk: Fraud risk management, cyber security, staff training.
• Liquidity Risk: Diversified funding sources, maintaining HQLA, using stress testing for
liquidity shocks.

Investment & Treasury Operations

• Banks invest surplus funds mainly in:
• SLR Securities: Govt. bonds (safe, regulatory requirement).
• Non-SLR Securities: Corporate bonds, debentures, equities (within RBI exposure
limits).
• Investment Classifications:
• Held to Maturity (HTM): Carried at book value, not marked to market.
• Available for Sale (AFS): Marked to market quarterly.
• Held for Trading (HFT): Marked to market daily.

Key Regulatory Guidelines

• Large Exposure Framework (LEF):
• Single borrower exposure ≤ 20% of Tier-I capital.
• Group borrower exposure ≤ 25% of Tier-I capital.
• Provisioning Norms:
• Standard assets: 0.25–1%.
• NPAs as per IRAC norms (Substandard, Doubtful, Loss assets).
• Stress Testing:
• Banks must conduct stress tests on credit, market & liquidity risk.
• Risk-Based Supervision (RBS): RBI approach focusing on risk profile, not just compliance.

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Recent Developments
• Ind AS (IFRS) implementation: To align provisioning with expected credit loss model
(phased implementation).
• Green Financing / ESG-linked Capital Management: Banks increasingly allocate capital
towards green bonds and sustainable assets.
• Digital Risk Management: Cyber risk and IT resilience now part of operational risk
framework.

10. Commercial & Institutional Credit

Introduction
• Commercial & Institutional Credit = Lending to large corporates, medium/large industries,
institutions, PSUs, Govt. bodies, infrastructure projects.
• Scope includes:
• Working Capital Finance (WCF)
• Term Loans (TL)
• Project Finance
• Consortium / Multiple Banking Arrangements
• Export & Institutional Finance
• Importance:
• Supports industrial growth, trade, infrastructure.
• Provides major chunk of bank lending portfolio.
• Needs strict appraisal & monitoring because of large exposure risk.

Working Capital Finance (WCF)

Purpose
• To finance day-to-day operations → purchase of raw material, wages, salaries, utilities,
receivables, etc.

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Assessment Methods
1. Turnover Method (Nayak Committee – RBI norm)
• Applicable for MSMEs with working capital needs up to ₹5 crore.
• Working Capital requirement = 25% of projected annual turnover.
• Borrower must bring 5% of turnover as margin, bank finances 20%.
2. Tandon Committee – Maximum Permissible Bank Finance (MPBF)
• Method 1: Bank finance = 75% of (Current Assets – Current Liabilities other than bank
borrowings).
• Method 2: Bank finance = 75% of Current Assets (borrower brings 25%).
• Method 3: Borrower funds 25% of Current Assets from long-term sources.
3. Cash Budget Method
• Used for seasonal industries (sugar, tea, textiles) & large corporates.
• Based on detailed cash inflows & outflows.

Forms of WCF
• Fund-based: Cash Credit, Overdraft, Working Capital Demand Loan (WCDL), Bill
Discounting.
• Non-fund based: Letters of Credit (LCs), Bank Guarantees (BGs).

Term Loan Finance

• Purpose: For acquisition of fixed assets (land, building, machinery, modernization).
• Tenure: 5–10 years; repayment in instalments with moratorium during project implementation.

Project Appraisal (TEV Study – Techno Economic Viability)

1. Technical Feasibility: Technology, raw materials, production capacity, location.
2. Economic Viability: Demand forecast, industry trends, cost-benefit analysis.
3. Financial Feasibility: Cash flows, profitability, break-even point, IRR, NPV.
4. Managerial Competence: Background & track record of promoters.

Debt Service Coverage Ratio (DSCR)

• DSCR = Net Cash Accruals / Debt Service (Principal + Interest).

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 • Benchmark: ≥ 1.25.

Project Finance
• Definition: Financing of new/expansion projects in industries & infrastructure.
• Repayment depends on cash flows generated by the project, not promoter’s balance sheet.
• Security:
• Mortgage of project assets.
• Escrow of project cash flows.
• Lenders’ safeguards:
• Multiple lenders in consortium/syndication.
• Independent TEV study.
• Monitoring of project milestones.
• Examples: Power plants, highways, telecom projects.

Consortium, Multiple Banking & Syndication

• Consortium Lending:
• Several banks jointly lend to a borrower.
• One bank acts as lead bank to coordinate appraisal, documentation, and monitoring.
• Advantage: Risk sharing, uniform monitoring.
• Multiple Banking:
• Borrower takes credit limits separately from different banks.
• No formal agreement between lenders.
• Disadvantage: Higher risk of fund diversion.
• Loan Syndication:
• Common in international/project finance.
• Lead arranger raises funds from multiple banks/investors and distributes risk.
• Used for very large loans (e.g., airports, metro projects).

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Export Credit
• Pre-shipment Credit (Packing Credit):
• Working capital facility given to exporter for procurement, processing, packing of
goods before shipment.
• Usually concessional interest rate.
• Post-shipment Credit:
• Finance given till export bills are realised.
• Forms: Bills Purchased/Discounted, Advance against Bills, Advance against Duty
Drawback.
• ECGC (Export Credit Guarantee Corporation): Provides insurance cover to banks &
exporters against payment risks.
• RBI Export Norms:
• Realisation & repatriation of export proceeds within 9 months (extendable for certain
cases).

Institutional Finance
• Loans given to PSUs, Government bodies, Educational/Health institutions, Cooperative
societies.
• Often backed by sovereign guarantee or Govt. budgetary allocation.
• Lower credit risk compared to private borrowers.
• Example: Funding for Municipal Corporations, State Transport Undertakings.

Credit Appraisal Process

1. Financial Appraisal: Balance sheet analysis, profitability ratios, DSCR, IRR, NPV.
2. Economic Appraisal: Demand-supply gap, industry outlook, pricing.
3. Technical Appraisal: Technology, capacity, plant location.
4. Managerial Appraisal: Promoter’s experience, corporate governance.
5. Legal Appraisal: Title deeds, clearances, approvals, licenses.

Exposure Norms (RBI Guidelines)

• Single Borrower Limit (SBL): 20% of Tier-I capital.

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 • Group Borrower Limit (GBL): 25% of Tier-I capital.
• For Infrastructure Projects: Extra 5% permitted with Board approval.
• Large Exposure Framework (LEF): Effective April 2019 – stricter monitoring of big
exposures.

Credit Monitoring
• Stock Statements: Regular submission by borrower for working capital.
• Quarterly Financial Reports: Reviewed for early stress.
• Early Warning Signals (EWS): Frequent LC devolvement, cheque returns, delays in project
implementation.
• CRILC (Central Repository of Information on Large Credits): RBI database for exposures
≥ ₹5 crore.
• Joint Lenders’ Forum (JLF): Coordination mechanism for stressed large accounts.
• Wilful Defaulter List: Banks report chronic defaulters to RBI & CICs (CIBIL, Experian,
Equifax, CRIF).

Priority Sector Aspects

• Large corporates’ lending is generally not PSL.
• Exceptions: Export credit, loans to MSME suppliers, indirect agriculture through corporates.

11. Credit Monitoring & NPA Management

Credit Monitoring – Purpose
• Continuous supervision of loans after disbursement.
• Objectives:
• Ensure end-use of funds.
• Identify early stress to prevent slippage into NPAs.
• Protect bank’s asset quality.
• Support timely corrective action (restructuring/recovery).

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Tools of Credit Monitoring
• Stock Statements & Book Debt Returns: For working capital loans.
• Financial Statements: Quarterly/half-yearly P&L, Balance Sheet.
• Site Inspections: Physical verification of stocks/assets.
• Review / Renewal of Limits: Mandatory annual process.
• Early Warning Signals (EWS):
• Decline in sales/profits.
• Frequent cheque returns.
• LC/BG devolvement.
• Delay in project completion.
• Non-submission of data.
• CRILC (Central Repository of Information on Large Credits):
• RBI database for loans ≥ ₹5 crore.
• Shared across banks to prevent fund diversion.
• Red Flag Accounts (RFA):
• Introduced to detect potential frauds at early stage.
• Mandatory forensic audit for accounts > ₹50 crore flagged red.

NPA – Definition & Classification

• NPA (Non-Performing Asset): Loan where principal/interest is overdue >90 days.

Exceptions:
• OD/CC Account: Out of order if:
• Outstanding > sanctioned limit/drawing power for 90 days.
• No credits for 90 days.
• Credits insufficient to cover interest debited.
• Bills Purchased/Discounted: Overdue >90 days.
• Agricultural Loans:
• Short duration crop – overdue for 2 crop seasons.

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 • Long duration crop – overdue for 1 crop season.

Special Mention Accounts (SMA)

• Stage before NPA, to track early stress.
• SMA-0: 1–30 days overdue.
• SMA-1: 31–60 days overdue.
• SMA-2: 61–90 days overdue.
• If not resolved → account becomes NPA.

Asset Classification
1. Standard Asset: Performing, regular loan.
2. Substandard Asset: NPA ≤ 12 months.
3. Doubtful Asset: NPA > 12 months.
4. Loss Asset: Uncollectible, identified by auditors/RBI.

Provisioning Norms
• Standard Assets: 0.25%–1% depending on sector.
• Substandard Assets: 15% (secured), 25% (unsecured).
• Doubtful Assets:
• Up to 1 year: 25%
• 1–3 years: 40%
• 3 years: 100%
• Loss Assets: 100% provisioning.

Income Recognition Norms

• Interest on NPAs cannot be accrued.
• Income recognized only on cash basis.
• Unrealized interest must be reversed.

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Recovery / Resolution Mechanisms

(A) Restructuring / One-Time Settlement (OTS)

• Restructuring: Changes in repayment terms, interest rate, moratorium, conversion of overdue
interest into TL.
• OTS: Bank agrees to accept partial settlement of dues, balance written off.

(B) SARFAESI Act, 2002

• Full form: Securitisation and Reconstruction of Financial Assets & Enforcement of Security
Interest Act.
• Objective: Allow banks/FIs to recover NPAs without court intervention.
• Eligibility:
• Loan classified as NPA.
• Amount ≥ ₹1 lakh, and NPA ≥ 20% of outstanding.
• Powers under Act:
• Issue 60-day demand notice to borrower.
• If unpaid → Bank can:
• Take possession of secured assets.
• Take over management.
• Appoint manager.
• Sell or lease assets via auction.
• Appeals: Borrower may appeal to DRT (45 days) → further to DRAT.
• Exclusions: Agricultural land, loans ≤ ₹1 lakh, aircraft/ships.

Important Sections

Section 13(2) – Demand Notice

• When borrower defaults & account is NPA →
• Bank issues 60-day notice demanding repayment.
• Borrower must discharge dues within 60 days.
• Borrower can make representation/objection, which bank must reply within 15 days.

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Section 13(4) – Measures for Recovery
If borrower fails to repay within notice period: Bank may:
1. Take possession of secured assets (movable/immovable).
2. Take over management of secured assets/business.
3. Appoint a manager to manage secured assets.
4. Sell/lease/assign assets to recover dues.

Section 14 – Chief Metropolitan Magistrate (CMM)/District Magistrate (DM)

• If borrower resists possession, bank can approach CMM/DM for assistance.
• CMM/DM directs police/administration to help bank take possession.

Section 17 – Borrower’s Right of Appeal

• Borrower can file appeal against bank’s action with DRT within 45 days.
• Further appeal → Debt Recovery Appellate Tribunal (DRAT) (within 30 days).

Section 18 – Appeal to DRAT

• Borrower must deposit 50% of debt due (can be reduced to 25% by DRAT) to file appeal.

(C) Lok Adalat

• Legal framework: Legal Services Authorities Act, 1987.
• Purpose: Settlement of small-value loan disputes amicably.
• Eligibility: Cases up to ₹20 lakh.
• Features:
• Based on mutual consent.
• Decision binding, treated as civil court decree.
• Useful for retail loans, credit card dues, agricultural loans.
• Types: National Lok Adalat, Permanent Lok Adalat (for public utility services).

(D) Debt Recovery Tribunals (DRTs)

• Established under RDDBFI Act, 1993 (now DRT Act).
• Jurisdiction: Recovery of bank/FI dues > ₹20 lakh.

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 • Process:
• Application filed by bank.
• Tribunal issues recovery certificate.
• Recovery Officer executes attachment/sale of property.
• Appeal: To DRAT (Debt Recovery Appellate Tribunal) within 45 days.
• Advantage: Faster than civil courts.

(E) Asset Reconstruction Companies (ARCs)

• Set up under SARFAESI Act.
• Role: Acquire NPAs from banks/FIs at discount, manage & recover.
• Process:
• ARCs buy NPAs (cash or Security Receipts – SRs).
• Manage/restructure/recover dues over time.
• Popular ARC: NARCL (National Asset Reconstruction Company Ltd) → Govt.-backed
"Bad Bank" launched in 2021.

(F) Insolvency & Bankruptcy Code (IBC), 2016

• Applicability: Corporate borrowers.
• Trigger: Default ≥ ₹1 crore (revised from ₹1 lakh due to Covid).
• Process:
1. Application by creditor to NCLT.
2. Interim Resolution Professional (IRP) takes over.
3. Management shifts from promoters to IRP.
4. Committee of Creditors (CoC) formed (lenders only).
5. CoC decides resolution plan within 180 days (extendable to 270).
6. If no resolution → liquidation.
• Advantages: Time-bound, transparent, improves recovery.
• Challenge: Delays beyond 270 days in many cases.

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Stressed Asset Resolution Framework (RBI, 2019)
• Lenders must report default within 30 days.
• Review Period: 30 days – decide resolution strategy.
• Implementation: Resolution Plan (RP) must be executed within 180 days.
• Options: Restructuring, change in ownership, IBC referral.

12. Financial Inclusion

Meaning & Importance
• Financial Inclusion (FI): Delivery of affordable financial services to the weaker and low-
income sections of society.
• Services include: Savings, Credit, Insurance, Pension, Remittance.
• Aim: Access, Availability, Affordability.
• Importance:
• Promotes inclusive growth.
• Reduces dependence on informal lenders.
• Improves savings & investments.
• Supports Govt. Direct Benefit Transfers (DBT).

PMJDY (Pradhan Mantri Jan Dhan Yojana, 2014)

• World’s largest FI programme.
• Features:
• Basic Savings Bank Deposit Account (BSBDA): Zero balance.
• RuPay Debit Card with accident insurance.
• Overdraft facility: Up to ₹10,000 (after 6 months of satisfactory operation).
• Life insurance cover: ₹30,000 (on accounts opened up to Jan 2015).
• Accident cover: ₹2 lakh (with RuPay card).
• Impact: > 50 crore accounts opened (2024).

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Basic Savings Bank Deposit Account (BSBDA)
• No minimum balance.
• 4 withdrawals per month (including ATM).
• Eligible for nomination facility.
• Mandated by RBI for FI.

Direct Benefit Transfer (DBT)

• Govt. subsidies/welfare benefits credited directly to beneficiary’s bank account.
• Linked with Aadhaar + PMJDY accounts.
• Examples: LPG subsidy (PAHAL), MNREGA wages, Scholarships.
• Reduces leakage, ensures transparency.

Self-Help Group (SHG) – Bank Linkage Programme

• Introduced by NABARD (1992).
• SHGs = 10–20 poor people, usually women, pooling savings and lending among themselves.
• Linked with banks for credit.
• Stages of linkage:
1. Savings first.
2. Savings + collateral-free loan.
3. Larger loans based on repayment record.
• Key for women empowerment & rural FI.

Business Correspondent (BC) / Business Facilitator (BF) Model

• BCs: Agents of banks → open accounts, collect deposits, disburse loans, remittances.
• Operate through micro-ATMs, AEPS (Aadhaar Enabled Payment System).
• Ensure last-mile connectivity.
• BFs: Limited role – sourcing of loans, recovery follow-up (no cash handling).

Small Finance Banks (SFBs) & Payments Banks

• SFBs: Focus on small borrowers, MSMEs, unorganised sector.

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 • Can accept all deposits & lend.
• Must lend 75% to PSL, 50% loans ≤ ₹25 lakh.
• Examples: AU SFB, Ujjivan SFB, Jana SFB.
• Payments Banks:
• Can accept demand deposits up to ₹2 lakh.
• Can issue debit cards, facilitate remittance.
• Cannot lend.
• Examples: Airtel Payments Bank, Paytm Payments Bank, India Post Payments Bank.

Government Social Security Schemes

• PMJJBY (Pradhan Mantri Jeevan Jyoti Bima Yojana):
• Life insurance cover ₹2 lakh.
• Premium: ₹436/year.
• Age: 18–50 years.
• PMSBY (Pradhan Mantri Suraksha Bima Yojana):
• Accidental insurance cover ₹2 lakh.
• Premium: ₹20/year.
• Age: 18–70 years.
• APY (Atal Pension Yojana):
• Pension scheme for unorganised sector.
• Monthly contribution → Guaranteed pension (₹1k–₹5k).
• Govt. co-contribution (for eligible low-income groups).

Microfinance
• Provision of very small loans (micro-credit) to poor households without collateral.
• Delivered through SHGs, MFIs, NBFC-MFIs.
• Interest rates capped by RBI.
• Critical for financial empowerment of rural women.

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PM-SVANidhi (Street Vendors Atmanirbhar Nidhi, 2020)
• Micro-credit for street vendors.
• Loan: ₹10,000 (1st), ₹20,000 (2nd), ₹50,000 (3rd).
• Interest subsidy: 7% (if repaid on time).
• Digital transaction incentives.

Financial Literacy
• RBI + Banks mandated to set up Financial Literacy Centres (FLCs) in districts.
• Activities: Awareness camps, school programs, digital financial literacy.
• Aim: Educate public on savings, responsible borrowing, fraud awareness, use of digital
banking.

Digital Financial Inclusion

• AEPS (Aadhaar Enabled Payment System): BCs use Aadhaar for authentication, cash
withdrawal, balance enquiry.
• UPI & BHIM: Mobile-based instant payment system.
• Jan Dhan-Aadhaar-Mobile (JAM) Trinity: Foundation for DBT.
• RuPay Cards: Domestic card scheme integrated with PMJDY.

13. Priority Sector Lending (PSL)

Introduction
• PSL: Lending to certain sectors of the economy identified by RBI as “priority sectors” which
need timely and adequate credit.
• Objective: Promote inclusive growth & support weaker/vulnerable sections.
• Applicable to: Domestic SCBs, RRBs, SFBs, UCBs, Foreign Banks (with some variations).

PSL Targets (Domestic Banks, SFBs, RRBs)

• Total PSL: 40% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance
Sheet Exposure (CEOBE).

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 • RRBs & SFBs: Higher target → 75% of ANBC.

Sub-Targets (within 40%):

1. Agriculture: 18% of ANBC.
• Within this, 8% to Small & Marginal Farmers (SMF).
2. Micro, Small & Medium Enterprises (MSME):
• Defined by MSME Act (Udyam Registration).
• Special focus on micro enterprises.
3. Weaker Sections: 12% of ANBC.
4. Advances to Non-Corporate Farmers: Must be significant portion.

Categories under PSL

(A) Agriculture (18%)

1. Farm Credit (Direct Finance)
• Crop loans (short-term production credit).
• Term loans (tractors, pumpsets, farm equipment).
• Allied activities (dairy, poultry, fisheries).
2. Indirect Finance
• Loans to PACS, FPOs, MFIs for onward lending to farmers.
• Loans to agri-infrastructure (warehouses, cold storage, soil health centers).
3. SMF Target
• Small & Marginal Farmers (≤ 2 hectares).
• At least 8% of ANBC must go here.

(B) MSME
• As per new MSME classification (July 2020, composite turnover + investment).
• Micro enterprises: At least 7.5% of ANBC must go here.
• Includes:
• Manufacturing & Service enterprises.
• Working capital & term loans.

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 • Loans to start-ups under CGTMSE.

(C) Export Credit

• Export credit to eligible exporters.
• For domestic banks, included under PSL up to 2% of ANBC.

(D) Education Loans

• Loans to individuals for studies in India/abroad.
• Limit: Up to ₹20 lakh per student.

(E) Housing Loans

• Loans to individuals up to:
• ₹35 lakh in metro (population ≥ 10 lakh).
• ₹25 lakh in other areas.
• Total cost of dwelling unit not to exceed:
• ₹45 lakh in metro.
• ₹30 lakh in non-metro.
• Loans to affordable housing projects also eligible.

(F) Renewable Energy

• Loans up to ₹30 crore for renewable energy projects (solar, wind, biomass, etc.).
• Loans up to ₹10 lakh for households (solar lights, water pumps, etc.).

(G) Social Infrastructure

• Loans up to ₹5 crore in rural/semi-urban areas for schools, health centers, drinking water,
sanitation.

(H) Weaker Sections (12%)

• Small & Marginal Farmers.
• Artisans, village industries, SC/ST beneficiaries.
• SHGs, JLGs.
• Distressed farmers (loans for debt redemption).
• Beneficiaries of Govt. schemes (NRLM, PMJDY overdrafts, PMAY).

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PSL Certificates (PSLCs)
• Introduced by RBI in 2016.
• Mechanism for banks to achieve PSL targets.
• Types: PSLC-Agriculture, PSLC-SMF, PSLC-MSME, PSLC-General.
• Features:
• Bought & sold on RBI’s e-Kuber platform.
• Valid for 1 year.
• No transfer of credit risk or loan asset – only priority benefit is transferred.

PSL Shortfalls
• If banks fail to meet PSL target/sub-targets →
• Required to deposit shortfall amount in Rural Infrastructure Development Fund
(RIDF) managed by NABARD.
• Other funds: NHB (housing), SIDBI (MSME), MUDRA Fund.

Special Schemes linked to PSL

• Kisan Credit Card (KCC): Flexible credit for farmers’ production & consumption needs.
• PMMY (Pradhan Mantri Mudra Yojana): Micro-enterprise loans up to ₹10 lakh.
• Shishu (≤ ₹50k), Kishor (₹50k–5L), Tarun (₹5–10L).
• Stand-Up India: Loans ₹10 lakh–₹1 crore to SC/ST & women entrepreneurs.
• CGTMSE: Credit guarantee for MSME loans up to ₹2 crore (collateral-free).

PSL for Foreign Banks

• Foreign banks with 20+ branches: Same as domestic banks (40% PSL).
• Foreign banks with <20 branches:
• PSL target = 40% of ANBC, but category distribution differs (more emphasis on export
credit, MSME).

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14. Banking Law & Practice
Definition of Banking
• Banking Regulation Act, 1949 (Sec. 5(b)):
“Banking means accepting, for the purpose of lending or investment, deposits of money from
the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order, or
otherwise.”
• Sec. 5(c): Defines “banking company” = any company that transacts the business of banking.

Important Banking Legislations

1. Banking Regulation Act, 1949 (BR Act).
2. Reserve Bank of India Act, 1934.
3. Negotiable Instruments Act, 1881.
4. SARFAESI Act, 2002.
5. Recovery of Debts & Bankruptcy Act, 1993 (RDDBFI → DRT Act).
6. Companies Act, 2013.
7. Insolvency & Bankruptcy Code (IBC), 2016.
8. PMLA, 2002.

Banking Regulation Act, 1949 – Key Provisions

• Sec. 5: Definitions (banking, banking company, etc.).
• Sec. 6: Permissible forms of business (lending, agency services, forex, etc.).
• Sec. 7: Only companies using words “bank”, “banker”, “banking” can conduct banking.
• Sec. 11: Minimum capital and reserve requirements.
• Sec. 17: Creation of statutory reserves by banks.
• Sec. 18: Cash Reserve (for non-scheduled banks).
• Sec. 19: Restriction on shareholding in other companies.
• Sec. 20: Prohibition on loans against own shares.
• Sec. 21: RBI’s power to control advances.
• Sec. 22: Licensing of banks.
• Sec. 23: Restriction on opening new branches without RBI approval.

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 • Sec. 24: Statutory Liquidity Ratio (SLR).
• Sec. 29–31: Accounts and audit of banks.
• Sec. 35: RBI’s power of inspection.
• Sec. 36: RBI’s power to give directions to banks.
• Sec. 45: Amalgamation of banks.

RBI – Role as Regulator (RBI Act, 1934)

• Sec. 3: Establishment of RBI (1935).
• Sec. 22: Sole right to issue currency notes.
• Sec. 42: CRR requirements for scheduled banks.
• Sec. 45L/M: Control over NBFCs.
• Functions:
• Monetary Policy (Repo, Reverse Repo, CRR, SLR).
• Supervision (CAMELS).
• Foreign Exchange (FEMA, 1999).
• Payment & Settlement oversight.

Banker–Customer Relationship
Debtor–Creditor:
• Customer deposits → Bank owes money = Bank = Debtor, Customer = Creditor.
• Creditor–Debtor:
• When customer takes loan → Customer = Debtor, Bank = Creditor.
• Bailor–Bailee:
• Locker facility → Customer = Bailor, Bank = Bailee.
• Trustee–Beneficiary:
• Bank acts as trustee for nominee/legal heirs.
• Agent–Principal:
• Bank collects/ pays cheques, bills, dividends on behalf of customer.

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Negotiable Instruments Act, 1881 – Important Provisions

Definitions
• Sec. 4: Promissory Note.
• Sec. 5: Bill of Exchange.
• Sec. 6: Cheque = Bill of exchange drawn on banker & payable on demand.

Types of Cheques
• Sec. 6 Explanation: Cheques include electronic cheques & truncation.
• Post-dated / Ante-dated / Stale cheques (validity = 3 months).

Crossing of Cheques
• Sec. 123: General crossing.
• Sec. 124: Special crossing.
• Sec. 126: Payment only through banker.
• Account Payee crossing (as per banking practice).

Endorsements
• Sec. 15: Endorsement = signing on instrument for negotiation.
• Types: Blank, Full, Restrictive, Conditional.

Penalties
• Sec. 138: Dishonour of cheque for insufficiency of funds → Punishable with imprisonment up
to 2 years or fine up to twice cheque amount, or both.
• Sec. 139: Presumption in favour of holder.
• Sec. 142: Cognizance of offences only on complaint by payee.

Banker’s Rights
• Right of General Lien (Sec. 171, Indian Contract Act, 1872):
• Bank can retain securities until customer clears dues.
• Right of Set-off: Adjust debit balance with credit balance.
• Right of Appropriation: Apply repayments against oldest dues if unspecified.

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 • Right to Charge Interest/Commission.

Obligations of Banker
• Maintain secrecy of customer accounts → Tournier’s Rule (UK Case Law).
• Honour cheques if sufficient funds.
• Follow KYC/AML norms under PMLA, 2002.
• Provide nomination (Sec. 45ZA of BR Act).

Types of Banking Institutions

• Public Sector Banks (SBI Act, Nationalisation Acts).
• Private Sector Banks.
• Foreign Banks.
• RRBs (RRB Act, 1976).
• Co-operative Banks (Co-op Societies Acts).
• SFBs & Payments Banks (RBI Licensing Guidelines).

Banking Ombudsman / RBI Integrated Ombudsman Scheme (2021)

Background
• Banking Ombudsman Scheme introduced in 1995 (RBI Act Sec. 35A powers).
• Revised in 2006, 2009.
• Integrated Ombudsman Scheme (IOS), 2021 – merged:
1. Banking Ombudsman Scheme, 2006
2. NBFC Ombudsman Scheme, 2018
3. Digital Transactions Ombudsman Scheme, 2019
• Aim: “One Nation, One Ombudsman”

Coverage
• Entities regulated by RBI:
• Scheduled Commercial Banks
• RRBs, SFBs, Payments Banks

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 • NBFCs (deposit taking & systemically important)
• Prepaid Instrument Issuers (wallets, fintechs)
• Payment System Operators

Grounds for Complaint

• Non-payment / inordinate delay in cheque clearing, drafts, bills.
• Non-payment / delay in inward remittances.
• Non-adherence to RBI instructions on loans, deposits, charges.
• Mis-selling of products, unfair practices.
• Non-adherence to KYC, digital fraud complaints, UPI/NEFT/RTGS failures.
• Non-adherence to govt. schemes (PMJDY, DBT).

Procedure
1. Step 1: Customer must first complain to the bank/NBFC/PSP.
2. Step 2: If no reply within 30 days, or unsatisfactory reply → escalate to RBI Ombudsman.
3. Filing Complaint:
• Online (RBI CMS Portal – Complaint Management System).
• Email / letter also accepted.
• No fee charged.
4. Ombudsman Action:
• Tries for conciliation / mediation.
• If unresolved → award passed (binding on bank if accepted by complainant).
5. Appeal: Lies to Appellate Authority – RBI Deputy Governor.

Powers of Ombudsman
• Can award compensation up to ₹20 lakh (for actual loss).
• Can award ₹1 lakh for mental agony/harassment.
• Decision binding on bank; complainant can reject and go to court.

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Prevention of Money Laundering Act (PMLA), 2002

Objective
• Prevent money laundering.
• Provide for confiscation of property derived from laundered money.
• Ensure compliance by banks/financial institutions.

Key Definitions
• Sec. 2(1)(p): “Money laundering” = process of converting black money into legitimate assets.
• Sec. 3: Offence of money laundering – directly/indirectly attempting to indulge, or knowingly
assisting in concealment, possession, acquisition or use of proceeds of crime.

Punishment
• Sec. 4: Imprisonment 3–7 years (up to 10 years if crime involves NDPS Act).
• Fine without limit.

Obligations of Banks/FIs (Sec. 12)

• Maintain record of all transactions > prescribed limits.
• Verify identity of customers (KYC).
• Furnish information to Financial Intelligence Unit – India (FIU-IND).
• Maintain records for 10 years.

Types of Reports Submitted by Banks

• CTR (Cash Transaction Report): Cash transactions > ₹10 lakh (single or series).
• STR (Suspicious Transaction Report): Unusual transactions (structuring, layering).
• NTR (Non-Profit Organization Transaction Report).
• CBWTR (Cross Border Wire Transfer Report): > ₹5 lakh.
• All reports go to FIU-IND.

Enforcement Authorities
• FIU-IND: Collects, analyses, disseminates info on suspect transactions.
• Enforcement Directorate (ED): Investigates & attaches property under PMLA.

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 • Adjudicating Authority: Confirms attachment.
• Appellate Tribunal: Hears appeals against Adjudicating Authority orders.

KYC & AML Guidelines

• Issued under Sec. 35A of BR Act & Sec. 12 of PMLA.
• RBI Master Directions (2016, updated):
• Customer Identification → OVDs (Aadhaar, Passport, Voter ID, etc.).
• Risk-based categorization: Low, Medium, High.
• Periodic updation of KYC.

15 – Treasury & Balance Sheet Management

Treasury Management – Concept

• Treasury = “Nerve centre of a bank’s financial operations”.
• Involves funds mobilization, liquidity management, investment, borrowing, trading,
hedging.
• Balances 3 objectives:
1. Liquidity – Ensure funds for payments & regulatory reserves.
2. Safety – Deploy funds in secure avenues (Govt. securities, AAA bonds).
3. Profitability – Maximize returns from surplus deployment.
👉 Example: A bank with deposits of ₹1000 Cr must maintain CRR/SLR, lend loans, and invest
excess – Treasury decides the mix.

Treasury Structure in Banks

• Front Office: Active trading – money market, forex, G-secs.
• Mid Office: Risk control, compliance, monitoring of limits.
• Back Office: Settlement, accounting, reconciliation.
• ALCO (Asset Liability Committee): Senior management body supervising ALM & treasury
operations.

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Sources of Funds (Liabilities)
1. Deposits:
• Demand (Current, Savings).
• Time (FD, RD).
2. Borrowings:
• RBI refinance (Repo, MSF).
• Interbank borrowing (call money, notice money, term money).
• Bonds, debentures.
3. Capital & Reserves.

Deployment of Funds (Assets)

1. Loans & Advances (retail, corporate, MSME).
2. Investments (Govt. securities, corporate bonds, equities).
3. Balances with RBI (CRR).
4. Other Assets (premises, receivables).

Investment Classification (RBI Norms)

1. HTM (Held to Maturity):
• Carried at acquisition cost (no MTM).
• Max 19.5% of NDTL (special relaxations possible).
• Example: 10-year G-sec for SLR.
2. AFS (Available for Sale):
• Marked to market quarterly.
• Profit/loss affects P&L.
3. HFT (Held for Trading):
• Marked to market daily.
• Intended for active short-term trading.
👉 Tip: HTM = safest, HFT = volatile.

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CRR & SLR
• CRR (Cash Reserve Ratio):
• Sec. 42 RBI Act.
• % of NDTL with RBI (cash).
• No interest.
• Example: If CRR = 4.5%, NDTL = ₹1000 Cr → ₹45 Cr with RBI.
• SLR (Statutory Liquidity Ratio):
• Sec. 24 BR Act.
• % of NDTL in approved securities.
• Currently ~18%.
• Example: NDTL ₹1000 Cr, SLR 18% → ₹180 Cr in Govt. securities.

Liquidity Management
• Liquidity Coverage Ratio (LCR):
• HQLA ÷ Net Outflows (30 days) ≥ 100%.
• Net Stable Funding Ratio (NSFR):
• Available stable funding ÷ Required stable funding (1 year) ≥ 100%.
• High Quality Liquid Assets (HQLA): Cash, reserves, sovereign bonds.

Asset-Liability Management (ALM)

• Purpose: Match maturities of assets/liabilities.
• Risks Managed: Liquidity risk, interest rate risk, forex risk.
• Tools:
• Gap analysis (by time buckets – 1 day, 14 days, 1 month, 3 months, 1 year, >5 years).
• Duration analysis (bond price sensitivity).
• ALCO (Asset Liability Committee):
• Headed by senior executive/ED.
• Reviews liquidity, pricing of deposits/loans, balance sheet mix.

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Treasury Operations

Money Market Operations

• Call Money: Overnight borrowing/lending (1 day).
• Notice Money: More than 1 day up to 14 days.
• Term Money (Short Money): 15 days to 1 year.
• Repo (Repurchase Agreement): Borrowing by selling securities with promise to repurchase.
• Reverse Repo: Lending funds against purchase of securities with agreement to resell.
• MSF (Marginal Standing Facility): RBI window for emergency overnight liquidity (rate =
Repo + 0.25%).
👉 Example: BOI short of liquidity borrows ₹500 Cr in call money for 1 day at 6%.
Forex Operations
• Trading in foreign currencies.
• Risks: Currency fluctuation.
• Hedging tools: Forwards, options, swaps.

Derivatives
• Interest Rate Swaps (IRS): Exchange of fixed rate vs floating rate obligations.
• Currency Swaps: Exchange of cash flows in different currencies.
• Futures/Options: Used for hedging interest & forex exposures.

Government Securities
• Primary market: RBI conducts auctions.
• Secondary market: Trading via NDS-OM platform.
• Categories: Dated securities, Treasury Bills (91, 182, 364 days).

Profitability & Balance Sheet Ratios

• NIM (Net Interest Margin): (Interest earned – Interest paid) ÷ Earning Assets.
• ROA (Return on Assets): Net Profit ÷ Total Assets.
• ROE (Return on Equity): Net Profit ÷ Net Worth.
• Cost-to-Income Ratio: Operating Expenses ÷ Operating Income.

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 • CRAR (Capital Adequacy Ratio):
• Basel III: ≥ 9% (India).
• Tier I (Core equity + reserves).
• Tier II (Subordinated debt).
• CCB = 2.5% extra.

Risk Management in Treasury

• Market Risk: Due to interest rate, FX, commodity price movement.
• Credit Risk: Counterparty default.
• Liquidity Risk: Inability to meet obligations.
• Operational Risk: Process/system failures, fraud.
Mitigation Tools:
• Diversification.
• Derivative hedging.
• Stop-loss mechanisms.
• Stress testing & scenario analysis.

16 – Official Language (Rajbhasha)

Constitutional Provisions
• Article 343:
• Hindi in Devanagari script shall be the Official Language of the Union.
• Numerals shall be in International form of Indian numerals (1,2,3… not Devanagari
१,२,३).

• Initially English continued for 15 years (i.e., till 1965).

• Article 344: Commission and Committee of Parliament to review OL provisions.
• Articles 345–351: Provisions relating to regional languages, promotion of Hindi, and
safeguards for linguistic minorities.

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Official Languages Act, 1963 (Amended 1967)
• Section 3: Both Hindi & English to be used for official purposes of the Union.
• Section 7: Language for communication between Union and States.
• Section 8: Governor of State may authorize Hindi use in certain cases.
• Section 9: Translation of Acts, Bills, etc. must be provided in Hindi.
• Section 10–11: Rules for translation and publication.
Important: Due to 1967 Amendment, English will continue along with Hindi as an official language
till further notification (no time limit fixed).

Official Language Rules, 1976

• Rule 5: Communications between central govt. offices in Hindi-speaking states → in Hindi.
• Rule 6: Communication between Hindi-speaking and non-Hindi-speaking states → in English.
• Rule 8: Documents like manuals, codes, circulars to be issued bilingually.

Implementation of Official Language in Banks

• Banks as Public Sector Undertakings (PSUs) under the Union Govt. must implement OL
policy.
• Guidelines issued by Dept. of Official Language (Rajbhasha Vibhag) under Ministry of
Home Affairs.
• RBI and banks must:
• Use bilingual forms, cheques, passbooks.
• Maintain bilingual displays (signboards, nameplates).
• Issue notices, circulars in bilingual format.
• Correspondence:
• With public in Hindi-speaking region → in Hindi.
• With public in non-Hindi states → in English.
• Between offices in Hindi states → in Hindi.
• Between offices in Hindi & non-Hindi states → in English.

Rajbhasha Committees & Mechanisms

1. OL Implementation Committee (OLIC):

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 • At branch/office level → monitors OL implementation.
2. Town Official Language Implementation Committee (TOLIC):
• At city/town level → common committee for banks/offices.
3. Parliamentary Committee on OL:
• Supervises implementation in all ministries & PSUs.
4. Dept. of Official Language (MHA): Nodal department for OL policy.

Use of Hindi in Banking

• Forms & Documents: Account opening forms, loan forms, challans must be bilingual.
• Passbooks & Cheques: Printed in Hindi & English.
• Displays: Name boards, signboards must be bilingual (trilingual in some states).
• Software & Technology: Core banking systems must support bilingual operations.
• Annual Reports & Statements: Must be published bilingually.

Important Terms
• Rajbhasha: Official language.
• Rashtrabhasha: National language (note: India has no declared national language).
• Official Language of Union: Hindi (Article 343).
• Link Language: English (as per OL Act, 1963).

Practical Implementation in Banks

• Forms/Circulars: Issued in both Hindi & English.
• Customer dealings:
• Customers have right to use Hindi or English.
• Staff encouraged to promote Hindi in daily transactions.
• Internal Work: Gradual increase of Hindi in notings, correspondence, reports.
• Rajbhasha Day: 14th September celebrated as Hindi Diwas.

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17. Other Misc.

Kisan Drone Scheme – Akashdoot

Purpose
• Loan for purchase of new agriculture drones with equipment/accessories.
• Uses:
• Spraying pesticides, fertilizers, anti-locust chemicals.
• Mapping of farmland, crop monitoring.
• Soil/field analysis, planting, irrigation.
• Applicable only for Custom Hiring Activity (not for personal use).

Eligible Borrowers
• Individuals.
• Self Help Groups (SHGs).
• Proprietorship/Partnership Firms.
• Private/Public Ltd. Companies.
• Co-operative Societies.
• Farmer Producer Organizations (FPOs)/Farmer Producer Companies (FPCs).

Eligibility Criteria
• Credit Score:
• Individuals: CIC ≥ 700.
• Firms/Companies: CBR Rank up to CBR-5.
• New-to-credit (No hits / -1 score): Also eligible.
• Joint accounts → CIC of principal borrower considered.
• Pilot Eligibility:
• Must pass 10th class or equivalent.
• Must have completed DGCA-approved Remote Pilot Training.

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 • Must hold Remote Pilot Certificate (RPC).
• Must be registered on Digital Sky platform with Unique Identification Number
(UIN) for drone (unless exempted).
• Drone Manufacturer:
• Must be DGCA-approved.
• Branch must verify DGCA website before financing.
• For Firms/SHGs/Companies:
• Must declare names & RPC of hired/trained pilots.

Age Criteria
• For Individuals: Age at loan maturity ≤ 65 years.
• If applicant >60 years → Co-applicant required.
• For Firms/Companies/SHGs/FPOs → No age limit.

Loan Facility
• Type: Term Loan.
• Quantum: Up to ₹25.00 lakh per borrower.
• Margin: Minimum 15%.
• Bank Finance: Maximum 85% of unit cost (including accessories, insurance, AMC).

Security
• Primary: Hypothecation of drone & accessories.
• Collateral: Covered under CGTMSE/CGFMU → No collateral needed.

Economic Viability
• Based on projected cash flows from custom hiring activity.
• DSCR: Minimum average = 1.25 : 1.

Disbursement & Insurance

• Drone must be purchased only from DGCA-approved manufacturer/dealer.
• Payment directly to dealer/supplier.

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 • Insurance: Mandatory, with Bank Clause in policy.

Repayment
• Maximum period: 5 years.
• Moratorium: Up to 6 months.
• Frequency:
• Principal: Monthly/Quarterly.
• Interest: Monthly.

Rate of Interest & NPA Norms

• Interest: As applicable to Agriculture Advances.
• NPA Norms: Loan becomes NPA if overdue >90 days.

Star Gold Loan

Eligibility
• Individuals / Proprietorship firms (lawful owner of gold).
• Gold: Jewellery, ornaments, coins (22 carat & above).
• Joint ownership allowed with close family members.
• Staff & relatives eligible under SZLCC approval.
• Gold belonging to wife (Stridhan) → wife must be co-borrower.
• Exclusions: Fraud-affected / security-risk branches may be excluded.

Restrictions
• Max total gold weight per borrower: 1 Kg.
• Max gold coin weight: 50 gm.
• Max loan limit: ₹30 lakh.
• Not allowed against:
• Purity below 18 carat.
• Gold bars, bullion, primary gold.

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 • For speculative/hoarding purposes.
• For purchase of gold itself.
• Jewellers/Goldsmiths/Gold Valuers & relatives not eligible.
• Not covered under CGTMSE / Interest Subvention Scheme.

Purpose of Gold Loans

• Star Gold Agriculture Multipurpose Loan.
• Star Gold Agriculture Overdraft.
• Star Gold MSME & OPS Loan.
• Star Gold MSME Overdraft.
• Star Gold Personal Loan.
• Star Gold Loan Personal Overdraft.

Loan-to-Value (LTV) & Assessment

• As per RBI guidelines → 75% LTV (Loan / Value of gold).
• Udyam Registration mandatory for MSME loans.
• For agriculture loans up to ₹2 lakh → treated as collateral-free.
• Loan eligibility = lower of (Activity-based assessment) OR (Value-based assessment).

Valuation & Appraisal

• Value = Average of last 30 days’ closing price of 18, 22, 24 carat gold (or current rate,
whichever is lower).
• For 19–21 carat → value adjusted with purity ratio.
• Valuation at branch in borrower’s presence.
• Karatometer mandatory for branches with portfolio > ₹5 Cr or fraud-prone zones.
• Second appraisal mandatory:
• Loan limit ≥ ₹5 lakh.
• During RBIA audit.
• At OD renewal.

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Types of Facilities & Tenure
• Demand Loan / Overdraft.
• Tenure: Max 12 months.
• OD: Annual review → extendable max 3 years.
• Max 5 loan accounts per borrower (aggregate ≤ ₹30 lakh).

Quantum & Documentation

• For crop loans > ₹2.5 lakh → copies of land records mandatory.
• Documents:
• AG-35 Loan-cum-Pledge Agreement.
• Demand Promissory Note.
• Undertaking & declaration for agricultural purpose.
• Hypothecation agreement.

Rate of Interest
• Linked to MCLR/RBLR.
• Concession 0.10% for loans ≥ ₹10 lakh with hallmarked jewellery.
• ROI cannot go below MCLR/RBLR in agri accounts.

Repayment
• Agriculture Loans:
• Bullet repayment → up to 12 months (aligned with crop season).
• Non-bullet → Monthly instalments (max 12 months).
• Other Loans:
• Bullet repayment → up to 12 months.
• Non-bullet → Monthly instalments (≤ 12 months).
• OD: Interest to be serviced as applied, account reviewed annually.

Asset Classification
• Standard / NPA norms apply → 90 days delinquency.

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 • Gold loans classified as NPA if overdue >90 days.

Security & Custody

• Primary security: Hypothecation of gold pledged.
• Insurance: Covered under bank’s blanket policy (fire, burglary, theft, fraud).
• Gold packets:
• Packed in transparent perforated bags (120 micron).
• Separate gold safe if >50 packets or >₹1 Cr portfolio.
• Gold register to record borrower details, weight, sanction, date, signatures.

Custodian Roles
• Dual verification & sealing.
• Periodic counting of packets.
• Safe-in/Safe-out register with dual signatures.

Appraisal & Appraiser Rules

• Max 3 branches per appraiser.
• Two appraisers per branch (rotation basis).
• Multiple loans from same borrower → use different appraisers.
• Appraisal fees:
• ₹5 per ₹1000 loan amount (min ₹100, max ₹1500 for ≤ ₹10 lakh).
• ₹2000 fixed for loans > ₹10 lakh.
• Second appraisal: Bank to bear.

Auction in Default Cases

• Re-appraisal before auction (different appraiser).
• Permission from Zonal Office.
• Notices:
• Display list in branch (15 days).
• Publish in 2 newspapers (vernacular + national).

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 • Inform borrower via registered post.
• Auction only as much gold as needed to recover dues.
• Reserve price fixed (bid ≥ dues + charges + tax).
• GST on auction = 3%.
• e-Auction also allowed through HO-approved providers.

BOI STAR ASSET BACKED LOAN (BSABL)

Target Group
• All Business Units (MSMEs – Manufacturing, Services, Trading) under MSMED Act.
• Includes Food & Agro processing units.
• Not eligible:
• HUFs.
• Builders / Property Dealers / Real Estate Agents.
• Capital market / speculative activities.
• Greenfield projects (new units without track record).
• Borrowers in RBI/IBA/ECGC defaulter list.

Purpose
• Working capital for building current assets.
• Acquisition of fixed assets, plant & machinery.
• Purchase/renovation/construction of business premises/office/godown/shop/unit.
• For temporary liquidity mismatch.
• Expenses for R&D, marketing, advertisement.
• Repayment of high-cost debt (Bank/FI/NBFC loans).

Eligible Customers
• Existing business enterprises complying with statutory requirements:
• Udyam Registration.
• GST Registration.

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 • Shops & Establishment/Trade Licenses.
• Unit must have:
• At least 1 full year of operations.
• Positive cash accrual in preceding year.

Type of Facility
• Fund Based (FB): Term Loan, Overdraft, Working Capital Demand Loan.
• Non-Fund Based (NFB): LC / BG facilities (with margin).
• Both FB & NFB can be sanctioned simultaneously.
• NFB alone not permitted under scheme.

Loan Amount & Tenure

• Term Loan:
• Max repayment = 15 years (180 months).
• Moratorium = up to 12 months.
• Repayment = Monthly / Quarterly instalments.
• Overdraft:
• Regular or Drop-down OD.
• No overdrawing permitted (incl. TOL/Adhoc).
• Annual review/renewal required.
• All facilities to be repaid 5 years before residual life of property.

Rate of Interest
• Linked to internal rating-based pricing for MSME accounts.
• No concession if account is below entry level rating.
• ROI restored if improved to entry level in subsequent review.

Processing Charges
• New Loans: As per service charge circular.
• Renewal: 0.10% of reduced drawing limit.

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 • NFB Commission: 25% concession allowed.

Loan-to-Value (LTV)
• Based on market value (with 2 empanelled valuers’ reports).
• Lower of the two values considered.
• Mix of residential & commercial → pro-rata value reckoned.
• Term Loan: Max 80% of project cost or prescribed LTV (whichever lower).
• Overdraft: Max = 25% of projected turnover or prescribed LTV (whichever lower).
• Example:
• Sales (FY): ₹500 lakh → 125% = ₹625 lakh → 25% = ₹156.25 lakh.
• RVS: ₹200 lakh → 75% = ₹150 lakh.
• Limit sanctioned = Lower of two = ₹150 lakh.

Assessment Criteria
• OD / WCDL: Based on projected turnover (max 125% of audited sales).
• DSCR: Avg ≥ 1.35, Min ≥ 1.15.
• Cash generation & repayment capacity = primary criteria.
• Past performance to be considered when accepting projections.

Security
• Immovable Property: Equitable / Registered mortgage of land & building (1st charge).
• No pari-passu or 2nd charge allowed.
• Housing loan mortgaged property may be used for residual value (after home loan margin).
• Not acceptable:
• Agricultural land.
• Open land.
• SEZ/Trust property.
• Property under POA.
• Residential Vacant Plot: Allowed if freehold, NA conversion, municipal limits, LTV ≤40%,
loan ≤₹1 Cr.

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Leased Property Norms
• Original lease ≥30 years.
• Residual lease ≥1.5× loan tenor (min 10 yrs).
• Leasehold Govt. properties accepted with approvals/NOC.
• Govt. leasehold → if <10 yrs left → OD to be converted to reducible OD, repayable 3 yrs
before lease expiry.

Guarantee
• Personal Guarantee: Promoters / Partners / Directors (except nominee/professional directors).
• Owner of mortgaged property → mandatory guarantor.

Review / Renewal
• OD Limit Renewal:
• If achieved ≥85% of projections & standard account → renewed at same level.
• If not, limit reduced.
• Commitment Charges: 0.50% extra ROI if utilization <70%.
• Prepayment Penalty: 2% (only in case of take-over by other bank).

Delegation & Takeover

• Standalone BSABL → Delegation irrespective of per group exposure.
• If rating falls below entry level → sanction by higher authority.
• Takeover:
• Up to ₹7.5 Cr → FGMLCC & above.
• Above ₹7.5 Cr → sanction only by higher committee (with Board reporting).
• All takeover cases must be CRILC/CIBIL/CMR satisfactory.

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Deceased Claim Settlement

Nomination – Basics
• What is Nomination?
Appointment of a person by depositor to receive account proceeds after death.
• Is it compulsory? → Not compulsory, but strongly recommended.
• Accounts covered: All deposit accounts (SB, CA, FD, RD).
• When taken? → At account opening or later.
• Claimants: Nominee, survivor(s), or legal heirs.
• Importance: Simplifies settlement; reduces disputes/litigation.

Online Death Claim Settlement Portal

• Available at: BOI Online → Online Services → Death Claim.
• Self-authentication: Claimant verifies with OTP (mobile no.).
• Three tabs available:
1. Document List.
2. Status of Lodged Claim.
3. Lodgment of Claim.
• Reference Number: Generated & sent to claimant via SMS/email for tracking.
• Branch’s Role:
1. Download claimant’s uploaded docs from DMS.
2. Verify and process claim as per norms.

Time Norms
• Accounts with survivor(s)/nominee: Within 15 days of claim receipt.
• Accounts without nomination/survivor: Within 1 month after receiving all requisite docs.

Settlement – Types of Accounts

Single Account
• With Nomination → Paid to nominee.

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 • Without Nomination → Paid to legal heirs (on production of documents).

Term Deposit
• On maturity:
• With Nomination → Paid to nominee.
• Without → Paid to legal heirs.
• Premature closure:
• Permitted in event of depositor’s death → paid to nominee/legal heirs.

Joint Accounts (Without Survivorship Mandate)

• If one holder dies:
• With Nominee → Balance paid to nominee.
• Without Nominee → Paid to legal heirs.
• If all joint holders die: Same principle (nominee → legal heirs).

Joint Accounts (With Mandate: “Either or Survivor”, “Former or Survivor”,

“Anyone or Survivors”, “Latter or Survivor”)
• If one depositor dies → Surviving holder can operate.
• If all die:
• With Nominee → Paid to nominee.
• Without Nominee → Paid to legal heirs.

HUF Accounts
• On death of Karta →
• Affidavit + indemnity (Annexure-7) from surviving members/legal heirs.
• New Karta nominated → allowed to continue.
• Limit: Up to ₹1 lakh balance (simplified).

Documents Required

(A) With Nomination / Survivor Clause

• Claim Form (Annexure-1).

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 • Death Certificate.
• ID proof of nominee/survivor.
• Stamped receipt signed by nominee/survivor.

(B) Without Nomination / Survivor – With Court Order

• Claim Form (Annexure-2).
• Death Certificate.
• Legal Representation (Succession Certificate/Probate/Letter of Administration).
• Identity proof of holder of court order.
• Stamped receipt signed by claimant.

(C) Without Nomination / Survivor – Without Court Order

• Claim Form (Annexure-2).
• Death Certificate.
• Proof of legal heirs.
• Letter of Disclaimer (Annexure-3).
• Affidavit (Annexure-4) → confirming heirs.
• Letter of Indemnity (Annexure-5) signed by heirs + 2 sureties.
• Opinion report of sureties (Annexure-9).

Indemnity & Surety Requirements

• Up to ₹5,000: Simple declaration from known person + IL.
• ₹5,000–25,000: Stamped indemnity + 1 surety.
• ₹25,000–5 lakh: Indemnity + surety (twice amount).
• ₹5 lakh–40 lakh: Indemnity + surety (thrice amount).
• > ₹40 lakh: Legal representation (Succession Certificate/Probate).

Delegation of Settlement Powers (for Legal Heirs)

• Scale I → ₹2 lakh.
• Scale II → ₹4 lakh.
• Scale III → ₹10 lakh.

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 • Scale IV → ₹20 lakh.
• SZLCC → ₹30 lakh.
• ZLCC → ₹40 lakh.
• ₹40 lakh → Only via court order (no delegation).

Missing Person Cases

• Indian Evidence Act Sec. 107/108: Presumption of death after 7 years missing.
• Documents Required:
• FIR copy.
• Police “non-traceable” certificate.
• Declaration that missing for 7 yrs.
• Court order presuming death OR Death certificate after 7 yrs.
• Settlement:
• Up to ₹1 lakh → FIR + police report + indemnity + surety.
• ₹1 lakh–₹40 lakh → Court order mandatory.

Lockers & Safe Custody

• Nominee/survivor given access as trustee of legal heirs.
• Branch must check court orders before giving access.
• Bank’s liability:
• Acts of God (natural calamities): No liability.
• Theft/fire/robbery/fraud by staff: Bank liable = 100× annual rent of locker.

“Success is not final, failure is not fatal: it is the courage to continue that counts.”
Winston Churchill

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