BANKING LAW AND PRACTICE

BANKING LAW AND PRACTICE
GENERAL CONTENTS OF VOLUME 1, 2 & 3

Foreword

Preface to the Second Edition

Preface to the First Edition

Consolidated Detailed Contents of Volume 1, 2 & 3

List of Abbreviations commonly used in Banking, Para-banking and Financial Sector

Abbreviations of Journals

Table of Cases

PART I

Banking Law and Practice

Volume 1

1. Development of Banking

2. Constitution and Regulation of Banks

3. Public Sector Banks

4. Regulation of the Indian Banking Sector

5. Reserve Bank of India

6. Legal Aspects of Banking Operations

7. Banker and Customer

8. Negotiable Instruments

9. Cheques

10. Paying Banker, its Duties and Rights

11. Collecting Banker, its Duties and Protection

12. Dishonour of Cheques

13. Magnetic Ink Character Recognition—MICR

14. Credit Appraisal

15. Lending by Banks

16. Types of Securities

17. Laws Relating to Securities and Modes of Charging

18. Post Sanction Supervision, Control and Monitoring of Credit

19. Priority Sector Advances

20. Letters of Credit

21. Indemnities and Bank Guarantees

22. Export Financing and Guarantee Cover provided by ECGC

23. Foreign Exchange Management Act, Export/Import Business and Obligations of Banks

Volume 2

24. Documentation

25. Asset Liability Management System in Banks

26. Risk Management System in Banks

27. Prudential Norms on Capital Adequacy

28. Non-Performing Assets, Prudential Norms on Income Recognition, Asset Classification and Provisioning

29. Recovery of Bank Dues through Debt Recovery Tribunals

30. Enforcement of Securities

31. Securitisation of Financial Assets in India

32. Miscellaneous Services provided by Banks

33. Consumer Protection and Banks

34. Banking Ombudsman

35. Balance Sheet and Profit and Loss Accounts of Banks

36. List of Returns/Statements furnished to RBI by Banks

37. Audit and Inspection in Banks

38. Frauds and Corruption in Banks

39. Vigilance in Banks

40. Universal Banking

41. Internet Banking

42. Sick Industries and their rehabilitation

43. Customer Services in Banks

44. Report of Expert Committee on Legal Aspects of Bank Frauds

(MITRA COMMITTEE)

45. Regulation of Credit Information Companies

46. Vyas Committee on Rural Credit and Related Issues

47. Use of Hindi in Banking Sector

48. Derivatives

PART II

Act, Rules, Regulations, Scheme and Guidelines

Division 1 : Law Relating to Banks and Bankers

Appendices 1 to 15

Volume 3

Division 1 : Law Relating to Banks and Bankers (Contd.)

Appendices 16 to 37

Division 2 : Law Relating to Debt Recovery and Securitisation of Financial Assets Laws

Appendices 38 to 61

Division 3 : Law Relating to Foreign Exchange Management by Banks and Financial Institutions

Appendices 62 to 84

Division 4 : Miscellaneous Laws Relating to Banks and Financial Institutions

Appendices 85 to 128

Consolidated Detailed Contents of
Volume 1, 2 & 3

PART i

Volume 1

CHAPTER 1

Development of Banking

1. Introduction

2. Bank of England.

(i) Peels Act, 1844

(ii) Regulation of issue of bank note in England.

(iii) Nationalisation of Bank of England

3. Banking in India

(i) Buddhist Period

(ii) Muslim Period

(iii) Mughal Period.

(iv) Advent of East India Company

(v) Establishment of Joint Stock Banks

(vi) Presidency Banks

(vii) Establishment of Imperial Bank of India

(viii) Establishment of Reserve Bank of India

(ix) Establishment of State Bank of India

(x) Other Joint Stock Banks

4. Nationalisation of banks

5. Old Private Sector Banks

6. New Private Sector Banks

7. Foreign Banks

· List of Foreign Banks operating in India—Country-wise

¨ Protected Disclosures Scheme for Private Sector and Foreign Banks

(a) Introduction

(b) Scope and Coverage

(c) Procedure for lodging the complaint under the Scheme

(d) Framing of protected disclosure policy by banks

8. Overseas branches of Indian banks

· Overseas Operations of Indian Banks

9. Offshore Banking Units (OBUs)

10. Co-operative Banks in India.

(i) Primary Urban Co-operative Banks.

(ii) Central Co-operative Banks at district level.

(iii) State Co-operative Banks at State level.

11. Regional Rural Banks.

(i) Amalgamation of RRBs.

(ii) Financial performance of RRBs

(iii) Entry of RRBs into insurance agency business

Opening of Currency Chests by RRBs

12. Land Development Banks

13. Local Area Banks.

14. Financial Institutions and Development Banks.

(i) Industrial Finance Corporation of India

(ii) Industrial Credit and Investment Corporation of India Ltd.

(iii) Merger of ICICI Ltd. with ICICI Bank

(iv) Industrial Development Bank of India

¨ The Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003

· Commencement of the Act

· Transfer of Undertaking

(v) Small Industries Development Bank of India

(vi) State Finance Corporations

(vii) Industrial Re-construction Bank of India Limited.

(viii) Export Import Bank of India

(ix) Discount and Finance House of India Ltd

(x) Securities and Trading Corporation of India Ltd.

(xi) Stock Holding Corporation of India Ltd.

(xii) National Housing Bank

APPENDICES

· Financial Performance of Scheduled Commercial Banks

· Financial Performance of Public Sector Banks

· Financial Performance of Old Private Sector Banks

· Financial Performance of New Private Sector Banks

· Financial Performance of Foreign Banks in India

· Financial Performance of Nationalised Banks

· Financial Performance of State Bank Group

· Select Financial Parameters of Scheduled Commercial Banks

· Financial Assistance Sanctioned and Disbursed by All Financial Institutions

CHAPTER 2

Constitution and Regulation of Banks

1. Introduction

(i) Statutory Corporations

(ii) Companies registered under the Companies Act, 1956.

(iii) Co-operative societies registered under the Co-operative Societies Act.

2. Control and Regulation of banks

3. Licensing of Banking Companies

4. Conditions to be satisfied before granting licence to the banking company

5. Branch Licensing

6. Branch Authorisation Policy

7. Opening of branches

(a) General Branches

(i) At Rural Centres

(ii) At Hilly and Tribal Areas

(iii) At Semi-urban/Urban and Metropolitan Centres

(b) Specialised branches

(c) Housing Finance Branches

(d) Industrial/Project Area Branches

(e) Opening of Satellite Offices

( f ) Service Branches

(g) Regional/Administrative/ Zonal/Controlling Offices

8. Shifting of general and specialised branches

(a) At Rural Centres

(i) Within the Block and Service Area

(ii) Outside the Block/Service Area

(iii) Sole Branch functioning at a Rural Centre

(b) At Semi-urban Centres

(c) Urban/Metropolitan Centres

9. Closure of branches

(i) Rural Centres

(ii) Semi-Urban Centres

(iii) Urban and Metropolitan Centres

10. Splitting or part shifting of branches within the same centre

11. Spinning-off of business

12. Swapping of bank branches

13. Conversion of branches

(i) Conversion of General/ Specialised branches.

(ii) Conversion of Full-fledged Rural Branches into Satellite Offices

14. Mobile Offices

15. Opening of extension counters

16. Upgradation of extension coun-ters into full-fledged branches

17. Automated Teller Machines (ATMs)

¨ ATMs of Scheduled Commercial Banks

18. Validity of authorisations and licences

19. Opening of Offices in the National Capital Territory (NCT) of Delhi

20. Opening of Branches in Haryana

21. Classification/Re-Classification of Centres

22. Submission of returns on Branch Banking

23. Foreign Banks

¨ Foreign banks entry into India

24. Credit Card Centres

25. Management of Banks

(i) Board of Directors of banks

(ii) Disqualification of directors

(iii) Maximum period for which a director can hold office

(iv) Reconstitution of the Board of a banking company

(v) Banking Company should have a whole-time Chairman

(vi) Qualification of the Chairman of banking company

(vii) Removal of Chairman or Managing Director of banking company

(viii) Removal under Section 10-B (6), Banking Regulation Act

(ix) Appeal against the Reserve Bank’s order of removal to Central Government

(x) Removal under Section 36-AA, Banking Regulation Act

(xi) Appeal against order of removal of managerial personnel to Central Government

(xii) Power of banking company to make suitable arrangement for temporary vacancy of Chairman.

(xiii) Power of Reserve Bank to appoint Chairman of a Banking Company

(xiv) Appointment or re-appointment of a Chairman, a managing director etc. or amendment in terms of their appointment requires previous approval of Reserve Bank of India

(xv) Chairman and certain directors not required to hold qualification shares

(xvi) Power of Reserve Bank to appoint Additional Directors of banking company

(xvii) Restrictions on certain forms of employment

26. Regulation of paid up capital, subscribed capital and authorised capital of banking companies

(i) Minimum paid up capital and reserves

(ii) Minimum paid up capital of Foreign banks

(iii) Minimum paid up capital of Indian banking companies

(iv) Paid up, subscribed and authorised capital of the banking company

(v) Restriction on voting rights of shareholders of banking company

(vi) Restriction on commission, brokerage, discount on sale of shares

(vii) Prohibition on creating charge on unpaid capital

(viii) Prohibition of floating charge on assets

(ix) Restriction on payment of dividend by banking company

27. Subsidiaries of banking companies

28. Restriction on banking company to hold shares in any company

29. Powers of Reserve Bank to issue directions to banks on various issues

(i) To give directions to banks in public interest or in the interest of banking policy etc.

(ii) To control advances by banking companies and to give directions relating thereto

(iii) To caution or give advice to banking companies

30. Maintenance of reserve fund by banking companies.

(i) Reserve Fund

(ii) Exemption of creating Reserve Fund

(iii) Provisions relating to creation of reserve fund do not apply to foreign
companies

31. Maintenance of cash reserve by banking companies

(i) By the non-scheduled bank

(ii) By the scheduled banks

(iii) Cash reserves of scheduled banks

(iv) Liabilities of scheduled bank which is not a State Co-operative Bank

(v) Liabilities of scheduled bank which is a State Co-operative Bank

(vi) Additional Cash Reserve Ratio

(vii) Maximum amount of balance on account of CRR to be maintained by the banks

32. Return of CRR to be submitted by banks to Reserve Bank of India

33. Demand and Time Liabilities (DTL)

(i) Demand Liabilities

(ii) Other Liabilities.

(iii) Time Liabilities

34. Other Demand and Time Liabilities

35. Liabilities not to be included for the computation of Demand and Time Liabilities

36. Liabilities which are not included for Net Demand and Time Liabilities

37. Power of RBI to allow the bank to furnish provisional return or monthly return 1.99

38. Penalty for default in maintenance of CRR or submit return

(i) Penalty for failure to maintain required CRR

(ii) Penalty for filing return relating to CRR

(iii) Payment of penalty by the bank for failure to maintain required CRR or submit fortnight return

(iv) Power of Reserve Bank to waive the penal interest or penalty

39. Maintenance of liquid assets

(i) Maintenance of Additional Liquid Assets

(ii) Demand and Time Liabilities of the bank

(iii) Other demand and Time Liabilities

(iv) Liabilities which are not included for DTL

(v) List of approved trustee securities for the purpose of SLR

(vi) List of unapproved securities for the purpose of SLR

(vii) Method of valuation of approved securities for the purpose of SLR

(viii) Furnishing of return showing maintenance of SLR.

(ix) Penalty for not maintaining prescribed SLR

(x) Payment of penalty by banking company

(xi) Power of RBI to waive the penalty or penal interest payable by the defaulting bank

40. Maintenance of assets by Banking Companies in India

(i) Furnishing of return of assets of banking company

(ii) Furnishing of return of unclaimed deposits

CHAPTER 3

Public Sector Banks

1. Introduction

2. State Bank of India

(i) Offices of State Bank

(ii) Management of the State Bank of India

(iii) Composition of the Central Board

(iv) Term of office of Chairman, Managing Director etc.

(v) Term of office of directors

(vi) Local Board of State Bank

(vii) Establishment of new local head office

(viii) Nomination to the post of President and Vice-President of Local Board

(ix) Term of office of members of Local Board

(x) Powers of the Local Board

(xi) Local Committees

(xii) Disqualifications for director-ship of Central Board or membership of Local Board or Committees

(xiii) Restrictions on directorship of Central Board etc.

o Vacation of Office of directors etc.

(xiv) Removal from the office of Directors etc.

(xv) Casual vacancies in the Central Board, Local Board or Committee

(xvi) Remuneration of directors

(xvii) Powers and Remuneration of Chairman, Vice-Chairman, Managing Director

(xviii) Meetings of the Central Board of State Bank

(xix) Interested director to disclose his interest in the meeting

(xx) Meeting of the Board may be presided by director, in the absence of Chairman or Vice Chairman

(xxi) Meeting of Local Boards

(xxii) Interested member to disclose his interest in the meeting

(xxiii) Business which may be transacted by State Bank of India

(a) To act as agent of the Reserve Bank

(b) To do banking business

(c) May acquire the business of other banks

(xxiv) Employees of the acquired banking institution

(xxv) Central Government may appoint a person to take over the business of banking institution

(xxvi) Central Government to order dissolution of banking institution

(xxvii) Integration and Development Fund

o Purpose for which the Fund will be used

(xxviii) Reserve Fund

(xxix) Accounts and audit of State Bank of India

3. Subsidiary Banks of State Bank

(i) Shareholding of the subsidiary banks

(ii) Restrictions on share-holdings of subsidiary bank of State Bank

(iii) Management of subsidiary banks

(iv) Composition of the Board of Directors of subsidiary bank

(v) Term of Office of directors

(vi) Disqualification for directorship

(vii) Restrictions on directorship of Subsidiary Bank

(viii) Vacation of Office of directors etc.

(ix) Casual vacancies among directors

(x) Removal from the office of Directors etc.

(xi) Managing Director

(xii) Powers, functions and duties of Managing Director of subsidiary bank

(xiii) Removal of Managing Director

(xiv) Meetings of the Board of Directors

(xv) Interested Director to disclose his interest in the meeting

(xvi) Executive Committee and other committees

(xvii) Business which can be transacted by the subsidiary banks

(a) To act as agent of the State Bank of India

(b) To act as agent of the Reserve Bank

(c) To do banking business

(d) To do other forms of business as authorised by the Central Government

(e) May acquire the business of other banks

(xviii) Employees of the acquired banking institution

(xix) Central Government may appoint a person to take over the business of banking institution

(xx) Central Government to order dissolution of banking institution

(xxi) Accounts and audit of subsidiary bank

4. Nationalised Banks

(i) Establishment of nationalised banks

(ii) Issue of capital of nationalised banks to public

(iii) Business to be transacted by the nationalised bank

(iv) Scheme to be made by the Central Government

(v) Management of the nationalised banks

(vi) Power of Reserve Bank to appoint additional director

(vii) Disqualification of directors

(viii) Removal of elected director by Reserve Bank

(ix) Supersession of Board in certain cases

(x) Vacation of office of directors

(xi) Chairman of nationalised bank

(xii) Managing Director of nationalised bank

(xiii) Same person may hold office as Chairman and Managing Director

(xiv) Term of office and remuneration of whole time director including Managing Director

(xv) Termination of term of office of whole time director including Managing Director

(xvi) Vacation of office of whole-time director including Managing Director

(xvii) Removal of whole-time director including Managing Director

(xviii) Term of office of other directors

(xix) Meetings of the Board of directors of nationalised bank

(xx) Interested director to disclose interest before meeting

(xxi) Management Committee of the Board

(xxii) Powers of Management Committee

(xxiii) Meetings of Management Committee

(xxiv) Passing of resolution by Management Committee

(xxv) Advisory Committees

(xxvi) Regional Consultative Committee for Nationalised Banks

(a) Meetings of Regional Consultative Committee

(b) Functions of Regional Consultative Committee

(xxvii) Accounts and audit of nationalised banks

(xxviii) Application of certain provisions of Banking Regulation Act, 1949 to the State Bank of India and other notified banks

CHAPTER 4

Regulation of the Indian Banking Sector

1. Introduction.

2. Applicability of the Banking Regulation Act, 1949 to nationalized banks.

3. Applicability of the Banking Regulation Act to Public Financial Institutions

4. Application of other laws not barred.

5. Act to apply to co-operative societies in certain cases

6. Power to suspend operation of Act

7. Interpretation.

8. Act to override memorandum, articles etc.

9. Forms of business in which banking companies may engage

10. Use of words "bank", "banker", "banking", or "banking company"

11. Prohibition of Trading

12. Disposal of non-banking assets

13. Prohibition of employment of managing agents and restrictions on certain forms of employment.

14. Board of Directors to include persons with professional or other
experience

15. Banking company to be managed by whole-time Chairman.

16. Power of Reserve Bank to appoint Chairman of the Board of Directors appointed on a whole-time basis or a Managing Director of a banking company

17. Chairman and certain directors not to be required to hold qualification shares

18. Provisions of Sections 10-A and 10-B to override all other laws, contracts etc.

19. Requirements as to minimum paid-up capital and reserves

20. Regulation of paid-up capital, subscribed capital and authorized capital and voting rights of shareholders

21. Election of new directors

22. Restriction on commission, brokerage, discount etc.

23. Prohibition of charge on unpaid capital

24. Prohibition of floating charge on assets

25. Restriction as to payment of dividend

26. Prohibition of common directors

27. Reserve fund.

28. Cash reserve.

29. Restriction on nature of subsidiary companies.

30. Restrictions on loans and advances.

31. Restriction on power to remit debts.

32. Power of Reserve Bank to control advances by banking companies

33. Rates of interest charged by banking companies not to be subject to scrutiny by Courts

34. Licensing of banking companies

35. Restrictions on opening of new and transfer of existing places of business

36. Maintenance of a percentage of assets

37. Assets in India

38. Return of unclaimed deposits

39. Monthly returns and power to call for other returns and information

40. Power to publish information

41. Accounts and balance-sheet

42. Audit

43. Submission of returns

44. Copies of balance-sheets and accounts to be sent to Registrar

45. Display of audited balance-sheet by companies incorporated outside India

46. Accounting provisions of this Act not retrospective

47. Production of documents of confidential nature

48. Inspection

49. Power of the Reserve Bank to give directions

50. Amendments of provisions relating to appointment of Managing Directors etc. to be subject to previous approval of the Reserve Bank

51. Further powers and functions of Reserve Bank

52. Certain provisions of the Act not to apply to certain banking companies

53. Power of Reserve Bank to remove managerial and other persons from office

54. Power of Reserve Bank to appoint additional directors

55. Part II-A to override other laws

56. Punishment for certain activities in relation to banking companies

57. Power of Central Government to acquire undertakings of banking companies in certain cases.

58. Power of the Central Government to make scheme

59. Compensation to be given to share-holders of the acquired bank

60. Constitution of the Tribunal

61. Tribunal to have powers of a civil Court

62. Procedure of the Tribunal

63. High Court defined

64. Suspension of business

65. Winding up by High Court

66. Court Liquidator

67. Reserve Bank to be Official-Liquidator

68. Application of Companies Act to liquidators

69. Stay of proceedings

70. Preliminary report by Official-Liquidator

71. Notice to preferential claimants and secured and unsecured creditors

72. Power to dispense with meetings of creditors, etc.

73. Booked depositors’ credits to be deemed proved

74. Preferential payments to depositors

75. Powers of High Court in voluntary winding up

76. Procedure for amalgamation of banking companies

77. Restriction on compromise or arrangement between banking company and creditors

78. Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution or amalgamation.

79. Part III-A to override other laws.

80. Power of High Court to decide all claims in respect of banking companies

81. Transfer of pending proceedings

82. Settlement of list of debtors

83. Special provisions to make calls on contributories

84. Documents of banking company to be evidence

85. Public examination of directors and auditors

86. Special provisions for assessing damages against delinquent directors etc.

87. Duty of directors and officers of banking company to assist in the realisation of property.

88. Special provisions for punishing offences in relation to banking companies being wound up

89. Power of High Court to enforce schemes of arrangements etc.

90. Public examination of directors and auditors etc., in respect of a banking company under schemes of arrangements

91. Special provisions for banking companies working under schemes of arrangement at the commencement of the amendment Act

92. Appeals

93. Special period of limitation

94. Reserve Bank to tender advice in winding up proceedings

95. Power to Inspect

96. Power to call for returns and information

97. Chief Presidency Magistrate and District Magistrate to assist official liquidator in taking charge of property of banking company being wound up

98. Enforcement of orders and decisions of High Court

99. Power of High Court to make rules

100. References to directors etc. shall be construed as including references to past directors etc.

101. Part II not to apply to banking companies being wound up

102. Validation of certain proceedings

103. Power of Central Government to make rules for the preservation of records

104. Return of paid instruments to customers

105. Nomination for payment of depositors’ money

106. Notice of claims of other persons regarding deposits not receivable

107. Nomination for return of articles kept in safe custody with banking company

108. Notice of claims of other persons regarding articles not receivable

109. Release of contents of safety lockers

110. Notice of claims of other persons regarding safety lockers not receivable

111. Penalties

112. Chairman, director etc. to be public servants, for the purpose of Chapter IX of the Indian Penal Code

113. Cognizance of offences

114. Power of Reserve Bank to impose penalty

115. Application of fines

116. Special provisions for private banking companies

117. Restriction on acceptance of deposits withdrawable by cheque

118. Change of name by a banking company

119. Alteration of memorandum of a banking company

120. Certain claims for compensation barred

121. Application of certain provision to the State Bank of India and other notified banks

122. Power of Central Government to make rules

123. Power to exempt in certain cases

124. Protection of action taken under Act.

125. Amendment of Act 2 of 1934

126. Power to remove difficulties

127. Act to apply to co-operative societies subject to modifications

CHAPTER 5

Reserve Bank of India

1. Introduction.

2. Organisation of the Reserve Bank of India

3. Nationalisation of Reserve Bank of India

4. Objectives of the Bank

5. Management of the Bank

6. Tenure of Governor, Deputy Governor and Directors

7. Local Boards

8. Disqualifications of directors and members of the Local Boards

9. Removal from and vacation of office

10. Functions of the Reserve Bank

(i) Management of Currency of the country

o Assets of the Issue Department

o Responsibility of the bank to supply different forms of currency

o Providing of clean notes by the banks to the public

o Management and distribution of currency

(ii) Banker to the Central/State Governments :

o Banker to the Central Government

o Banker to the State Governments

o Investment of surplus funds of Central/State Governments

o Management of public debt of Central/State Governments

o Repo and Reverse Repos

o Issue of other instruments

(iii) Credit Control

o Bank Rate Policy

o Open Market Operations

o Variable reserve ratio method

o Cash reserve ratio

· Liabilities of Scheduled bank which is not a State co-operative bank

· Liabilities of Scheduled bank which is a State Co-operative bank

· Interest on eligible cash balances for CRR

· Submission of return by the banks relating to CRR

· Penalty for not maintaining proper CRR by the banks

o Statutory liquidity ratio

· Furnishing of Returns by the banks to Reserve Bank of India

· Penalty on banking company for not maintaining of assets in the pres-cribed form

· Recent Trends in the rate of SLR

o Selective credit controls

o Moral suasion and credit rationing

o Recent methods of credit control

(iv) Regulation and supervision of financial institutions, banks etc.

o All India Financial Institutions

o Monitoring of Financial Institutions

o Banks

· Forms of business permitted for banking companies

· Licensing of banking companies

· Restrictions on opening of new and transfer of existing places of business

· Control over management of banking companies

· Regulation of paid up capital etc. of the banking companies

· Reserve Fund to be kept by the banking company

· Maintenance of Cash Reserve

· Maintenance of Statutory Reserve with the Reserve Bank

· Prudential Limit for Inter Bank Liabilities (IBL)

· Accounts and Balance sheet of banking companies

· Appointment of auditors for the banking companies

· Power of Reserve Bank to give directions to the banking companies

· Punitive measures for violation of provisions of the Banking Regulation Act or directions issued by Reserve Bank of India

o Regulation of Banking Companies by the Reserve Bank of India

· Minimum Capital Requirement

· Licence from the Reserve Bank of India for carrying on the business of banking

· Restrictions on share-holding and voting rights in banking companies

· Exposure norms for the banking companies

· Lending to directors or to any firm or company in which Directors are interested

· Prudential Norms on Capital Adequacy and Income Recognition and provisioning

· Accounting Standards for Investments

· Disclosure standards

· Asset Liability Management System and Risk Management by banks

· Diversification of business by the banks

o Supervision of Banks by the Reserve Bank of India

o Recent Development in Banking Supervision

· Long Form Audit Report

· Prompt Corrective Action

o Regulation and supervision of non-banking financial companies by Reserve Bank

· Regulations governing non-banking financial companies accepting deposits

· Regulatory Norms and Directions for NBFCs

* Important statutory provisions of Chapter III-B of the Reserve Bank of India Act as applicable to NBFC's

* Directions applicable to NBFC's

(1) Deposit acceptance related regulations

(2) Prudential norms applicable to only those NBFC's which are accepting/holding public deposits

(3) Prudential norms applicable to all NBFC's irrespective of whether they accept/hold public deposit or not

o Supervision of non-banking financial companies

o Guidelines on Fair Practices Code for NBFCs

(v) Exchange control and management

o Exchange control

o Authorised dealers and money changers

o Receipts and payment in foreign exchange

o Exports from India

o Imports of goods to India

o Import and export of gold and silver

o Non-resident accounts

o Foreign investments in India

o Indian investments abroad

o Foreign institutional investment

o Foreign currency accounts

· Exchange Earners Foreign Currency Account

· Resident Foreign Currency Account

· Foreign Currency (Domestic) Account

· Foreign Currency Account in India in certain other cases

o Foreign exchange management

o Exchange rate management

· Gold standard System

· Paper Currency System

· Brettonwoods System

(vi) Banker’s bank and lender of the last resort

(vii) Role in payment systems

o Electronic Clearing Services

o Indian Financial Network (INFINET)

o Centralised Funds Management System (CFMS)

o Real Time Gross Settlement System (RTGS)

(viii) Promotional Role

o Industrial Credit

o Export Credit

o Rural Credit

(ix) Development of Money market

(x) Development of Government securities market

o New Investment

11. Banking Policy—Interference by Courts

12. Right to Information Act, 2005 and RBI’s Obligation

(i) Seeking Information from RBI

(ii) Other Sources of Information

(iii) Making an Application under the Right to Information Act, 2005

(iv) Procedure for Application

(v) Address for sending Application

(vi) Time to be taken to provide information

(vii) Fees to get the information

(viii) Fees when payable

(ix) Information after payment of requisite fee

(x) Exemption of certain information from disclosure

(xi) Right to appeal

(xii) Option on non-satisfaction with the decision of the appellate authority

CHAPTER 6

Legal Aspects of Banking Operations

1. Introduction

2. How contracts are made or revoked

3. Offer, acceptance and intimation of acceptance completes the contract

4. Essentials of Contract

(i) Agreement

(ii) Proposal

o Rules relating to offer

· An offer should give rise to legal relationship

· The terms of offer should be definite or capable of being made definite

· An offer must be distin-guished from an invita-tion to offer

· Offer must be communicated

· Offer must be communicated with a view to obtaining his assent

· Offer properly communicated will continue as such until it lapsed

· Offer lapses under the following circumstances

· Offer to the whole World

(iii) Acceptance

(a) Unaccepted offer creates no right or obligation

(b) Manner of acceptance

o Rules relating to acceptance

· Acceptance must be communicated

· Communication of acceptance

· Communication may be waived by the offeror

· Acceptance must be absolute and unqualified

· Acceptance can be made by a person to whom it is made

· Omission to communicate—Acceptance by conduct

· Acceptance by performing conditions, or receiving consideration.

· Performance by act—Inference of acceptance

· Dispensing with notice of acceptance

· Deed executed by one party only

· Acceptance by the plaintiff

5. Proposal and acceptance of purchase of shares

6. Acceptance by Court

7. Plea of ignorance of conditions

8. Communication when complete

9. Formal instrument—Formality of contract, how to enter into a contract

10. Contract by correspondence—Antecedent and subsequent negotiations—Rules for construction

11. Communication of proposal and acceptance

12. Counter proposal with qualification

13. Acceptance after refusal

14. When contract comes into existence

15. Place and time of contract by correspondence

16. Rule of promissory estoppel—When applies to concluded contract

17. Validity of consents

18. Concluded contract—Proposal into a promise

19. Agreement should be made by the free consent of the parties

(i) Coercion

(ii) Undue Influence

(iii) Fraud

(iv) Misrepresentation

20. Mistake

(i) Mistake where there is absence of consent

(a) Mistake as to identity of person

(b) Mistake as to identity of subject matter

(c) Mistake as to the nature of transaction

(ii) Mistake by misconception of some matter

(a) Mistake should be relat-ing to facts essential to the agreement

(b) Mistake should be of fact, not of law

(c) Mistake should be by both the parties

21. Agreement should be made by the parties competent to contract

(i) Person who is not minor

(ii) Person who is of sound mind

(iii) Persons not competent to contract disqualified from contracting by any law

22. Agreement should be for a lawful consideration

o Lawful consideration

· Forbidden by law

· Agreements which would defeat the provisions of any law

· Agreement fraudulent

· Agreement involving injury to the person or property of another

· Agreement immoral or opposed to public policy

23. Object of the agreement should be lawful

24. Void Agreement

(i) Unlawful agreement

(ii) Agreement without consideration

(iii) Agreement in restraint of marriage

(iv) Agreement in restraint of trade

(v) Agreement in restraint of legal proceedings

(a) Contracts to refer to arbitration dispute that may arise

(b) Contracts to refer any question which has already arisen

(vi) Agreements void for uncertainty

(vii) Agreement by way of wager void

(viii) Agreements to do impossible acts void

25. Revocation

26. Tenders—An offer to supply goods

27. Continuing offer

28. Withdrawal by telegram or oral withdrawal

29. Special oath

30. Referee’s statements general

31. Offer open for a definite period

32. Jurisdiction

33. Finality of contract and their discharge

34. Revocation by notice—Communication of revocation

35. Revocation by act

36. Lapse of time

37. Revocation or modification of an offer

38. Agent’s delay in making the offer

39. Fulfilment of condition precedent

40. Performance of contract

(i) By whom contracts should be performed

(a) The contract should be performed by the promisor himself or his legal repre-sentatives

(b) In case of joint liability, the contract should be per-formed jointly

(c) In case of joint promisors, any one of joint promisors may be compelled to perform

(ii) Time and place for performance of contract

(a) When no time specified and no application is to be made

(b) When time is specified, but no application to be made

(c) When performance to be made on certain day at proper time and place

(d) Where no place fixed for performance and no application to be made

(e) Performance to be in a manner or at time prescribed by the promisee

41. Performance of reciprocal promises

(i) Promisor not bound to perform unless reciprocal promisee ready and willing to perform

(ii) Order of performance of reciprocal promises

(iii) Effect of default as to that promise which should be first performed

42. Discharge of contract

(i) By performance of the contract

(ii) By death of the parties, if contract is of personal nature

(iii) By impossibility of performance of contract

(iv) By breach of contract

(v) Anticipatory Breach

(vi) During the performance

(vii) By agreement

(a) Novation

(b) Dispensing or remission of performance

(c) Accord and satisfaction

(d) By Rescission of voidable contract

(viii) By operation of law

(a) Merger

(b) By judgment of Court

(c) Bankruptcy

(d) Object of agreement rendered illegal

43. Types of contract

(i) Executed contract

(ii) Executory contract

(iii) Contingent contract

44. Enforcement of contract contingent on an event happening

45. Enforcement of contracts contingent on an event not happening

46. When event on which contract is contingent to be deemed impossible, if it is the future conduct of a living person

47. Contracts become void which are contingent upon happening of specified event within fixed time

48. Enforcement of contracts which are contingent on specified event not happening within fixed time

49. Agreements contingent on impossible events void

50. Implied contracts—Contracts by mere silence

51. Implied and express promise

52. Arbitration clause in one contract cannot form part of a new contract

53. Quantum meruit

54. Acknowledgement

55. Evidence of previous dealings

56. Contract and quasi contracts

57. Implied contracts and quasi contracts

58. Quasi contracts

(i) Necessaries supplied to a person incapable of contracting

(ii) Reimbursement of persons paying money due by another in payment of which he is interested

(iii) Obligation of persons enjoying benefit of non-gratuitous act

(iv) Responsibility of finder of goods

(v) Liability of person to whom money is paid, or thing delivered by mistake or under coercion

59. ‘Express Contract’—Meaning of

60. Special Contracts

(i) Contract of Indemnity

o Law relating to indemnity

(ii) Contract of Guarantee

o Distinction between a Contract of Indemnity and Contract of Guarantee

o Kinds of guarantees

o Law relating to guarantee

(iii) Contract of bailment

o Gratuitous bailment

o Bailment for reward

o Law relating to bailment

o Pledge

o Law relating to pledge

(iv) Contract of agency

o Creation of Agency.

· By actual authority

· By ratification

· Ostensible authority

· Agents of necessity or by implication of law in case of necessity

o Agent’s duty to principal

o Agent's rights

o Law relating to agency

(v) Proof of agency

61. Withdrawal of offer and enforcement of bid security

62. Hire purchase agreements

CHAPTER 7

Banker and Customer

1. Banker

2. Who can undertake banking business in India ?

¨ "Carrying on business"—Meaning of

3. Customer

4. Relationship between Banker and Customer—Element of confidentiality

5. Know your Customer—Norms and Cash transactions

¨ "Know Your Customer" (KYC) guidelines for new accounts

Ÿ KYC Policy

Ÿ Customer identification

Ÿ "Know Your Customer" procedures for existing customers

Ÿ Ceiling and monitoring of cash transactions

Ÿ Risk management and monitoring procedures

Ÿ Internal Control Systems

Ÿ Terrorism Finance

Ÿ Internal Audit/Inspection

Ÿ Identification and Reporting of Suspicious Transactions

Ÿ Adherence to Foreign Contribution Regulation Act (FCRA), 1976

Ÿ Record Keeping

Ÿ Training of staff and management

6. The Banker-Customer Relationship

(i) Debtor-Creditor relationship

(ii) The relationship of Trustee and Cestui Que Trust

(iii) The relationship of Principal and Agent

(iv) The relationship of bailor and bailee

(v) Bailor or Bailee—Relation between Bank and godown keeper

(vi) Banker's general lien to retain the goods

(a) Money/securities deposited by customer for specific purposes

(b) Articles kept for safe custody

(c) Securities left inadvertently with the banker

(d) Debts not matured

(e) If the securities are not owned by the customer

( f ) If the bank can exercise its right of set off

(g) Lessor and Lessee

(h) Banker creditor and customer debtor

7. Distinction between lien and set-off

8. Various Types of Accounts

(i) Demand Deposits

(a) Current Deposit

¨ Bank Pass Book

¨ Bank's Right to recover amount for credits made in error

(b) Saving Deposit

¨ Joint account operated by either and survivor

(ii) Time Deposits

¨ Fixed Deposit Receipts Assignable

Ÿ Fixed deposits held benami

Ÿ Attachment of Fixed Deposit Receipt

Ÿ Premature withdrawal of Fixed Deposit

Ÿ Overdue Deposits

Ÿ Loss of Fixed Deposit Receipt

Ÿ Fixed Deposit in joint names

Ÿ Joint Account payable to either or survivor

Ÿ Joint Account payable to former or survivor

Ÿ Nomination by the joint holders

Ÿ Nomination in favour of two persons

9. Opening of Account

(i) Competency of contracting

(ii) Introduction and Identification

(a) To get statutory protection under Section 131, Negotiable Instruments Act, 1881

(b) To protect against fraud

(c) To recover the inadvertent overdraft to customer

(d) To provide opinion about the customer to other bankers

(iii) Procedure for opening accounts

(iv) Quoting of Permanent Account Number or General Index Register Number issued under Income-tax Act

10. Types of Customers

(i) Individuals

(a) Minors

¨ Minor as agent

¨ Minor as witness

(b) Lunatics

(c) Intoxicated persons

(d) Illiterate person

(e) Blind person

( f ) Agents

¨ Revocation of agency

(ii) Joint Hindu Families

¨ Doctrine of pious obligation

(iii) Partnership Firm

¨ Authority of partners

¨ Dormant Partner

¨ Minor admitted to the benefits of partnership

¨ Opening of account of partnership firm

¨ Dissolution of a firm

¨ Procedure on dissolution of partnership

¨ Change in the constitution of the firm

¨ Liability of the partners for the debts of partnership firm

(iv) Company

¨ Classification of companies

Ÿ Public and Private Companies

Ÿ Limited and Unlimited Companies

Ÿ Government Companies

Ÿ Foreign Companies

¨ Opening of Account of Companies

Ÿ Certified copy of Memorandum and Articles of Association

Ÿ Copy of Certificate of Incorporation

Ÿ Copy of Certificate of Commencement of Business

Ÿ List of Directors of the Company

Ÿ Certificate of Resolution passed by Board of Director authorizing opening of account etc.

Ÿ Account opening form duly filled in by authorized signatories

Ÿ Specimen signatures of Directors and authorised signatories

¨ Operation of company account

¨ Position of Directors

¨ Borrowing by the company

(v) Trust

¨ Opening of Account of trust

Ÿ Certified copy of the trust deed

Ÿ Certified copy of the resolution

Ÿ Reference from the trustees

Ÿ Mandate governing transaction on the account

¨ Delegation of powers by trustees

¨ Power of Trustees to borrow

¨ Misuse of the Trust property

¨ Vacation of post of Trustee

¨ Appointment of a new Trustee

(vi) Clubs and Associations

(vii) Co-operative Societies

(viii) Executors and Administrators

¨ Opening of account by executors or administrator

(ix) Local Bodies

¨ Opening of account by local bodies

(x) Company Liquidators

(xi) Statutory corporations

(xii) Government Departments

(a) Receipts from the public

(b) Payments to the public or officers of the department

(xiii) Societies registered under Societies Registration Act, 1860

11. Cessation of Banker Customer Relationship

(i) On the request of the customer

(ii) By the banker

(iii) Death of customer

(iv) Insolvency of customer

(v) Insanity of customer

(vi) Winding up of the company

12. Freezing of bank account

13. Levy of interest-tax

CHAPTER 8

Negotiable Instruments

1. Definition

2. Characteristics of Negotiable Instruments

(i) Transferability

(ii) Property in negotiable instrument passes by delivery, or by endorsement and delivery of instrument

(iii) Transferee of negotiable instrument gets title free from defects of the transferor’s title

(iv) Any party liable to the instrument can sue or be sued in his own name

(v) Passing of consideration is presumed

3. Who can be a Drawer of a Cheque

4. Liability of Legal Representative signing an instrument

5. Liability of the Drawer of a bill or cheque

6. Liability of the Drawee of a Cheque

7. Negotiable Instruments expressly payable to a particular person and not containing words prohibiting transfer

8. Bond and Negotiable Instrument

9. Negotiable Instrument expressed to be payable to bearer or on which the only or last indorsement is an indorsement in blank, will be payable to bearer

10. Negotiable Instrument expressed to the order of specified person and not to him or his order is payable to him or his order

11. Negotiable Instruments payable to two or more payees jointly

12. Negotiable by Estoppel

13. Promissory Note

14. Essentials of a Promissory Note

(i) The instrument must be in writing

(ii) The instrument should contain a promise to pay and the promise must be express

(iii) The undertaking to pay must be unconditional

(iv) The promissory note should be signed by the maker

(v) The maker or the person signing must be a certain person

(vi) The promise should be to pay a certain sum

(vii) The amount payable should be in money and money only

(viii) The payee should be certain

(ix) A bank note or a currency note is not a promissory note

(x) Payment endorsement on a promissory note

(xi) Holder in due course

15. Form of Promissory Note

16. Bill of Exchange

17. Essentials of a Bill of Exchange

(i) Bill must be in writing

(ii) Bill must contain an order to pay

(iii) Order to pay must be unconditional

(iv) Bill must be signed by the drawer

(v) Drawee must be certain

(vi) Sum payable must be certain

(vii) Bill must contain an order to pay money and money only

(viii) Payee must be certain person

18. Bills of Exchange v. Promisory Notes

19. Forms of bill of Exchange

20. Inland Instrument and Foreign Instrument

21. Drawer and drawee

22. Other parties to Bill of Exchange

(i) Acceptor

(ii) Acceptor and acceptance

(iii) Indorser

23. Holder in due course

24. What is Delivery

25. Negotiable instrument made without consideration

26. Acceptance of Bills

27. Presentment for acceptance

28. Rules as to presentment

29. Drawee’s time for deliberation

30. Acceptance of a bill

31. Types of Acceptance of bills

(i) General Acceptance

(ii) Qualified Acceptance

32. Effect of qualified acceptance

33. What is retiring a Bill

34. Presentment of promissory note

35. Presentment for payment

36. Time of payment

37. Rules relating to presentment of negotiable instruments for payment

(i) To whom presentment may be made

(ii) Presentment by whom

(iii) The time when presentment of the instrument should be done

(iv) Hours for presentment

(v) Place for presentment

(vi) Instrument payable at specified place

(vii) Presentment where no exclusive place specified

(viii) Presentment when maker etc. has no known place of business or residence

(ix) Presentment of instrument payable on demand within reasonable time

(x) Presentment to agent, representative of deceased or assignee of insolvent

38. When presentment for payment not necessary

39. Payment by Bills, Notes and Cheques

40. Dishonour of Negotiable Instruments :

(i) Dishonour of bill of exchange by non-acceptance

(ii) Dishonour by non-payment

(iii) Notice of Dishonour

(iv) Mode in which notice may be given.

(v) Party receiving notice of dishonour must transmit notice

(vi) When party to whom notice given is dead

(vii) Notice by agent to principal, when instrument is deposited with agent

(viii) When notice of dishonour is not necessary

41. Rules as to Compensation

42. Bills, Pro-Notes, Hundi etc., signed by Directors—Whether Company or Directors personally liable

43. Companies Act, Section 47 and Section 106, Evidence Act

44. Noting and Protest

(i) Noting

(ii) Protest

(iii) Protest for better security

(iv) Contents of protest

(v) Notice of protest

(vi) Protest for non-payment after dishonour by non-acceptance

(vii) Protest of foreign bills

(viii) Acceptance for honour

(ix) How acceptance for honour must be made

(x) Acceptance not specifying for whose honour it is made

(xi) Liability of acceptor for honour

(xii) When acceptor for honour may be charged

(xiii) Payment for honour

(xiv) Right of payer for honour

45. What are the rights and duties of the owner of a lost bill or note

46. Ambiguities in document—"Patent ambiguities" and "latent ambiguities"

47. Patent ambiguity and latent ambiguity

48. Ambiguous and Inchoate Instruments

(i) Ambiguous instruments

(ii) Inchoate instruments

49. Distinction between Ambiguous Instrument and Inchoate Instrument

50. Inaccuracies in documents

51. Rules of International Law

CHAPTER 9

Cheques

1. Origin of the cheque

2. Definition of cheque

3. Bill of Exchange

4. Bill of Exchange v. Cheques

5. Essentials of a cheque

(i) Cheque must be in writing

(ii) Unconditional order

(iii) Drawn on a specified banker

(iv) Payable on demand

(v) Does not require acceptance

(vi) Signature of drawer

(vii) Amount of cheque

(viii) Payee should be certain person

(ix) Drawn on a banker only

6. Liability of the Drawer

7. Cheque forms

8. Date on the cheque

9. Incomplete cheque

10. Fictitious or non-existing payee

11. Payable in cash

12. Cheques payable to officials

13. Marking or certification of cheque

14. Out of date or stale cheque

15. Crossing of cheque

16. Crossing is a direction to the paying bank to pay money to a bank

17. General crossing

18. Account payee

19. Special crossing

20. Not negotiable crossing

21. Who can cross the cheque ?

22. Banker’s duty in paying crossed cheques

23. Opening a crossing

24. Negotiability of a cheque

25. Endorsement

26. Who can endorse or negotiate

27. Whether endorsement on a promissory note embodies all the terms of the contract

28. Restrictive indorsement

29. Conditional indorsement

30. Qualified indorsement

31. Validity and regularity of indorsement

32. What is the liability of Indorsers

33. Forged instruments

34. What is Negotiation back

35. Negotiation v. Assignment

¨ What is assignability

36. Banker justified in dishonouring the cheque or cases in which banker is bound to dishonour the cheque

37. Duty of the Customer towards the Banker

38. Instruments analogous to cheques

(i) Dividend warrant

(ii) Interest warrant

(iii) Banker's draft

(a) Relationship between the banker issuing draft and purchaser of draft

(b) Whether the payment of the demand draft can be stopped ?

(c) Issue of duplicate draft on the loss of original draft

(iv) Travellers cheques

(v) Postal order

CHAPTER 10

Paying Banker, its Duties and Rights

1. Payment of cheques

(i) If the banker has notice about the death or insanity or insolvency of the customer

(ii) If the contractual relationship between the banker and customer determined

(iii) If the customer has not sufficient funds in his account to meet the cheque

(iv) If a third party has laid claim to the balance standing to the customer's credit

(v) If the cheque has been countermanded by the customer

(vi) If the customer holds money in trust and the customer is guilty of breach of trust

(vii) If the banker has notice that the person presenting cheque has no title

(viii) If the bank receives attachment order from the Court

(ix) If the bank has been served notice under Section 226 (3), Income-tax Act, 1961

(x) When the cheque is not presented at the office where the account has been kept

(xi) If the cheque is not presented during business days and hours

(xii) If the cheque is mutilated

(xiii) If the banker has reason to believe that money is being misused or misappropriated by the signatory

(xiv) Whether the cheque properly presented

(a) Payment of crossed cheques

(b) Payment of uncrossed cheque

2. Protection to the paying banker

3. Regular endorsement on the cheque

4. Payment in due course

(i) Payment

(ii) Payment at or after maturity

(iii) Good faith

(iv) Banker should not be negligent in making payment

(v) Payment should be in accordance with apparent tenor of the cheque

(vi) Payment should be made to rightful person

5. Bearer cheque

6. Crossed cheque

7. Crossed cheque marked "Account Payee"

8. Liability of paying banker

(i) Payment made by mistake

(ii) Payment made with forged drawer's signature.

(iii) Payment made by negligence

(iv) Payment of negotiable instruments with material alterations

CHAPTER 11

Collecting Banker, its Duties and Protection

1. Collecting banker

2. Duties of collecting banker

(i) Presentment of cheque within a reasonable time

(ii) Employment of sub-agent

(iii) Giving of prompt notice of dishonour to his customer

(iv) Remittance of proceeds to customer

3. Statutory protection to collecting banker

4. Conditions required to be fulfilled to enable collecting banker to get statutory protection

(i) The banker should act in good faith in receiving payment

(ii) The banker should act without negligence

(a) Cases of negligence

¨ Opening of account

¨ Cheque payable to com-panies deposited by the employees for collection

¨ Cheques payable to officials

¨ Collecting third parties cheques

¨ Negligence in not taking into account the status of customer's account

¨ Negligence in not verifying the endorsements or apparent tenor of the instruments

(b) Contributory negligence

(c) Lulling to Sleep

(iii) The person for whom the banker acts must be his customer

(iv) The banker should act as a mere agent in collecting the cheque

(v) The cheque should be one crossed generally or specially to him

5. Principles governing liabilities of a collecting banker

6. Provisions relating to payment and collection of cheques applicable to drafts

CHAPTER 12

Dishonour of Cheques

1. Introduction

2. Post-dated cheques

3. Blank cheques

4. Holder in due course

5. Reasons for returning the cheque unpaid to be stated

6. Wrongful dishonour of the cheque

7. Damages for wrongful dishonour of cheques

(i) Breach of contract

(ii) Libel

8. Penalties in case of dishonour of certain cheques for insufficiency of funds in the accounts

9. Ingredients of the offence under Section 138

10. Word ‘bank’—Meaning of

11. Vicarious liability in case of dishonour of cheque

12. Cheque drawn on closed/not-existent account

13. Mens rea not necessary for the constitution of the offence under Section 138

14. Burden of proof¾ Meaning of

15. Punishment of imprisonment for dishonur of cheque

16. Constitutional validity of Section 138

17. Instructions of "Payment Stopped" or "Account closed" after issue of cheque

18. Important points regarding commission of offfence under Section 138 by dishonour of cheque

(i) Cheque should have been issued for the discharge of debt or liability

(ii) Holder in due course

(iii) Service of notice necessary

(iv) Giving notice in writing¾ Mode of

(v) Ingredients of notice

(vi) Cause of action—Interpretation of

(vii) Complaint filed prematurely—Cognizance taken by Magistrate

(viii) Cheque may be presented more than once

(ix) Presumption in favour of holder

(x) Facts to be stated in the complaint

(xi) Defence which may not be allowed in any prosecution under Section 138

19. Dishonour of cheque—complaint may be filed by power-of-attorney holder with permission of court

20. "Company" and "other association of individuals"

21. Offences of dishonour of cheques by companies

22. Expression "any person"—Connotation of

23. Complaint¾ Connotation of

24. Applicability of bar under Section 69 of the Partnership Act on criminal proceedings under Section 138, Negotiable Instruments Act.

25. Maintainability of proceedings under Section 138, Negotiable Instruments Act¾ Ban imposed by Sick Industrial Companies (Special Provisions) Act, 1985

26. Liability of Directors where cheque dishonoured prior to order for winding-up but during pendency of petition

27. Limitation for filing complaint

28. Cognizance of offences

29. Complaint by agent—Validity

30. Complaint filed under Section 138, Negotiable Instruments Act—No ground to quash F.I.R. under Section 420, I.P.C.

31. Power of Court to try cases summarily

32. Jurisdiction of Court

33. Single complaint for dishonour of several cheques¾ Maintainability of

34. Mode of service of summons

35. Evidence on affidavit

36. Bank’s slip prima facie evidence of certain facts

37. Jurisdiction of Court to receive additional material in evidence

38. Exemption of accused from personal attendance on hearing dates

39. Dismissal of complaint for absence of complainant

40. Stay of trial pending civil proceedings

41. Power of High Court to quash complaint

42. Offences to be compoundable

43. Agreement during pendency of complaint

44. Imposition of costs

45. Parallel proceedings for dishonour of cheque both under Civil law and Criminal law

46. Death of complainant—Prosecution does not abate

47. Remission of sentence

CHAPTER 13

Magnetic Ink Character Recognition—MICR

1. MICR

(i) Auxilitiary On-Us Symbol

(ii) Route and Transit Symbol

(iii) On-Us Symbol

(iv) Amount Symbol

(v) Magnetic Ink?

(a) Character shape

(b) Magnetic content

2. Purpose of MICR

3. Development of MICR

4. How MICR works

5. MICR Fonts

6. MICR and Government Transactions

7. MICR and Current Account

8. Use of Cheques Books MICR

9. Inter-City Clearing of MICR cheques

10. MICR Technology Introduced

11. Mechanised Cheque Processing Using MICR Technology—Procedural Guidelines by RBI

(i) Introduction

(ii) Standardisation of Cheque Forms

(iii) MICR Code Line Structure

(iv) Issue of MICR Cheque Books

(v) Non-Standard Instruments to be Standardised

(vi) MICR cheque processing equipments

(a) MICR Document Encoder

(b) Reader Sorter

(c) Image Capture

(vii) Endorsements on cheques

(a) Special crossing stamp

(b) Other endorsements

(c) Clearing stamp

(d) Confirmation of endorsement

(viii) Detailed Clearing Procedure to be followed by banks and the MICR Cheque Processing Centres

12. Access Criteria for Clearing Houses at MICR Centres-Procedural Guidelines

ANNEXURE I

Names of Cities and Banks Setting up MICR Centres

ANNEXURE II

Technical Specifications for Printing of Standard Cheque Forms and Forms of other Payment Instruments

Part I—Specifications for cheque paper

A. General

B. Sensitized security cheque paper

C. Supply of paper

Part II—Printing Specifications

ANNEXURE III

List of Security Printers included in the panel to undertake printing of cheques for banks

ANNEXURE IV

Panel of approved Paper Manufacturers

ANNEXURE V

Details of MICR city codes

ANNEXURE VI

List of All India Bank Code Numbers

ANNEXURE VII

Transaction Codes List

ANNEXURE VIII

Address of the MICR Cheque Processing Centres (CPC)

ANNEXURE IX

Detail guidelines regarding MICR Encoders

ANNEXURE X

Special Crossing Stamp

ANNEXURE XI

Format of Local Clearing Stamp Reverse of the cheque or other payment instrument

CHAPTER 14

Credit Appraisal

1. Introduction

2. Borrower

3. Nature of business

4. Security

5. Location of business

6. Liquidity

7. Analysis of Financial Statements

8. Classification of Assets and Liabilities :

(i) Assets

(a) Current Assets

(b) Fixed Assets

(c) Miscellaneous Assets

(d) Intangible Assets

(ii) Liabilities

(a) Permanent or net worth

(b) Long term Liabilities

(c) Current Liabilities

(d) Contingent Liabilities

9. Ratio Analysis

10. Important ratios for bankers

(i) Liquidity Ratios

(a) Current Ratio

(b) Quick or Acid Test Ratio

(c) Working Capital Turnover Ratio

(ii) Leverage or Solvency Ratios

(a) Debt-Equity Ratio

(b) Total Indebtedness Ratio

(c) Fixed Assets Coverage Ratio

(d) Proprietary Ratio

(iii) Profitability Ratios

(a) Gross Profit & Net Profit Ratio

(b) Operating Profit Ratio

(c) Return on Investment Ratio

(d) Return on Proprietor’s funds/Net Worth Ratio

(iv) Activity Ratios

(a) Inventory Turnover Ratio

(b) Debtors Turnover Ratio

(c) Creditor’s Turnover Ratio

(d) Fixed Assets Turnover Ratio

11. Limitations of the Ratio Analysis

(i) Reliability of ratios depends upon the accuracy of accounts

(ii) Ratios can be interpreted accurately, if the effect of change is taken into consi-deration

(iii) Change in conditions

(iv) Ratios should be interpreted after understanding the relationship between two items in a statement of account

(v) Ratios should be looked with different approaches

CHAPTER 15

Lending by Banks

1. Principles of bank lending

(i) Borrower—His character, status and competence

(ii) Purpose of advance

(iii) Amount of the loan

(iv) Duration of the loan

(v) Source of repayment

(vi) Nature of business

(vii) Security

(viii) Profitability of the advance

(ix) National policy

(x) Lease finance

2. Statutory and other restrictions on lending by banks

3. Statutory restrictions

(i) Advances against bank’s own shares

(ii) Advances to bank’s directors

(iii) Restrictions on power to remit debts

(iv) Restrictions on holding shares in companies

(v) Restrictions on credit to companies for buy-back of their securities

4. Regulatory restrictions

(i) Granting loans and advances to relatives of directors

(ii) Lending to directors and their relatives on reciprocal basis

¨ Scope of certain expressions

(a) Relative

(b) Loans and advances

(c) Substantial interest

(iii) Restrictions on grant of loans and advances to officers and the relatives of senior officers of the bank

(a) Loans and advances to officers of the bank

(b) Loans and advances to relatives of senior officers of the bank

(c) Application of the guide-lines in case of consortium arrangements

¨ Scope of certain expressions

(a) Relative

(b) Senior officer

(c) Credit facility

(d) Substantial interest

5. Restrictions on grant of financial assistance to industries produc-ing/Consuming Ozone Depleting Substances (ODS)

6. Restrictions on advances against sensitive commodities under Selective Credit Control (SCC)

¨ Commodities currently exempted from Selective Credit Control

¨ Commodities covered under Selective Credit Control

¨ Stipulations of Selective Credit Control

(a) Margin on Sugar

(b) Valuation of sugar stocks

(c) Interest rates

(d) Other operational stipulations

(e) Delegation of Powers

7. Restrictions on other loans and advances

(i) Loans and advances against shares, debentures and bonds

(ii) Advances against Money Market Mutual Fund

(iii) Advances against Fixed Deposit Receipts (FDRs) issued by other banks

(iv) Advances to agents/intermediaries based on consideration of deposit mobilisation

(v) Loans against Certificate of Deposits (CDs)

8. Bank finance to Non-Banking Financial Companies (NBFCs)

9. Bank finance to equipment leasing companies

10. Bank finance for purchase/lease of existing assets

11. Financing of infrastructure projects

¨ Issuable of Bank Guarantees in favour of Financial Institutions

12. Discounting/Rediscounting of bills by banks

13. Advances against gold/silver bullion

14. Loans and advances to Small Scale Industries

15. Loan system for delivery of bank credit

16. Working capital finance to Information Technology and Software Industry

ANNEXURES 1 and 2

Loans and Advances—Statutory and other restrections list of controlled substances

ANNEXURE 3

Loans and Advances—Statutory and other restrictions selective credit control—Other operational stipulations

17. Regulation of lending by Reserve Bank

(i) Bank finance to registered NBFCs

(ii) Bank finance to NBFCs not requiring registration

(iii) Bank finance to Residuary Non-Banking Companies (RNBCs)

¨ Net Owned Fund (NOF)

¨ Assessment of Working Capital

18. Activities not eligible for bank credit

19. Leased and sub-leased assets

20. Prohibited loans

21. Financing of equities and investments in shares by banks

22. Ceiling on overall exposure to capital market

23. Ceiling on direct investment in shares etc.

24. Advances against shares and debentures

(i) Advances to individuals

(ii) Financing of Initial Public Offerings (IPOs)

(iii) Avoidance of concentration to a few stock broking entities

(iv) Margins on advances against shares/issue of guarantees

(v) Financing of arbitrage operations

25. Risk Management and Internal Control System

(i) Investment Policy

(ii) Investment Committee

(iii) Risk Management

(iv) Separation of functional responsibilities

26. Valuation and disclosure

27. Directives on exposure norms

(a) Credit Exposures to individual/group borrowers

(i) Ceilings

(ii) Lending under consortium arrangements

(b) Exemptions

(i) Rehabilitation of Sick/ Weak Industrial Units

(ii) Food Credit

(c) Definitions

(i) Capital funds

(ii) Exposure

(iii) Credit exposure

(iv) Investments exposure

(v) Group

(vi) Review

28. Credit Exposure to industry or certain sectors

(i) Internal Exposure Limits

(a) Specific Sectors

(b) Exposure to real estate

¨ Exposure to leasing, hire purchase and factoring services

¨ Exposure to Indian Joint Ventures / wholly-owned subsidiaries abroad

(ii) Exposure limits on advances against Shares and Holding of Shares as Investments

¨ Statutory limit on share-holding in companies

¨ Regulatory limits

¨ Advances against shares to individuals

(c) Advances against units of mutual funds

(d) Bank finance to employees to buy shares of their own companies

(e) Advances against shares to stock brokers and market makers

( f ) Bank loans for financing promoters contributions

29. Bridge loans

¨ Bank finance to employees to buy shares of their own companies

30. Exposure norms for investments

(i) Bank’s investment in the bonds of a corporate

(ii) Bank’s investment in venture capital

(iii) Banks investment in sub-ordinated debt instruments

(iv) Underwriting of corporate shares and debentures

(v) Prohibition on underwriting operations

(vi) Underwriting of bonds of public sector undertakings

(vii) "Safety Net" schemes for public issues of shares, debentures etc.

31. Exposure to unsecured guarantees and unsecured advances

ANNEXURE I

List of All-India Financial Institutions

ANNEXURE 2

List of All-India Financial Institutions

32. Types of Lending

(1) Fund Based Facilities

(i) Overdrafts

(ii) Cash credit account

(a) Operating cycle method for small business

(b) Turnover method for SSI units

(c) Cash budget method

(d) Projected balance-sheet method

(iii) Bill Finance

¨ Types of Bills

(a) Demand bill and usuance bill

(b) Clean bill and documentary bill

(c) Trade bill and accommodation bill

(d) Inland bill and foreign bill

(e) Trade bill and supply bill

(iv) Export Packing Credit Facility

(v) Project Finance

(a) Market analysis

(b) Management appraisal

(c) Technical appraisal

(d) Financial appraisal

(e) Repayment schedules

( f ) Location of the project

(g) Commercial and economic viability

(h) Permissions from statutory authorities

(vi) Loans and advances

(a) Demand Loans

(b) Medium term loans

(c) Long term loans

(vii) Consortium Finance

(viii) Loan Syndication

(ix) Bridge Loan

(2) Non-fund based facilities

(i) Letter of Credit

(ii) Bank guarantees

(a) Financial guarantee

(b) Performance guarantee

(c) Deferred payment guarantee

(iii) Co-acceptance facility

(a) Instructions of Reserve Bank of India regarding co-acceptance facility

(b) Safeguards

33. Interest rates on advances

(i) Prime Lending Rate (PLR)

(ii) Freedom to fix lending rates

(iii) Tenor linked PLRs

(iv) Fixed interest rate for loans

(v) Levying of penal rates of interest

(vi) Enabling clause

(vii) Withdrawals against uncleared effects

(viii) Loans under consortium arrangement

(ix) Charging of interest at monthly rests

ANNEXURE I

Interest Rate Structure for rupee advances of commercial banks

ANNEXURE II

An illustrative list of Intermediary Agencies

34. Fair Practice Code on Lender's Liability

(i) Applications for loans and their processing

(ii) Loan appraisal and terms/conditions

(iii) Disbursement of loans including changes in terms and conditions

(iv) Post disbursement supervision

(v) General

(vi) Grievances Redressal Mechanism

(vii) Time limit for adopting fair practice code and for modification

(viii) Putting of Fair Practice Code on website

CHAPTER 16

Types of Securities

1. Introduction

2. Various types of securities

2(1) Shares

(a) Advantages of shares as security

(i) Valuation of security

(ii) Stability in prices

(iii) Easy to ascertain title

(iv) Less formalities for creation of charge

(v) Easy realisation

(vi) Easy transferability

(vii) Income yielding securities

(viii) Easy release

(b) Disadvantages of shares as security

(i) Fraud prone

(ii) Risk in partly paid shares

(iii) Forged scrips

(iv) Company’s lien

(c) Precautions to be taken by the banks while accepting shares as securities

(i) Partly paid shares should not be accepted

(ii) Shares of private limited companies should not be accepted

(iii) Bank cannot grant loan on its own shares

(iv) Ceiling on holding of shares

(v) Restriction in holding securities of the company, in which managing director or manager of the bank is interested

(vi) Ascertainment of market price of the shares

(vii) The scrips should be examined

(viii) Shares should be transferred in bank’s name, if required

(ix) In case of composite security, the advances should be segregated

2(2) Debentures

(a) Advantages of debentures as security

(i) Easy to transfer or sell

(ii) Risk of price fluctuation is less

(iii) In case of liquidation, debenture holders have a priority

(b) Disadvantages of debentures as security :

(i) In case debentures are not charged, further charge by the company will get a priority

(ii) Transfer becomes difficult, in case of nonpayment of interest on debentures

(c) Precautions to be taken while accepting debentures as securities

(i) Terms and conditions of issue of debentures should be examined

(ii) The borrowing power of the company to issue debentures should be examined

(iii) Factors like financial position etc. of the company should also be examined

2(3) Land and Building

(a) Advantages of land and building as security

¨ Value of immovable property never decreases

(b) Disadvantages of land and building as security

(i) Ascertaining the title of the property

(ii) Valuation of the property

(iii) Charging security is costly

(iv) Nature of various types of land

(v) Restrictions on transfer of properties

(c) Precautions to be taken while accepting lands and buildings as securities

(i) Title report from Solicitor or Advocate

(ii) Valuation of the property

(iii) Obtaining of uptodate non-encumbrance certificate

(iv) Financial soundness of the borrower

(v) Documentation and registration

(vi) Insurance of the property

2(4) Goods and commodities

(a) Advantages of goods as security

(i) Tangible security

(ii) Valuation of goods

(iii) Goods can be sold easily

(iv) Creation of security is cheap and involves minimum formalities

(b) Disadvantages of goods as security

(i) Deterioration of goods

(ii) Storage of goods is difficult

(iii) Risk of fraud

(iv) Value of goods fluctuating

(v) Warehouse charges

(c) Precautions to be taken while accepting goods as securites

(i) Bank should accept goods from the genuine traders

(ii) Bank should study the market

(iii) Title of goods should be verified

(iv) The bank should collect sufficient information about the goods

(v) Selection of godown keeper and watchmen for godown

(vi) Bank should take proper care of goods in case of pledge

(vii) Undertaking from the borrower, in case of hypothecated goods

(viii) Necessary margin should be taken

(ix) RBI’s Directives regarding restrictions on advances against commodities should be complied with

(x) Requirement of licences from Government

2(5) Documents of title to goods

(a) Advantages of documents of title as security

(i) Pledge of goods by pledge of documents

(ii) Goods can be easily transferred

(iii) Documents easily transferable

(b) Disadvantages of documents of title

(i) Fraud and dishonesty by borrower

(ii) Forgery and alteration in documents

(iii) Bank does not get better title than the transferor

(iv) Right of stoppage in transit by unpaid seller

(v) Delivery of goods without document of title to goods

(c) Precautions to be taken while accepting documents of title as securities

(i) Advances against documents of title should be granted to well known customers

(ii) All copies of bill of lading should be obtained

(iii) Certificate from reliable packer should be asked

(iv) Carrier should be advised about the pledge of goods

(v) Goods should be insured

(vi) Bill of lading endorsed in blank should be obtained

¨ Trust receipts

2(6) Fixed Deposit Receipts

¨ Precautions to be taken while granting loan against the Fixed Deposit Receipts

2(7) Life Insurance Policies

(a) Advantages of Life Insurance Policies as security

(b) Disadvantages of Life Insurance policy as security

(c) Precautions to be taken while accepting life insurance policies as securities

2(8) Government Supply Bills

(a) Disadvantages of granting advance against supply bills

(i) The security suffers from drawbacks of assignment of debts

(ii) Government department or agency directly making payment to borrower

(iii) Payment of bills is delayed

(b) Precautions to be taken while granting advances against supply
bills

(i) Advance should be granted to a reliable and honest supplier

(ii) Terms/conditions of the contract should be checked

(iii) Power of Attorney should be obtained from the borrower

(iv) Undertaking to pay balance amount of the bill should be obtained

2(9) Book Debts

¨ Precautions to be taken while granting advance against book debts

(i) The advance against book debts should be granted to first class parties

(ii) Bank should ascertain solvency of the debtor and right of set off if any

(iii) Instrument of assignment of debt should be in writing and signed by the assignor or his duly authorised agent

(iv) Notice of assignment should be served to debtors

(v) Bank should obtain power of attorney authorising it to collect book debts

(vi) In case of assignment of book debts of company, the charge should be registered with Registrar of Companies

(vii) Undertaking to repay amount of debts collected to the bank

2(10) Government Securities

¨ National Savings Certificates etc.

CHAPTER 17

Laws Relating to Securities and Modes of Charging

1. Introduction

2. Modes of creating charge

2(1) Mortgage

(a) Ingredients of mortgage

(b) Classification of mortgage

¨ Simple mortgage

¨ Mortgage by conditional sale

¨ Usufructuary mortgage

¨ English Mortgage

Ÿ Distinction between English mortgage and simple mortgage

Ÿ Distinction between English mortgage and mortgage by conditional sale

¨ Mortgage by deposit of title deeds

Ÿ Documents of title

Ÿ Equitable mortgage can be created in specified towns only

Ÿ Creation of an equitable mortgage

¨ Anomalous mortgage

(c) Second mortgage

¨ Postponement of prior mortgage

¨ Mortgage to secure uncertain amount when maximum is expressed

(d) Priority amongst registered documents

(e) Mortgagee's right of sale of mortgaged property

¨ Sale of mortgaged property through court's order

¨ Private sale of mortgaged property

( f ) Mortgagee's right to sue for recovery of mortgage money

¨ If the mortgagor binds himself to repay the mortgage money

¨ Where the mortgaged property is wholly or partially destroyed

¨ Where the mortgagee is deprived of the whole or part of his security

¨ Where the mortgagor fails to deliver the possession of the mortgaged property, to the mortgagee who was entitled to possession of the same

2 (2) Reverse Mortgage

(i) Features of reverse mortgage

(ii) Reverse Mortgage and Forward Mortgage

(iii) Forward Mortgage—Falling debt : Rising equity

(iv) Reverse Mortgage—Rising debt : Falling equity

(v) Exception to the rule

(vi) Procedure of reverse mortgage

(vii) Payment of the loan amount

(viii) Cost of the mortgage

(ix) Advantages of the scheme

(x) Release of Reverse Mortgage

(xi) Reverse Mortgage—India

(xii) Issues in reverse mortgage

2 (3) Pledge

(a) Ingredients of pledge

(i) Delivery of goods pledged should be made to the pawnee

(ii) Pawnee has only a special property in the pledge, but the general property in the goods remain with the pawnor

(b) Persons who can create pledge of goods

(c) Rights of the pawnee

(i) To retain the goods pledged

(ii) To receive extraordinary expenses incurred by pawnee for the preserva-tion of goods

(iii) Rights in case of default by the pawnor

(iv) Right to protect the goods against third parties

(d) Right of Government to seize the pledged goods

(e) Duties of the pawnee

(i) Duty to take care of goods

(ii) Duty not to mix with his own goods

(iii) Duty not to make any unauthorised use of the goods

(iv) Duty not to set up adverse title

(v) Duty to return goods on the accomplishment of the purpose

( f ) Duties of the pawnor

(i) To disclose defects in the goods

(ii) Duty to bear extraordinary expenses

(iii) Duty to indemnify bailee for defective title of the goods

2 (4) Hypothecation

(a) Hypothecation and pledge

(b) Criminal breach of trust

(c) Priority of charge

2 (5) Assignment

2 (6) Lien

2 (7) Set-off

(i) Express or implied agreement

(ii) Account containing trust funds

(iii) Debt can be set-off against moneys owing to a company in liquidation

(iv) Personal account of a guarantor cannot be set-off to adjust the debts of the principal debtor

(v) When the account is stopped due to insolvency, death or mental capacity of the customer

(vi) Surplus left with the bank after sale of security for a specific advance to a borrower

(vii) Accounts of different customers

CHAPTER 18

Post Sanction Supervision, Control and Monitoring of Credit

1. Introduction

(i) Legal Control

(ii) Physical Control

(iii) Financial Control

2. Off-site and on-site inspection and supervision

3. Off-site supervision by banks

4. Returns/statements submitted to the banks at the instance of Reserve Bank

(i) Quarterly Information System—Forms I & II

(ii) Half yearly operating and fund flow statements—Form III

(iii) Annual review

(iv) Monthly statement of Selected Operational Data

5. Control at the instance of bank

6. On site supervision by banks

(i) Inspection of goods, where the goods are pledged with bank

(ii) Inspection of goods, where the goods are hypothecated to bank

7. Stock Audit

8. Stock Audit Report

9. Supervision of credit

(i) End use of funds

(ii) Security for credit

10. Fixed assets

11. Stocks

12. Bills

13. Collateral

14. Maintenance and furnishing of accounts by borrower

15. Supervision of the progress of the borrower unit

16. Identifying early problems credits

17. Recall of advances and recovery of loans

CHAPTER 19

Priority Sector Advances

1. Introduction

2. Priority Sectors

3. Classification of Priority Sector Advances

(1) Agriculture

(i) Direct Finance

(A) Finance to individual farmers [including Self Help Groups (SHGs) or Joint Liability Groups (JLGs) i.e. Groups of individual farmers, provided banks maintain disaggregated data on such finance] for Agriculture and Allied Activities (dairy, fishery, plggery, poultry, bee-keeping, etc.)

(B) Finance to others [such as corporates, partnership firms and institutions] for Agriculture and Allied Activities (dairy, fishery, piggery, poultry, bee-keeping, etc.)

(ii) Indirect Finance

¨ Finance for Agriculture and Allied Activities

¨ Simplification of procedures and processes for obtaining agricultural loans

(2) Small Enterprises

(i) Direct Finance

(A) Manufacturing Enterprises

(a) Small (manufacturing) Enterprises

(b) Micro (manufacturing) Enterprises)

(B) Service Enterprises

(a) Small (service) Enterprises

(b) Micro (service) Enterprises

(c) Khadi and Village Industries Sector (KVI)

(ii) Indirect Finance

(iii) Small Scale Service and Business Enterprises (SSSBE's)

(a) Illustrative List of Small Scale Service Business (Industry Related) Enterprises (SSSBEs)

(b) Illustrative List of Activities which are not recognised as SSSBE's

(iv) Indirect Finance in the small-scale industrial sector will include credit to

(3) Housing Sector

(i) Direct housing finance

(ii) Indirect housing finance

(a) General

(b) Lending to Housing Finance Institutions

(c) Lending to Housing Boards and Other Agencies

(d) Financing of Land Acquisition

(e) Terms and Conditions for Lending to Housing Intermediary Agencies

(f) Term Loans to Private Builders

(iii) Housing Loans under Priority Sector

(a) Direct Finance

(b) Indirect Finance

(c) Investments in Bonds

(iv) RBI Refinance

(v) Construction Activities not Eligible for Bank Credit

(vi) Reporting

(vii) Opening of Specialised Housing Finance Branches

(viii) Home Loan Account Scheme (HLAS) of NHB

(a) Foreclosure of Loans Obtained from Other Sources

(b) Classification of Deposits/Loans under HLAS

(ix) Bank’s exposure to real estate sector

(x) Risk Weight on Housing Finance

(xi) Delhi High Court order on unauthorised construction—

(a) Housing loan for building construction

(b) Housing loan for purchase of constructed property/built up property

(xii) Terms and Conditions for Banks’ Investment in Mortgage Backed Securities (MBS)

Annexure 1

Annexure 2

Annexure 3

ANNEXURE 4

(4) Other activities/borrowers in the priority sector :

(i) Small Road and Water Transport Operators (SRWTO)

(ii) Retail trade

(iii) Small business

(iv) Professional and Self Employed Persons :

(v) State sponsored organisations for Scheduled Castes/ Scheduled Tribes

(vi) Education

(viii) Consumption loans

(ix) Loans to Self-Help Groups (SHGs)/NGOs/Microcredit

(x) Food and Agro-based Processing sector

(xi) Software industry

(xii) Venture capital

(5) Certain types of funds deployment eligible as priority sector advances :

(i) Investment in Special Bonds

(a) State Financial Corporations (SFCs)/State Industrial Development Corporations (SIDCs)

(b) Rural Electrification Corporation (REC)

(c) NABARD

(d) Small Industries Development Bank of India (SIDBI)

(e) The National Small Industries Corporation Ltd. (NSIC)

(f) National Housing Bank (NHB)

(g) Housing and Urban Development Corporation (HUDCO)

(ii) Other investments

(iii) Lines of Credit

(iv) Bills Rediscounting

(v) Deposits in Rural Infrastructure Development Fund (RIDF)

(vi) Leasing and hire purchase

4. Credit facilities to Scheduled Castes and Scheduled Tribes

(i) Flow of Credit to Scheduled Castes/Scheduled Tribes

(a) Planning Process

(b) Role of Banks

(c) Role of SC/ST Development Corporations

(d) Rejection of Applications

(e) Centrally sponsored schemes

(i) Swarnjayanti Gram Swarozgar Yojana (SGSY)

(ii) Prime Minister's Rozgar Yojana

(iii) Swarna Jayanti Sahari Rozgar Yojana

(iv) Differential Rate of Interest Scheme

(v) Scheme for Liberation and Rehabilitation of Scavengers

( f ) Relaxations for SC/ST beneficiaries under major centrally sponsored schemes

(g) Monitoring and Review by the banks of the facilities to Scheduled Castes and Scheduled Tribes

(h) Reporting requirements

FORM

Statement showing advances granted to Scheduled Castes/ Scheduled Tribes as on the last Friday of March/September

5. Credit Facilities to Minority Communities

(i) Direct/Indirect Agricultural Lending

(ii) Definition of Minority Communities

(iii) Creation of Special Cell and Designating an exclusive Officer

(iv) Advances under DRI Scheme

(v) Monitoring

(vi) Training

(vii) Publicity

(viii) National Minorities Development and Finance Corporation (NMDFC)

ANNEXURE 1

List of Minority Concentration Districts

ANNEXURE 2

6 (1) Targets for priority sector lending by scheduled commercial banks (excluding RRBs)

(a) Direct/Indirect Agricultural Lending

(b) Small Scale Industries

(c) DRI advances

(d) Weaker Sections

(2) Targets for Foreign Banks

(3) Deposit by Foreign banks with SIDBI towards shortfall in priority sector lending

(4) Contribution by banks to Rural Infrastructure Development Fund (RIDF)

7. Common guidelines for priority sector advances

(i) Processing of Applications :

(a) Completion of Application Forms

(b) Issue of Acknowledgement of Loan Applications

(c) Disposal of Applications

(d) Rejection of Proposals

(e) Register of Rejected Applications

(ii) Mode of Disbursement of Loan

(iii) Repayment Schedule

(iv) Rate of Interest

(v) Penal Interest

(vi) Inspection Charges

(vii) Insurance against Fire and Other Risks

(viii) Other charges

(ix) Photographs of borrowers

(x) Discretionary powers

(xi) Machinery to look into complaints

(xii) Amendments

8. Deposit Insurance and Credit Guarantee Corporation of India

¨ Management of the Corporation

9. Small Loans Guarantee Scheme, 1971

(1) (a) Scope of guarantee

(b) Credit Facility not eligible under the scheme

(2) General provisions in regard to credit facilities :

(i) Procedure to be followed by the credit institution

(ii) Agreement to be executed by the credit institution

(3) Special provisions relating to various types of borrowers :

(i) Transport Operators

(a) Eligibility Criteria

(b) Requirement of guarantee of credit

(c) Limit on advance

(d) Guarantee cover

(ii) Retail traders in goods other than fertilisers (or mineral oils)

(a) Eligibility criteria

(b) Requirements of guarantee of credit

(c) Guarantee cover

(d) Limit on advance

(iii) Professional and Self Employed persons

(a) Eligibility criteria

(b) Credit requirements

(c) Limit of advance

(d) Guarantee cover

(iv) Small Business Enterprises

(a) Eligibility criteria

(b) Requirements of guarantee of credit

(c) Guarantee cover

(v) Farmers and Agriculturists

(a) Eligibility criteria

(b) Purpose for which credit facility should be granted

(c) Period within which the credit facility to be repaid

(d) Requirements of guarantee of credit

(e) Guarantee cover

(vi) Educational Loans

(a) Eligibility criteria

(b) Limits on advance

(c) Purpose of advance

(d) Guarantee cover

(vii) Housing Loans : Eligibility criteria

(a) Direct Finance

(b) Indirect Finance

(c) Guarantee cover

(viii) Consumption Loans

(a) Eligibility criteria

(b) Limits on advances

(c) Guarantee cover

(ix) Advances under Differential Interest Rates Scheme

(a) Eligibility criteria

(b) Requirements of guarantee of credit

(c) Guarantee coverage

(x) State sponsored organisations for Scheduled Castes and Scheduled Tribes

(a) Eligibility criteria

(b) Limits on advance

(c) Guarantee cover

(d) Payment of guarantee fee by credit institution

(e) Invocation of guarantee by credit institution

( f ) Payment of a claim to discharge the Corporation

(g) Subrogation of rights and recoveries on account of claims
paid

(h) Losses not to be written off without the Corporation's approval

(i) Observations relating to scheme

10. Small Loans (Small Scale Industries) Guarantee Scheme, 1981

(i) Eligible borrower under the scheme

(ii) Eligible credit institution

(iii) Small Scale Industrial Unit

(iv) Guarantee by the corporation

(v) Credit facilities eligible under the scheme

(vi) Credit facilities not eligible under the Scheme

(vii) Credit facilities granted by the credit institution jointly with any other institution or institutions

(viii) Agreement to be executed by the credit institution

(ix) Extent of the guarantee

(x) Payment of guarantee fee by credit institution

(xi) Claims by credit institution from the Corporation

(xii) Claims in respect of the same borrower by more than one credit institutions

(xiii) Subrogation of rights and recoveries on account of claims paid

(xiv) Losses not to be written-off without the Corporation's approval

(xv) Termination of Corporation's liability

11. Lead Bank Scheme

¨ Functions of the Lead Bank

12. Poverty Alleviation Programmes

(a) Poverty Alleviation Programmes

(b) Twenty Point Programme

13. Credit Linked Programmes

(i) Integrated Rural Development Programme (IRDP)

(a) Target Groups

(b) Agencies for implementation of programme

(c) Identification of beneficiaries under the programme

(d) Sanction of loans by the banks

(ii) Development of Women and Children in Rural Areas (DWCRA)

(a) Target Group under the programme

(b) Grant of Loan to the Group

(c) Implementation and monitoring of the programme

(iii) Differential of Women and Children in Urban Areas (DWCUA)

(a) Instructions and Guidelines

(b) Administration of subsidy

(c) Monitoring and Review

(iv) Differential Rate of Interest (DRI) Scheme

(a) Eligibility of beneficiaries under the scheme

(b) Purpose for which loan can be granted under the scheme

(c) Grant of Loan under the scheme

(d) Monitoring of the scheme

(v) Prime Minister’s Rozgar Yojana (PMRY)

(a) Eligibility of beneficiaries under the scheme

(b) Reservations under the scheme

(c) Relaxations of PMRY Norms for North-East Region, Himachal Pradesh, uttaranchal and Jammu & Kashmir

(d) Selection of beneficiaries under the scheme

(e) Salient features of the scheme

(f) Training of selected beneficiaries

(g) Norms of the banks granting loans under the scheme

(vi) Scheme of Urban Micro Enterprises for Urban Poor (SUME)

(a) Eligibility of beneficiaries under the scheme

(b) Selection of beneficiaries under the scheme

(c) Grant of Loans to the beneficiaries

(d) Repayment of loan amount

(e) Monitoring of the scheme

( f ) Scheme Merged with PMRY

(vii) Self Employment Scheme for Educated Unemployed Youth (SEEUY)

(a) Eligibility of beneficiaries under the scheme

(b) Purpose of the loan under the scheme

(c) Selection of beneficiaries under scheme

(d) Grant of loans by the banks

(e) Grant of Subsidy

( f ) Repayment of loan amount

(g) Monitoring of scheme

(h) Scheme Merged with Swaran Jayanti Shahari Rozgar Yojana

(viii) National Scheme of Liberalisation and Rehabilitation of Scavengers

(a) Eligibility of beneficiaries under the scheme

(b) Selection of beneficiaries under the scheme

(c) Norms of the scheme

(d) Training of the beneficiaries

(e) Repayment of loan amount

(ix) Swarn Jayanti Shahari Rojgar Yojna (SJSRY)

(a) Eligibility of beneficiaries under the scheme

(b) Grant of Loan by the bank

(c) Payment of subsidy

(d) Repayment of loan

(x) Swarn Jayanti Gram Swarojgar Yojana (SGSY)

(a) Activities for which assistance may be given under the scheme

(b) Target group under the scheme

(c) Assistance under the scheme

(d) Activity Clusters, Key activities

(e) Norms for assistance

(i) Self Help Groups

(a) Assistance to individuals

(b) Assistance to group

(ii) Individual Swarojgaris

(f) Skill upgradation

(g) Revolving Fund

(h) Lending Norms

(i) Security Norms for the loans

(j) Rate of interest under the loan

(k) Time limit for grant of loan

(l) Subsidy

(m) Post Credit follow up

(n) Risk Fund for Consumption Credit

(o) Repayment of loan under the scheme

(p) Recovery of loan under the scheme

(q) Refinance of SGSY Loans

(r) Monitoring of the scheme

TABLES

(i) Advances to the Priority Sectors by Public Sector Banks

(ii) Advances of Public Sectors Banks to Agriculture and Weaker Sections

(iii) Advances to the Priority Sector by Private Sector Banks

(iii) Advances of Private Sector Banks to Agriculture and Weaker Sections

CHAPTER 20

Letters of Credit

1. Introduction

2. Letters of Credit and Bank Guarantees

3. Parties to a Letter of Credit

(i) The buyer

(ii) The seller or beneficiary

(iii) Issuing Bank

(iv) Advising or notifying bank

(v) Negotiating Bank

(vi) Confirming bank

(vii) Paying banker

4. Kinds of letter of credit

(i) Revocable and irrevocable Letters of Credit

(ii) Confirmed letter of Credit

(iii) Revolving Letter of Credit

(iv) Transferable Letter of Credit

(v) Back to Back credit

(vi) Red Clause Credit

(vii) Green Clause Credit

(viii) With Recourse and without recourse letter of credit

5. Opening of Letter of Credit

(i) Application for Letter of Credit

(ii) Appraisal of application

(iii) Margin

(iv) Insurance

(v) Issuance of Letter of Credit

6. Presentation and Negotiation of Documents

7. Settlement of bills under Letter of Credit

8. Non-Payment of bill and other amount by the buyer

9. Liability of payment under Letter of Credit

10. Uniform Customs and Practice for Documentary Credit (UCP) 500

(i) General Provisions and Definitions

(a) Application of UCP

(b) Meaning of credit

(c) Distinction between Letter of Credit and Contract

(d) Parties to Letter of Credit deal with documents

(e) Instructions to Issuing bank should be clear

(ii) Form and Notification of Letters of Credits

(a) Revocable and Irrevocable Letters of Credit

(b) Liability of Advising bank

(c) Revocation of Letter of Credit

(d) Liability of Issuing banks in case of irrevocable letter of credits

(e) Liability of confirming banks in case of irrevocable letter of credit

( f ) Other important facts about liability of issuing and confirming banks

(g) Types of Letters of Credit

(h) Nominated bank

(i) Liability of Nominated bank

( j) Tele-transmitted letters of Credit

(k) Pre-advice of Letter of credit

(l) Effect of incomplete or unclear instructions

(iii) Liabilities and responsibilities of banks under letters of credit

(a) Standard for examination of documents

(b) Liability of banks in case documents presented are in compliance with letter of credit

(c) Discrepant documents and notice

(d) Banks not liable for effectiveness of documents

(e) Banks not liable for transmission of messages

( f ) Force Majeure

(g) Banks not liable for acts of an instructed party

(h) Liability of the party instructing

(i) Arrangements of reimbursement from bank to bank

(iv) Documents

(a) Ambiguity as to the Issuers of documents

(b) Signature on letter of credit

(c) Copies of the documents to be presented

(d) Satisfaction of conditions in letter of credit

(e) Unspecified insurers or contents of documents

(f) Date of issue of documents

(g) Marine/Ocean bill of lading

(h) Acceptance of bill of lading by the banks

(i) Non-negotiable sea way-bill

(j) Acceptance of non-negotiable sea way-bill by the banks

(k) Charter party bill of lading

(l) Multimodal transport document

(m) Banks may accept mutlimodal transport document even transhipment prohibited

(n) Air transport document

(o) Banks may accept air transport document even transhipment prohibited

(p) Road, rail or inland water-way transport documents

(q) Acceptance of transport documents by the banks

(r) Banks may accept road, rail or inland waterway transport document even if transhipment prohibited

(s) Post receipts

(t) Courier Receipts

(u) Transport documents issued by the Freight Forwarders

(v) "On deck", "Shipper's load and count", name of consignor

(w) Clean transport documents

(x) Freight payable/prepaid transport documents

(y) Insurance documents

(z) Acceptance of insurance documents

(za) Type of Insurance cover

(zb) All Risks insurance cover

(zc) Commercial Invoices

(zd) Acceptance of commercial invoices by banks

(ze) Other documents

(v) Miscellaneous provisions relating to letters of credit

(a) Allowances in credit amount, quantity and unit price

(b) Partial shipment/drawings

(c) Instalment shipment/ drawings

(d) Expiry date and place of presentation of documents

(e) Limitation on the expiry date of letter of credit

( f ) Extension of expiry date of letter of credit

(g) Hours of presentation of documents

(h) General expression as to the date for shipment

(i) Date terminology for period of shipment

(vi) Transferable letters of credit

(vii) Assignment of proceeds

(a) Assignment of proceeds

(b) Arbitration by ICC

CHAPTER 21

Indemnities and Bank Guarantees

1. Indemnity

2. Rights of the Indemnity Holder

(i) Guarantee and indemnity

(ii) Implied contract of indemnity

(iii) Indemnity and damages

(iv) Indemnified and indemnifier

¨ Rights of Indemnity holder when sued

(a) Damages

(b) Costs

(c) All sums

· Section 125, Contract Act

· Cause of action—Breack of an indemnity clause

· Judgment against promisee conclusive

· Bankruptcy of promisee

3. Rights of the promisor

4. Indemnity used by the banks

5. Forms of Indemnity and Indemnity-cum-Surety Bonds

(i) Indemnity Bond to be obtained from the customer for issue of a duplicate Demand Draft

(ii) Simple Indemnity-cum-surety Bond to be obtained from a customer for issue of a Duplicate Draft

(iii) Indemnity bond for release of amount to the legal heirs without insisting upon Succession Certificate

6. Stamp duty payable on Bond of Indemnity

7. Bank Guarantee

(i) Section 126, Contract Act

(ii) Principal must have liability to discharge

(iii) Discharging the liability of a third person

(iv) Bank guarantee is a tripartite agreement

(v) Essentials of a contract of Bank guarantee

(vi) Construction of contract of Bank guarantee

(vii) Bank guarantee and/or Letter of credit

(viii) Distinction between bank guarantee and letter of credit

(ix) Distinction between contract of indemnity and contract of guarantee

(x) Indemnity and guarantee

(xi) Proof of Contract of Guarantee

(xii) Restraining encashment of Bank guarantee

(xiii) Guarantee may be oral

(xiv) Surety for decree—Procedure for enforcement

(xv) Instances of guarantee—Contract of guarantee

(xvi) Limitation

8. Consideration for guarantee

(i) Some consideration for guarantee essential

(ii) No consideration or insufficient consideration

9. Liability of Surety

(i) Section 128, Contract Act—Surety’s liability

(ii) Construction of Contract of guarantee

(iii) "Unless otherwise agreed"

(iv) Contract affecting surety’s liability within scope of agreement

(v) Contract of guarantee—Loan taken from Bank

(vi) Co-extensive liability of a surety when no contract

(vii) Limited liability of principal and liability of surety

(viii) Part liability of the surety

(ix) Bank guarantee—Independent contract

(x) Suit against surety without suing the principal

(xi) Surety may be liable though the principal’s contract is void

(xii) Invalid grants and liability of surety

(xiii) Surety’s liability where causes of action against the principal are separate

(xiv) Limitation against the principal and liability of surety

(xv) Limitation against surety and liability of the principal

(xvi) Where debt is unenforceable, surety is also discharged

(xvii) Sureties are not discharged in case of

(a) Death of the principal

(b) Acquittal of the principal of misappropriation

(c) When decree against principal is vacated

(d) Suit against the principal if bars a suit against the surety

(e) Sale of the principal’s interest

(f) Realization of the surety amount from the property of the absconding accused

(g) Application of money realized from surety

(h) Liability of sons for father’s guarantee

(i) Creditor’s right to surety’s securities

(j) Surety bonds, when becomes operative

(xviii) Surety bond to Court

(xix) Burden of proof

(xx) Limitation against surety

10. Continuing Guarantee

(i) Continuing guarantee—Construction

(ii) Security bond executed by surety under Section 55 (4), Civil Procedure Code and continuing guarantee—Distinction

(iii) Cases of continuing guarantee

(iv) Bank guarantee—Exceptions which are fraud must be established

(v) Bank to pay without demur or protest

11. Revocation of continuing guarantee

(i) Where death does not terminate suretyship

(ii) Contribution

(iii) Cases where Section 130, Contract Act, does not apply

(iv) Surety for a definite case

(v) Sureties for Receivers, Guardians and Administrators

(vi) Guarantee for servant’s fidelity

(vii) Notice—Denial in pleadings

12. Forbearance

(i) Mere forbearance as distinguished from forbearance

(ii) Suing surety without suing principal

(iii) No obligation to notify default

(iv) Liability of surety being co-extensive with that of the principal-debtor

(v) Guarantee not released by forbearance to sue

13. Discharge of Surety

(i) By variance in terms of the contract

(a) When creditor’s act discharges surety

(b) Executants of pro-note cannot be surety

(c) No liability beyond strict terms

(d) Variation of contract—Guarantee, guarantor, counter-guarantee

(e) Immaterial variation

(f) New arrangement with the principal discharges surety

(g) Non-performance of a condition

(h) General clause of waiver and statutory right

(i) Where two contracts may be performed

(j) Variance made by Legislature or sanction of law

(k) Execution of decree against surety

(ii) By release or discharge of principal debtor

(a) Liability of the surety—Legal consequence

(b) Discharge by operation of law

(c) Release with reservation of rights against the sureties

(d) Forbearance to sue and discharge of principal debtor by creditor

(e) Merger

(f) Omission to sue the principal debtor in time

(g) Omission to serve summons on the principal

(h) Judgment against surety only

(i) Failure to make respondents in appeal

(j) Failure to substitute legal representatives

(k) When the surety’s liability in a particular case ceases

(iii) By compounding or giving time to or agreeing not to sue principal debtor

(a) Giving time, when discharges the surety

(b) Applicability of Section 135, Contract Act

(c) Mere forbearance to sue would not discharge surety

(d) Surety bond in favour of Court

(e) Acceptance of interest in advance

(f) Contract to the contrary

(g) Section 135, Contract Act—Inapplicable to claims decreed

(h) Consent decree made without the knowledge of the surety

(i) Composition will discharge surety

(j) Arrangement by surety’s agent

(k) Discharge of surety for judgment-debtor

(iv) By creditor’s act or omission impairing surety’s eventual remedy

(a) What is necessary for discharge of surety

(b) Impairing the surety’s eventual remedy

(c) Inconsistent with the surety’s rights

(d) Liability of surety

(e) Subsequent suit against the surety

(f) Surety bond in favour of Court

(v) Co-sureties—Section 138, Contract Act

14. Rights of the Sureties

(i) Right of Subrogation

(a) Meaning of expression "is invested with all the rights......... principal debtor"

(b) Subrogation of the surety in creditor’s place on full payment

(c) Bailment without an enforceable contract

(d) Bank to proceed against mortgaged property first

(e) Creditor’s right paramount

(f) No assignment necessary

(g) Recovery of interest paid

(h) Bar of limitation

(i) Surety’s right in bankruptcy of the principal

(j) Surety and surety bond

(k) Principal and Surety

(l) Meaning of the expression "security"

(m) Surety’s right in case of loss of security

(n) Loss of hypothecated properties—Duty of creditor

(o) Joint debtors

(p) Continuing guarantee—Whether confined to series of transactions

(q) Appropriating security to different debt

(r) "Surety is discharged ......... security"

(ii) Right to Indemnity

(a) Surety’s right

(b) Surety to sue principal debtor

(c) "Whatever sum"—Liable "in praesenti"

(d) "Rightfully paid"—Banker liable to pay the depositor

(iii) Rights against co-sureties to contribute equally

(a) Contribution among co-sureties on payment of principal debt

(b) Contribution for costs by the sureties

(c) Co-surety satisfying debt by executing pro-note

(d) Counter security from the principal debtor

(e) Defence of being a surety merely—Oral evidence

15. Invalid guarantees

(i) Scope of Section 142, Contract Act

(ii) Avoidance of suretyship for misrepresentation

(iii) Concealment must be fraudulent—No right to voluntary disclosure

16. Kinds of guarantees

(i) Financial Guarantees

(ii) Performance Guarantees

(iii) Deferred Payment Guarantees

(iv) Statutory Guarantees

17. Guidelines issued by the Reserve Bank to banks relating to bank guarantees

18. Guidelines relating to the conduct of guarantee business— General Guidelines

19. Norms for unsecured advances and guarantees

20. Exclusions from the norms

21. Additional precautions for averting Frauds

22. Ghosh Committee Recommendations

23. Internal Control System

24. Guarantees on behalf of Bank’s Directors

25. Bank Guarantee Scheme of Government of India

26. Guarantees on behalf of Share and Stock Brokers

27. Guidelines relating to obtaining of personal guarantees of directors and other managerial personnel of borrowing concerns

(i) Where guarantees need not be considered necessary

(ii) Where guarantees may be considered helpful

(iii) Worth of the guarantors, payment of guarantee, commission etc.

(iv) Personal guarantees in the case of sick units

28. Guarantees of State Government

29. Bid bonds and performance bonds or guarantees for exports—Exchange Control Stipulation

30. Other stipulations

31. Unconditional Guarantees in favour of Overseas Employers/ Importers on behalf of Indian Exporters

32. Certain precautions in case of Project Exports

33. Review of Banks Procedures

34. Other Guarantees Regulated by Exchange Control Rules

(i) Minor Guarantees

(ii) Bank Guarantees—Import under Foreign Loans/Credits

¨ Loans abroad against securities provided in India

(iii) Guarantees for Non-Residents

35. Restrictions on Guarantees of Inter-Company Deposits/Loans

36. Restriction on guarantees for placement of funds with NBFCs

37. Restrictions on Inter-institutional Guarantees

38. Infrastructure Projects

¨ Further guidelines regarding guarantees

· Guaranteeing banks

· Lending banks

39. Injunction encashing the irrevocable letters of credit or bank guarantees

40. Analysis of bank guarantees

41. Obligations under bank guarantees

42. Obligations of the bank under performance guarantees

43. Bank guarantees—Conditional or unconditional

44. Unconditional and irrevocable bank guarantees

45. Encashment of bank guarantee

46. Payment of Invoked guarantees

ANNEXURE I

Types of unsecured advances to be excluded from the total of unsecured advances for the purpose of norms relating to unsecured advances and guarantees

47. Invocation of bank guarantee

48. Invocation of bank guarantees without protest or demur

49. Global Tenders—Encashment of performance guarantee

50. Non-invocation of bank guarantees

51. Liability of bank under bank guarantee is not affected by the liquidation of the company, on behalf of which the guarantee was issued

52. Liability of the Bank not suspended by suspension of the main contract

53. Sick industrial company—Invocation of bank guarantee

54. Exceptions to the making of payment by banks for invocation of bank guarantee

(i) Fraud

(ii) Resulting of irretrievable Injury

55. Limitation period for claiming amount under bank guarantee

56. Territorial jurisdiction

CHAPTER 22

Export Financing and Guarantee Cover provided by ECGC

1. Introduction

2. Rupee Export Credit

3. Pre-Shipment Export Credit

(a) Period of Advance

(b) Disbursement of Packing Credit

(c) Liquidation of Packing Credit

(i) General

(ii) Packing credit in excess of export value

(iii) The banks have, however, operational flexibility to extend the following relaxations to their exporter clients who have a good track record

(d) Running Account' Facility

(e) Interest on Packing Credit

(a) Export Credit against Proceeds of Cheques, Drafts, etc. Representing Advance Payment for Exports

(b) Rupee Pre-shipment Credit to Specific Sectors/Segments

(c) Rupee Export Packing Credit to Sub-Suppliers

(d) Rupee Pre-shipment Credit to Construction Contractors

(e) Export of Consultancy Services

(f) Export of IT Service and software

(i) Software services and programming services

(ii) Project services

(iii) Software products and packages

(iv) Information technology related services (IT service)

(f) Pre-shipment Credit to Floriculture, Grapes and Other Agro-based Products

Export Credit to Processors/ Exporters-Agri-Export Zones

4. Post-Shipment Export Credit

Ÿ Liquidation of Post-shipment credit

5. Rupee Post-shipment Export Credit

(a) Period

(b) Interest Rate Structure

(c) Advances against Undrawn Balances on Export Bills

(d) Advances against Retention Money

(e) Export on Consignment Basis

(i) General

(ii) Export of precious and semi-precious stones

(iii) Consignment exports to CIS and East European Countries

(iv) Consignment exports to Russian Federation against repayment of State Credit in rupees

(f) Exports through the Warehouse-cum-Display Centres Abroad

(g) Export of Goods for Exhibition and Sale

(h) Post-shipment Credit on Deferred Payment Terms

(i) Post-shipment Advances against Duty Drawback Entitlements

( j ) ECGC Whole Turnover Post-shipment Guarantee Scheme

6. Deemed Exports—Concessive Rupee Export Credit

Ÿ Gold Card Scheme for exporters

7. Special Financial Package For Large Value Exports—Rupee Credit Interest Rates

8. Interest On Export Credit

(a) General

(b) ECNOS

(c) Interest Rate structure on Rupee Export Credit

(d) Interest Rate on Rupee Export Credit—Interest Rate Structure

(e) Application of Interest Rates

(f) Interest on pre-shipment Credit

(g) Interest on post-shipment Credit

(h) Overdue Export Bills

(i) Interest on Post-shipment Credit Adjusted from Rupee Resources

(j) Change of Tenor of Bill

9. Export Credit In Foreign Currency

(a) Pre-shipment Export Credit

(i) Pre-shipment Credit in Foreign Currency (PCFC)

(ii) General

(iii) Scheme

(iv) Choice of Currency

(v) Source of Funds for Banks

(vi) Spread

(vii) Period of Credit

(viii) Disbursement of PCFC

(ix) Liquidation of PCFC Account

(x) Cancellation/Non-execution of Export Order

(xi) Running Account Facility for All Commodities

(xii) Forward Contracts

(xiii) Sharing of EPC under PCFC

(xiv) Supplies from One EOU/EPZ/SEZ Unit to Another EOU/EPZ/SEZ Unit

(xv) Deemed Exports

(xvi) Refinance

(xvii) Other Aspects

(xviii) Diamond Dollar Account (DDA) Scheme

(b) Post-shipment Export Credit

(i) Rediscounting of Export Bills Abroad Scheme (EBR)

(ii) Exporters' Choice

(iii) Scheme

(iv) Eligibility Criteria

(v) Source of On-shore Funds

(vi) Facility of Rediscounting 'with recourse' and 'without recourse

(vii) Accounting Aspects

(viii) Restoration of Limits and Availability of Export Benefits such as EEFC Account

(ix) ECGC Cover

(x) Refinance

(xi) Export Credit Performance

(c) Interest on Export Credit

Ÿ Interest Rate Structure on Export Credit in Foreign Currency

10. Time limit fixed for export credit by the banks

(i) Customer Service

(a) General

(b) Delay in Crediting the Proceeds of Export Bills Drawn in Foreign Currency

(c) Payment of Compensation to Exporters for Delayed Credit of Export Bills

(ii) Sanction of Export Credit Proposals

(a) Time Limit for Sanction

(b) Ad hoc Limit

(c) Other Requirements

(iii) Simplification of Procedure for Delivery of Export Credit in Foreign Currency and in Rupees

(a) General

(b) Guidelines

(iv) Monitoring Implementation of Guidelines

11. Reporting Requirements

(i) Export Credit Perfomance Indicator for Banks

(ii) Quarterly Data of Export Credit Disbursements

(iii) Pre-shipment Credit to Diamond Exporters—Conflict Diamonds & Sierra Leone Rough Diamonds

12. Export Credit Refinance (ECR) Facility

(i) Limit

(ii) Interest Rate

(iii) Margin Requirement

(iv) Duration

(v) Collateral

(vi) Minimum Amount of Availment

(vii) Place of Availment

(viii) Repayment

(ix) Penalties

(x) Documentation

(xi) Reporting Requirement

13. Export Credit Insurance by Export Credit Guarantee Corporation of India Ltd.

14. Standard Policy

(a) Risk covered under the policy

(i) Commercial Risks

(ii) Political Risks

(b) Risks not covered

(c) Shipment covered

(d) Exclusions

(e) Shipments against Letters of credit

(f) Shipments to associates

(g) Shipments on consignment basis

(h) Shipment made by air

(i) Additional cover for shipments to Government Buyers

(j) Contract cover

(k) Shipments made on credit exceeding 180 days

15. How the risks are covered

(a) Maximum Liability

(b) Credit Limits on buyers

(c) Status Enquiry Charges

(d) Discretionary Limit

(e) Restricted cover countries

(f) Percentage of Cover

(g) Minimum Premium

(h) Declaration of shipment and payment of additional premium

(i) Premium Rates

(j) Reporting Defaults

(k) Extending credit period or changing the tenor of the bills

(l) Resale of unaccepted goods

(m) Time for payment of claim

(n) Recovery of debt

(o) Sharing recovery with ECGC

16. Procedure for obtaining a policy

17. Small Exporter's Policy

(a) Period of Policy

(b) Minimum Premium

(c) Declaration of shipments

(d) Declaration of overdue payments

(e) Percentage of cover

(f) Waiting period for claims

(g) Change in terms of payment or extension in credit period

(h) Resale of Unaccepted goods

(i) Claims due to loss or damage to goods

18. Specific Polices

(a) Forms of Specific Policy for supply contracts

(b) Insurance cover for Buyer's Credit and Line of Credit

(c) Service Policy

(d) Construction Works Policy

19. Guarantee to Banks

(a) Packing Credit Guarantee

(b) Export Production Finance Guarantee

(c) Post-shipment Export Credit Guarantee

(d) Export finance guarantee

(e) Export Performance Guarantee

(f) Export Finance (Over-Seas Lending) Guarantee

20. Special Schemes

(a) Transfer Guarantee

(b) Overseas Investment Insurance

(c) Exchange Fluctuation Risk Cover

21. Specific Shipment Policies—Short Term

(a) Types of SSP-ST

(b) Risks Covered

(i) Commercial risks

(ii) Political risks

(iii) Insolvency and Default of L/C opening bank

(c) Risks Not Covered

(d) Shipments to be covered

(e) Period of the Policy

(f) Percentage of Cover

(g) Maximum Liability

(h) Processing fee and Premium

(i) Withdrawal of Cover

(j) Foreclosure of Policy

(k) Extension of the validity Period of the Policy

(l) Obligations on the Part of the Exporter

(i) Statement of shipments made

(ii) Statement of overdue

(iii) Intimation of events affecting the risk

(iv) Action for minimising loss

(m) Claim and Recovery

(i) Time for ascertainment of loss

(ii) Time for filing claim

(iii) Action on payment of claim for recovery

(m) Closure of Policy

CHAPTER 23

Foreign Exchange Management Act, Export/Import Business
and Obligations of Banks

1. Introduction

2. Definitions

(i) Foreign Exchange

(ii) Export

(iii) Import

(iv) Person resident in India

(v) Person resident outside India

(vi ) Service

3. Liberalisation of Export and Import Procedure

(i) Exports

(a) Extension of Time for Realisation of Export Proceeds

(b) Write-off of unrealised Export bills

(c) Repatriation of Funds in case of On-site Software Contracts

(d) Reduction in Invoice Value

(ii) Imports

¨ Import Bills—Credit Report on the Overseas Supplier

(iii) General

¨ Different Time Base Prescribed in RBI Directives

4. Export of goods and services

5. Realisation and repatriation of foreign exchange

6. Holding of Foreign Exchange etc

7. Exemption from holding, realisation and repatriation

8. Authorised person to deal in foreign exchange

9. Penalties for contravention of the provisions of the Act etc.

10. Challenge to show-cause notice

11. Export of goods and services

(i) Declaration as regards export of goods and services

(ii) Declaration in Form GR/SDF

¨ Power of AD Banks for approving GR Forms

(iii) Declaration in Form PP

(iv) Counter-signature on PP forms

(v) Declaration in form SOFTEX

(vi) Shut out shipments and Short shipments

(vii) Consolidation of Air Cargo

(viii) Exports by Barges/Country Craft/Road Transport

(ix) Obligations of Authorised Dealer relating to exports

(a) Delay in submission of shipping documents by exporters

(b) Check-list for Scrutiny of Forms

(x) Trade Discount

(xi) Advance Payments against Exports

¨ Guarantees for Export Advance

(xii) Part Drawings

(xiii) Consignment Exports

(xiv) Despatch of Shipping Documents

(xv) Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade Representative

(xvi) Export Bills Register

(xvii) Follow-up of Overdue Bills

(xviii) Exemptions

(xix) Manner of payment of export value of goods

(xx) Payment for export in certain cases

(xxi) Period within which export value of goods/software to be realised

(xxii) Export on Elongated Credit Terms

(xxiii) Forfaiting

(xxiv) Certain exports requiring prior approval

(a) Counter Trade Arrangement

(b) Export of goods on lease, hire etc.

(c) Participation in Trade Fairs Abroad

(d) Project Exports and Service Exports

(xxv) Reduction in invoice value on account of prepayment of usance bills

(xxvi) Reduction in Value

(xxvii) Export Claims

(xxviii) Change of buyer/consignee

(xxix) Extension of time limit

(xxx) Shipments lost in transit

(xxxi) Payment of Claims by ECGC

(xxxii) Write-off of Unrealised Export Bills

(xxxiii) Return of Documents to Exporters

(xxxiv) Exporters' Caution List

(xxxv) Remittances connected with export

(a) Agency Commission on Exports

(b) Refund of Export Proceeds

12. Liberalisations in Project and Service Exports

13. Import of goods and services

(i) Prohibition on drawal of Foreign Exchange

(ii) Prior approval of Government of India

(iii) Prior approval of Reserve Bank

(iv) General

(v) Import Licences

(vi) Obligation of Purchaser of Foreign Exchange

(vii) Manner of Rupee Payment

(viii) Letters of Authority

(ix) Application for making payments towards imports

(x) Imports Financed in Rupees

(xi) Endorsement on Import Licences

(xii) Import Licences for c.i.f. Value

(xiii) Surrender of Import Licences

(xiv) Advance Remittance

(xv) Time Limit for Settlement of Import Payments

(xvi) Interest on Import Bills

(xvii) War Risk Insurance/Bunker/ Congestion Surcharge/Premium for Extended insurance

(xviii) Imports under Penalty

(xix) Remittances against Replacement Imports

(xx) Guarantee for Replacement Import

(xxi) Evidence of Import

(xxii) Follow up by Authorised Dealers

(xxiii) Precautions for handling Import Documents

(xxiv) Receipt of import Bills/ Documents

(xxv) Postal Imports

(xxvi) Import of Gold/Platinum/ Silver by Nominated Banks/ Agencies

(a) Import of Gold on consignment basis

(b) Import of gold on unfixed price basis

(xxvii) Import of films on lease/ rental basis

(xxviii) Gold Loans

¨ Gold (Metal) Loan—Tenor of

(xxix) Import factoring

(xxx) Import of Gold, Silver and Jewellery

(xxxi) Merchanting Trade

(xxxii) Observance of procedures by banks

Volume 2

CHAPTER 24

Documentation

1. Introduction

(i) Proving of electronic documents

(ii) Admissibility of electronic documents

2. Purpose of documentation by banks

3. Different types of documents

4. Important factors relating to documentation

5. Payment of Stamp duty on documents

6. Cancellation of adhesive stamps

7. Payment of improper stamp duty on document/instrument

8. Demand Promissory Note

9. Bill of Exchange

10. Validation of documents which are improperly stamped

11. Regularisation of documents not stamped or not duly stamped

12. Adjudication of stamp duty by the Collector of Stamps

13. Instruments other than bills and notes executed out of India

14. Instruments executed in one State and taken to another State

15. Stamp duty on balance confirmation letters/Acknowledgement of Debts

16. Execution of documents

17. Execution means signing a document—Formal execution

18. Rules relating to proof of documents

(a) Document must be proved

(b) Mode of proof of signature or writing

(i) Proof as to digital signature

(ii) Proof as to verification of digital signature

(c) Presumptive proof of the execution of a document

(d) Proof of the signature of an attesting witness

(e) Oral evidence is admissible to show that a writing does not represent a completed transaction

(f) Rule of evidence is not applicable where the whole contract has not been reduced to writing

(g) Oral evidence of the intention of the parties to a document is inadmissible

(h) Section 91, Evidence Act is applicable to third parties

(i) Distinction between the provisions of Section 64 and those of Section 91, Evidence Act

(j) Three classes of cases where oral evidence is excluded by documentary evidence

(k) Oral evidence is not excluded where the fact to be proved is neither the contents of a document, nor the terms of a contract, grant or disposition of property, nor a matter required by law to be reduced to writing

(l) Fact to be proved is a fact other than facts referred to in Section 91, Evidence Act

(m) Date of document

(n) Oral proof of payment or non-payment of money for which a receipt has been taken is admissible

(o) In the case of a contract, grant or disposition, oral evidence is excluded only if the transaction has been actually reduced to writing; but in the case of a matter required by law to be reduced to writing oral evidence is excluded whether the matter has been reduced to writing or not

(p) Oral evidence is excluded only if all the terms of the contract, grant or disposition have been reduced to writing

(q) Whether bought-and-sold notes constitute a contract so as to exclude other evidence ?

(r) Other evidence is inadmissible in proof of terms of a contract, grant or disposition of property, if such terms have been reduced to writing

(s) Acknowledgment of liability; payment of interest on, and part payment of the principal of a debt

(t) Transaction contained in more documents than one

(u) Only one original need be proved

(v) Bill of Exchange or Loan of money—Illustration (b) to Section 91, Evidence Act

(w) Oral evidence is not excluded if the terms of the contract, grant or disposition have been reduced to writing

(x) Oral evidence is admissible to show that, notwithstanding a written agreement, there was no real agreement between the parties

(y) Preliminary negotiations, conversation, correspondence, etc., not admissible to contradict or vary the terms of a document but admissible to identify the subject matter of the agreement

(z) Oral agreement to vary terms implied by law in a written contract

(za) Whether the ostensible executant of a written contract can show that he signed otherwise than as an executant, e.g. as an agent, partner, surety, witness or a benamidar ?

(zb) Benami Promissory note

(zc) Endorsement of payment on the back of a bond

(zd) Gift cannot be shown to be a Will

(ze) Absolute gift cannot be shown to be revocable

(zf) Gift cannot be proved to be a conveyance

(zg) Oral agreement to waive a default clause in a bond

(zh) Deposit or pledge

(zi)Oral evidence to show that two documents embody one transaction

(zj) Grammatical and lexicographical meaning of the words or meaning of the writer

19. Attestation

20. Registration of Documents

(i) Documents of which registration is compulsory

(ii) Documents of which registration is optional

(iii) Effect of non-registration of compulsorily registrable documents

(iv) Documents presented in the language not understood by registering officer

(v) Maps and plan to be enclosed

(vi) Time in which the document may be registered

(vii) Place where document should be registered

(viii) Grounds on which the Registrar can refuse to register the document

21. Practical problems regarding documentation and their solutions

(i) Stamped printed forms not required by bank

(ii) Spoiling of Stamps

(iii) Application for relief under Section 49 when to be made

(iv) Documents executed or kept blank

(v) Documents required to be registered, but not registered

(vi) When documents required to be attested are not attested and vice versa

22. Interpretation of Documents

¨ Ex praecedentibus et consequentibus optoma fit interpretatio

23. Types of borrowers

(i) Individual

(ii) Sole Proprietary Firms

(iii) Hindu Undivided Family (HUF)

(iv) Partnership firm

¨ Registration of Partnership firms

(v) Limited companies

(a) Memorandum of Association

(b) Articles of Association

(c) Certificate of Incorporation

(d) Certificate of commencement of business

(e) Board of Directors

( f ) Board Resolution

(g) Resolution of General Body of members relating to borrowing exceeding board's powers

¨ Grant of advances to the company

¨ Registration of charge with the Registrar of Companies

(vi) Statutory corporations

(vii) Trust

(viii) Co-operative societies

(ix) Literary societies

24. Different types of securities and documents

(A) Clean advance

(B) Secured Advances :

(i) Advance against bank fixed deposits

¨ Precautions to be taken in granting advance against bank fixed deposit

(ii) Advances against shares

¨ Precautions to be taken in granting advance against shares

(iii) Advances against debentures

¨ Precautions to be taken in granting advance against debentures

(iv) Advances against Life insurance policies

¨ Precautions to be taken in granting advance against Life Insurance Policy

(v) Advances against units of Unit Trust of India

¨ Precautions to be taken in granting advance against units of UTI

(vi) Advances against National Savings Certificates and other postal securities

¨ Precautions to be taken in granting advance against NSCs etc.

(vii) Advances against Government Securities and public sector bonds etc.

¨ Precautions to be taken in granting advance against Government securities and public sector bonds etc.

(viii) Advances against hypothecation of vehicles

¨ Precautions to be taken in granting advance against hypothecation of vehicles

(ix) Advances against Commodities

¨ Precautions to be taken in granting advance against commodities

(x) Advances against Gold ornaments

¨ Precautions to be taken in granting advance against gold ornaments

(xi) Advances against book debts

¨ Precautions to be taken in granting advance against Book debts

(xii) Advances against documents of title to goods

¨ Precautions to be taken in granting advance against Book debts

(xiii) Advances against Government supply bills

¨ Precautions to be taken in granting advance against Government Supply Bills

(xiv) Advance against mortgage of immovable property

PRECEDENTS

1. Promissory note payable on demand

2. Promissory note payable in instalments

3. Joint promissory note

4. Letter of Lien by the holder of Fixed Deposit for availing overdraft

5. Simple Letter of Guarantee to Bank

6. Bank Guarantee issued by the bank on behalf of a contractor

7. Agreement for Cash Credit

8. Agreement for Hypothecation of goods for securing advance

CHAPTER 25

Asset Liability Management System in Banks

1. Introduction

2. Asset-Liability Management (ALM) System in banks—Guidelines

(a) ALM Information Systems

(b) ALM Organisation

(c) ALM Process

3. Liquidity Risk Management

4. Currency Risk

5. Interest Rate Risk (IRR)

6. General

APPENDICES

1. Maturity Profile—Liquidity

2. Interest Rate Sensitivity

7. Amendments to Guidelines on Asset-Liability Management (ALM) System

CHAPTER 26

Risk Management System in Banks

1. Introduction

(i) Credit Risk

(ii) Investments

(iii) Off-Balance Sheet Exposure

(iv) Inter-bank exposure and Country Risk

(v) Market Risk

(vi) Liquidity Risk

(vii) Interest Rate Risk

(viii) Capital for Market Risk

(ix) Operational Risk

2. Risk Aggregation and Capital Allocation

3. Guidelines for Risk Management System in banks

4. Risk Management Systems in Banks

5. Risk Management Structure

6. Credit Risk—General

7. Instruments of Credit Risk Management

8. Credit Approving Authority

9. Prudential Limits

10. Risk Rating

11. Risk Pricing

12. Portfolio Management

13. Loan Review Mechanism (LRM)

(i) Qualification and Independence

(ii) Frequency and Scope of Reviews

(iii) Depth of Reviews

14. Credit Risk and Investment Banking

15. Credit Risk in off-balance sheet exposure

16. Inter-bank Exposure and Country Risk

17. Market Risk

18. Market Risk Management

19. Liquidity Risk

20. Alternative Scenarios

21. Contingency Plan

22. Interest Rate Risk (IRR)

23. Types of Interest Rate Risk :

(i) Gap or Mismatch Risk

(ii) Basis Risk

(iii) Embedded option Risk

(iv) Yield Curve Risk

(v) Price Risk

(vi) Reinvestment Risk

(vii) Net Interest Position Risk

24. Measuring Interest Rate Risk

25. Trading Book

26. Banking Book

27. Maturity Gap Analysis

28. Duration Gap Analysis

29. Simulation

30. Funds Transfer Pricing

(i) Deposit profit centre

(ii) Lending profit centre

(iii) Investment profit centre

(iv) Funds Management profit centre

31. Foreign Exchange (Forex) Risk

32. Forex Risk Management Measures

33. Capital for Market Risk

34. Operational Risk

35. Measurement

36. Risk Monitoring

37. Control of Operational Risk

38. Policies and Procedures

39. Internal Control

40. Operational Risk Management—Business Continuity Planning

41. Risk Aggregation and Capital Allocation

42. Stress Testing

(i) Background

(ii) Utility

(iii) Framework requirements

(iv) Identification of risks

(v) Stress scenarios / levels

(vi) Frequency of stress testing

(vii) Interpretation of stress test results

(viii) Remedial Actions

(ix) Effective Date

Illustrative Examples of Stress Tests

Stress test illustration 1 : Liquidity risk

Stress test illustration 2 : Interest rate risk – earnings perspective

Stress test illustration 3 : Credit risk – Impact on capital adequacy

Stress test illustration 4 : Credit risk

Stress test illustration 5 : Foreign exchange risk

CHAPTER 27

Prudential Norms on Capital Adequacy

1. Introduction

2. Prudential norms on capital adequacy

(i) Approach to implementation

(ii) Effective Date

(iii) Parallel run

(iv) Migration to other approaches under the Revised Framework

3. Scope of Application

4. Capital Funds

(i) General

(ii) Elements of Tier I Capital

(iii) Elements of Tier II Capital

(a) Revaluation reserves

(b) General provisions and loss reserves

(c) Hybird debt capital instruments

(d) Subordinated debt

(e) Limits on Tier 2 Capital

(vi) Deductions from capital

5. Capital Charge for Credit Risk

(i) General

(ii) Claims on Domestic Sovereigns

(iii) Claims on Foreign Sovereigns

(iv) Claims on public sector entities (PSEs)

(v) Claims on MDBs, BIS and IMF

(vi) Claims on banks

(vii Claims on Primary Dealers

(viii) Claims on corporates

(ix) Claims included in the regulatory retail portfolios

¨ Qualifying criteria

(i) Orientation criterion

(ii) Product criterion

(iii) Granularity criterion

(iv) Low value of individual exposures

(x) Claims secured by residential property

(xi) Claims secured by commercial real estate

(xii) Non-performing assets (NPAs)

(xiii) Specified categories

(xiv) Other Assets

(xv) Off-balance sheet items

(a) General

(b) Non-market-related off balance sheet items

(c) Market related off-balance sheet items

(d) Current Exposure Method

(e) Failed transactions

(xvi) Securitisation Exposures

(a) General

(b) Deduction of securitisation exposures from capital funds

(c) Implicit support

(d) Application of external ratings

(e) Risk weighted securitisation exposures

(f) Off-balance sheet securitisation exposures

(f) Recognition of credit risk mitigant

(h) Liquidity facilities

6. External credit assessments

(i) Eligible Credit Rating Agencies

(ii) Scope of application of external ratings

(iii) Mapping process

(iv) Long term ratings

(v) Short term ratings

(vi) Use of unsolicited ratings

(vii) Use of multiple rating assessments

(viii) Applicability of issue rating to issuer/ other claims

7. Credit Risk Mitigation

(i) General principles

(ii) Legal Certainty

(iii) Credit risk mitigation techniques - Collateralised transactions

(a) Collateral transactions-A collateralised transaction is one in which

(b) Overall framework and minimum conditions

(c) The comprehensive approach

(d) Eligible financial collateral

(e) Calculation of capital requirement

(f) Haircuts

(iv) Credit risk mitigation techniques-On-balance sheet netting

(v) Credit risk mitigation techniques–Guarantees

(a) Operational requirements for guarantees

(b) Additional operational requirements for guarantees

(c) Range of eligible guarantors (counter-guarantors)

(d) Risk weights

(e) Proportional cover

(f) Currency mismatches

(g) Sovereign guarantees and counter-guarantees

(vi) Maturity mismatch

(a) Definition of maturity

(b) Risk weights for maturity mismatches

(vii) Treatment of pools of CRM techniques

8. Capital charge for Market Risk

(i) Introduction

(ii) Scope and coverage of capital charge for market risks

(iii) Measurement of capital charge for interest rate risk

¨ Specific risk

¨ General Market Risk

¨ Capital charge for interest rate derivatives

¨ Capital charge for interest rate risk in foreign currencies

(iv) Measurement of capital charge for equity risk

¨ Specific and general market risk

(v) Measurement of capital charge for foreign exchange risk

(vi) Aggregation of the capital charge for market risks

9. Capital Charge for Operational risk

(i) Definition of operational risk

(ii) The measurement methodologies

(iii) The Basic Indicator Approach

10. Market Discipline

(i) General

(ii) Achieving appropriate disclosure

(iii) Interaction with accounting disclosures

(iv) Scope and frequency of disclosures

(v) Validation

(vi) Materiality

(vii) Proprietary and confidential information

(viii) General disclosure principle

(ix) Scope of application

(x) Effective date of disclosures

(xi) The disclosure requirements

(xii) Risk exposure and assessment

(xiii) General qualitative disclosure requirement

¨ Credit risk

ANNEXURE 1

Terms and conditions applicable to Innovative Perpetual Debt Instruments for inclusion as Tier 1 capital

ANNEXURE 2

Terms and conditions applicable to Debt capital Instruments to qualify for inclusion as Upper Tier 2 Capital

ANNEXURE 3

Issue of subordinated debt for raising Lower Tier 2 capital

ANNEXURE 4

Illustrations on Credit risk mitigation

ANNEXURE 5

Measurement of capital charge for market risks in respect of interest rate derivatives and options

Appendix 1

Capital Adequacy Ratio—Public Sector Banks

Appendix 2

Capital Adequacy Ratio—Private Sector Banks

Appendix 3

Capital Adequacy Ratio—Scheduled Commercial Banks

CHAPTER 28

Non-Performing Assets, Prudential Norms on Income Recognition,
Asset Classification and Provisioning

1. Introduction

2. Fixing of Prudential Norms on Income Recognition, Asset classification and provisioning by the Reserve Bank

(i) Non-Performing Assets

(ii) Amount becoming Past Due

(iii) Definition of Non-Performing Asset w.e.f. 31st March, 2001

(iv) Definition of Non-Performing Asset w.e.f. 31st March, 2004

3. Out of Order Status of an account

4. Overdue amount

5. Recognition of Income

6. Reversal of Income on NPAs

7. Reversal of income in case of leased Assets

8. Appropriation of recovery in NPAs

9. Application of interest

(A) Guidelines on preventing slippage of NPAs

(B) Background

(C) Recommendations

(i) Early Recognition of the problem

(a) Recognise the problem early

(b) Recourse to the new ordinance

(c) Early Alert System

(d) Special Mention Accounts

(ii) Identifying borrowers with genuine intent

(iii) Timeliness and adequacy of response

(iv) Focus on Cash Flows

(v) Management effectiveness

(vi) Consortium/multiple financing

(vii) Legal and related issues :

¨ Change in mindset regarding legal action

(viii) Auditor's Responsibility

(ix) Government relief

10. Furnishing a report of NPAs

11. Asset Classification

(i) Sub-standard Assets

(ii) Doubtful Assets

(iii) Loss Assets

12. Guidelines for classification of Assets

13. Accounts with temporary deficiencies

14. Regularisation of accounts near about the balance-sheet date

15. Classification of asset should be borrower-wise and not facility wise

16. Advances under consortium arrangements

17. Accounts, where there is erosion in the value of security

18. Advances to PACS/FSS ceded to Commercial banks

19. Advances against Term Deposits, NSC’s, KVP/IVP etc.

20. Loans with moratorium for payment of interest

21. Agricultural advances

22. Government guaranteed advances

23. Restructuring/Rescheduling of Loans

24. Treatment of Restructured Standard Accounts

25. Treatment of restructured sub-standard accounts

26. Upgradation of restructured accounts

27. General

28. Corporate Debt Restructuring

(i) Objective

(ii) Legal Basis

(iii) Stand-still Clause

(iv) Accounting treatment for restructured accounts

29. Projects under Implementation

30. Availability of security/net worth of borrower/guarantor

31. Take-out finance

32. Post Shipment Supplier’s credit

33. Export Project Finance

34. Advances under rehabilitation approved by BIFR/Term Lending Institution

35. Provisioning Norms

(i) Loss Assets

(ii) Doubtful Assets

(iii) Sub-standard assets

(iv) Standard assets

(v) Floating provisions

(vi) Provisions on Leased Assets

36. Guidelines for provisions under special circumstances

(i) Government guaranteed advances

(ii) Advances granted under rehabilitation package approved by BIFR/Term lending institutions

(iii) Advances against term deposits, NSCs etc.

(iv) Advances against gold ornaments etc.

(v) Treatment of interest suspense account

(vi) Advances covered by ECGC/ DICGC guarantee

(vii) Advance covered by CGTSI guarantee

(viii) Take-out finance

(ix) Reserve for Exchange Rate Fluctuations Account (RERFA)

37. Writing-off of NPAs

38. Settlement of Non Performing Assets-Obtaining Consent Decree from Court

39. Purchase/sale of Non Performing Assets

ANNEXURE I

Reporting Format for Non-Performing Assets—Gross and Net Position

ANNEXURE II

Relevant extract of the list of direct agricultural advances from the Master Circular on lending to priority sector

ANNEXURE III

Non-performing assets as percentage of total assets—Scheduled Commercial Banks

ANNEXURE IV

Non-performing assets as percentage of advances—Scheduled Commercial Banks

ANNEXURE V

Sector-wise non-performing assets public sector banks

ANNEXURE VI

Sector-wise non-performing assets of private sector banks

CHAPTER 29

Recovery of Bank Dues through Debt Recovery Tribunals

1. Introduction

2. Extent of the Act

3. Application of the Act

4. Definitions

¨ Forms of business in which banking companies may engage

5. Establishment of Debt Recovery Tribunal

6. Composition of Debt Recovery Tribunal

7. Qualifications for appointment as Presiding Officer

8. Term of Office

9. Staff of Tribunal

10. Registrar of the Tribunal

11. Additional powers and duties of Registrar

12. Establishment of Appellate Tribunals

13. Composition of Appellate Tribunal

14. Qualification for appointment as Chairperson of the Appellate Tribunal

15. Term of office of Chairperson of Appellate Tribunal

16. Staff of the Appellate Tribunal

17. Registrar of Appellate Tribunal

18. Powers and functions of the Registrar

19. Additional powers and duties of Registrar

20. Salary and allowances and other terms and conditions of service of Presiding Officer of Debt Recovery Tribunal

21. Filing up of vacancies

22. Resignation and removal

23. Orders constituting Tribunal or an Appellate Tribunal to be final and not to invalidate its proceedings

24. Jurisdiction, powers and authority of Tribunals

¨ Execution of foreign decree held by bank

¨ Tribunal has no jurisdiction over co-operative banks

¨ Admiralty jurisdiction whether ousted by constitution of Debt Recovery Tribunal

25. Power of Chairperson of Appellate Tribunal

26. Bar of Jurisdiction

27. Civil revisions

28. Submission of application by the Bank or Financial Institution

29. Parallel proceedings initiated by bank for recovery of loan

30. Other bank or financial institution may join the applicant bank

31. Application to the Tribunal should be in prescribed form and accompanied by documents and other evidence and fee

(a) Presentation and scrutiny of applications

(b) Procedure for filing application

(c) Application fee

(d) Contents of application

(e) Documents to accompany the application

(f) Bar seeking of plural remedies

(g) Copy of application to be endorsed to defendant

(h) Amendment of pleadings

32. Notice by Tribunal to defendant and furnishing written statement

33. Admission of liability by the defendant

34. Evidence of witnesses by way of affidavit

35. Claim of set-off and counter claim by the defendant

(a) Meaning of set-off

(b) Meaning of counterclaim

(c) Distinction between set-off and counterclaim

(d) Counter-claims—Court-fees

36. Grant of injunction or stay or attachment by Tribunal

37. Attachment of property during the pendency of the matter

38. Disobedience of order of Tribunal

39. Appointment of Receiver of any property etc.

40. Certificate of recovery issued against a company

41. Order relating to interest

42. Order to be signed and dated

43. Publication of orders

44. Forwarding copy of order to the applicant and defendant

45. Issue of Certificate to the Recovery Officer

46. Forwarding of copies of certificate of recovery to other Tribunals

47. Review of order by the Tribunal

48. Application to be dealt with expeditiously

49. Inherent powers of the Tribunal

50. Jurisdiction

51. Appeal to the Appellate Tribunal

52. Procedure of filing appeal before the Appellate Tribunal

53. Condonation of delay

54. Form of appeal

55. Contents of Memorandum of Appeal

56. Plural Remedies

57. Documents to accompany Memorandum of Appeal

58. Endorsing copy of appeal to the respondents

59. Fee

60. Appellate Tribunal to pass order after giving the parties an opportunity of being heard

61. Filing of reply by the Respondents

62. Opportunity of being heard to the parties

63. Order by the Appellate Tribunal

64. Inherent powers of Appellate Tribunal

65. Expeditious disposal of appeal by Appellate Tribunal

66. Compromise of suit

67. Deposit of amount debt due, on filing appeal

68. Tribunal and Appellate Tribunal not bound by the provisions of C.P.C.

69. Powers of Tribunal and Appellate Tribunal

70. Proceedings before Tribunal or Appellate Tribunal deemed to be judicial proceeding

71. Right to legal representation and Presenting Officers

72. Limitation

73. Recovery of Debt determined by Tribunal

(a) Attachment and sale of movable and immovable property of the defendant

(b) Arrest of the defendant and his detention in civil prison

(c) Appointment of receiver for the management of the properties of the defendant

74. Validity of certificate and amendment thereof

75. Stay of proceedings under Certificate and amendment or withdrawal thereof

76. Other Modes of Recovery

77. Application for certain provisions of Income Tax Act, 1961

78. Appeal against the order of Recovery Officer

79. Alternative remedy

80. Miscellaneous

81. Power of Tribunal to issue certificate of recovery in case of decree or order

82. Chairperson, Presiding Officer and staff of Appellate Tribunal and Tribunal to be public servants

¨ Criminal misconduct in discharge of official duty

83. Protection of action taken in good faith

84. Act to have overriding effect

85. Jurisdiction of High Court in petition against order of Debts Recovery Appellate Tribunal

86. Contempt

87. Simultaneous remedies

88. Joint trial when two actions arise out of same transaction

CHAPTER 30

Enforcement of Securities

1. Introduction

2. Enforcement of Security without Intervention of Court

¨ Goods in bank’s possession as pledge

(a) Sale of goods by private sale

(b) Sale of goods by public auction

(i) Each to a separate contract

(ii) Auction sale when complete

(iii) Right to reserve a bid by or on behalf of the seller

(iv) Auction sale subject to a reserve or upset price

(v) Effect of pretended bidding to raise the price

(c) Bank can bring a suit against the borrower and retain pledged goods as collateral security

(i) Goods hypothecated to bank

(ii) Assignment of life insurance policy of the borrower

(iii) Securities under English mortgage

(iv) Right of general lien

3. Initiation of legal action against the borrower

4. Service of notice in certain cases

5. Leave of the Court

6. Sick Industrial Companies (Special Provisions) Act, 1985

7. Companies Act, 1956

8. Presidency Towns Insolvency Act, 1908/Provincial Insolvency Act, 1920

9. Recovery of Debts Due to Banks and Financial Institutions Act, 1993

10. Filing of Suit

11. Jurisdiction of the Court

(i) Court in which suits to be instituted

(ii) Suits to be instituted where subject matter situate

(iii) Suit for immovable property situate within jurisdiction of different Courts

(iv) Place of institution of suit where local limits of jurisdiction of Courts are uncertain

(v) Suits for compensation for wrongs to person or movables

(vi) Other suits to be instituted where defendants reside or cause of action arises

12. Institution of suits

13. Plaint

14. Particulars to be contained in plaint

15. Plaint in money suits

16. Where the subject matter of the suit is immovable property

17. Statements plaint should contain

18. Framing of suit

19. Service of summons

20. Delivery of summons to the plaintiff or his agent

21. Simultaneous issue of summons for service by the Court controlled process

22. Service of summons by substituted service

23. Summons on Corporations/ Limited Companies

24. Leave to defend

25. Filing of written statement by the defendant/s

26. Contents of written statement

27. Ascertainment about denial or admission of facts

28. Court’s direction to opt for any one mode of alternative dispute resolution

29. Framing of Issues

30. Summary Procedure

31. Plaintiff entitled to decree if defendant does not appear and defend

32. Procedure for the appearance of defendant

33. Hearing of summons for judgement

34. Production of documents

35. Court’s power to set aside decree

36. Mortgage suits

37. Final decree in suit for sale

38. Where payment has not been made

39. Recovery of balance due on mortgage in suit for sale

40. Sale of property subject to prior mortgage

41. Interim Reliefs

(i) Arrest before judgment

(ii) Furnishing of security by the defendant

(a) Defendant to be sent to civil prison, if he fails to furnish security

(b) Attachment of property, where no cause shown or security not furnished

(c) Mode of making attachment of property

(iii) Temporary Injunctions

(a) Attachment of property before judgment

(b) Conditional attachment of property

(c) Issue of notice to the defendant before granting injunction

(d) Court to dispose of application for injunction within thirty days

(e) Consequences of disobedience or breach of injunction

(iv) Interlocutory Orders

(a) Power to order interim sale

(b) Detention, preservation, inspection etc. of subject matter of suit

(c) Application for such orders to be after notice

(d) When party may be put in immediate possession of land the subject matter of suit

(e) Deposit of money etc. in Court

(v) Appointment of receivers

¨ Duties of the Receiver

42. Hearing of the Suit and Examination of Witnesses

43. Judgment and decree

44. Contents of decree

45. Preparation of decree

46. Execution of decrees

47. Transfer of decrees

(i) On the application of the decree holder

(ii) To subordinate Court

(iii) Questions to be determined by the Court executing decree

(a) Question arising between the parties to the suit

(b) Question relating to execution, discharge or satisfaction of decree

48. Executing Court cannot go behind the decree

49. Enforcement of decree against the legal representatives of judgment-debtor

50. Procedure in Execution

51. Modes of execution of decree for payment of money

52. Payment of money by judgment-debtor under the decree

53. Payment out of Court to decree holder

54. Arrest and detention of judgment-debtor in civil prison

55. Attachment of property

56. Property liable to attachment and sale in execution of decree

57. Properties and money exempt from attachment or sale

58. Partial exemption of agricultural produce

59. Objections to attachment

60. Withdrawal of attachment of property

61. Sale of attached property

62. Distribution of proceeds of execution sale

63. Application of judgment-debtor to set aside sale

64. Payment of interest

65. Recovery of loan as arrears of Land Revenue

CHAPTER 31

Securitisation of Financial Assets in India

1. Concept of Securitisation

2. Features of Securitisation

3. Process of Securitisation

4. Securitisation in India

5. Legal and regulatory issues in securitisation

6. Special Purpose Vehicle as a Company

7. Legal Framework

8. Regulatory Framework

9. Widening Investor Base

10. Market Orientation

11. Role of RBI

12. Background—Reforms prior and till June 2002

13. Legal reform measures

14. Capital needs, NPAs and Asset Liability Management

15. Statement of Object and Reasons of SARFAESI Act, 2002

16. Scope of SARFAESI Act, 2002

17. Objects of SARFAESI Act, 2002

18. Extent of SARFAESI Act, 2002

19. Scheme of the SARFAESI Act, 2002

20. Need for a clear definitions

21. Non-clarity and ambiguity

22. Similar provisions—Enforcement of security

23. Natural justice—Edifice of the Act

24. SARFAESI Act, 2002—Remedy against the secured creditor

25. SARFAESI Act, 2002—Rationale—Some observations

26. Vires of the Act—Security enforcement

27. Securitisation under the Act

28. Certificate of Registration

29. Cancellation of Certificate of Registration

30. Failure to carry on business

31. Cease to receive or hold investment

32. Acquisition of financial assets

33. Whose assets may be acquired ?

34. Acquisition of financial assets—Modes

35. Acquisition of financial assets—Securitisation

36. Acquisition of financial assets—Reconstruction

37. DRAT and powers for transfer of cases to one tribunal

38. Transfer of pending cases and consequence

39. DRAT and jurisdictions for transfer of pending cases

40. Jurisdiction of Appellate Tribunal in transfer of pending cases

41. Notice of acquisition—Not mandatory

42. Amendment to Section 7

43. Issue of security receipts

44. Security receipts to be issued to qualified institutional buyer

45. Securities to be issued without public offer

46. Issue of security to be as per other Acts

47. Security receipt—Exemption from registration

48. Asset reconstruction

49. Asset reconstruction—Non obstante clause

50. Asset reconstruction—Securitisation company

51. Asset reconstruction—Measures thereof

52. Securitisation/reconstruction company to act as agent

53. Agent for recovery of dues

54. Manager in case of enforcement of securities

55. Certificate of Registration—A pre-requisite

56. Transitional provisions for existing companies

57. Dispute—Resolution thereof

58. Default—A basic presumption

59. Issue of General Directions—Power’s of RBI

60. Issue of Specific Guidelines—Power’s of RBI

61. RBI Directions—An outside interference

62. Enforcement of security interest

63. Amendment to Section 13

64. Section 13 of Securitisation Act, 2002—Validity

65. Is the natural justice is hit by the provisions of Section 13

66. Invokation of provisions of section—Permission of DRT not necessary

67. Provisions of Section 13 constitutionally valid

68. Reasonable protection to the borrower

69. Secured creditor to have access to remedies in case of default

70. Secured creditor's power not barred because civil Court had been moved

71. Non obstante clause—Enforcement of security

72. Simultaneous proceedings—Permissible

73. Notice to borrower

74. Notice to guarantor also

75. Notice—Content thereof

76. Notice—Nature of

77. Notice—Mandatory or discretionary

78. Notice—Statutory and non-statutory—Difference between

79. Notice serving—Methods of

80. Notice —Natural justice to prevail

81. Notice—Bank holding decree and execution petition pending—Validity of notice

82. Notice—Some express provisions

83. Notice—Not required in certain cases

84. Notice—Consequences of non-compliance

85. Notice—Non-compliance with provisions of Section 13 (2)—Notice quashed

86. Liability of borrower and amount

87. Taking possession/management of busines/assets—Meaning thereof

88. Express provisions

89. Appointment of manager

90. Rights of secured creditor—‘Any money is due’

91. Wide ranging powers and implications

92. Takeover—In case of consortium financing

93. ‘Discharge liability in full’—Meaning thereof

94. Workers rights—Enforcement of security

95. Power to notify the borrower the total loan not yet released

96. Provisions of Section 13 to be legal

97. Sale of Assets—Guidelines of Supreme Court

98. Sale of assets—Some basic principles

99. Sale of assets—Bonafide

100. Debtor's plea cannot be ignored

101. Secured creditor—Responsibility to be fair

102. Sale of assets—Loss of lien by secured creditor

103. Sale of assets—Right of auction purchaser

104. Sale of assets—Publicity and public auction

105. Possession of the Assets—Role of District Magistrate

106. Use of force by District Administration

107. Power of District Administration

108. No forcible dispossession

109. Appointment of Director and Administrator

110. Administrator—Meaning of

111. Publication of notice—Consequences of

112. Director—Definition of

113. Manager—Definition of

114. Duties of Directors/ Administrators

115. Custody—Meaning of

116. Powers of Directors/Administrators

117. Take-over of business—Consequences of

118. Bar on winding-up

119. Applicability of provisions of Companies Act

120. Similar provisions

121. Realisation of dues—Consequences of

122. Premature termination of Directors—Consequences of

123. Recovery of personal dues—Provisions of

124. Right of borrower to approach the DRT after the secured creditor has taken steps under Section 13 (4)

125. Vires of the Section 17

126. Condition with regard to payment of fee alongwith application

127. Action by DRT on application

128. Power of DRT—SARFAESI Act and Recovery of Debt Act

129. Restoration of assets management to borrower

130. Entitlement of the secured creditors

131. Disposal of application

132. Application to be disposed of within 4 months

133. Consequence of not disposing application within four months

134. Right to appeal and consequences

135. Appeal only after action taken

136. Alternative remedy to approach DRT

137. Court fee or ad-valorem court fee—Fixation of

138. Appellate Tribunal—Rule of

139. Period of making an Appeal

140. Dealing with Appeal (DRT)—Procedure thereof

(i) Scope of Section 18-B

(ii) Quantum of fee

(iii) Reduction of fee

(iv) Consequence of wrongful possession—To be settled in appeal

141. Secured creditor to compensate the borrower

142. Central Registry

143. Central Registrar

144. Filing of particulars—Mandatory

145. Responsibility of filing particulars

146. Time period of filing the particulars

147. Delayed filing of returns and consequence

148. Security interest—Modification of

149. Security interest—Secured creditor

150. Security interest—Securitisation company

151. Intimation of satisfaction

152. Satisfaction of security interest—Procedure

153. Records—Right of Inspection

154. ‘Any persons’—Meaning thereof

155. Penal provisions

156. Directions of RBI

157. Non-compliance of directions—Consequences

158. Offence—Meaning thereof

159. Trial for offence

160. Non-applicability of the provisions of Act

161. Immunity and extent

162. Legal proceedings—Meaning

163. Saving from actual proceedings

164. Offence—Meaning

165. Offence—Consequences

166. Offence—Who shall be guilty thereof?

167. A company—Meaning

168. Director—Meaning

169. Bar of jurisdiction

170. Bar of jurisdiction—Implications

171. Existence of alternative remedy—Not a bar for exercise of writ jurisdiction

172. Civil Court jurisdiction—Extent of exclusion

173. Meaning of inconsistency

174. Section 37 and implications thereof

175. Period of limitation

176. Specific laws not barred

177. In case of inconsistency

178. "Any other Act"—Meaning

179. Making of Rules—Provisions thereof

180. Rule—Meaning thereof

181. "May"—Used in imperative mode

182. "Without prejudice to the power"—Explained

183. "Any other matter"—Rules

184. Laying of Rules—Procedures

185. Validity of an act previously done

186. Applicability of provisions of Central Registry

187. Power to remove difficulty—Specific feature of delegated legislation

188. Amending provisions

(i) Companies Act—Amendments thereto

(i) SCRA—Amendments thereto

(iii) SICA—Amendment thereto

189. Repeal of Ordinance

190. Regularisation of acts done under the Ordinance

CHAPTER 32

Miscellaneous Services provided by Banks

1. Introduction

(A) Credit Cards, Smart Cards, Debit Cards etc.

(i) Credit Card

(a) Features of a credit card

(i) Cardholder's Name

(ii) Issuing Bank's Name

(iii) Card Number

(iv) Place of validity of the card

(v) Period of Validity

(vi) Photograph of the Cardholder

(vii) Logo

(viii) Hologram

(ix) Magnetic stripe

(x) Signature Panel

(xi) Customer Verification Value

(b) Procedure for issue of credit card

(c) Acquiring bank

(d) Issuer Bank

(e) Merchant Establish-ments

( f ) Collection of credit card outstandings

(i) Selection of Card holder

(ii) Collection System should start after the due date

(iii) Retention of title in goods purchased on credit

(iv) Personal guarantees

(v) Fixed Deposit Cushion

(vi) Direct debit to the cardholder's bank account

(vii) Bill of Exchange

(viii) Black List or stop list

(ix) Collection of credit card dues

(x) Guidelines for the banks undertaking Credit card business.

(xi) Fraud Control

(xii) Processing

(xiii) Fees, charges on credit cards

(ii) Smart Card

(iii) Debit Card

(a) Instructions relating to issue of Smart Card/Debit cards by banks

(b) Guidelines for the issue of Smart Cards/Debit Cards by banks

(B) Merchant Banking

(i) Corporate Counselling

(ii) Project Counselling

(iii) Loan Syndication for domestic borrowings

(iv) Arranging foreign currency loans

(v) Management of Public Issue

(vi) Portfolio Management

(C) Remittance of funds by Demand draft/Mail transfer/ telegraph/SWIFT transfer

(i) Demand Drafts

(a) Stop payment by the purchaser of bank draft

(b) Issue of duplicate draft

(ii) Mail Transfer

(iii) Telegraphic/Telex Transfers (TT Transfers)

(iv) Transfer by SWIFT messages

(D) Gift Cheques

(E) Travellers' cheques

(F) Safe Deposit Lockers

¨ Nomination Facility for Safe Deposit Vaults

(G) Safe Custody of Articles

(i) Safe Custody Receipt

(ii) Withdrawal of articles kept in safe custody

(iii) Maintenance of Safe Custody Register

(iv) Death of the Customer depositing articles for safe custody

(v) Nomination for return of articles kept in safe custody with bank

(vi) Insolvency of the depositor

(vii) Insanity of the depositor

(viii) Liability of banker for the goods kept in safe custody

(a) Negligence

(b) Dishonest acts of bank's employees

(c) Conversion

(d) Detinue

(H) Issue of bank guarantees

(I) Issue of Letters of Credit

(J) Standing instructions

(K) Securitisation of debt

(L) Factoring

(i) Types of factoring

(a) Recourse factoring

(b) Full service or without recourse factoring

(c) Disclosed factoring

(d) Undisclosed or confi-dential factoring

(e) Bulk factoring

( f ) Maturity factoring or Debt Administration

(g) Agency factoring

(h) Export factoring

(ii) Advantages of factoring

(a) Availability of finance to the supplier (principal)

(b) Services provided by factor

(c) Credit insurance

(d) Power of factors in collection of debts

(e) Elimination of trade discount or incentive for early payment

(iii) Disadvantage or constraints of factoring

(a) Reputation of principal

(b) Factoring cost

(c) Cost of assignment of debt

(d) Credit rating and appraisal of debtors

(e) Funds to factors

( f ) Regulation of factoring companies

(iv) Legal formalities of factoring

(a) Assignment of Debts

(b) Agreement between the Principal and Factor

(M) Forfaiting services

(N) Other Miscellaneous services like Execution of Trusts, Administra-tion of Estates etc.

(i) Execution of trusts

(ii) Executor and Administrator

(iii) Attorney

(iv) Providing investment advice

2. Banking Codes and Standards Board of India

¨ Code of Banks commitment to customers

CHAPTER 33

Consumer Protection and Banks

1. Introduction

2. Constitutional validity of the Consumer Protection Act, 1986.

3. Act not in derogation of any other law

4. Definitions

(i) Consumer

¨ "Consumer"—When not

(ii) Complainant

(iii) Complaint

(a) Adoption of unfair trade practice or restrictive trade practice by the trader

(b) Restrictive Trade Practice

(c) Goods bought or agreed to be bought by the complainant suffer from one or more defects

(d) Services hired or availed of or agreed to be hired or availed of by complainant suffer from deficiency in any respect

(e) Charging of prices which is in excess of the price fixed by or under law or displayed on goods or any package which contains such goods

(f) Goods which are hazardous to life and safety when used, are offered for sale in contravention of the provisions of any law

(iv) Defect

(v) Service

(vi) Deficiency

(a) Cases of deficiency in banking services

(i) Collection of cheques/ dishonour of cheques etc.

(ii) Demand Draft

(iii) Locker facility

(iv) Travellers cheques

(v) Fixed Deposits

(vi) Payment of interest

(vii) Repayment of deposits by Non-Banking Finance Companies

(viii) Pledge

(ix) Hypothecation

(x) Sanction of Loan

(xi) Operation of the accounts

(xii) Freezing of sanctioned working facilities

(xiii) Miscellaneous services

(b) Cases, where no deficiency in services

(i) Cheques

(ii) Demand Drafts

(iii) Fixed Deposit

(iv) Grant of Credit facilities

(v) Pledge

(vi) Hypothecation

(vii) Bank Guarantee

(viii) Miscellaneous

(ix) Force majeure

5. Consumer Redressal Agencies

(i) Consumer Disputes Redressal Forum

(a) Composition of the District Forum

(b) Procedure of appointment of members of District Forum

(c) Tenure of members of District Forum

(d) Salary or Honorarium of members of District Forum

(e) Jurisdiction of District Forum

¨ Subject wise jurisdiction

¨ Pecuniary jurisdiction

¨ Territorial jurisdiction

(ii) Consumer Disputes Redressal Commission

(a) Composition of the State Commission

(b) Tenure of members of State Commission

(c) Salary or honorarium of members of State Commission

(d) Jurisdiction of the State Commission

¨ Original jurisdiction

¨ Appellate Jurisdiction

¨ Revisional Jurisdiction

(iii) National Consumers Disputes Redressal Commission

(a) Composition of the National Commission

(b) Tenure of members of National Commission

(c) Salary or honorarium of members of National Commission

(d) Terms and Conditions of service of the President and members of the National Commission

(e) Removal of President or members from office in certain circumstances

( f ) Jurisdiction of the National Commission

¨ Original jurisdiction

¨ Appellate Jurisdiction

¨ Revisional Jurisdiction

6. Manner in which complaint shall be made

7. No complaint can be filed if the issue involved has been decided by the Courts

8. No complaint can be filed, if the matter has been considered by the High Court in the writ petition

9. No complaint can be filed, if the matter has been adjudicated by the Arbitrator

10. No complaint can be filed, if the matter had been adjudicated by the MRTP Commission

11. Limitation period for filing the complaint before the Authorities under Consumer Protection Act

12. Procedure on receipt of complaint

13. District Forum should not entertain a complaint, when the matter is sub-judice

14. District Forums are not to adjudicate complicated questions of facts and law

15. Finding of the District Forum

16. Appeal to the State Commission against the order of District Forum

17. Procedure applicable to State Commission

18. Appeals to the National Commission

19. Hearing of Appeal

20. Power and procedure applicable to the National Commission

21. Procedure to be followed by the National Commission

22. Procedure for hearing the appeal by National Commission

23. Additional powers of the National Commission, State Commission and District Forum

24. Appeal to Supreme Court from the orders of National Commission

25. Finality of Orders

26. Enforcement of orders of the District Forum, the State Commission or the National Commission

27. Dismissal of frivolous or vexatious complaints

28. Penalties

29. Compensation—Grant of

30. Compensation—Determination of

CHAPTER 34

Banking Ombudsman

Frequently Asked Questions

Banking Ombudsman Scheme, 2006

CHAPTER I

PRELIMINARY

1. Short title, commencement, extent and application

2. Suspension of the scheme

3. Definitions

CHAPTER II

ESTABLISHMENT OF OFFICE OF BANKING OMBUDSMAN

4. Appointment and tenure

5. Location of office and temporary headquarters

6. Secretariat

CHAPTER III

JURISDICTION, POWERS AND DUTIES OF BANKING OMBUDSMAN

7. Powers and jurisdiction

CHAPTER IV

PROCEDURE FOR REDRESSAL OF GRIEVANCE

8. Grounds of complaint

9. Procedure for filing complaint

10. Power to call for information

11. Settlement of complaint by agreement

12. Award by the banking ombudsman

13. Rejection of the complaint

14. Appeal before the appellate authority

15. Banks to display salient features of the scheme for common knowledge of public

CHAPTER V

MISCELLANEOUS

16. Removal of difficulties

17. Application of the Banking Ombudsman Schemes, 1995 and 2002

Annexure ‘A’

Form of complaint (to be lodged) with the Banking Ombudsman

CHAPTER 35

Balance Sheet and Profit and Loss Accounts of Banks

1. Introduction

2. Submission of balance sheet and profit and loss account to Reserve Bank

3. Publication of Balance-sheet etc.

4. Instructions Relating To Balance Sheet

(a) Transfer to Reserve Fund

(b) Provision for Retirement Benefits to staff

(c) Provision for Foreign Exchange Losses

(d) Development Fund

(e) Profit on sale of Fixed Assets

( f ) Treatment of excess provisions for depreciation on investments

(g) Rate of depreciation on computers

(h) Classification and valuation of investments

5. Instructions regarding revised Guidelines

6. Non-SLR Investments of Banks

7. Booking of Income

8. Declaration of Dividend by Public and Private Sector Banks

9. Proforma of Report on Capital Structure, Earnings, Provisions and Appropriations in The Context of Dividend Declaration

10. Analysis of Balance sheets

11. Accounting of expenditure of Voluntary Retirement Scheme

(a) The VRS related expenditure will comprise of

(b) Ex-gratia payment

(c) Termination benefits

(d) Period of deferment

(e) Leave encashment expendi-ture

( f ) Allocation of expenditure

(g) Disclosure

(h) When acceptance of application is not completed

12. Disclosures in Balance Sheet

CHAPTER 36

List of Returns/Statements furnished to RBI by Banks

¨ Returns required to be filed by the banks to reserve bank

CHAPTER 37

Audit and Inspection in Banks

1. Concurrent Audit

(A) Appointment of Concurrent Auditors and their accountability

(B) Remuneration of Concurrent Auditors

(C) Facilities which should be provided to the Concurrent Auditors

(D) Objectives of concurrent audit

(E) Instructions issued by the Reserve Bank of India regarding Concurrent Audit

(F) Coverage of business/branches by concurrent audit

(i) Departments / Divisions / branch offices dealing with Treasury functions

(ii) Branches having large credit and exposure

(G) Types of activities to be covered by concurrent audit

(H) Suggested items of coverage of concurrent audit

(1) Cash

(2) Investments

(3) Deposits

(4) Advances

(5) Foreign Exchange Transactions

(6) Housekeeping

(7) Other items

(I) Duties of concurrent auditors

(i) Checking on First day of audit

(a) Cash

(b) Postage stamps, travellers cheques, gift cheques, petty cash etc.

(c) Foreign currency

(d) Government securities

(e) Security forms

( f ) Inward Bills

(ii) Checking on daily basis

(a) Cash and cash book

(b) Deposits

(c) Advances

(d) Bills

(e) Letters of Credit

( f ) Bank Guarantees

(g) Foreign Exchange

(h) Income

(i) Miscellaneous

(iii) Checking on weekly basis

(a) New accounts opened

(b) Issue of Cheque Books

(c) Cheques returned register

(d) Bills returned register

(e) Credits and debits to RBI/ SBI/Local branch

(f) Clearing Differences

(g) Disposal of inward and outward bills

(h) Suit filed register

(i) Despatch and presentation of outstation instruments

(iv) Checking on fortnightly basis

(a) Deposit account ledger

(b) General Ledger and day book

(c) Arrangement for keeping daily voucher bundles

(d) Disposal of complaints received

(e) Disposal of credit proposals

( f ) Refinancing of loans from NABARD/IDBI

(g) Casting, checking and tallying of balances

(h) Registration of charges with Registrar of Companies

(i) Inventory statements and drawing powers register

( j) Lodgement of claim with DICGC and ECGC

(v) Checking on monthly basis

(a) Loans and advances

(b) Control returns

(c) Bills remaining outstanding beyond reasonable time

(d) Overdue bills of exchange

(e) Reconciliation of bank accounts

( f ) Staff accounts

(g) Adjustment of petty cash account

(h) Outstanding suspense account

(i) Surprise check of cash, foreign currencies etc.

( j) Reconciliation accounts

(k) Balancing of ledger accounts

(l) Compliance of inspection or audit reports

(m) Government business

(vi) Checking on quarterly basis

(a) Operations in cash credit accounts

(b) Classification of advances

(c) Claims for interest subsidy

(d) Scrutiny of quarterly operational statement submitted by borrowers

(e) Charging of interest rate

(f) Overdue credit limits

(g) Commission earned on government business

(h) Fraud or defalcation occurred in the branch

(i) Submission of compliance reports

( j) Security arrangements

(k) Advance portfolio

(l) Customer service

(m) Branch Income

(n) Staff cards

(o) System procedures, security aspects etc.

(J) Report by concurrent auditors and action thereon

2. Statutory Audit

(A) Appointment of Branch Auditor

(B) Functions and duties of statutory auditor of a branch

(C) Auditor's programme for audit of branch

(D) Check list for audit of branch

(1) Cash

(2) Branch Investments

(3) Bank's Premises

(4) Furniture and fixtures

(5) Bills Purchased and Discounted

(6) Deposit and other accounts

(7) Suspense Account

(8) Bills for collection

(9) Contingent Liabilities

(10) Draft, TTs, MTs and Banker's cheques payable

(11) Stationery and Postal Stamps

(12) Borrowings Accounts

(13) Provisions

(14) Head Office Account

(15) Profit and Loss Account

(16) Loans and Advances

(a) Ledgers and Advances

(b) Constitution of borrowers

(c) Documents

(d) Verification of securities

(i) Shares and other securities

(ii) Hypothecation of goods

(iii) Fixed Deposit Receipts

(iv) Immovable properties

(v) Insurance policies

(vi) Vehicles / Hire Purchase documents

(vii) Gold ornaments and bullion

(e) Inspection of Godowns

( f ) Scrutiny of ledgers

(E) Statutory Audit of Head Office of the Bank

(F) Check List of Statutory Auditor of Head Office of Bank

(1) Branch Returns and reports

(2) Internal Control Measures of the bank

(3) Report of the Reserve Bank inspection/internal auditors

(4) Statutory books and records

(5) Directors' fees, allowances and expenses

(6) Depreciation of the fixed assets

(7) Auditors Fees and expenses

(8) Miscellaneous expenditure

(G) Statutory auditor's report

(H) Qualifications in the audit report

(I) Long form audit report

(J) Questionnaire in connection with long form audit report in case of banks

(i) General

(ii) Balances with other banks

(iii) Investments

(iv) Advances

(v) Premises

(vi) Other assets/liabilities

(vii) Reserves and provisions

(viii) Miscellaneous

(K) Questionnarie in connection with the long form audit report in case of bank branches

(i) General

(1) Branch Returns

(2) Reconciliation of Control and Subsidiary Records

(3) Previous Reports

(4) Inter Branch accounts

(ii) Assets

(1) Cash

(2) Balances with Reserve Bank/SBI etc.

(3) Balances with other Banks

(4) Money at call and short notice

(5) Investments

(6) Advances

(7) Depreciation

(8) Other assets

3. Internal Audit

(A) Internal Audit of Branch

(1) Cash

(2) Safe custody items

(3) Godowns

(4) Stocks hypothecated to the bank

(5) Documents

(6) Saving Bank Accounts

(7) Term Deposits

(8) Current Account

(9) Borrower's ledgers

(10) Limits sanctioned

(11) Temporary or clean advances

(12) Bills purchased

(13) Bank Guarantees issued by the bank

(14) Payments made on account of branches

(15) Head Office Account

(16) Stationery

(17) Stamps

(18) Interest received

(19) Commission and exchange receipts

(20) Service charges

(21) Purchase and Sale of Capital assets

(22) Profit and Loss Account

(a) Checking of vouchers and sanction of Head Office

(b) Salary Bills

(c) Medical Expenses

(d) Travelling Expenses

(e) Overtime paid to the staff

( f ) Postal charges

(g) Telephone, fax, internet and mobile telephone charges

(h) Stationery

(i) Payment of interest

( j) Commission paid

(k) Other expenses

(B) Internal Audit of Head Office

(1) Bank's Investments

(2) Reconciliation of interbranch accounts

(3) Stationery

(4) Purchase of fixed assets, furniture and fixtures etc.

(5) Purchase and construction of premises

(6) Borrowings from other banks

(7) Reserve

(8) Renewal of credit limits

(9) Medical bills

(10) Fees and travelling expenses of Directors

(11) Internal audit report

(12) Establishment expenses

(13) Publication and other miscellaneous expenses

4. Revenue Audit

(a) Interest charged on Advances

(b) Cash credit/Overdraft etc.

(c) Various charges

(d) Bills purchased/discounted

(e) Exchange commission

( f ) Safe Custody and Locker rent etc.

(g) Income from Investments

(h) Letter of Credit

(i) Interest paid on deposits

( j) Expenses

5. Computer Audit

(A) Advanced Ledger Posting Machines (ALPM)

(B) Total Branch Mechanisation (TBM)

(C) Centralised Computer system

(D) Audit of Advanced Ledger Posting Machines (ALPM)

¨ Check list for audit of Advanced Ledger Posting Machines

(a) General
(b) Power Requirements
(c) Pass words
(d) Back ups
(e) Operational check
(f) Floppy
(g) Application review
(h) Master files
(i) Cheque
( j) Clearance Module
(k) Entries relating to transactions
(l) Audit Trails
(m) Balancing of books
(n) Checking/verification

(E) Audit of Total Branch Mechanisation (TBM)

CHAPTER 38

Frauds and Corruption in Banks

1. Introduction

2. Fraud—Definition of

3. Classification of Frauds

4. Definitions of Offences relating to Banks

(i) Dishonest misappropriation of property

(ii) Criminal breach of trust

¨ Punishment for Criminal breach of trust

¨ Criminal breach of trust by public servant, or by banker, merchant or agent

(iii) Cheating

¨ Cheating by personation

¨ Punishment for cheating

(iv) Forgery

(v) Making a false document

¨ Punishment for forgery

¨ Forgery of record of court or of public register etc.

¨ Forgery of valuable security, will etc.

¨ Forgery for purpose of cheating

¨ Forged document or electronic record

¨ Uses as genuine a forged document or electronic record

(vi) Falsification of accounts

(vii) Offences relating to currency notes and bank notes

¨ Using as genuine, forged or counterfeit currency notes or bank notes

¨ Possession of forged or counterfeit currency notes or bank notes

5. Important acts relating to offences in banks

(i) Material alterations in negotiable instruments/documents

¨ How to check alterations in the negotiable instruments/ documents

(ii) Forged signatures

(a) Detection of forged signatures

(b) Features of forged signatures

(iii) Counterfeit travellers cheques, bank drafts etc.

(iv) Counterfeit banknotes

¨ Authority to impound counterfeit banknotes

¨ Stamping on the counterfeit banknote

¨ Issue of Receipt to the Tenderer

¨ Counterfeit banknotes detected in cash tenders received by the branch

¨ Guidelines on detection of counterfeit banknotes

¨ Examination of banknotes

¨ Establishment of Forged Note Vigilance Cell

¨ Provision of ultraviolet lamps and other infrastructure

¨ Data compilation and submission of returns

Annexure I

Acknowledgement Receipt to be issued to the tenderer of counterfeit banknotes

ANNEXure II

ANNEXure III

ANNEXURE IV

Designs of bank notes issued by the Reserve Bank of India since 1967

ANNEXure V

List of nodal officers–Statewise for monitoring ficns

6. Fraud Prone Departments in the Banks

(i) Deposit Accounts Department

¨ Preventive measures suggested

(ii) Loans and Advance Department

(a) Term Loans

¨ Preventive measures suggested

(b) Cash credit accounts

¨ Preventive measures suggested

(iii) Cash Department

(a) Robbery in banks

(b) Robbery in premises

(c) Forged currency notes

(iv) Credit Card Department

¨ Preventive measures suggested

(v) Purchase Bills Department

¨ Preventive measures suggested

(vi) Remittance Department

¨ Preventive measures suggested

(vii) Foreign Exchange Department

¨ Preventive measures suggested

(viii) Lockers room and safekeeping Department

¨ Preventive measures suggested

7. Computer frauds in the banks

(i) Computer crimes which are generally committed

(a) Spy software

(b) Destruction of data of the computer system

(c) Wire tapping

(d) Frauds in Electronic fund transfer

(e) Hacking

( f ) Software piracy

(g) Theft of software accessories, equipments etc.

¨ Preventive measures suggested

(ii) Laws to deal with computer crimes

(a) Penalty for damages to computer, computer system etc.

(b) Tampering with computer source documents

(c) Hacking with Computer system

(d) Adjudication of penalty

(e) Powers to investigate offences under the Information Technology Act, 2000

8. Reporting of fraud cases to Reserve Bank—Classification of Frauds

(i) Frauds involving Rs. 1 lakh and above

(ii) Frauds committed by unscrupulous borrowers

(iii) Frauds involving Rs. 100 lakh and above

(iv) Cases of attempted fraud

9. Reports of frauds to the top management

10. Steps to be taken in specified cases of frauds

(i) Frauds committed by unscrupulous borrowers

(ii) Frauds relating to negotiable instruments

(iii) Cases of attempted frauds

(iv) Submission of Quarterly/Half yearly Statements

(v) Quarterly Returns—Report on Frauds Outstanding (FMR-2)

(vi) Progress Report on Frauds (FMR-3)

(vii) Reporting of Frauds to the Board

(viii) Quarterly Review of Frauds

11. Annual Review of Frauds by the Banks

12. Guidelines for reporting frauds to Police/CBI

(i) Private sector banks

(ii) Public sector banks

13. Closure of Fraud Cases

14. Report of cases of theft, bulgary, dacoity and bank robberies

ANNEXURE

Instructions for compiling the Fraud Report (FMR 1)

CHAPTER 39

Vigilance in Banks

1. Introduction

2. Classification of vigilance cases in banks

(i) Preventive vigilance

(ii) Detective vigilance

(iii) Punitive vigilance

3. Chief Vigilance Officer in banks

4. Central Vigilance Commission

5. Special chapter on banks added in the Vigilance Manual

(i) Vigilance case

(ii) Vigilance cases in banks

6. Strengthening of vigilance mechanism for speedy disposal in banks

¨ Category 'F' frauds :

7. Advisory Board for banking, commercial and financial frauds

8. Regional Advisory Boards on bank frauds

9. Investigation of cases by CBI

10. Investigation reports received from the CBI

11. Complaints and action thereon

12. Investigation of complaints by CVO

(i) Anonymous/Pseudonymous complaints

(ii) Other complaints

13. Action on Investigation Report

14. Categorisation of cases

15. Reconsideration of the Commission’s Advice

16. Procedure for imposing major penalty

17. Action by Disciplinary authority on the report of Inquiry Report

18. Procedure for imposing Minor penalties

19. Appeal and review

20. Action against persons making false complaints

21. Difference of opinion between the CVO and CMD

22. Grant of immunity to "Approvers" in Departmental inquiries

23. Supervision by CVC on vigilance activities

24. Institutional Meetings

25. Reporting and confirmation of action taken beyond their powers

26. Report of the high level group for strengthening of vigilance mechanisms for speedy disposal

(i) Introduction

(ii) Terms of reference

(iii) Meetings

(iv) Materials utilised

(v) Recommendations

(vi) Reporting to RBI

(vii) Prioritisation of Cases by C.B.I.

(viii) Delays in internal investigation and issue of chargesheet

(ix) Strengthening Internal Control Mechanisms

(x) Acknowledgements

27. Report of the sub-Group constituted by high level group on frauds in banking sector

(i) Introduction

(ii) Terms of reference

(iii) Internal Control Mechanism

(iv) Inspection & Audit

(v) Branch visit

(vi) Rationalisation of control returns

(vii) Internal House Keeping

(viii) Delegation of Powers

(ix) Credit Related Funds

(x) Mobility of Staff

(xi) General observations

(xii) Reporting of fraud to RBI, Police and CBI

(xiii) Disciplinary Action-Delays : Causes and suggestions

(a) Investigation

(b) Suggestions

(xiv) General Observations

CHAPTER 40

Universal Banking

1. Introduction

2. Narasimham Committee on the Banking Sector Reforms

3. Khan Working Group

4. Report of Working Group

(a) Changes in role, structure and operations

(b) Change in Regulatory and Legal Framework

(c) Changes in Supervisory Practices

(d) Statutory Obligations

(e) Re-organisation of State-level institutions (SLIs)

( f ) Harmonising the Role, Operations and Regulatory Framework of DFIs and Banks

(g) Organisation Redesign

(h) Risk Management

(i) Information Technology and MIS

( j ) Human Resource Development

5. Harmonising the Role and operations of Development Financial Institutions and Banks : A discussion paper

(a) Approach to Universal Banking

(b) Meeting the long-term capital requirements of the Corporate sector

(c) Future role of DFIs

(d) Regulatory and supervisory Issues

6. Architecture of Financial System of the future

7. Approach to Universal Banking in India

8. Operational and Regulatory requirements for conversion of DFI into a bank

9. Salient Operational and Regulatory issues to be addressed by the FIs for conversion into a universal bank :

(a) Reserve Requirements

(b) Permissible activities

(c) Disposal of non-banking assets

(d) Composition of the Board

(e) Prohibition on floating charge of assets

( f ) Nature of subsidiaries

(g) Restrictions on investments

(h) Connected lending

(i) Licensing

( j ) Branch Network

(k) Assets in India

(l) Format of Annual Reports

(m) Managerial remuneration of the Chief Executive Officer

(n) Deposit Insurance

(o) Authorised Dealer’s Licence

(p) Priority Sector Lending

(q) Prudential Norms

CHAPTER 41

Internet Banking

1. Introduction

2. Working Group on Internet Banking

3. Basic Structure and Topology of Internet

4. E-Mail

5. World Wide Web (WWW)

6. Wireless Application Protocol (WAP)

7. E-Commerce

8. Business-to-Consumers (B2C)

9. Business-to-Business (B2B)

10. Internet Banking

11. International Experience

12. The Indian Scenario

13. Future Scenario

14. Types of Risks Associated with Internet Banking

(a) Operational Risk

(b) Security Risk

(c) System Architecture and Design

(d) Reputational Risk

(e) Legal Risk

( f ) Money Laundering Risk

(g) Cross Border Risks

(h) Strategic Risks

(i) Other Risks

( j ) Credit Risk

(k) Liquidity Risk

(l) Interest rate risk

(m) Market Risk

(n) Risk of unfair competition

15. Group's recommendations and RBI's Directions

(I) Technology and Security Standards

(II) Legal Issues

(III) Regulatory and Supervisory Issues

CHAPTER 42

Sick Industries and their rehabilitation

1. Introduction

2. Industrial company

3. Sick Industrial Company

4. Causes of sickness

4(A) Causes relating to borrower

4(B) Causes relating to project

(i) Deficiency in Planning

(ii) Deficiency in implementation of project

(iii) Deficiencies in production

4(C) External causes

5. Symptoms of sickness

7. Purpose and object of the Act

8. Conferment of jurisdiction on the BIFR

9. Authorities under Sick Industrial Companies (Special Provisions) Act, 1985

(i) Board for Industrial and Financial Reconstruction

(ii) Appellate Authority for Industrial and Financial Reconstruction

10. Reference to Board

(i) Reference by the Board of Directors of the Company

(ii) Appointment of Operating Agency

(iii) Time limit for making inquiry

(iv) Period of limitation

(v) Appointment of Special Director/s on the board of the company

(vi) Power of Board to make suitable order on the completion of inquiry

(vii) Board may give time to the company to make its networth

(viii) Board may appoint operating agency, if it is not practicable that the company may make its networth

(ix) Preparation of scheme by the operating agency

(x) Formulation of scheme by operating agency

¨ Viability

(xi) Monitoring and implementation of package

11. Furnishing of information to BIFR

12. Consent for providing financial assistance

13. Applicability of the Sick Industrial Companies (Special Provisions) Act, 1985

14. Broad instructions for grant of relief and concessions

15. Single Window Concept for Lending (SWCL)

16. Sanction of the scheme by the Board

17. Different cut-off dates for crystallization of dues

18. Review of the sanctioned scheme

19. Transfer of property and liability

20. Scheme shall be binding on all concerned

21. Rehabilitation by giving financial assistance

22. Arrangement for continuing operations etc. during inquiry

23. Winding up of sick industrial company

24. Preparation of inventory by operating agency

25. Suspension of legal proceedings—No distinction as between proceedings by company or against company

26. Suspension of legal proceedings, contracts etc.

27. Shareholders of sick industrial company cannot appoint director, if the management of the company is taken over

28. Declaration by the Board about suspension of contracts of the company

29. Potentially Sick Industrial Company

30. Report of loss of net worth of fifty per cent or more to Board by Central Government etc.

31. Powers of the Board on receipt of report

32. Winding up of the industrial company

33. Appeal to Appellate Authority

34. Judicial review by the High Court

35. Res judicata

36. Repeal of Sick Industrial Companies (Special Provisions) Act, 1985

37. Companies (Second Amendment) Act, 2002

(i) Industrial Company

(ii) Industrial Undertaking

(iii) Net worth

(iv) Operating Agency

(v) Sick Industrial Company

38. Important Provisions

(i) Constitution of National Company Law Tribunal

(ii) Composition of Tribunal

(iii) Qualification for appointment of President and Members

(iv) Appellate Tribunal

(v) Constitution of the Appellate Tribunal

(vi) Revival and Rehabilitation of Sick Industrial Companies :

(a) Reference by the Company to the Tribunal

(b) Reference by the Government, Reserve Bank, State Government etc.

(c) Time limit for making reference

(d) Passing of the Order by the Tribunal

(vii) Enquiry into working of Sick Industrial Companies

(viii) Appointment of Special Directors in the Sick Industrial Company

(ix) Powers of Tribunal to make suitable order on completion of inquiry

(x) Preparation of the Scheme

(xi) Sanction of the Scheme by the Tribunal

(a) Publication of the Scheme

(b) Keeping of the Scheme at the Registered Office of the Company

(c) Modification in the Scheme

(d) Sanction of the Scheme

(e) Modification in the Scheme by the Tribunal

(xii) Transfer of Property if provided in the Scheme

(xiii) Sanction of the Scheme conclusive evidence of fulfillment of all requirements

(xiv) Filing of the Scheme with the Registrar of Companies

Scheme binding on all concerned

(xv) Preparation of the Scheme by the Creditors

(xvi) Removal of difficulties in the implementation of the scheme

(xvii) Tribunal may direct operating agency to implement the scheme

(xviii) Distribution of sale proceeds

(xix) Monitoring of the Scheme

(xx) Rehabilitation by giving financial assistance

(xxi) Arrangement for continuing operations, etc. during inquiry

(xxii) Winding up of sick industrial company

¨ Winding-up—Realisation and distribution of assets of company in liquidation

(xxiii) Operating agency to prepare complete inventory, etc.

(xxiv) Direction not to dispose of assets

(xxv) Power of Tribunal to call for periodic information

(xxvi) Misfeasance proceedings

CHAPTER 43

Customer Services in Banks

1. Introduction

2. Banking Commission

3. Talwar Working Group on Customer Services in Banks

4. Standing Committee on customer Service of banks

5. Steps taken by the Government of India and Reserve Bank of India to redress the grievances of customers

6. Progress in Customer Service in banks

7. Assessment of improvements in customer service

8. Goiporia Committee on Customer Service

(a) Constitution of the Committee

(b) Terms of Reference of the Committee

(c) Recommendations of Goipoiria Committee

(d) Recommendations of Goiporia Committee report which are required to be implemented

¨ Service at the counter

¨ Doorstep banking

¨ Uninterrupted service

¨ Guidance to customers

¨ Teller System

¨ Cash related issues

¨ Deposit and other accounts

¨ Saving bank Passbooks/Statement of Accounts

¨ Term deposits

¨ Advisory services on deposit schemes

¨ Brochures/Pamphlets for guidance of customers

¨ Safe Deposit lockers

· Extension of Safe Deposit Locker/Safe Custody Article Facility and Access to Safe Deposit Lockers/Return of Safe Custody Articles by banks

¨ Remittance and collection of Instruments

¨ Banker’s Cheques, Pay Orders

¨ Bank Orders

¨ Collection

¨ Time frame for collection of outstation instruments up to Rs. 10,000 and local cheques above Rs. 5000/-

¨ Time frame for outstation cheques up to Rs. 10,000

¨ Credit of local cheques above Rs. 5,000

¨ Safeguards to limit the risks in immediate credit

¨ Steps for ensuring time schedule

¨ Measures for reduction in time taken for realisation of cheques

¨ Delay in collection of outstation cheques-Need for issuance of Payable at par/Multicity cheques

¨ Delay in collection

¨ Bills

¨ Export proceeds

¨ Dishonoured instruments

¨ Overdue interest

¨ Reimbursement of interest by paying bank

¨ Valuedating of telegraphic transfers (TTS) and mail transfers (MT)

¨ Loans and advances

¨ Simultaneous appraisal

¨ Delegation of powers

¨ Consortium finance

¨ Work culture, discipline and attitude

¨ Job enrichment

¨ Training

¨ Quality circles

¨ Reward and recognition

¨ Work technology

¨ Systems and procedures

9. Customer Service Audit

10. Customer Surveys

11. Customer Service Ratings

A. Methodology of implementation

B. The Rating System

12. Constitution of Customer Service Committees

13. Visit of branches by Senior Officers

¨ Periodical meetings with bodies representing customers

¨ Customer relation programmes

¨ Inspection/Audit reports

¨ Complaint prone areas

¨ Complaint prone branches

¨ Complaint prone employees

¨ Periodical visits by senior officials

¨ General

¨ Specialised branches

¨ Optium size of branches

¨ Spinning-off of large branches

¨ Manpower redistribution/Redeployment

¨ Publicity by banks

¨ Customer education

¨ Sunday banking

¨ Security arrangements

¨ Telephone enquiry

¨ Annual awards

¨ Non-Banking services

¨ Display of time norms

CHAPTER 44

Report of Expert Committee on Legal Aspects of Bank Frauds

(MITRA COMMITTEE)

1. Constitution of the Committee

2. Terms of reference

3. Observations of the Committee

(i) Contractual dimension of fraud

(ii) Tortuous dimensions of fraud

(iii) Criminal dimension of Fraud

4. Financial Fraud

5. Definitional Limitation :

(i) On the question of intention in a chain of transaction

(ii) On the issue of relationship between the parties to checkmate each other to prevent fraud

(iii) Tracing and restoration of the property

(iv) Common law definition of fraud and its inadequacies

(v) Major frauds

6. Evidential complexity

7. Procedure of Investigation and Investigating Agency

8. Inadequate justice delivery system

9. Cross-border relationship

10. Concept of Fraud in Common law

11. Fraud in India

12. Anatomy of fraud and guideline for prevention

13. Prevention of fraud

14. Detection of frauds

15. Investigation and staff side action

16. Circumstances which facilitate the perpetration of fraud

17. Comparative study of US and U.K. Law

(i) Fraud under American Law

(a) Classification of fraud under American law

(b) Distinguishing cause of action based on contract from one based on fraud/ deceit

(c) Effect of fraud

(d) Legislature provisions on fraud

(ii) Fraud under Law of United Kingdom

(a) Financial Fraud

(b) Vetting of the case by SFO

(c) Trial of case by SFO

(d) Powers of the SFO

(e) Safeguards against abuse of powers by SFO

(i) Inadmissibility of statements

(ii) Reasonable excuse and other safeguards

( f ) Problems faced by the SFO in investigation of serious fraud

(iii) Fraud under European Union

¨ Definition of fraud in European Union

18. Gap in the management and Administrative Legal System

(i) No in house procedural legal order : No best practice code

(ii) Use of discretionary power at every level

(iii) No legal system audit, no compliance certificate

(iv) Non-compliance of RBI guide-lines and FCNR/NRI account related fraud

19. Role of Reserve bank of India in Frauds reported by banks

20. Credit transaction data registration and information sharing

21. Recommendations of the Committee

(i) Preventive aspects of management of financial fraud

(1) Development of Best Practice Code

(2) System of internalization of BPC

(3) Internal Check and Internal Control

(4) Legal Compliance Certificate

(5) Legal Compliance Audit

(6) Data building on the exercise of discretionary power and monitoring of the same

(7) Appropriate incentive system

(8) Liability of the accounting and auditing profession

(9) System of credit registration and data information sharing

(10) Responsibility of Reserve Bank in frauds reported by banks

(ii) Prohibitive aspects to deal with Financial Fraud

(1) Separate Act to deal with Financial Fraud

(2) Financial fraud to be criminalized

(3) Serious financial fraud to be separately treated

(4) Strict liability and shift of burden of proof

(5) Special responsibility of the regulator

(6) Criminal behaviour not within the fold of Regulatory function

(7) Separate institution for investigation of Serious Financial Fraud cases

(8) Office of Director for Investigation of Financial Fraud

(9) Search, seize and Attachment

(10) Special Courts

(11) Cross-border Financial fraud

(12) Draft Legislation

(iii) Constitution of Financial Fraud Enquiry Committee

¨ Functions of the Committee

(iv) Constitution of Bureau of Investigation for Financial Fraud

¨ Powers and Functions of the Bureau

(v) Establishment of Special Court

(a) Jurisdiction of Special Court

(b) Procedure and Powers of Special Court

(c) Appeal from the orders, judgement etc. of Special Court

(vi) Restoration of the property

(vii) Receiver and Administrator

(viii) Amendment to the Indian Penal Code, Criminal Procedure Code and Evidence Act

(a) Amendment to Indian Penal Code, 1860

¨ Section 512—Financial Fraud

¨ Section 513—Punishment for Financial Fraud

(b) Amendment to Indian Evidence Act, 1872

¨ Section 114-B—Presumption as to Financial Fraud

(c) Amendment to Criminal Procedure Code, 1973

¨ Section 105-M—Right of the Investigating Officer to search

¨ Section 105-N—Right of the Investigating Officer to seize movable properties and documents

¨ Section 105-O—Right of the Investigating Officer to trace the properties and funds

¨ Section 105-P—Right of the Investigating Officer to temporarily attach immovable properties and funds

¨ Section 105-Q—Court’s con-firmation of attachment

¨ Section 105-R—Court’s order of forfeiture

¨ Section 105-S—Court’s Order for restoration

CHAPTER 45

Regulation of Credit Information Companies

1. Introduction

2. Enactment of the statute

3. Credit Information on Borrowers

(i) The Credit Information Companies (Regulation) Act, 2005

(ii) The Credit Information Companies Rules, 2006

(iii) The Credit Information Companies Regulations, 2006

4. Organisation of the statute

5. Territorial jurisdiction

6. Effect of the statute on other Acts

7. Definitions of important terms

(i) Words defined in the Act

(ii) Words defined in the Rules

(iii) Words defined in the Regulations

8. Registration of Credit Information Companies

(i) Prohibition to commence or carry on business of credit information

(ii) Application for registration

· Submission of application

(iii) Grant of certificate of registration

(iv) Power of Reserve Bank to cancel certificate of registration

(v) Appeal against order of Reserve Bank

(a) Appellate Authority

(b) Form and procedure of appeal

(c) Sitting of appellate authority

(e) Appeal to be in writing

(f) Contents of memorandum of appeal

(g) Documents to accompany memorandum of appeal

(h) Presentation and scrutiny of memorandum of appeal

(i) Notice of appeal to the respondent

(j) Filing of reply to the appeal and other documents

(k) Date of hearing to be communicated

(l) Hearing of appeal

(m) Order to be signed and dated

(n) Communication of order

(o) Orders and directions in certain cases

(vi) Requirement as to minimum capital

9. Management of credit information companies

(i) Management of credit information company

(ii) Power of Reserve Bank to determine policy

(iii) Power of Reserve Bank to give directions

(iv) Inspection of credit information company, credit institution and specified user

· Specified Users

· Powers and duties of auditors

11. Functions of Credit Information Companies

(i) Functions of a credit information company

· Form of business in which credit information companies may engage

(ii) Credit institution to be member of a credit information company

(iii) Failure to become a member of a credit information company

(iv) Collection and furnishing of credit information

(a) Form of notice for collection and furnishing of credit information

(b) Extension of time for providing credit information

(c) permissible uses of credit information

(v) Settlement of dispute

12. Information Privacy Principles and Furnishing of Credit Information

(i) Accuracy and security of credit information

(ii) Privacy principles

(a) Care in collection of credit information

(b) Access to, and modification of the credit information

(c) Data use limitation

(d) Length of preservation of credit information

(iii) Principles and procedures relating to personal data

(a) Manner and purpose of collection of personal

(b) Solicitation of personal data from an individual

(c) Length of preservation of personal data

(iv) Alteration of credit information files and credit reports

(v) Unauthorized access to credit information

(vi) Prohibition from unauthorized access or use or disclosure

(vii) Steps for security and safeguards to be taken by credit institutions

(viii) Collection of data and maintaining credit information

(viii) Accuracy of data provided by a credit institution

(x) Disclosure of disputed data by a credit institution

(xi) Updating of the credit information by credit institution

(xii) Data security and system integrity safeguards

(xiii) Formulation and adoption of the procedure by credit information companies

(xiv) Accuracy of data provided by a credit information company

(xv) Disclosure of disputed data by a credit information company

(xvi) Formulation and adoption of the procedure by specified user

13. Offenses and Penalties

(i) Offenses and penalties

(ii) Cognizance of offences

(iii) Power of Reserve Bank to impose penalty

(iv) Application of fines

14. Miscellaneous

(i) Power of Reserve Bank to specify maximum amount of fees

· Maximum Amount of Fees

(ii) Disclosure of information before any court or tribunal or authority

(iii) Obligations as to fidelity and secrecy

Obligation for fidelity and secreey

(iv) Protection of action taken ingood faith

(v) Bar of jurisdiction

(vi) Power of Reserve Bank to exempt in certain cases

(vii) Application of other laws not barred

(viii) Amendment of certain enactments

(ix) Removal of difficulties

(x) Power to make rules

(xi) Power of Reserve Bank to make regulations

15. Various forms under rules and regulations

(i) Appeal Under Section 7 of the Act Against Rejection of Application for Grant of Certificate of Registration/Cancellation of Certificate of Registration

(ii) Information to b collected by a credit institution in relation to its identified borrower)

(iii) Declaration of Fidelity and Secrecy

(iv) Application for Grant of Certificate of Registration

(v) Certificate of Registration as Credit Information Company

(vi) Notice for submission of credit information

CHAPTER 46

Vyas Committee on Rural Credit and Related Issues

A. Introduction

B. Terms of Reference

1. Goals of Credit Policy and Strength of the Financial System

2. Areas of Concern

3. Basic Premises of NABARD

4. Study by the Committee

5. Changes in Rural Economy

6. Financing Assetless Poor

7. Financing Small Farmers and Tenants

8. Financing Dry Land Agriculture

9. Financing Crop Production

10. Financing Agriculture Sub-Sectors

11. Financing Private Capital Formation

12. Financing Rural Non-Farm Activities

13. Co-operative Credit Institutions

14. Revitalisation of Co-operatives

15. Effective Co-operative Govern-ance

16. Strengthening PACS

17. Tiers in Co-operative Credit System

18. Integration of Long and Short-term Structures

19. Relaxation of Norms of Refinance for Co-operatives

20. Commercial Banks—Waning Enthusiasm

21. Continued Involvement in Rural Lending

22. Reduction of Interest Rates on RIDF Deposits necessary to Meet Mandate

23. Reporting and Review

24. Credit flow to disadvantaged sections and areas

25. Dealing with low credit deposit ratios

26. Regional Rural Banks Re-capitalisation and Reforms

27. Progress towards Objectives

28. Shareholders' Support

29. Reorganisation as Means to Viability

30. Improving Lending

31. Support from State Govern-ments

32. Board Appointments

33. Converting RRBs into LABs

34. Amendments to RRB Act

35. Personnel—Areas of Concern

36. Staffing Patterns

37. Staff Selection and Processes

38. Leadership

39. Motivation and Training

40. Support Facilities

41. Improving branch affairs

42. Legal Systems—Beset with Problems

43. Imperative to Improve Recoveries

44. Improving disbursals

45. Improving recoveries

46. Effective Co-ordination Required

47. Reserve Bank of India

48. National Bank for Agriculture and Rural Development

49. Government of India

50. State Governments

51. Panchayati Raj and Civil Society Institutions

CHAPTER 47

Use of Hindi in Banking Sector

A. Use of Hindi in Public Sector Banks

1. Introduction

2. Correspondence in Hindi.

3. Acceptance of cheques drawn and signed in Hindi

4. Signature in Hindi on official documents

5. Implementation of the Section 3(3) of Official Languages Act, 1963

6. Issuing advertisements bilingually

7. Bilingualisation of Annual Reports

8. Hindi version of the term 'A Government of India Undertaking'

9. Bilingualisation of stationery items

10. Display of name-boards, designation boards, counter boards, sign boards etc.

11. Use of Hindi for Internal Circulars, Office Orders, Inviation Cards etc.

12. Issue of bilingual agenda notes and proceedings of all-India conferences

13. Setting up of Hindi Deptts./ Sections/Cells etc.

14. Formation of Hindi cadre and filling up of Hindi Posts

15. Duties of Hindi Officers

16. Re-designation of Hindi Cells/Sections/Departments and Hindi Officers

17. Submission of quarterly progress reports and other reports

18. Official Language Implementation Committees

19. Setting up of Hindi Libraries

20. Publication of periodicals in Hindi

21. Adding of Hindi section in House Magazines

22. Hindi Teaching Schemes

23. Banking training through Hindi medium

24. Learning of Hindi Typewriting/ Stenography by Typists and Stenographers of banks

25. Hindi Workshops

26. Printing of forms and translation of Codes, Manuals etc.

27. Notification under Rule 10 (4) and specifying under Rule 8 (4) of the Official Language Rules,1976

28. Making entries in Hindi in the ledgers and registers

29. Submission of Inspection Reports forwarded by the officials of Rajbhasha Vibhag

30. Submission of reports on implementation of Official Language Policy to the Board of Directors

31. Capsule Course

32. Induction courses of the banks

33. Publication of balance sheets by banks bilingually

34. Granting of awards for books and essays originally written in Hindi on financial, banking and economic subjects

35. Participation in meetings of Town Official Langrage Implementation Committees

36. Naming of new bank subsidiaries/schemes in Hindi or othe Indian languages

37. Inclusion in corporate plan

38. Use of Hindi in customer service

39. (a) Proviving statement of accounts to the account holders in Hindi by the computerised branches

(b) Provision of bilingual software

40. Use of Hindi in the branches of Indian banks functioning in foreign countries

41. Honourable Prime Minister's directions for increasing use of Hindi in the official work

42. Hindi in internal work of Banks¾ Recommendations of the Group on Reporting system

43. Work in Hindi on Computers

(i) Consolidated guidelines on word in Hindi on computers

(ii) Bilingual Data Processing Software/Core Banking Solutions

(iii) Internal standing working group

(iv) Use of only bilingual electronic equipments

44. Miscellaneous instructions

B. USE OF HINDI IN PRIVATE SECTOR BANKS

Annexure—A

Annexure—B

CHAPTER 48

Derivatives

1. Definition of derivative

2. Definition for regulatory purpose

3. Derivatives Markets

4. Participants

5. Purpose

6. Eligibility criteria

7. Broad principles for undertaking derivative transactions

8. Permissible derivative instruments

(a) Forward Rate Agreement (FRA)

(b) Interest Rate Swap (IRS)

(c) Interest Rate Futures (IRF)

(d) Foreign Exchange Forward

(e) Currency Swaps

(f) Currency Options

(g) Interest Rate Caps and Floors

9. Rupee Interest Rate Derivatives

(a) Product Market:

(b) Products

(c) Benchmark Rate/s for FRA/ IRS

(d) Participants

(e) Purpose

10. Risk management and corporate governance aspects

(a) Corporate governance

(b) Board and senior management oversight

(c) Suitability and Appropriateness Policy

(d) Documentation

(e) The identification of risk

(f) Risk measurement

(g) Risk Limits

(i) Market risk limit

¨ Commonly used market risk limits

· Notional or volume limit

· Stop loss limits

· Gap or maturity band limits

· Value-at-risk limits

· Options limits

(ii) Credit limit

(iii) Liquidity limit

(h) Management Information Systems

(i) Independent risk control

(j) Operational controls

(i) Segregation of duties

(ii) Politics as procedure

¨ Recommendations on operational controls

· Segregation of duties

· Trade Entry and Transaction Documentation

· Confirmation Procedures

· Settlement and Disbursement Procedures

· Reconciliation Procedures

· Revaluation Procedures

· Exception Reports

· Contingency plan

(iii) Contingency plan

11. Internal audit

12. Prudential norms relating to derivatives

13. Prudential limits on derivatives

14. Regulatory reporting, balance sheet disclosures, valuation and Accounting

PART II

§ Act, Rules, Regulations, Scheme and Guidelines

Division 1

Law Relating to Banks and Bankers

1. The African Development Bank Act, 1983

2. The African Development Fund Act, 1982

3. The Bankers' Books Evidence Act, 1891

4. The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970

5. The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980

6. The Banking Companies (Nomination) Rules, 1985

7. The Banking Companies (Period of Preservation of Records) Rules,
1985

8. The Banking Ombudsman Scheme, 1995

9. Banking Ombudsman Scheme, 2002

10. The Banking Ombudsman Scheme 2006

11. The Banking Regulation Act, 1949

12. The Banking Regulation (Companies) Rules, 1949

13. The Banking Regulation (Co-operative Societies) Rules, 1966

14. The Banking Service Commission Act, 1984

15. The Bills of Exchange Act, 1882 (U.K.)

Volume 3

Division 1

Law Relating to Banks and Bankers (Contd.)

16. The Co-operative Banks (Nomination) Rules, 1985

17. The Co-operative Banks (Period of Preservation of Records) Rules, 1985

18. The Export-Import Bank of India Act, 1981

19. The Guidelines on Fair Practices Code for Lenders

20. The Industrial Development Bank of India Act, 1964

21. The Industrial Development Bank (Transfer of Undertaking and
Repeal) Act, 2003

22. The Industrial Reconstruction Bank (Transfer of Undertakings and Repeal) Act, 1997

23. The National Bank for Agriculture and Rural Development Act, 1981

24. National Bank for Agriculture and Rural Development General Regulations, 1982

25. National Bank for Agriculture and Rural Development (Additional) General Regulations, 1984

26. The National Housing Bank Act, 1987

27. National Housing Bank (Recovery of Dues of the Approved Institutions) General Regulations, 2002

28. The Nationalised Banks (Management and Miscellaneous Provisions)
Scheme, 1970

29. The Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1980

30. The Negotiable Instruments Act, 1881

31. The Regional Rural Banks Act, 1976

32. The Reserve Bank of India Act, 1934

33. Reserve Bank of India (Non-Banking Financial Companies) Returns Specifications, 1997

34. The Small Industries Development Bank of India Act, 1989

35. The State Bank of India Act, 1955

36. The State Bank of India (Subsidiary Banks) Act, 1959

37. The State Bank of Sikkim (Acquisition of Shares) and Miscellaneous Provisions Act, 1982

Division 2

Law Relating to Debt Recovery and Securitisation of Financial Assets Law

38. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993

39. The Debts Recovery Appellate Tribunal (Financial and Administrative Power) Rules, 1997

40. The Debts Recovery Appellate Tribunal (Financial and Administrative Power) Rules, 1997

41. The Debts Recovery Appellate Tribunal (Procedure for Appointment as Chairperson of the Appellate Tribunal) Rules, 1998

42. The Debts Recovery Appellate Tribunal (Procedure) Rules, 1994

43. The Debts Recovery Appellate Tribunal (Salaries, Allowances and other Conditions of Service of the Officers and Employees) Rules, 1993

44. The Debts Recovery Tribunal (Procedure for Appointment as Presiding Officer of the Tribunal) Rules, 1998

45. The Debts Recovery Tribunal (Procedure) Rules, 1993

46. The Debts Recovery Tribunal (Salaries, Allowances and other Conditions of Service of Recovery Officer and other Officers and Employees) Rules, 1993

47. The Debts Recovery Tribunal (Salaries, Allowances and other Terms and Conditions of Service of Presiding Officer) Rules, 1993

48. The Depositories (Appeal to Securities Appellate Tribunal) Rules, 2000

49. Depositories (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 2005

50. The Securitisation and Resconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

51. The Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003

52. Security Interest (Enforcement) Rules, 2002

53. The Guidance Notes for Securitisation Companies and Reconstruction Companies

54. The Guidelines to Banks/Financial Institutions on Sale of Financial Assets to Securitisation Company/ Reconstruction Company

55. Housing Finance Institutions (Procedure for Recovery of Dues) Rules, 2002

56. Housing Finance Institutions Debt Recovery Appellate Tribunal (Financial and Administrative Powers) Rules, 2002

57. Housing Finance Institutions Debt Recovery Appellate Tribunal (Procedure) Rules, 2002

58. Housing Finance Institutions Debt Recovery Appellate Tribunal (Procedure for Appointment as Presiding Officer of the Appellate Tribunal) Rules, 2002

59. Housing Finance Institutions Debt Recovery Appellate Tribunal (Salaries, Allowances and other Conditions of Service of the Officers and Employees) Rules, 2002

60. Housing Finance Institutions Debt Recovery Appellate Tribunal (Salaries, Allowances and other Terms and Conditions of Service of the Presiding Officer) Rules, 2002

61. Housing Finance Institutions Recovery Officers' (Qualifications and Conditions of Service) Rules, 2002

Division 3

Law Relating to Foreign Exchange Management by Banks
and

Financial Institutions

62. The Foreign Exchange Management Act, 1999

63. Appellate Tribunal for Foreign Exchange (Recruitment, Salary and Allowances and Other Conditions of Service of Chairperson and Members) Rules, 2000

64. The Foreign Exchange (Authentication of Documents) Rules, 2000

65. The Foreign Exchange (Compounding Proceedings) Rules, 2000

66. The Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000

67. The Foreign Exchange Management (Current Account Transactions)
Rules, 2000

68. The Foreign Exchange Management (Deposit) Regulations, 2000

69. The Foreign Exchange Management (Encashment of Draft, Cheque, Instrument and Payment of Interest) Rules, 2000

70. The Foreign Exchange Management (Acquisition and Transfer of Immovable Property outside India) Regulations, 2000

71. The Foreign Exchange Management (Borrowing and Lending in Rupees) Regulations, 2000

72. The Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000

73. The Foreign Exchange Management (Export and Import of Currency) Regulations, 2000

74. The Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) Regulations, 2000

75. The Foreign Exchange Management (Guarantees) Regulations, 2000

76. The Foreign Exchange Management (Insurance) Regulations, 2000

77. The Foreign Exchange Management (Issue of Security in India by a Branch, Office or Agency of a Person Resident outside India) Regulations, 2000

78. The Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000

79. The Foreign Exchange Management (Offshore Banking Unit) Regulations, 2002

80. The Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000

81. The Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000

82. The Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000

83. The Foreign Exchange Management (Remittance of Assets)
Regulations, 2000

84. The Foreign Exchange Management (Removal of Difficulties) Order, 2000

Division 4

Miscellaneous Laws Relating to Banks and Financial Institutions

85. The Agricultural Refinance and Development Corporation Act, 1963

86. The Consumer Protection Act, 1986

87. The Consumer Protection Rules 1987

88. The Consumer Protection Regulations, 2005

89. The Credit Information Companies (Regulation) Act, 2005

90. The Credit Information Companies Rules, 2006

91. The Credit Information Companies Regulation, 2006

92. The Deposit Insurance and Credit Guarantee Corporation Act, 1961

93. The Depositories Act, 1996

94. The Indian Contract Act, 1872

95. The Industrial Disputes (Banking and Insurance Companies) Act, 1949

96. The Industrial Disputes (Banking Companies) Decision Act, 1955

97. The Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993

98. The Interest Act, 1978

99. The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993

100. The Micro, Small And Medium Enterprises Development Act, 2006

101. The Multi-State Co-operative Societies Act, 2002

102. Multi-State Co-operative Societies Rules, 2002

103. The Non-Banking Financial Companies and Miscellaneous Non-Banking Companies (Advertisement) Rules, 1977

104. Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007

105. Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007

106. Non-Banking Financial Companies Acceptance of Public Deposits
(Reserve Bank) Directions, 1998

107. Non-Banking Financial Companies Auditor’s Report (Reserve Bank) Directions, 1998

108. Miscellaneous Non-Banking Companies (Reserve Bank) Directions, 1977

109. The Prevention of Money-Laundering Act, 2002

110. The Prevention of Money-Laundering (Appeal) Rules, 2005

111. Prevention of Money-Laundering (Forms, Search and Seizure and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005

112. Prevention of Money-Laundering (Maintenance of Records of the Nature and Value of Transactions, the Procedure and Manner of Maintaining and Time for Furnishing Information and Verification and Maintenance of Records of the Identity of the Clients of the Banking Companies, Financial Institutions and Intermediaries) Rules, 2005

113. Prevention of Money-laundering (Manner of Receiving the Records authenticated Outside India) Rules, 2005

114. Prevention of Money-laundering (Receipt and Management of Confiscated Properties) Rules, 2005

115. Prevention of Money-Laundering (The Forms and the Manner of Forwarding a Copy of Order of Arrest of a Person along with the Material to the Adjudicating Authority and its period of Retention) Rules, 2005

116. Prevention of Money-Laundering (The Manner of Forwarding a Copy of the Order of Provisional Attachment of Property along with the Material, and Copy of the Reasons along with the Material in Respect of Survey, to the Adjudicating Authority and its Period of Retention) Rules, 2005

117. Prevention of Money-Laundering (The Manner of Forwarding a Copy of the Order of Retention of Seized Property along with the Material to the Adjudicating Authority and the Period of its Retention) Rules, 2005

118. Adjudicating Authority Regulations, 2006

119. Anti-Money Laundering Standards

120. The Public Financial Institutions (Obligation as to Fidelity and Secrecy) Act, 1983

121. Residuary Non Banking Companies (Reserve Bank) Directions, 1987

122. The Securities and Exchange Board of India Act, 1992

123. The Special Economic Zones Act, 2005

124. The Special Economic Zones Rules, 2006

125. The State Financial Corporations Act, 1951

126. Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002

127. The Usurious Loans Act, 1918

128. The Voluntary Deposits (Immunities and Exemptions) Act, 1991

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