Welcome to JAIIB Classes

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Welcome to JAIIB Classes

• PRINCIPLES OF BANKING
• FUNCTIONS OF BANKS

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BANKER-CUSTOMERRELATIONSHIP

• DEBTOR-CREDITOR
• CREDITOR-DEBTOR
• AGENT-PRINCIPAL
• LESSOR-LESSEE
• BAILEE-BAILOR

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KNOW YOUR CUSTOMER- KYC

• Know your customer norms are applicable
• to all customer accounts. It deals with not
• only to identify the customer but also
• to understand the activities of the customer,
• to ensure that the operations in the customer
• account/s is/are for genuine purpose

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KYC RULES

• The main rules are
• Customer identification
• Ceiling and monitoring of cash transactions
• Internal Control Systems
• Prevention of Terrorism Finance
• Identification and Reporting of Suspicious
  Transactions
• Adherence to Foreign Contribution Regulation Act
  (FCRA), 1976
• Record Keeping
• Training of staff and management

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BANKER - CUSTOMER RELATIONSHIP

• Deposit Accounts

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Indian Banking - Significant events 1

• Three presidency banks were established in
  Calcutta (1806) in Bombay (1840) and in Madras
  (1843)
• In the early part of 20th century, on account of
  the Swadeshi movement a number of join stock
  banks were established by Indians like Bank of
  India, Bank of Baroda and Central Bank of India.
• In 1921 the three presidency banks were merged
  and the Imperial Bank of India was created.
• During the period 1900 to 1925 many banks failed,
  and the Government appointed in 1929 a Central
  Banking Enquiry Committee to trace the reasons
  for the failure of banks.
• The Reserve Bank of India Act was passed in 1934
  and the RBI came into existence in 1935 and RBI
  was nationalised in 1949
• The Banking Regulation Act,1949 gave wide powers
  to RBI to act as the regulator for banks in India

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Indian Banking - Significant events 1

• Three presidency banks were established in
  Calcutta (1806) in Bombay (1840) and in Madras
  (1843)
• In the early part of 20th century, on account of
  the Swadeshi movement a number of join stock
  banks were established by Indians like Bank of
  India, Bank of Baroda and Central Bank of India.
• In 1921 the three presidency banks were merged
  and the Imperial Bank of India was created.
• During the period 1900 to 1925 many banks failed,
  and the Government appointed in 1929 a Central
  Banking Enquiry Committee to trace the reasons
  for the failure of banks.
• The Reserve Bank of India Act was passed in 1934
  and the RBI came into existence in 1935 and RBI
  was nationalised in 1949
• The Banking Regulation Act,1949 gave wide powers
  to RBI to act as the regulator for banks in India

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Progress of banking in India

• In the liberalised, privatised and globalised
  environment, banks opeating in India have
  diversified their banking activities by offering
  Para Banking facilities like
• Merchant banking/Mutual funds
• ATMs/Credit Cards/Internet banking
• Venture capital funds
• Factoring
• Bancassurance

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Non-Resident Accounts - 1
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Foreign Currency Non-residentDeposit Accounts
FCNR (B)

• FCNR (B) accounts
• NRIs,PIOs,residing outside India can open FCNR
  (B) accounts
• FCNR (B) accounts are maintained as fixed
  deposits in certain designated currencies
• The designated currencies are
• US, GBP, Japanese Yen, Euro, Cad, Aus
• Maintained in Banks in India in the above
• mentioned foreign currencies and interest is
  also earned in such foreign currencies
• Repatriation of funds (principal, interest) is
  allowed

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Loan Products Fund Based
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Loan Products Non Fund Based
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SERVICES OFFERED BY BANKS

• Over and above the traditional role of a bank to
  take deposits and offer credit facilities Banks
  today offer the following services-
• Internet Banking
• Telephone Banking
• Mobile Banking
• On-line trading in shares
• Bills payment on- line
• Booking air/ railway tickets on- line
• Bills payment on-line
• Cash Management Services

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SERVICES OFFERED BY BANKS - contd

• 9 On-line remittance facility-RTGS/NEFT etc
• 10 Sale of third party products Mutual fund
  schemes/insurance
• 11Safe Custody
• 12 Safe deposit vault
• 13 Depository Services
• 14 tax payments on-line
• 15 Counseling Services

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CASH MANAGEMENT SERVICES

• In today's competitive market place, effective
  management of cash flows can make the difference
  between success and failure
• The cash management product usually offers
  corporate customers fast track cheque
  collections, speedier release of funds and
  profitable funds management, at a reasonable cost
• Payments received from buyers and made to
  suppliers of a corporate client are efficiently
  processed to optimise cash flow position and to
  ensure the effective management of business'
  operating funds
• The flow of receivables and payables can also
  usually be seen on-line.

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DEPOSITORY SERVICES

• With a view to adding value to banking services
  and making available the numerous benefits of
  depository system to clients, banks in India
  offer Demat services through either Depositories
  viz.National Securities Depository Limited (NSDL)
  or Central Depository Services (India) Ltd.
  (CDSL) or both by becoming a sub-participant.
• Services offered are usually at par with those
  offered by specialized organizations like
  Integrated etc

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COUNSELLING SERVICES

• The following are the usual objectives of
  counselling services provided by some banks.
• Advising on gaining access to structured
  financial system including banking
• Creating awareness among the public about
  financial management
• Counseling people who are struggling to meet the
  repayment obligations and helping debt resolution
  
• Helping in rehabilitation of borrowers in
  friendly and timely guidance not only to
  mitigate the immediate stress of the trapped
  individuals and their households, but also to
  help to infuse confidence in others who are in
  distress.

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POWER OF ATTORNEY

• Power of attorney (POA) also called letter of
  attorney is an authorization to act on someone
  else's behalf in a legal or business matter. The
  person authorizing the other to act is the
  principal, granter or donor (of the power), and
  the one authorized to act is the agent
• A power of attorney may be special or limited to
  one specified act or type of act, or it may be
  general, and whatever it defines as its scope is
  what a court will enforce as being its scope. It
  may also be limited as to time.
• The POA is usually stamped and notarised
• The POA can be cancelled or amended by the donor
  at any time.However is responsible for all acts
  till he gives notice

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MANDATE

• Usually an unstamped letter
• Addressed to a particular bank
• Authorises a third party to act on his/her behalf
• Issued for short/ temporary period
• Not acceptable from limited companies/
  cooperative societies

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CHARGES

• HYPOTHECATION
• PLEDGE
• MORTGAGE
• ASSIGNMENT
• LIEN
• SET OFF

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LIEN SET OFF

• A lien is the right of a creditor in possession
  of goods, securities or any other assets
  belonging to the debtor to retain them until the
  debt is repaid, provided that there is no
  contract express or implied, to the contrary. It
  is a right to retain possession of specific goods
  or securities or other movables of which the
  ownership vests in some other person and the
  possession can be retained till the owner
  discharges the debt or obligation to the
  possessor.
• The right of set off is also known as the right
  of combination of accounts .A bank has a right to
  set off a debt owing to a customer against a debt
  due from him.
• Both the claim and the set-off must be mutual
  debts, due from and to the same parties, under
  the same right A claim by a person in a
  representative capacity cannot be set off against
  a personal claim

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Garnishee Order

• A garnishee order is an attachment order issued
  by a court
• Example A borrows money from B .A fails to
  repay the loan. B files a suit under Civil
  Procedure Code and the Court issues
• a decree and attaches the funds in As bank
  account with Bank XYZ Ltd.
• The order issued by the Court on bank XYZ Ltd is
  called aGarnishee Order
• B is called the judgement creditor. A is the
  Judgement debtor. Bank XYZ Ltd is Judgement
  debtors debtor
• It has 2 parts order nisi , and order absolute

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CHEQUES
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NEGOTIABLE INSTRUMENTSPaying Banker
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NEGOTIABLE INSTRUMENTS

• BANKERS DUTIES
• RESPONSIBILITIES
• C0LLECTING
• BANKER
• COLLECTION OF
• CHEQUES

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Six Cs

• Character
• Capital
• Capacity
• Collateral
• Condition
• Compliance

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Working Capital Cycle
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FUND BASED FINANCE
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Non-Fund Based Finance
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Credit Management in Banks
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